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{ "title": [ "Background", "DOE’s Missions and Spending", "Contract Types", "Contract Oversight", "IPERA Risk Assessment and IG Requirements", "Roles and Responsibilities of Organizations Involved in DOE’s IPERA Activities", "DOE Developed a Process for Assessing Improper Payment Risks, but Those Assessments Do Not Fully Evaluate Risk", "In Fiscal Year 2011, DOE Developed a Process for Assessing Improper Payment Risks", "For 2011, DOE Did Not Prepare Risk Assessments for All Its Programs, and the Quantitative Information That Programs Reported Was Not Reliable", "Nearly Half of DOE’s Payment Sites Did Not Prepare Risk Assessments for 2011", "Quantitative Information Reported for Improper Payments for 2011 Was Not Reliable", "DOE Headquarters Did Not Prepare Risk Assessments for Its Grant and Loan Programs for Fiscal Year 2011", "DOE’s Fiscal Year 2011 Risk Assessments Did Not Always Include a Clear Basis for the Risk Determination", "DOE’s Fiscal Year 2011 Risk Assessments Did Not Fully Evaluate Other Relevant Risk Factors", "For Fiscal Years 2012 and 2013, DOE Directed Programs to Report Less Information on Improper Payment Risks", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objective, Scope, and Methodology", "Appendix II: Comments from the Department of Energy", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "This section discusses DOE’s missions and spending, contract types, contract oversight, IPERA risk assessment and IG requirements, and the roles and responsibilities of organizations involved in DOE’s IPERA activities.", "DOE’s missions include developing, maintaining, and securing the nation’s nuclear weapons capability; cleaning up the environmental damage resulting from more than 60 years of producing nuclear weapons; and conducting basic energy and science research and development. The department carries out these diverse missions at 85 different sites across the country, including major laboratories and field facilities. With a DOE workforce of about 15,000 employees and in excess of 100,000 contractor staff, the department relies primarily on its contractors to manage and operate its sites and accomplish its missions. DOE oversees the work of its contractors through its staff and program offices at DOE headquarters and its field offices. For example, DOE contracting officers provide oversight and ensure contractors are in compliance with the terms of their contracts.\nIn fiscal year 2013, DOE spent about 90 percent of its total annual budget, or $24 billion of $26.4 billion, on contracts.\nA significant share of this spending, about $17.1 billion in fiscal year 2013, was for management and operating (M&O) contracts, which are used by DOE generally for the purposes of managing DOE laboratories and other government-owned or government-controlled facilities. DOE’s M&O contracts, among other things, provide contractors with the authority to draw money directly from DOE-funded accounts to pay for contract performance. In contrast, for the less common non-M&O contracts, DOE relies on more traditional bill payment methods—which include receipt of an invoice, payment approval and authorization, and disbursement of funds. In addition to conducting work through its contractors, DOE manages a number of grant and loan programs—which accounted for about $2.4 billion of DOE spending in fiscal year 2013. DOE also includes the Federal Energy Regulatory Commission and the Power Marketing Administrations.", "Federal agencies can choose among a number of different types of contracts to procure goods and services, including fixed-price, time-and- materials, and cost-reimbursement contracts. The choice of contract type is a principal means for agencies to divide the risk of cost overruns between the government and the contractor. For example, under a firm- fixed-price contract, the contractor assumes most of the cost risk; by accepting responsibility for completing a specified amount of work for a fixed price, the contractor earns a profit if the total costs it incurs in performing the contract are less than the contract price, but loses money if its total costs exceed the contract price. Under a time-and-materials contract, by contrast, the government bears the risk of cost overruns because payment is based on the number of labor hours billed at a fixed hourly rate that includes wages, overhead, general administrative costs, profit, and the costs of materials if applicable. However, time-and- materials contracts include a ceiling price that the contractor exceeds at its own risk, meaning there is no guarantee that costs above the ceiling price will be reimbursed by the government.\nUnder cost-reimbursement types of contracts, the government assumes the cost risk because it pays the contractor’s allowable costs incurred, to the extent prescribed by the contract, although these contracts also establish a ceiling that the contractor exceeds at its own risk. In fiscal year 2013, about 90 percent, or $21.7 billion, of DOE’s total contract spending was on cost-reimbursement type contracts that include contractor fees, according to DOE officials. This includes cost-plus-fixed- fee, cost-plus-incentive-fee, and cost-plus-award-fee contracts. Under these types of contracts, the federal agency reimburses a contractor for all allowable costs and also pays a fee that is either fixed at the outset of the contract or adjustable based on objective or subjective performance criteria set out in the contract. Cost-reimbursement types of contracts place the primary risk of cost overruns on the government because of the potential for the government to pay more than the contract’s estimated cost and because the government must reimburse the contractor’s costs of performance up to the contract cost ceiling regardless of whether the end item or service is completed. In a September 2009 report, we concluded that cost-reimbursement types of contracts are suitable only when the agency’s requirements cannot be defined sufficiently or the cost of the work cannot be estimated with sufficient accuracy to allow for the use of any type of fixed-price contract. Cost-reimbursement type contracts allow the agency to contract for work that might otherwise present too great a risk to contractors.", "The choice of a contract type—and whether the contract is an M&O contract or not—will also affect the types of internal control and contract auditing activities needed to help protect the government’s interests and reduce the risk of improper payments. Under federal standards for internal control, control activities are an integral part of an entity’s planning, implementing, reviewing, and accountability for stewardship of government resources and achieving effective results. Control activities include both preventive and detective controls. Preventive controls—such as invoice review prior to payment—are controls designed to prevent improper payments (errors and fraud), waste, and mismanagement. Detective controls—such as incurred cost audits—are designed to identify errors or improper payments after the payment is made. Incurred cost audits are intended to examine contractors’ cost representations and reach an opinion on whether the costs are allowable, allocable to government contracts, and reasonable in accordance with the contract and applicable government acquisition regulations. We have previously concluded that a sound system of internal controls contains a balance of both preventive and detective controls that is appropriate for the agency’s operations.\nDOE’s contracting activities for both M&O and non-M&O contracts are governed by federal law and regulations, including the Federal Acquisition Regulation as supplemented by the Department of Energy Acquisition Regulation. The contracting cycle consists of activities throughout the acquisition process, including preaward, award, and contract administration and management. Prior to contract award, an agency generally identifies a need and develops a requirements package. Under the Federal Acquisition Regulation, the agency generally determines the method of acquisition; solicits and evaluates bids or proposals; determines the adequacy of the contractor’s accounting system; and ultimately negotiates a price and contract terms, resulting in the contract award. After contract award, the Federal Acquisition Regulation generally requires the agency to perform activities related to contract administration and management, which involves monitoring the contractor’s performance, as well as reviewing and approving (or disapproving) the contractor’s requests for payments.\nContract auditing assists in achieving prudent contracting by providing those responsible for government procurement with financial information and advice relating to contractual matters and the effectiveness, efficiency, and economy of contractors’ operations. Depending on the contract type, various contract audit activities can occur in the preaward, award, and administration and management phases of a contract. For example, before awarding a cost-reimbursement or other non-fixed-price type contract, the Federal Acquisition Regulation requires agency contracting officers to determine the adequacy of a contractor’s accounting system. After certain types of contracts are awarded, contract audits—including incurred cost audits—are intended to be a key control to help ensure that contractors are charging the government in accordance with applicable laws, regulations, and contract terms. At DOE, the requirements and responsibility for conducting contract and other audits— including incurred cost audits and audits of subcontractor costs—vary, depending on whether the contract is an M&O or a non-M&O type contract, as follows:\nM&O contracts. In its M&O contracts, DOE does not require contractors to submit invoices; instead, the agency provides contractors with the authority to draw funds directly from federal accounts to pay for contract performance. Therefore, DOE does not rely on traditional invoice reviews prior to payment as a means of helping prevent improper payments. Instead, DOE relies on a combination of audits of contractor accounting systems and certain detective controls. Specifically, using a process known as the Cooperative Audit Strategy, DOE relies on its M&O contractors to perform the audit work necessary to ensure that their accounting systems are adequate and that they are charging DOE for only those costs that are allowable under the contract. As part of DOE’s Cooperative Audit Strategy, M&O contractors are required to maintain an internal audit organization that is responsible for performing operational and financial audits, including incurred cost audits, and assessing the adequacy of management control systems.addition, M&O contractors are required to provide adequate audit coverage of subcontractors where costs incurred are a factor in In determining the amount payable.to submit an annual Statement of Costs Incurred and Claimed that includes the contractor’s certification that the costs claimed represent allowable contract costs. To support this statement, the contractors’ internal audit organization conducts an annual incurred cost audit. Among other things, in conducting the annual incurred cost audit, the internal auditors are expected to develop a sampling methodology that will allow them to test selected transactions to determine whether the associated costs are allowable under the contracts’ terms and to make projections regarding the total amount of unallowable costs based on the testing results. According to DOE’s Financial Management Handbook, under the Cooperative Audit Strategy, DOE’s IG is required to annually perform an assessment of these statements for the 10 M&O contractors who incurred and claimed the most costs annually. For the remaining M&O Statements of Costs Incurred and Claimed, the IG is required to perform assessments on a rotational basis, meaning the IG reviews a few each year until it completes all of the remaining ones and then starts over again. DOE officials cite the Cooperative Audit Strategy as a key internal control.\nM&O contractors are also required\nNon-M&O contracts. Non-M&O contractors do not fall under DOE’s Cooperative Audit Strategy and therefore are not required to submit an annual Statement of Costs Incurred and Claimed, maintain an internal audit organization, or provide audit coverage of subcontracts. Instead, DOE relies on traditional bill payment methods, which include prepayment review of invoices, for its non-M&O contracts. DOE also relies on contract audits—including incurred cost audits—for detecting improper payments. The Defense Contract Audit Agency (DCAA) has traditionally been the primary auditor for non-M&O contracts— performing preaward and annual incurred cost audits to ensure that non-M&O contractor costs are allowable under the contract. According to DOE’s acquisition guide, the majority of DOE’s contract dollars have traditionally been spent on M&O contracts, and DCAA services were used for the few other DOE contracts that were typically of small dollar value.its use of non-M&O contracts.\nMore recently, however, DOE has expanded Regardless of the approach used, DOE contracting officers are responsible for determining whether costs incurred are allowable under the contract. During the course of conducting incurred cost audits, auditors sometimes question the allowability of certain costs. Based on this information, contracting officers may eventually decide to disallow certain costs. Before moving to disallow costs, however, the Federal Acquisition Regulation requires agencies to “make every reasonable effort” to reach a satisfactory settlement with the contractor.", "Under IPERA and OMB’s implementing guidance, which together provide the specific requirements for assessing and reporting on improper payments,activities that they administer and identify any program that may be susceptible to significant improper payments—a process known as a risk assessment. Agencies must institute a systematic method of reviewing and assessing their programs, which may take the form of either a quantitative analysis based on a statistical sample or a qualitative evaluation. federal agencies are required to review all programs and IPERA requires that agencies, in performing their risk assessments, take into account those risk factors that are likely to contribute to significant improper payments, such as 1. whether the program or activity reviewed is new to the agency; 2. the complexity of the program or activity reviewed, particularly with respect to determining correct payment amounts; 3. the volume of payments made annually; 4. whether payments or payment eligibility decisions are made outside of the agency, for example, by a state or local government, or a regional federal office; 5. recent major changes in program funding, authorities, practices, or 6. the level, experience, and quality of training for personnel responsible for making program eligibility determinations or certifying that payments are accurate; and 7. significant deficiencies in the audit reports of the agency including but not limited to the agency Inspector General or the Government Accountability Office report audit findings or other relevant management findings that might hinder accurate payment certification.\nOMB’s implementing guidance added an eighth risk factor, directing agencies to consider the results from prior improper payment work. For the purposes of this report, we will refer to these as the eight risk factors. It is important to note that these eight risk factors do not necessarily represent all of the risks for improper payments across all federal agency programs. OMB’s guidance describes these risk factors as the minimum that agencies should consider. Under IPERA, an agency’s assessment of risk factors likely to contribute to significant improper payments may include other risk factors, as appropriate, specific to the program or activity being assessed.\nWe have reported on the importance of risk assessments for managing improper payments and best practices for conducting them. As described in our executive guide for helping agencies identify effective strategies to manage improper payments in their programs,comprehensive review and analysis of program operations to determine if risks exist and the nature and extent of the risks identified. The information an agency develops during a risk assessment forms the foundation or basis upon which agency management can determine the nature and type of corrective actions needed, and it gives management baseline information for measuring progress in reducing improper payments. In addition, reducing improper payments, according to our executive guide, requires a strategy appropriate to the organization involved and its particular risks. a risk assessment is a Under IPERA, agencies were required to conduct risk assessments for all federal programs and activities in fiscal year 2011 and at least once every 3 years thereafter for programs and activities deemed not risk susceptible. As discussed previously, DOE reported in fiscal year 2011 that it did not have any programs susceptible to significant improper payments. However, we note that, in fiscal years 2012 and 2013, the department elected to conduct certain risk assessment related activities that were not required under IPERA. Under IPERA, if, in its risk assessment, an agency finds that a program is susceptible to significant improper payments, the agency must conduct annual statistical sampling of payment transactions to estimate improper payments, publicly report the results, and implement corrective actions to reduce future improper payments. Because DOE reported in fiscal years 2011 through 2013 that none of its programs were susceptible to significant improper payments, under IPERA, the department was not required to take these additional steps. Under IPERA, however, all agencies are required to identify and recover improper overpayments by conducting recovery audits, also known as payment recapture audits, for agency programs that expend $1 million or more annually, if such audits would be cost-effective. OMB requires agencies, including DOE, to report annually on their recovery auditing efforts in their Performance and Accountability Reports or their Agency Financial Reports.\nAdditionally, IPERA requires that each fiscal year, as first implemented in fiscal year 2011, the IG of each agency determine whether the agency is in compliance with certain criteria in IPERA and submit a report on that Specifically, IGs determination to the head of the agency and others.are to determine whether agencies 1. published a Performance and Accountability Report or Agency Financial Report for the most recent fiscal year and posted that report and any accompanying materials required by OMB on the agency website; 2. conducted a program-specific risk assessment for each program or activity that conforms with IPERA (if required); 3. published improper payment estimates for all programs and activities identified as susceptible to significant improper payments under its risk assessment (if required); 4. published programmatic corrective action plans in the Performance and Accountability Report or Agency Financial Report (if required); 5. published, and has met, annual reduction targets for each program assessed to be at risk and measured for improper payments; 6. reported a gross improper payment rate of less than 10 percent for each program and activity for which an improper payment estimate was obtained and published in the Performance and Accountability Report or Agency Financial Report; and 7. reported information on its efforts to recapture improper payments.\nIn its fiscal year 2011 report on IPERA compliance, DOE’s IG reported that the department had not met the OMB criteria in its implementation guidance for compliance under IPERA. Among other things, the IG reported that DOE, in its review of programs to determine whether any might be susceptible to significant improper payments, had inconsistently executed its risk assessments. The IG recommended, among other things, that DOE implement policies and procedures to ensure oversight and communication of the application of the improper payment definition by its sites and adherence to the prescribed guidance. DOE concurred with this recommendation. In subsequent reports on IPERA compliance for fiscal years 2012 and 2013, the IG found that DOE had complied with all requirements of IPERA.", "DOE’s Office of the CFO, hereafter referred to as the DOE headquarters CFO, is responsible for issuing IPERA guidance and consolidating and reporting improper payments information annually in DOE’s Agency Financial Report. DOE’s contractors, along with other DOE field office staff, provide information that is the basis for DOE’s IPERA risk assessment and reporting activities. In addition to having contractor internal auditors, DOE has M&O contractor CFOs who play a role in assessing risk and reporting improper payment information. Generally, contractor CFOs assist in preparing the payment sites’ risk assessment and improper payment data. DOE’s 11 field CFOs, in cooperation with DOE contracting officers, are responsible for overseeing contactor and other activities in the field and assist DOE’s headquarters CFO in implementing IPERA requirements.", "DOE developed a process to assess its programs for risks of improper payments in fiscal year 2011 that included both a qualitative risk assessment and quantitative information on improper payments. However, based on our evaluation of the department’s fiscal year 2011 risk assessment process, we found that DOE did not prepare risk assessments for all of its programs, and the quantitative information reported was not reliable; DOE’s risk assessments did not always include a clear basis for the risk determination; and DOE’s risk assessments did not fully evaluate other relevant risk factors. In addition, because DOE found its programs to be at low risk for significant improper payments in fiscal year 2011, the department was not required to prepare risk assessments again until fiscal year 2014. In fiscal years 2012 and 2013, although not required, DOE directed its sites to prepare an overall risk assessment rating and information on the amount of actual improper payments identified through the normal course of business. However, we found that the information reported in fiscal years 2012 and 2013 constituted less information on improper payments risk than what was provided in fiscal year 2011, and the information reported provided limited insight into the risk of improper payments.", "To comply with IPERA, DOE developed a process in fiscal year 2011 to assess its programs’ risks for improper payments. DOE defined its programs as including both the sites responsible for making payments on behalf of DOE (hereafter referred to as payment sites) and its grant and loan programs. Specifically, in 2011, DOE identified 55 payment sites as programs. Of those sites, 38 were contractor sites, which include sites such as DOE laboratories, weapons production facilities and major cleanup sites. The remaining 17 payment sites were managed by DOE. These sites include local DOE site offices and the Oak Ridge Financial Service Center (collectively referred to as DOE field office sites); the department’s four Power Marketing Administrations; and the Federal Energy Regulatory Commission.\nTo aid in its compliance with IPERA, DOE issued guidance in fiscal year 2011 that directed payment sites to (1) develop a site-specific risk assessment that takes into account, at a minimum, the eight risk factors, (2) prepare a statistically valid estimate of the annual amount of improper payments, and (3) submit a copy of the risk assessment and improper payments estimate to the DOE headquarters CFO. DOE’s fiscal year 2011 guidance did not specify who would be responsible for evaluating the risks of DOE’s grant and loan programs, but DOE officials told us that DOE headquarters was responsible for performing this function.\nDOE officials told us that under this process, cognizant DOE field CFO offices reviewed payment site risk assessments before they were submitted to the headquarters CFO. Based on the risk assessments and statistical sampling information that payment sites submitted to the headquarters CFO, DOE determined in 2011 that it did not have any programs susceptible to significant improper payments. Additionally, DOE reported in its Fiscal Year 2011 Agency Financial Report that its estimate of the annual amount of improper payments from statistical sampling was $17.5 million out of $31.2 billion in total outlays, which represents an overall improper payment rate of .06 percent.", "DOE did not prepare risk assessments for nearly half of its payment sites for fiscal year 2011, and the quantitative information that payment sites reported for improper payments was not reliable. In addition, DOE did not prepare risk assessments for its grant and loan programs for fiscal year 2011.", "We found that 26 of the 55 payment sites that DOE had designated as programs for fiscal year 2011 did not prepare risk assessments. Of these 26 sites, 11 sites did not submit either a qualitative assessment or quantitative information, and 15 submitted quantitative information on the site’s estimated amount of improper payments but did not provide a qualitative assessment of risk, as required by DOE guidance. IPERA requires federal agencies to assess the risk of all programs for significant DOE had a process and guidance in place for improper payments.conducting risk assessments, and DOE’s fiscal year 2011 guidance directed each payment site to complete a risk assessment that, at a minimum, considered the eight risk factors. DOE’s guidance also states that each site will provide a copy of the risk assessment to the DOE headquarters CFO to support their conclusions. However, 26 sites did not prepare and submit risk assessments as required (i.e.,10 non-M&O contractor payment sites, 11 DOE field office sites, and 5 M&O contractor sites).\nDOE officials said the 10 non-M&O payment sites did not prepare risk assessments for fiscal year 2011 because they were covered as part of the risk assessments conducted by the cognizant DOE field office that year. In reviewing risk assessments, we found that 3 of the 10 non-M&O payment sites were discussed in the assessment by a cognizant DOE field office site—the Richland Office. However, the discussion of the non- M&O sites did not constitute a risk assessment for those sites because the Richland Office only made limited mention of the internal controls used by these 3 non-M&O sites, rather than a more robust assessment of the risk factors. Moreover, we found no evidence that the remaining 7 non-M&O sites were assessed by the cognizant field office site—in part, because many of the other cognizant field office sites did not prepare risk assessments in 2011. DOE officials told us that the Oak Ridge Office, which prepared a risk assessment in 2011, was the cognizant DOE field office that covered the risk assessments for some of the non-M&O contracts. However, we found that its risk assessment did not address the eight risk factors as they relate to the specific payment processes and For example, at the time of controls at the non-M&O contractor sites.the fiscal year 2011 reporting, the Oak Ridge payment site oversaw USA Repository Services LLC, a non-M&O payment site, but the Oak Ridge risk assessment does not mention the contractor or discuss any of the processes and controls specific to that contractor. Assessing risk at the non-M&O contractors is important because many of the prepayment review processes and controls that impact the risk associated with making an improper payment reside at the non-M&O contractor site. For example, upon receipt of an invoice, DOE officials at the non-M&O site are responsible for verifying that the goods and services reflected on the invoice have been received. Regardless of whether the cognizant DOE field site’s risk assessment covered these non-M&O contractors, not having completed risk assessments for these non-M&O contractor sites limited the information DOE needed to assess the risk for all of its programs.\nFor the 11 DOE field office sites that did not prepare and submit risk assessments as required, DOE officials said that the 11 sites did not have to prepare risk assessments. Absent their inclusion in a risk assessment prepared for some other program or activity within DOE, this statement is not consistent with IPERA, and again not having completed risk assessments for these 11 field sites limited the information DOE needed to assess the risk for all of its programs. DOE officials further explained that they believe the 5 M&O contractor sites did prepare risk assessments for fiscal year 2011, but the DOE officials were unable to locate those risk assessments in their files. As discussed later in this report, in fiscal year 2012, all but 4 payment sites prepared and submitted risk assessment ratings and, in fiscal year 2013, all payment sites prepared and submitted risk assessment ratings.\nIn July 2014, DOE issued its IPERA risk assessment guidance for fiscal year 2014 with a number of revisions. One revision directs DOE field office sites to consider the payment processes of the non-M&O contractors they oversee when completing required risk assessments. However, the guidance does not specify that those sites should address the eight risk factors as they relate to the non-M&O sites. Without directing field office sites in guidance to address the eight risk factors as they relate to the non-M&O contractor risk assessments, the sites cannot fully assess the risk of improper payments, and DOE cannot fully understand its risks for improper payments and take corrective actions to mitigate such risks in the future.", "The quantitative information on the amount of improper payments DOE reported in its Fiscal Year 2011 Agency Financial Report was not reliable because it was not complete and did not match the total information submitted by payment sites. As discussed previously, DOE determined for 2011 that it did not have any programs susceptible to significant improper payments based on both the qualitative risk assessments prepared by the payment sites as well as the statistical sampling information that some payment sites submitted to the headquarters CFO. DOE reported in its Fiscal Year 2011 Agency Financial Report that its estimate of the annual amount of improper payments from statistical sampling was $17.5 million out of $31.2 billion in total outlays. However, our review could not verify the accuracy of the $17.5 million reported for two reasons. First, 13 payment sites did not submit to DOE quantitative information on their estimated improper payments or their outlays, so the information reported was incomplete. Second, for payment sites that submitted their information to DOE, the totals for the quantitative information submitted did not equal the amount reported in DOE’s Agency Financial Report.\nIn addition, we did not evaluate the sampling methodology that DOE used to estimate its improper payments in fiscal year 2011 because the DOE IG previously reported on this issue and found problems with DOE’s methodology. In its fiscal year 2011 report on IPERA compliance, the DOE IG found that DOE used a nonstatistical sampling method to arrive at its estimated improper payment rate. The IG recommended that DOE develop a system of controls to help ensure the sampling methodologies used at the sites align with the methodology required in the department’s IPERA reporting guidance. At that time, DOE concurred with the recommendation. However, according to DOE officials, DOE decided not to conduct statistical sampling in later years because IPERA does not require that agencies perform statistical sampling as part of a risk assessment.", "DOE did not prepare required risk assessments for its grant and loan programs for fiscal year 2011. As discussed previously, DOE officials told us that DOE headquarters was responsible for evaluating the risks of its grant and loan programs for improper payments for 2011. However, DOE headquarters officials told us that they did not prepare the required risk assessments for these programs for 2011. DOE headquarters officials said they did not conduct a risk assessment on grant programs for 2011 because they were awaiting more detailed guidance from OMB on how to assess grant programs under IPERA—specifically, whether to assess risk at the primary or the subrecipient level. In terms of the loan programs, DOE officials said that they held discussions with OMB and identified strong financial controls and oversight associated with the Federal Financing Bank that administers DOE’s loan payments and determined that the existence of these controls provided a low risk of improper payments in the loans area. Therefore, DOE officials concluded that a separate risk assessment for loans was not warranted for fiscal year 2011. However, DOE did not provide documentation to support this conclusion. Moreover, this is inconsistent with IPERA and OMB’s implementing guidance, which requires federal agencies to review all programs for significant improper payments, and DOE’s 2011 guidance, which directs each payment site to complete a risk assessment.\nIn July 2014, DOE issued its IPERA risk assessment guidance for fiscal year 2014 with a number of revisions. One revision directs payment sites with cognizance over grants to report their known improper grant payments. Another revision directs DOE’s Loan Guarantee Program Office to prepare a risk assessment for DOE’s loan programs. In August 2014, DOE officials told us that cognizant payment sites will now be responsible for considering grant payments in their risk assessments, and that payment sites and the DOE Loan Office will explicitly address the risk factors for grant and loan programs, respectively. If implemented effectively, this revision to DOE’s guidance could address our findings related to DOE not fully assessing its grant and loan programs.", "DOE’s fiscal year 2011 risk assessments did not always include a clear basis for their risk determinations. For the 29 payment sites that prepared risk assessments for fiscal year 2011, we analyzed them to determine whether the risk assessments took into account the eight risk factors.\nBased on our analysis of the risk assessment documentation provided, we found that some payment sites did not take into account the eight risk factors. For those that did, the support for their conclusions varied widely, and some assessments did not contain enough information for us to determine how the payment sites arrived at their risk determination.\nBased on our analysis, we determined that at least 6 of the 29 sites that prepared risk assessments did not take into account the eight risk factors, making the basis of their risk assessment determinations unclear. For example, one site’s risk assessment did not address the eight factors and instead noted that it conducted a 100 percent payment review for all invoices and thus determined that its risk of improper payments was low. However, the risk assessment did not provide any information as to the results of its invoice reviews. In another instance, a site’s risk assessment consisted of two sentences noting that its account volume of payments had not changed significantly and that its funding, authorities, practices, and procedures, as well as the level and quality of training of its personnel had not changed significantly. Based on this, the site concluded it had a low amount of improper payments and had controls in place to identify and record them. In a third instance, a site’s risk assessment contained information on its internal controls indicating that many of its payment processes were high risk. Specifically, this risk assessment rated each of the subprocesses associated with payroll administration, payables management, and travel administration as high or medium risk. For example, under the payables management subprocess, some of the high-risk areas that were noted include the unauthorized approval of invoices; payments made without an approved invoice; and invalid payees established in the payee data file.\nNonetheless, this site concluded that its risk of improper payments was low, but it provided no additional clarification on how it arrived at this conclusion.\nThrough our analysis, we also determined that at most the 23 remaining payment sites submitted risk assessments that took into account the eight risk factors. However, support for their conclusions varied widely, and some assessments did not contain enough information for us to determine how the payment sites arrived at their risk determination, raising questions about who at DOE was responsible for reviewing and approving risk assessments for consistency. DOE’s guidance directs its sites to submit a risk assessment to DOE headquarters that incorporates the eight factors in support of their risk determination. However, its guidance does not provide further direction on what should be provided in the assessment to address each risk factor. DOE officials told us that they left it up to the payment sites to determine how to address the eight risk factors. As a result, we found that the support provided to address each risk factor was inconsistent, ranging from several paragraphs of narrative to one sentence answers or “yes or no” responses. In some cases, we could not determine how payment sites considered the eight risk factors to arrive at a risk determination. For example, in one case, the risk assessment was a table populated with a designation of high, medium, or low for each of the eight risk factors by specific payment functions, such as accounts payable, travel, and payroll. In this example, it was not clear how the site arrived at the risk designations for each of the specific payment functions or how the site weighted each risk designation to arrive at a risk determination for the program.\nDOE’s fiscal year 2011 IPERA guidance directed each site to provide a copy of the risk assessment to support its risk designation, but it did not specify how sites were to document the basis for their risk determinations. Under the Standards for Internal Control in the Federal Government, internal controls and all transactions and other significant events need to be clearly documented. Based on our review of DOE’s risk assessments, the documentation they contained did not always provide a clear basis for the risk determinations. Instead, like the discussion of risk factors, the support for risk determinations was inconsistent, ranging from several paragraphs of narrative to mere designations of high, medium, or low risk with no accompanying documentation. Absent clarification in guidance of how payment sites are to address the eight risk factors and document the basis for their risk rating determinations, DOE personnel may not have a consistent understanding of how to complete risk assessments.\nIn addition, DOE’S fiscal year 2011 IPERA guidance did not specify who at DOE was responsible for reviewing and approving risk assessments for consistency with IPERA requirements and OMB and DOE guidance. Under the federal standards for internal control, federal agencies are to employ internal control activities, such as reviews by management at the functional or activity level, and such activities include approvals, authorizations, verifications, and reconciliations. As previously mentioned, DOE officials told us that cognizant DOE field CFOs reviewed payment site risk assessments. However, given the level of inconsistency we found in our review of payment site risk assessments, it is unclear who was reviewing the assessments. Without clarifying in guidance who at DOE is responsible for reviewing and approving risk assessments for consistency across sites, DOE may not have reasonable assurance that the assessments are receiving the same level of oversight at each site.\nAs discussed previously, DOE issued new IPERA risk assessment guidance in July 2014 with a number of revisions. Among other things, these revisions are aimed at addressing inconsistencies in the risk assessments. One revision directs payment sites to include a brief explanation for each risk factor. DOE officials also told us in August 2014 that their IPERA training covers how payment sites are to perform risk assessments. However, the 2014 guidance does not specify how payment sites should address each factor and what documentation they are to include in support of their risk determinations, which is inconsistent with federal standards for internal control. As mentioned earlier, without clarifying in guidance how payment sites are to address the eight risk factors and document the basis for their risk rating determinations, DOE cannot be assured that its personnel have a consistent understanding of how to complete risk assessments. The 2014 guidance also does not clarify who at DOE is responsible for reviewing and approving risk assessments for consistency. Also mentioned earlier, without clarifying in guidance who at DOE is responsible for reviewing and approving risk assessments consistent with federal standards for internal control, DOE may not have reasonable assurance that the assessments are receiving the same level of oversight at each site. In addition, while DOE provided training for its payment sites for its fiscal year 2011 IPERA reporting, given the number of deficiencies we identified with that process, clarifying the guidance could help prevent inconsistencies in future risk assessments.", "DOE’s risk assessments did not fully evaluate other relevant risk factors. As previously stated, the eight risk factors do not necessarily represent all of the risks for improper payments across all federal agency programs, and OMB’s guidance describes these risk factors as the minimum that agencies should consider. DOE’s 2011 IPERA guidance requires that programs consider, at a minimum, the eight risk factors, but it does not require programs to consider other factors that are specific to the program being assessed. In particular, DOE’s guidance does not require programs to consider, as part of their risk assessments, weaknesses in key controls for preventing and detecting improper payments.\nControl activities such as prepayment reviews and matching invoices with receiving reports are important for preventing improper payments, and contract audits—including subcontract audits and annual incurred cost audits—are intended to be a key control for detecting improper payments. However, the DOE IG found in April 2013 that, from 2010 to 2012, subcontracts with a total value in excess of $906 million had either not been audited by M&O contractors or had audits that did not meet audit standards. The report further noted that the insufficient audit coverage substantially increases the risk that improper payments will be incurred and not detected in a timely manner. In addition, DOE officials told us that contract audits, particularly for non-M&O contracts, are not always performed in a timely manner. DCAA has traditionally performed contract audits for DOE’s non-M&O contracts; however, a significant backlog of audits at the Department of Defense has impacted DCAA’s ability to Untimely contract perform work for other agencies, including DOE.audits, regardless of the cause, represent a risk that improper payments will not be identified in a timely manner. However, DOE’s 2011 guidance did not require that programs consider risk factors related to internal control weaknesses—such as untimely contract audits or inadequate subcontractor oversight.\nDOE’s fiscal year 2011 IPERA guidance states that programs must have an effective system of internal control to prevent and detect improper payments and to recover overpayments. The guidance also states that key controls should be tested as part of OMB Circular A-123 evaluations. A-123 is OMB’s Circular on reporting for internal controls and certain DOE officials said that during DOE’s IPERA training, financial risks.sites have been instructed to consider the results of the A-123 evaluations, which include evaluation of key risks and controls, when determining susceptibility to high risk of improper payments. In addition, DOE officials said that DOE headquarters CFO officials have reviewed A- 123 results across the department when determining the department’s overall risk. However, DOE does not require programs to consider weaknesses in its internal controls as part of its risk assessment. In our review of DOE’s fiscal year 2011 risk assessments, of the 29 sites that did risk assessments, at most, 10 included information stating that the results of A-123 evaluations were considered as part of the risk assessments. Information from A-123 evaluations on internal controls could potentially provide information relevant to assessing the risk of improper payments. However, based on the documentation provided in the fiscal year 2011 risk assessments, it was not clear how many sites considered the results of their A-123 evaluations and for those that did, how those results were factored into the risk assessment.\nIn implementing Standards for Internal Control in the Federal Government, management is responsible for developing the detailed policies, procedures, and practices to fit agency operations and to ensure that they are an integral part of operations. In addition, according to our executive guide on strategies for managing improper payments, reducing improper payments requires a strategy appropriate to the organization involved and its particular risks. However, DOE’s 2011 IPERA guidance did not direct sites to augment the eight risk factors for a qualitative evaluation with other risk factors that might be appropriate to a program and its particular risks, so many of the payment sites did not fully consider other risk factors.\nIn its July 2014 updated IPERA risk assessment guidance, DOE recognized the need to address other risk factors relevant to agencies’ operating environments. One revision directs payment sites to consider a ninth risk factor: Evaluate the inherent risk of improper payments due to the nature of the agency’s programs/operations. The guidance states that this new risk factor was added based on a 2014 draft revision of OMB’s improper payments guidance. However, it is unclear how DOE’s guidance will be implemented by the department’s payment sites because the guidance does not provide specific examples of potential inherent risks for improper payments—such as untimely contract audits or inadequate subcontractor oversight—that all payment sites should consider and this is not consistent with federal standards for internal control and effective strategies included in GAO’s executive guide. Without providing in its guidance specific examples of other risk factors that present inherent risks likely to contribute to improper payments and directing payment sites to consider those other factors when performing their improper payment risk assessments, DOE will not have reasonable assurance that its payment sites consistently consider other relevant risk factors to fully evaluate risks.", "In fiscal years 2012 and 2013, we found that DOE directed programs to report less information on improper payment risks. Specifically, DOE required fewer payment sites to report under IPERA and, for those sites that were required to report, we found that DOE requested less information on the risks of improper payments. DOE reported that it did not have any programs susceptible to significant improper payments in 2011. As previously discussed, we found that DOE did not fully consider program risks in its fiscal year 2011 risk assessments and included unreliable data, which raises questions about whether the 2011 assessments were reliable. Nonetheless, because of its 2011 determination that it did not have programs susceptible to significant improper payments, the department was not required under IPERA to prepare risk assessments in 2012 and 2013. DOE elected to conduct certain risk assessment related activities in fiscal years 2012 and 2013. However, we found the risk assessment and other related information that sites reported provided limited insight into the department’s risk of improper payments.\nIn electing to conduct certain risk assessment related activities in fiscal years 2012 and 2013, DOE required fewer sites to report and allowed the remaining sites to provide more limited information on risk. Specifically, for fiscal years 2012 and 2013, DOE’s guidance redefined its programs, reducing the number from 55 to 43 payment sites by combining certain contractor payment sites with payment sites managed by DOE. According to DOE officials, for the purposes of IPERA reporting, cognizant DOE field offices—which are themselves payment sites—are now responsible for assessing risk for all non-M&O contracts. In addition, DOE’s fiscal year 2012 and 2013 guidance did not direct sites to submit risk assessments. Instead, the guidance directed sites to (1) prepare an overall risk assessment rating for the site of high, medium, or low based on the eight risk factors and the amount of actual improper payments identified through the normal course of business; (2) submit the overall risk rating and known improper payment information to DOE headquarters CFO; and (3) maintain any detailed risk assessment support or other detailed support for the known improper payments data. DOE’s guidance included a reporting template listing the eight risk factors and a place for payment sites to indicate their overall risk rating, which DOE prepopulated with a low risk rating. The template also included tables to report information on known improper payments. According to DOE’s fiscal years 2012 and 2013 guidance, known improper payments include, among other things, payments identified by a contractor’s internal accounting practices or those identified during the course of IG audits.\nBased on our review of the reporting templates that were submitted by payment sites in fiscal years 2012 and 2013, we found that 4 payment sites did not submit a reporting template in 2012, but that all sites submitted a reporting template in 2013. In addition, we found that the overall risk assessment rating for each payment site provides limited insight into DOE’s risk for improper payments. Although DOE’s 2012 and 2013 guidance directed sites to maintain support for their overall risk assessments rating, it did not require sites to submit supporting documentation for their risk ratings. The low risk designation that all of the sites provided in both years without supporting documentation did not provide information on how those sites considered the eight risk factors, how they weighed each factor against the others, or how they considered the eight factors in relation to their improper payments data to arrive at their overall risk rating.\nWe also found that DOE’s reporting of a program’s amount of improper payments for fiscal years 2012 and 2013 also provided limited insight into DOE’s risk of improper payments. IPERA and OMB guidance do not require DOE to report total known improper payments and, although not required to, DOE reports its total known improper payments annually in its Agency Financial Report. DOE cites this reporting as evidence in determining that its programs, and the department as a whole, are at low risk for improper payments. For example, in its Fiscal Year 2013 Agency Financial Report, DOE reported that it had identified $21.8 million in improper payments made in fiscal year 2012 out of $46.5 billion in total outlays. In reporting this number, DOE did not report the full extent of its improper payments as it did not disclose information on prior year improper payments. In addition, DOE did not disclose information on settled costs, as shown in the following:\nPrior year improper payments. According to DOE officials, the amount of DOE’s total known improper payments does not include known improper payments identified in prior years. This means that improper payments that occurred in prior fiscal years but were not identified until a later reporting year are not included. Thus, the $21.8 million in improper payments that DOE reported in its Fiscal Year 2013 Agency Financial Report only includes improper payments made and identified during fiscal year 2012. Therefore, DOE’s reporting does not provide the full extent of DOE’s total improper payments. Specifically, DOE pays contractors throughout the year for services performed, and those charges are subject to incurred cost audits to ensure that they are allowable under the terms of the contract. If charges are ultimately found to be unallowable by DOE, those charges are considered improper payments under IPERA. The process for ultimately determining that costs are unallowable can take a considerable amount of time, and the amount of money involved can be significant. For example, in April 2012 and October 2012, the IG reported about $4.4 million in disallowed costs identified in fiscal year 2012 related to prior year payments. However, this $4.4 million was not included when DOE reported its known improper payments for fiscal year 2012 in DOE’s Fiscal Year 2013 Agency Financial Report.\nSettled costs. DOE’s IG and contractor internal auditors have the ability to question costs they find to be potentially unallowable under the terms of a contract. Once costs have been questioned, DOE must ultimately make a determination whether to allow or disallow those costs. Before disallowing costs, the Federal Acquisition Regulation requires agencies to “make every reasonable effort” to reach a satisfactory settlement with the contractor. In one settlement agreement we reviewed, the contractor agreed to reimburse DOE for $10 million in questioned costs, referring to them as “potential unallowable costs.” Because those costs are not explicitly identified as unallowable in the settlement agreement, DOE does not consider them improper under IPERA and therefore does not disclose them in its reporting.\nDOE officials told us that their reporting of current year known improper payments in their Agency Financial Report is consistent with OMB guidance. We recognize that DOE is reporting more information than is required. However, citing an amount of improper payments without further explanation is potentially misleading to external stakeholders, including Congress and the public. According to federal standards for internal control, effective communications should occur in a broad sense with information flowing down, across, and up the organization.should ensure there are adequate means of communicating with, and obtaining information from, external stakeholders that may have a significant impact on the agency achieving its goals. By not disclosing more information in its IPERA reporting about total known improper payments, DOE does not allow readers, including congressional and public stakeholders, to fully understand what the total known improper payments amount represents and the extent to which this improper payments total could potentially be more pervasive.", "Recognizing the importance of assessing the risks of improper payments, DOE issued new guidance in 2014 to address payment processes involving non-M&O contractors, to clarify the way payment sites address risk factors, and to consider inherent risks of improper payments due to the nature of the agency’s programs/operations. These are positive steps, but further efforts could help to more fully assess DOE’s risk of improper payments and make more effective use of DOE and contractor resources. Specifically, DOE’s 2014 guidance directs DOE field sites to consider the payment processes of the non-M&O contractors they oversee when completing required risk assessments. However, the guidance does not specify that those sites should address the eight risk factors as they relate to the non-M&O sites. We found that risk assessments for non-M&O payment sites were not always conducted in fiscal year 2011. Without directing in its guidance that sites address the eight risk factors as they relate to the non-M&O contractor risk assessments, the sites cannot fully assess the risk of improper payments, and DOE cannot fully understand its risks for improper payments and take corrective actions to mitigate such risks in the future. In addition, DOE’s 2014 guidance directs payment sites to include a brief explanation for each risk factor supporting the risk rating. However, the 2014 guidance does not specify how payment sites should address each factor and what supporting documentation to include as the basis for their risk rating determinations, which is inconsistent with federal standards for internal control. Without clarifying in guidance how payment sites are to address the eight risk factors and document the basis for their risk rating determinations, DOE cannot be assured that its personnel have a consistent understanding of how to complete risk assessments. In addition, the 2014 guidance does not clarify who at DOE is responsible for reviewing and approving risk assessments for consistency. Without clarifying in guidance who at DOE is responsible for reviewing and approving risk assessments consistent with federal standards for internal control, DOE may not have reasonable assurance that the assessments are receiving the same level of oversight at each site.\nFurthermore, DOE’s 2014 guidance directs payment sites to consider an additional, ninth risk factor on inherent risks, in its risk assessments beyond the previous eight risk factors that need to be considered to be consistent with federal standards for internal controls and GAO’s executive guide. However, it is unclear how DOE’s guidance will be implemented by the department’s payment sites because the guidance does not provide specific examples of potential inherent risks for improper payments—such as untimely contract audits or inadequate subcontractor oversight—that all payment sites should consider, and this is not consistent with GAO’s executive guide. Without providing specific examples in guidance of other risk factors that present inherent risks likely to contribute to improper payments and directing payment sites to consider those other factors when performing their improper payment risk assessments, DOE will not have reasonable assurance that its payment sites consistently consider other relevant risk factors. Finally, DOE annually reports the amount of its total known improper payments and cites this amount as a key reason why its programs and the department as a whole are low risk. However, this amount provides limited insight on the extent of improper payments and is potentially misleading. By disclosing additional information in its IPERA reporting, DOE could better position readers, including congressional and public stakeholders, to fully understand what the total known improper payments amount represents and the extent to which improper payments could potentially be more pervasive.", "To help improve its ability to assess the risk of improper payments and make more effective use of DOE and contractor resources, we recommend the Secretary of Energy direct the department’s Chief Financial Officer to take the following four actions to revise the department’s IPERA guidance: direct field office sites with responsibility for non-M&O contractor risk assessments to address risk factors as they relate to those sites and take steps to ensure sites implement it; clarify how payment sites are to address risk factors and document the basis for their risk rating determinations and take steps to ensure sites implement it; clarify who is responsible at DOE for reviewing and approving risk assessments for consistency across sites and take steps to ensure those entities implement it; and provide specific examples of other risk factors that present inherent risks likely to contribute to significant improper payments, in addition to the eight risk factors, direct payment sites to consider those when performing their improper payment risk assessments, and take steps to ensure sites implement it.\nTo provide better transparency regarding its total known improper payments reported under IPERA, we recommend the Secretary of Energy direct the department’s Chief Financial Officer to improve public reporting on the amount of total known improper payments by disclosing additional information regarding this amount and the extent to which improper payments could be occurring.", "We provided a draft of this report to DOE for comment. In its initial comments, DOE had concerns with our recommendation to disclose more information on its total known improper payments number included in its Agency Financial Report. In reviewing DOE’s initial comments, it was clear there was a misunderstanding about the intent of the recommendation. Subsequently, we discussed the recommendation with DOE officials, clarified our intent, and modified the recommendation to ensure that DOE discloses information on the extent of improper payments that could be occurring. In its final comments, reproduced in appendix II, DOE concurred with all five of our recommendations. DOE also provided technical comments that were incorporated, as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of the Department of Energy, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "This report examines the extent to which the Department of Energy (DOE) assesses its programs’ risks for improper payments. To determine this, we reviewed the Improper Payments Elimination and Recovery Act of 2010 (IPERA). For additional context, we also reviewed the Improper Payments Information Act of 2002 and the Improper Payments Elimination and Recovery Improvement Act of 2012. We examined the Office of Management and Budget’s (OMB) and DOE’s IPERA guidance. We reviewed relevant effective practices for conducting risk assessments as described in our executive guide on strategies for managing improper payments. Given the relevance and stated importance of DOE’s Cooperative Audit Strategy, we analyzed the strategy and related documents, including the DOE Office of Inspector General (IG) Audit Manual, the DOE Financial Management Handbook, contractor incurred cost audits, and IG reviews of those audits.\nWe interviewed key officials with the DOE headquarters Office of the Chief Financial Officer (CFO). Specifically, we met with officials from the Office of Financial Control and Reporting within the Office of the CFO, which carries out DOE’s efforts to comply with IPERA by issuing guidance and consolidating and reporting information annually in DOE’s Agency Financial Report. We discussed DOE’s process for implementing IPERA, including how payment site risk assessments were reviewed and approved by DOE and how headquarters conducted risk assessments on the grant and loan programs. We interviewed IG officials to discuss their role in overseeing DOE’s IPERA implementation and DOE’s strategy to oversee the auditing of its contractors’ incurred costs. We reviewed the IG’s fiscal year 2011, 2012, and 2013 IPERA compliance audits, including how they were conducted and their findings, conclusions, and recommendations. We determined that these reports were sufficiently reliable for the purposes of using them to support our results.\nFor fiscal years 2011 through 2013, we analyzed DOE’s IPERA reporting, including qualitative risk assessments and quantitative information. We choose to review fiscal years 2011 through 2013 because those were the years subject to IPERA requirements for which we had available documentation. We reviewed each risk assessment to determine if it (1) contained narrative responses specifically taking into account the eight factors; (2) provided a basis for the risk determination; and (3) if it was a DOE field office, whether it specifically addressed the eight risk factors with regard to any non-M&O contractors they oversee. We also determined if the risk assessment documented consideration of evaluations conducted pursuant to OMB Circular A-123. To assess the reliability of financial data used in DOE’s payment site risk assessments, we compared the figures reported in all payment site risk assessments associated with known improper payments and outlays with the aggregated figures contained in DOE’s Fiscal Year 2011 Agency Financial Report. Where applicable and appropriate, we also compared the figures reported in payment site risk assessments with the back-up documentation provided by various specific DOE payment sites (or “programs”). We assessed the reliability of financial data used in DOE’s payment site risk assessments. To gain additional context related to documenting these analyses, we also reviewed our Standards for Internal Control in the Federal Government.\nWe visited two DOE field CFOs in Oak Ridge, Tennessee, and Albuquerque, New Mexico, and with officials from DOE’s Oak Ridge Financial Service Center. We chose these two locations because they oversee IPERA reporting for M&O and non-M&O contracts that accounted for about 28 percent of DOE’s IPERA reported outlays in fiscal year 2013. In addition, we selected the Oak Ridge Financial Services Center to visit because it handles all payments made to non-M&O contracts. DOE’s 11 field CFO’s, in cooperation with site-located contracting officers, oversee contactor and other activities in the field and assist DOE headquarters in carrying out IPERA. We discussed how DOE payment sites were implementing IPERA and how payment site risk assessments were reviewed by DOE. During these trips, we also met with six contractor site locations overseen by these field CFOs. These six contractor locations include the following:\nEast Tennessee Technology Park;\nLos Alamos National Laboratory;\nOak Ridge Associated Universities;\nOak Ridge National Laboratory;\nSandia National Laboratory; and\nY-12 National Security Complex.\nWe choose to visit these payment sites because they represent a cross section of the types of contractor payments made at DOE and because they accounted for about 38 percent of DOE’s total outlays in fiscal year 2013. At each payment site, we met with contractor CFO and internal audit officials, as well as the cognizant DOE contracting officer. During our meetings, we obtained perspectives from over 70 DOE and contractor officials involved with IPERA reporting, including those that had prepared or reviewed improper payment risk assessments. We also discussed the guidance and direction provided by DOE to payment sites in implementing IPERA, as well as consistency across DOE payment sites in preparing risk assessments.\nWe reviewed prior GAO and IG reports that identified deficiencies in DOE internal controls, such as subcontract audits and annual incurred cost audits, including how they were conducted and their findings, conclusions, and recommendations. We also reviewed the IG’s fiscal year 2011, 2012, and 2013 IPERA compliance audits, including how they were conducted and their findings, conclusions, and recommendations. We interviewed IG officials to discuss their prior reports and their role in overseeing DOE’s IPERA implementation and DOE’s strategy to oversee the auditing of its contractors’ incurred costs. We determined that these reports were sufficiently reliable for the purposes of using them to support our results.", "", "", "", "In addition to the individual named above, Diane LoFaro (Assistant Director), Cheryl Arvidson, Vaughn Baltzly, Mark Braza, Mark Keenan, Jason Kirwan, Phillip McIntyre, Jeanette Soares, Kiki Theodoropoulos, Nicholas Weeks, and William Woods made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_title", "", "", "", "h3_full", "", "h0_full h3_full h2_title h1_title", "", "h0_title", "h0_full", "", "", "h1_full", "h2_full", "h0_full h3_full", "h2_full", "", "", "h0_full h2_full", "", "", "", "" ] }

{ "question": [ "What process did DOE develop?", "How did DOE comply with the Improper Payments Elimination and Recovery Act of 2010?", "What flaws did GAO find in how the DOE directed its programs to develop risk assessments?", "How well did DOE's programs account for the eight qualitative risk factors?", "What guidance does DOE provide for preparing risk assessments?", "What results from DOE not providing further direction on what risk factors to include?", "What relevant risk factors did DOE's risk assessments fail to fully evaluate?", "What did GAO find?", "What is missing from DOE guidance?", "Why is providing examples of other relevant risk factors important?", "What is a significant problem within the federal government?", "How did IPERA address the problem of improper payments?", "Why did GAO designate DOE's contract management as a high-risk area vulnerable to fraud?", "How did DOE respond to GAO's designation?" ], "summary": [ "The Department of Energy (DOE) developed a process to assess its programs for risks of improper payments, but its assessments do not fully evaluate risk.", "To comply with the Improper Payments Elimination and Recovery Act of 2010 (IPERA), in fiscal year 2011, DOE directed its programs to develop risk assessments using eight qualitative risk factors, such as recent major changes in program funding, and report quantitative information on improper payments.", "GAO found that 26 of 55 programs did not prepare risk assessments in 2011 and that the quantitative information reported, including the estimated amount of improper payments, was not reliable because, for example, it did not include information for all programs.", "DOE did not always include a clear basis for risk determinations . At least 6 of the 29 programs that prepared risk assessments did not take into account the eight qualitative risk factors, making the basis of their risk determinations unclear. At most, the assessments for 23 programs took into account the risk factors. However, support for their determinations varied widely, and some did not contain enough information to identify how the program arrived at its risk determination, which is inconsistent with federal standards for internal control.", "DOE's guidance directs personnel to prepare a risk assessment that considers these eight factors but does not provide further direction on what to include.", "Absent such direction, DOE personnel may not have a consistent understanding of how to complete their risk assessments.", "DOE's risk assessments did not fully evaluate other relevant risk factors, such as weaknesses in key controls for preventing and detecting improper payments—including inadequate subcontractor oversight.", "GAO found that some risk assessments included information from internal control evaluations, but many did not.", "DOE guidance does not instruct personnel to consider weaknesses in key controls for preventing and detecting improper payments.", "Without providing specific examples of other relevant risk factors in guidance and directing personnel to consider them when performing risk assessments, DOE will not have reasonable assurance that each of its programs fully evaluates risks.", "Improper payments are a significant problem in the federal government.", "To address this problem, IPERA requires that federal agencies review their programs and identify those that are susceptible to significant improper payments—a process known as a risk assessment.", "DOE's history of inadequate management and oversight of its contractors led GAO to designate DOE's contract management as a high-risk area vulnerable to fraud, waste, abuse, and mismanagement.", "However, DOE reported that it does not have any programs susceptible to significant improper payments." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, -1, -1, 2, -1, 0, -1, 2 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 5, 5, 5, 5, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Roles and Responsibilities", "Traveler and Cargo Entry Requirements", "CBP Has Processes for Inspections at Land POEs, But Has Not Updated Related Policies Consistent with CBP Guidance", "CBP’s Inspection Processes Include Screening to Identify Higher-Risk Travelers, Vehicles and Cargo and Conducting Physical Inspections", "Many of CBP’s Policies Related to Inspections at Land POEs Have Not Been Reviewed and Updated to Reflect Changes Consistent with CBP Guidance", "CBP Uses Various Mechanisms to Monitor Inspection Activities at Land POEs, But Does Not Fully Analyze the Results of Some National Monitoring Programs CBP Monitors Inspections at Land POEs Using Mechanisms Deployed at the Port, Field Office, and National Levels", "CBP Conducts Analysis of the Results of National Level Monitoring Programs, But Opportunities Exist to Enhance Analyses", "CBP Analyzes Self-Inspection Program Results Each Year, But Does Not Analyze Results of Individual POEs to Identify Reoccurring Deficiencies", "CBP Has Produced Comprehensive Analyses of Some Covert Testing Results, But Does Not Have a Policy to Conduct These Analyses on a Periodic Basis", "CBP Has Performance Measures to Assess Its Land POE Inspections but Has Not Set a Target for One Measure That Drives Performance Improvements", "CBP Uses Various Sets of Measures to Evaluate Its Efforts to Detect Illegal Activity at Land POEs", "Organizational Performance Measures", "Program and Port-Specific Measures", "Metrics Required by National Defense Authorization Act for Fiscal Year 2017", "CBP Performance Measures Generally Reflect Key Attributes of Effective Measures but CBP Does Not Set an Ambitious Target for One Measure", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Homeland Security", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "CBP’s Office of Field Operations (OFO) is responsible for inspecting pedestrians, passengers, and cargo at 110 land POEs, which have a combined total of 173 crossings (see figure 1). OFO has 20 field offices nationwide that oversee the operations of all POEs within their designated areas of responsibility.", "Travelers seeking entry to the United States through a land POE are required to present valid travel documents. In response to a recommendation from the 9/11 Commission and the Intelligence Reform and Terrorism Prevention Act of 2004, DHS and the Department of State implemented the Western Hemisphere Travel Initiative, which requires all travelers to present documents that denote identity and citizenship, such as a passport, when entering the United States. Foreign nationals may have particular travel document requirements, such as a visa or other entry permit, which vary based on such factors as nationality and the purpose of travel. See table 1 for examples of the types of acceptable documents for travelers coming into the United States through land POEs.\nThere are also documentary requirements for commercial vehicles with cargo seeking entry into the United States. The Trade Act of 2002, as amended, establishes requirements for commercial vehicles with cargo to electronically submit information to CBP at least 1 hour in advance of arrival at a land POE. The information required includes data on the vehicle (e.g., Vehicle Identification Number or license plate number), the shipper, the carrier, scheduled date and time of arrival, and the description and weight of the cargo, among other things. Commercial vehicles with cargo valued less than $2,500 are considered “informal entries” that are exempt from the advance cargo information reporting requirements.", "", "CBP inspects travelers and cargo seeking to enter the country through land POEs. These inspections involve a targeting process in which CBP uses law enforcement databases to identify and target higher-risk passengers, pedestrians, commercial vehicles, and cargo before arrival at a land POE.\nTargeting. CBP uses law enforcement, intelligence, and other enforcement data to identify higher-risk individuals, vehicles, or cargo for additional scrutiny upon their arrival at a land POE. Most cargo-carrying commercial vehicles must submit an electronic manifest (e-manifest) with information on the shipment to CBP at least 1 hour in advance of arrival at a land POE. CBP personnel at the POEs are to use the e-manifest and CBP’s Automated Targeting System to identify high-risk inbound cargo. The Automated Targeting System 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. It draws on many law enforcement, intelligence, and other enforcement databases, including the Terrorist Screening Database, the Department of Justice’s National Crime Information Center, the Social Security Administration Death Master File, and the National Insurance Crime Bureau’s private database of stolen vehicles. CBP policy requires that high-risk cargo be targeted for additional research and analysis and generally will also require the high- risk cargo to undergo a secondary examination once it arrives at the POE.\nIn addition, CBP personnel at the POEs or field offices may review seizure and arrest reports, and other law enforcement information to identify individuals or vehicles that have associations with known criminals and place a “lookout” on them in TECS, CBP’s system for processing travelers. TECS will flag travelers with lookouts for additional inspection if they arrive at the land POE. CBP personnel at the POEs or field offices may also use this information to develop products on recent trends that can help inform inspections.\nOnce passengers, pedestrians, and commercial vehicles arrive at a land POE, CBP has various processes for inspecting them, including preprimary, primary, and secondary inspections, as explained below (see figure 2).\nPreprimary. In the preprimary area, both commercial vehicles and passenger vehicles will generally pass through radiation portal monitors that are designed to detect radiation and help prevent the smuggling of nuclear material into the United States (see figure 3).\nIn the passenger vehicle environment, the preprimary area also contains license plate readers and Radio Frequency Identification (RFID) readers to capture information on vehicles and RFID-enabled travel documents. Examples of RFID-enabled travel documents include passport cards and border crossing cards. When a vehicle enters the preprimary inspection lane, a sensor grid determines that a vehicle has entered the lane. The sensors deploy a flash strobe that illuminates the area and license plate reader cameras take a picture of the front and rear of the vehicle. The information associated with the license plate number is run against law enforcement databases to alert the officer during the primary inspection if there is a potential issue with the vehicle or its occupants. Similarly, as a vehicle approaches the primary inspection area, travelers are directed to hold up their RFID travel documents to be read by RFID readers. Some land POEs may also have RFID readers for pedestrians. See figure 4 for examples of a license plate reader and RFID reader.\nThe preprimary area is also used to direct travelers to different lanes according to the type of travel documents they have. For example, CBP may use signs to designate specific lanes for travelers with RFID or other machine readable documents (“Ready lanes”) or for trusted travelers (see figure 5).\nPrimary inspection. During the primary inspection, CBP officers inspect travelers, vehicles, and cargo to determine compliance with U.S. law and admissibility to the United States. A CBP officer is to examine travel documents to ensure their validity and visually match the traveler to the photo identification to confirm the traveler’s identity. All travelers’ names and license plates generally are to be screened against law enforcement databases. As previously discussed, this screening process may begin in the preprimary area when license plate and RFID readers collect data on vehicles and travelers with RFID travel documents. CBP officers may also manually enter data on travelers and vehicles during the primary inspection. A CBP officer is to interview travelers to obtain a declaration of citizenship, the purpose of travel, and items acquired outside the United States. For commercial vehicles, the CBP officer may also review the manifest and the results of targeting, if any. All CBP officers conducting primary inspections are to wear personal radiation detectors— small devices designed to be worn on a belt—to help detect radiation and help ensure the safety of officers and the traveling public.\nIf the inspection cannot be completed at the primary inspection location, a more thorough inspection is required and the travelers, vehicles, or cargo are to be referred for secondary inspection. Travelers, vehicles, or cargo can be directed to secondary inspection for a wide range of issues, including when: radiation is detected (either on the traveler or from his or her vehicle), the traveler does not have required travel documents, the officer has questions about the validity of travel documents, the traveler’s information matches information that may be of concern from law enforcement or intelligence data, or the officer suspects that the traveler is carrying contraband.\nForeign visitors to the United States (with the exception of Canadian citizens and Mexican citizens using border crossing cards) may also be referred to secondary inspection to complete processing of their admission records, referred to as Form I-94s. Additionally, CBP selects passenger vehicles at random to be sent to a secondary inspection for a Compliance Examination (COMPEX). COMPEX is a program designed to help measure the effectiveness of CBP’s inspections and is discussed in more detail later in this report.\nSecondary inspection. A secondary inspection may include a CBP officer conducting further questioning of travelers or additional examination of the traveler, vehicle, or cargo. CBP may use canines, non- intrusive inspection (NII) X-ray, Gamma-ray, or radiation detection equipment, or physically examine the traveler, vehicle, or cargo. CBP may also examine a traveler’s electronic devices, such as computers, tablets, and mobile phones. To examine cargo, CBP may require the contents to be offloaded. When foreign visitors are referred to a secondary inspection to process Form I-94 admission records, CBP officers are to conduct interviews and additional database screening, including biometric checks of fingerprints. CBP policy calls for documentation, immigration, and other admissibility issues to be resolved before a traveler or vehicle is permitted to enter the country. Below, figure 6 shows a canine examination and figure 7 shows an example of NII equipment and scans of vehicles with indicators of contraband smuggling.\nCBP also has additional processes to enhance preprimary, primary, or secondary inspections at land POEs, including:\nCanines. CBP has canines that can detect concealed humans, narcotics, currency, firearms, and agriculture products. Depending on availability, land POEs may deploy officers with canines to walk among the vehicles in preprimary waiting to reach an inspection booth. Canines may also be used in the pedestrian and commercial vehicle environments. As previously mentioned, canines are also used for some secondary searches.\nAnti-Terrorism Contraband Enforcement Teams. These teams conduct special operations that focus on anti-terrorism and the interdiction of narcotics, alien smugglers, and fraudulent documents, among other contraband. For example, at one POE we visited, members of the Anti-Terrorism Contraband Enforcement Team told us they often walk among the passenger vehicles in the preprimary area to look for indicators of illicit activity.\nTactical Terrorism Response Teams. These teams provide immediate counterterrorism response capabilities at some land POEs. Members of Tactical Terrorism Response Teams receive counterterrorism training and are responsible for interviewing known and suspected terrorists at ports of entry to help determine admissibility and collect intelligence.\nBlitzes and other local practices. CBP officers at land POEs may perform “blitzes”, in which inspections are enhanced for a period of time. For example, CBP officials told us that blitzes may include looking in all vehicle trunks during the primary inspection or sending additional vehicles for NII (X-ray) exams during a certain period of time. Officers at the POEs we visited also discussed other local initiatives to enhance inspections. For example, one POE we visited used NII to screen all commercial vehicles. Another POE we visited partnered with the local authority that manages an international bridge to deploy license plate readers for commercial vehicles before the vehicles enter the bridge into the United States. The bridge authority uses the license plate reading to check if the commercial vehicle has submitted the required e-manifest to CBP; only those commercial vehicles that have submitted the required e-manifests are allowed to cross. Officials from CBP told us that, in the future, CBP and the bridge authority plan to deploy additional technology in the preprimary area on the non-U.S. side of the border, including facial recognition and NII.\nIn addition, CBP has plans to make future improvements to inspection processes. For example, CBP is conducting tests to use facial recognition technology as part of inspections at land POEs. According to CBP, facial recognition technology may enhance its ability to detect imposters by matching facial images of those arriving with images on file. CBP began a facial recognition test in the passenger vehicle environment at the Anzalduas, Texas land POE in August 2018 and expects the test to run for up to 1 year. In September 2018, CBP initiated a project at the Port of San Luis, Arizona to demonstrate the feasibility of acquiring photos of all arriving pedestrians and comparing those photos to photos on file. Subsequently, in October 2018, CBP officials stated they extended this demonstration project to the Port of Nogales, Arizona. According to CBP, these pedestrian demonstration projects built upon an earlier pilot project at the Port of Otay Mesa, California, which ran from February through May 2016. Testing this technology is one of CBP’s key efforts in developing the capability to fulfill DHS’ statutory responsibility to collect biometric information from arriving and departing aliens.", "CBP has numerous directives, handbooks and other official instructions that specify policies and procedures for inspections at land POEs. However, many of these documents have not been reviewed and updated as required by OFO’s January 2016 OFO Policy Management Handbook. This guidance states that all of OFO’s policies must be reviewed and updated, as necessary at least once every 3 years to help ensure the timely provision of uniform and relevant policy. In some cases, the policy documents issued by OFO or its program offices have not been reviewed and updated for almost two decades. See table 2 below for a list of such policies we identified that have not been reviewed and updated to reflect changes in processes since their issuance consistent with OFO’s policy management requirements.\nAs a result of policies not being reviewed and updated by OFO, these policies, as currently written, do not fully reflect changes in technology, operating conditions, or inspection processes. For example:\nThe 2008 policy on processing travelers and vehicles at land POEs does not include information on the Consolidated Secondary Inspection System, the current system used to record secondary inspections. It also directs officers to follow guidance in the Inspector’s Field Manual, which has since been discontinued.\nThe 1999 Compliance Measurement directive refers to procedures for a paper-based system, while the system is now electronic, according to officials.\nThe 2004 Personal Search Handbook does not incorporate the 2015 National Standards on Transport, Escort, Detention, and Search policy that prohibited CBP officers from observing personal cavity searches conducted by medical personnel.\nThe 1999 Narcotics Interdiction Handbook and the 2002 canine policies do not address fentanyl. Fentanyl is a synthetic opioid that requires special handling and has been a main contributor to the recent spike in overdose deaths in the United States, according to the Centers for Disease Control and Prevention.\nOFO’s Planning, Program, Analysis, and Evaluation (PPAE) Quality Assurance Enterprise Division (QAED) is responsible for monitoring that each program office review and update, as needed, the policies for its programs. QAED has an internal tracking system and sends out reminders to CBP program offices about policies that need to be reviewed, and updated, if necessary. QAED officials acknowledged that many policies need to be updated because some are almost 20 years old and many technological and other changes have occurred that may not be described in existing policies.\nCBP officials stated that they are in the process of updating some policies, including the 1999 Compliance Measurement directive, the 2002 Canine Enforcement Program Handbook, the 2004 Personal Search Handbook, and the 2008 Primary Processing of Travelers and Vehicles Seeking Entry to the United States at Land Ports of Entry directive. Officials attributed the lack of timely updating to several factors. OFO officials responsible for reviewing and updating policies said that the process can be time-consuming and difficult, as there may be many needed changes or may include conducting site visits to identify best practices and areas for improvement. In addition, QAED officials responsible for monitoring policy updates said QAED has 12 staff and is responsible for three OFO-wide mission areas in addition to policy management, as well as a number of other responsibilities within PPAE. Further, according to QAED officials, they do not have authority to require cognizant program offices to review and update their policies in line with the OFO Policy Management Handbook. QAED officials agreed that CBP and OFO could better ensure compliance with OFO’s policy updating requirements.\nOFO’s 2016 OFO Policy Management Handbook states that the timely provision of uniform and relevant policy facilitates informed decision- making at all levels of the organization and that an effective policy management program is critical to the success of any organization. By reviewing and updating as necessary all relevant policies related to land POE inspections consistent with OFO’s policy handbook, CBP could better ensure that officers have guidance needed to consistently and properly inspect vehicles and their passengers, pedestrians, and commercial vehicles.", "CBP uses various mechanisms at the port, field office, and national levels to monitor inspection activities at land POEs to help ensure that CBP officers are following policies and procedures. At the POE level, supervisors and port management monitor many of the inspection tasks in real-time by reviewing computer-based records and logs of inspections and observing inspections. CBP also provides tools to the ports to assist with supervisory monitoring efforts, such as Enforcement Link Mobile Operations Red Flag (ELMOrf)—a computer application that provides alerts to supervisors via mobile device when certain types of events occur during primary inspections that warrant supervisory oversight. Table 3 below provides key monitoring mechanisms CBP uses for its land POE inspections at the port level.\nAt the field office level, field office staff may monitor land POE activities within their area of responsibility through periodic assessments of supervisor monitoring duties, such as inspection report reviews. In addition, all field offices have Integrity Officers tasked with identifying potential corruption and officer training issues at the ports. Table 4 below provides key monitoring mechanisms CBP uses for its land POE inspections at the field office level.\nCBP’s national level initiatives include its Self-Inspection Program (SIP) and the Operational Field Testing Division’s covert testing program. The Self-Inspection Program is an annual internal self-assessment of various CBP component offices and includes assessment of various inspection activities at POEs. Table 5 below provides key monitoring mechanisms CBP uses for its land POE inspections at the national level.", "", "CBP produces CBP-wide analyses of the SIP results it collects annually, but the analyses are not done in a manner—such as at the port level and over multiple years—that would allow CBP to identify potentially reoccurring deficiencies at individual POEs. The Management Inspections Division issues a report each year which provides comprehensive SIP results across CBP offices for that year and highlights compliance issues identified (referred to as the SIP Summary Analysis Report). Similarly, OFO issues an annual report which provides comprehensive results and highlights compliance issues identified across OFO’s programs for that year. See figure 8 for an overview of the SIP process.\nWith regard to the 2018 SIP Summary Analysis Report, the Management Inspections Division reported that approximately 80 percent of all SIP worksheets, which document the results of the self-assessments, submitted across CBP in the 2018 cycle had no deficient conditions. The report also identified the six worksheets with the highest number of deficient conditions across OFO and the questions associated with the most corrective actions for those worksheets. For worksheets that the report did not highlight, additional summaries of the OFO data are provided, including the number of worksheets submitted and the number of worksheets reporting corrective actions.\nOFO’s SIP annual report also provides summaries of the SIP results, but with additional analysis specific to OFO. The 2018 OFO SIP annual report calculated an overall compliance rate of 92.4 percent across the 31,947 questions for worksheets completed by OFO that year. The report also provided summaries of data used to calculate compliance rates for each worksheet assigned to OFO and included trends in compliance rates for each over 3 years. Additionally, the report provided summaries of the data for each OFO field office that includes number of worksheets submitted, the number of deficient conditions in the given year, and the number of corrective actions for each POE under the field office. Beginning in 2017, the OFO report provided an analysis of any SIP worksheet question with a compliance rate below 90 percent in a given year and the actions planned or taken to increase future compliance.\nWhile these reports provide useful summary data of CBP’s monitoring of inspections activities and recommendations for increasing compliance for some programs and processes, our analysis of SIP results showed that opportunities exist for CBP to identify potential reoccurring deficiencies at individual land POEs over time. Specifically, our analysis of SIP results from 2013 through 2018 identified reoccurring instances of noncompliance at individual land POEs indicating the possibility that the corrective actions taken each year to address the deficiencies did not fully remediate them.\nWe found that management at the land POEs with reoccurring instances of deficiencies took corrective actions each year to address the identified deficiencies, and in some instances, management proposed and implemented the same corrective action in multiple years to try to resolve the identified deficiency. While the Management Inspections Division and OFO reports provide some useful analysis to identify programs or specific activities across CBP to target for remediation each year, these reports have not positioned CBP to identify and more effectively address reoccurring deficiencies at individual POEs.\nStandards for Internal Control in the Federal Government provides that management should use quality information to achieve the entity’s objectives and management should process the obtained data into quality information that supports the internal control system. Furthermore, management should remediate identified internal control deficiencies on a timely basis and the audit resolution process is completed only after action has been taken that (1) corrects identified deficiencies, (2) produces improvements, or (3) demonstrates that the findings and recommendations do not warrant management action. Additionally, management, with oversight from the oversight body, is to monitor the status of remediation efforts so that they are completed on a timely basis.\nManagement Inspections Division and OFO officials stated that their analyses are designed to identify systemic compliance issues across OFO. In addition, OFO officials stated that port management is responsible for addressing compliance issues of individual land POEs. However, without an analysis to identify reoccurring deficiencies at all individual land POEs, the Management Inspections Division and OFO are not well positioned to determine whether CBP may need to take additional or alternative actions to more effectively address the deficiencies at these ports. By enhancing analysis of the SIP data to include analysis at the port level over time, CBP could better identify potential reoccurring deficiencies with inspections at land POEs and could be better positioned to more fully remediate them and ensure compliance with inspection policies.", "CBP has produced comprehensive analyses of the results from some of its covert operational tests conducted at land POEs in fiscal years 2013, 2014 and 2018. These comprehensive assessments of aggregated covert test results provide analysis of trends, common vulnerabilities, and best practices used in inspections across land POEs; however, CBP has not developed comprehensive assessments for various other covert tests it conducted during this time frame. Of the 213 land POE tests conducted from fiscal years 2013 through 2018, 78 were included in comprehensive assessments.\nCBP’s Operational Field Testing Division (OFTD) is responsible for covertly assessing and evaluating the integrity of CBP’s personnel, technologies, and policies and procedures at land POEs. From fiscal years 2013 through 2018, OFTD conducted a variety of tests of inspections at land POEs including: fraudulent document and imposter tests, canine contraband detection tests, biological agent detection tests, NII equipment contraband detection tests, radiation detection capabilities tests, and assessments of Tactical Terrorism Response Teams. See figure 9 for an overview of the process for fraudulent document and imposter covert testing.\nFor tests conducted from fiscal years 2013 to 2018, OFTD produced three comprehensive assessments related to tests it conducted at land POEs. One assessment compiled the results of 129 fraudulent document and imposter tests conducted at 10 land POEs and 14 airports in fiscal years 2012 and 2013. Another assessment covered 34 NII equipment tests conducted in fiscal years 2013 and 2014 at land POEs and seaports, of which nine of the tests were at land POEs. The third assessment, issued in 2018, covered 33 NII equipment tests conducted in fiscal year 2018 at six land POEs.\nWhile OFTD produced comprehensive assessments for these tests, OFTD did not comprehensively analyze the results of various other types of covert tests conducted from fiscal years 2013 through 2018. Such covert tests included 34 tests for canine detection of contraband, 11 for agricultural and biological agent detection, seven for radiation detection, and seven for Tactical Terrorism Response Team response. Additionally, OFTD conducted another 72 fraudulent document and imposter tests and six NII equipment tests over this time period that were not included in the comprehensive assessments described above. Overall, we found that 135 of 213 tests conducted from fiscal years 2013 through 2018 were not included in comprehensive assessments.\nFor tests not included in comprehensive assessments, analysis of the test is limited to a test summary document that is produced following a test or group of tests conducted during a field visit to one location. The summaries identify officer actions during the test and record whether the test resulted in an interdiction of the test subject. Some of the summaries also include findings, identify leading practices, and provide recommendations to the POE where the test or tests were conducted to improve the inspections. While these summaries provide useful information, they encompass the results of tests at individual POEs and do not provide an evaluation of aggregated test results that could more broadly identify vulnerabilities, trends, and best practices across land POEs as provided in the comprehensive assessments.\nAccording to OFTD officials, they have drafted a policy and standard operating procedures that would address comprehensive analysis of covert testing results, but these have been in development for 3 years and have not been finalized. OFTD did not provide further details or documentation of the draft policy or procedures or a date for completion. Additionally, OFTD officials stated that in some cases they did not have a sufficient number of covert test results to conduct a comprehensive analysis. OFTD officials also stated that an additional comprehensive assessment of fraudulent document and imposter tests was not needed as OFTD completed this type of assessment in 2013 and no new findings were generated by subsequent tests.\nWe recognize that the small number of certain tests limit OFTD’s ability to conduct comprehensive analyses. However, we found that from fiscal years 2013 through 2018 over half (135 of 213) of the tests conducted at land POEs were not included in a comprehensive assessment and a formalized policy could better position OFTD to be able to conduct these analyses moving forward. Further, our analysis of covert test interdiction rates suggests that additional periodic comprehensive analysis could help inform CBP management of vulnerabilities, systemic inspection deficiencies, leading practices observed, and ways to improve inspection processes. Moreover, the reasons for non-interdiction in the fraudulent document and imposter covert tests conducted since the last comprehensive assessment may be different due to changes in inspection technologies, training, personnel, or the threat environment. OFTD officials agreed and stated that another comprehensive assessment is being developed based on covert tests focused on facial recognition technologies.\nStandards for Internal Control in the Federal Government provides that management should implement control activities through policies, including documenting such policies. In addition, management should monitor the internal control system through ongoing monitoring and separate evaluations. These evaluations are to be used periodically and may provide feedback on the effectiveness of ongoing monitoring. Furthermore, management should evaluate and document issues identified through separate evaluations to identify internal control deficiencies and monitor changes in the internal control system.\nBy implementing a policy for conducting periodic comprehensive analyses of its covert operational test results, CBP would be better positioned to understand the effectiveness of inspection policies, personnel, and technologies across land POEs over time. Furthermore, periodic analyses could help identify inspection vulnerabilities that may be occurring more broadly, trends in these vulnerabilities, and best practices in mitigating such vulnerabilities on a more consistent basis.", "CBP uses various sets of performance measures including organizational performance measures, internal performance measures, program and port-specific measures, and measures required by the National Defense Authorization Act for Fiscal Year 2017 (NDAA). CBP reports organizational measures externally to inform program management while internal measures track additional areas of performance to inform OFO management. In addition, some CBP programs and ports track measures specific to their performance at land POEs. DHS also reports measures that cover CBP’s efforts to detect illegal activity at land POEs as required by the NDAA. These performance measures generally reflect attributes of effective measures, however, CBP has not set an ambitious target for one measure—the land border interception rate.", "", "CBP tracks and externally reports the results of performance measures annually in its Organizational Performance Measures Overview. The Overview states that it serves as a tool for leadership to manage programs using performance information and includes performance measure descriptions, targets, results, and trends over time. CBP developed and reports on two measures that cover the detection of illegal activity among inbound passenger vehicle and cargo traffic at land POEs: (1) the estimated percentage of land border privately-owned vehicles with passengers who are compliant with laws, rules, and regulations; and (2) the percentage of inbound cargo identified as high-risk that is assessed or scanned prior to departure or at arrival at a U.S. air, land, and sea POE. CBP also tracks, but does not report, data on the percentage of high-risk inbound cargo assessed or scanned prior to departure or upon arrival at U.S. land POEs, which in fiscal year 2018 was 97.7 percent. See figures 10 and 11 for CBP’s reported results for these measures by fiscal year.\nCBP measures the percentage of privately-owned vehicles with passengers who are compliant with all federal, state, and local laws and regulations through its COMPEX program. COMPEX is a statistical survey in which vehicles cleared for entry into the United States by CBP are randomly selected for a comprehensive audit through a computer- generated random sample. CBP is to conduct an audit of the selected vehicles by doing a secondary inspection using a standardized system of checks to identify any violations that were missed during the routine inspection.\nViolations found in the COMPEX audits represent violations missed by CBP and are used by CBP to estimate the total number of violations missed by CBP operations. According to officials, CBP uses these data— along with data on violations CBP officers identify during the normal inspection process—to calculate the overall estimated percentage of land border privately-owned vehicles with passengers compliant with laws, rules, and regulations. As shown in Figure 10, CBP has set a target rate of 99.5 percent compliance. From fiscal years 2015 through 2018, CBP reported estimated rates of over 99 percent compliance. While CBP nearly met its target across all of these years, CBP plans to work with field office management and review COMPEX secondary inspection findings to identify noncompliance trends and identify the underlying reasons for noncompliance. In addition, CBP plans to develop materials to educate travelers on relevant laws and requirements.\nAs previously discussed, in the cargo environment, CBP identifies potentially high-risk cargo through the Automated Targeting System. CBP then tracks the percentage of such cargo assessed or scanned prior to arrival or at a land POE. As shown in Figure 11, CBP has set a target rate of identifying 100 percent of potentially high-risk cargo. For fiscal years 2014 through 2017, CBP reported rates of 99 percent or higher, and in 2018, the rate was 97.9 percent. According to CBP, it did not meet its target rate of 100 percent in fiscal year 2018 because of challenges related to changes in high-risk status that occur en route, data entry errors, and logistical or scheduling errors. OFO plans to address these challenges by working with internal stakeholders to resolve status- tracking problems and information-processing errors and by working with shippers and carriers to rectify logistical and scheduling issues.\nIn addition to its externally-reported organizational performance measures, OFO tracks two performance measures internally that relate to efforts to detect illegal activity among inbound traffic at land POEs: the percentage of individuals screened against law enforcement databases for entry into the United States and the land border interception rate for passengers in privately-owned vehicles with major violations. See figure 12 for CBP’s performance by fiscal year.\nCBP uses COMPEX data to estimate the land border interception rate for privately-owned vehicles containing passengers with major violations (interception rate). This represents the number of major violations in privately-owned vehicles at the border that CBP intercepts divided by the estimated total number of major violations.\nCBP tracked the percentage of individuals screened against law enforcement databases for entry into the United States across fiscal years 2013 through 2018, but plans to discontinue use of this measure beginning in fiscal year 2019 according to CBP officials. CBP officials stated that this measure was originally created to track progress toward electronic screening of travel documents as part of the Western Hemisphere Travel Initiative. This measure tracks the percentage of travelers screened against law enforcement databases using electronically readable documents. According to CBP officials, there have been a variety of technology infrastructure upgrades and changes to vehicle processing software at land POEs that have reduced the relevance of this measure for land POE operations and CBP plans to discontinue its use as a result.", "Some CBP programs that operate as part of the inspection process track performance data on the results of their program activities. For example, CBP tracks results from the Canine Program. Canine handlers are to enter performance data into the Canine Tracking System locally at land POEs. They track data on the numbers of days canine officers worked, searches conducted, and fines and arrests that result from canine searches.\nIn addition, some land POEs track performance data on local efforts to detect illegal activity. For example, officials at one POE we visited track data on the numbers and types of seizures, arrests, and immigration enforcement actions that occur at the port.", "In 2018, DHS began reporting additional metrics to measure the effectiveness of border security at land POEs in response to the National Defense Authorization Act for Fiscal Year 2017 (NDAA). The NDAA requires DHS to produce an annual report for appropriate congressional committees, the Comptroller General, and certain other entities. This report is to include certain metrics to measure the effectiveness of border security between POEs, at POEs, in the maritime environment, and with respect to aviation assets and other air and marine operations in the land domain.\nDHS submitted the fiscal year 2017 Border Security Metrics Report in response to the NDAA requirement in May 2018. Nine of the metrics in DHS’s fiscal year 2017 report cover CBP’s efforts to detect illegal activity at land POEs, although many of these measures group land POE data with other types of ports. DHS reported data for 7 of these 9 metrics. In some instances, DHS reported that it did not have the specific data needed for a required metric and provided other available data instead. DHS reported data in response to the following required metrics related to land ports of entry in the fiscal year 2017 Border Security Metrics Report: total inadmissible travelers at ports of entry (DHS does not have a methodology to estimate total inadmissible travelers, and therefore presented data on known inadmissible travelers), refusal rate at ports of entry, illicit drugs seized at ports of entry, port of entry illicit drug seizure rate, major infractions at ports of entry (DHS does not have a methodology to estimate all major infractions, and therefore included data on known passenger infractions), cocaine seizures effectiveness rate at land ports of entry, and secondary examination rate.\nCBP did not leverage existing data from the COMPEX program to estimate all major infractions in the fiscal year 2017 Border Security Metrics Report, but began reporting these data in the fiscal year 2018 report. The NDAA requires DHS to report the number of infractions related to travelers and cargo committed by major violators who are interdicted by OFO at ports of entry and the estimated number of such infractions committed by major violators who are not so interdicted. In the fiscal year 2017 DHS Border Security Metrics Report, DHS reported the number of known major infractions at ports of entry. DHS also reported that they did not have a methodology to estimate the number of infractions among those who are not interdicted. However, CBP estimates the number of undetected major infractions through the COMPEX program. CBP officials stated there was likely a miscommunication within CBP that led to the DHS Office of Immigration Statistics—the DHS office that compiled the Border Security Metrics Report— not using COMPEX data to report the estimated number of major infractions in the 2017 Border Security Metrics Report. In addition, the DHS Office of Immigration Statistics was not aware that CBP’s COMPEX was applicable for purposes of reporting this metric. As a result of our review, DHS included an estimate of the number of major infractions not interdicted by CBP using data from the COMPEX program in the fiscal year 2018 Border Security Metrics Report.", "CBP organizational and internal performance measures for detecting illegal activity at land POEs generally reflect key attributes of effective performance measures that we previously identified. Based on our analysis of CBP’s organizational and internal performance measures, these measures generally reflect the key attributes listed in table 6. For example, CBP clearly defines its externally-reported organizational measures and presents baselines and trends in its Organizational Performance Measures Overview. In addition, CBP’s Organizational Performance Measures Overview provides linkage between its externally-reported organizational measures and DHS mission. CBP performance measures also have limited overlap with each other presenting new information beyond what other measures provide.\nOur analysis of CBP’s measures found that they focus on the commercial and passenger-owned vehicle environments and currently provide limited coverage of the pedestrian traveler environment. According to CBP officials, the agency is in the process of expanding the two COMPEX measures to include pedestrian travelers at land POEs, which would provide greater coverage of CBP’s core program activities for detecting illegal activity at land POEs. According to CBP officials, CBP began collecting COMPEX data for all pedestrian POEs in 2015. CBP officials stated they are in the process of reviewing the collected data and are working to refine the methodology and operational issues that may impact the reliability of the results. After CBP resolves these data issues, CBP will begin reporting the results of COMPEX audits in the pedestrian environment, according to CBP officials.\nOur analysis of CBP’s measures also found that CBP generally sets ambitious but realistic targets for its organizational and internal performance measures. However, CBP’s target for the land border interception rate is lower than the actual reported rate for fiscal years 2015 through 2018.\nWe previously identified critical success factors for goal-setting and performance measurement efforts. Creating ambitious but realistic and measurable “stretch” goals based on current performance levels, among other things, supports the organization in achieving performance improvements. In addition, the Office of Management and Budget Circular A-11 states that agencies are expected to set ambitious goals to push them to achieve significant performance improvements beyond current levels.\nOFO officials stated they set the target for the land border interception rate following methodological changes OFO implemented in the COMPEX program in 2015. However since that time, OFO officials in the Strategic Transformation Office—the office that reviews and provides input into targets for CBP’s organizational performance measures—stated they have not reviewed this target because it is an internal measure and they do not review these as they would for the externally-reported organizational measures. Nevertheless, OFO officials stated they use this measure internally for performance management and to report results to OFO management. Because OFO sets a target for the interception rate and uses this measure internally, a more ambitious target for the measure would better encourage CBP to review its performance of inspection activities that impact the measure and challenge them to identify ways of improving performance.", "Inspecting travelers and cargo seeking entry to the United States through land POEs is critical to preventing terrorists and other inadmissible persons, as well as nuclear materials, narcotics, and other contraband, from entering the country. OFO has implemented processes and deployed technology to screen and examine travelers and cargo at POEs; however, by reviewing and updating its inspection policies in accordance with its own established time frames, CBP could better ensure that officers have guidance needed to consistently and properly inspect passengers, pedestrians, and commercial vehicles. Further, while CBP has taken steps to monitor compliance with inspection policies through the SIP and covert operational tests, it could more fully analyze the results. By identifying and addressing reoccurring SIP deficiencies at individual land POEs and implementing a policy to conduct periodic comprehensive analyses of covert test findings, CBP could be better positioned to enhance inspections and address vulnerabilities. Lastly, CBP has established various measures to assess the effectiveness of its inspections; however, establishing an ambitious and realistic target for its major violations interception rate could encourage additional improvements in performance.", "We are making the following four recommendations to CBP: The Commissioner of CBP should review and update policies related to land port of entry inspections in accordance with OFO guidance. (Recommendation 1)\nThe Commissioner of CBP should analyze the results of the Self- Inspection Program over time and at a level necessary to identify and address potentially reoccurring inspection deficiencies at individual ports of entry. (Recommendation 2)\nThe Commissioner of CBP should implement a policy to conduct periodic comprehensive analyses of covert test findings. (Recommendation 3)\nThe Commissioner of CBP should develop a new target for the land border interception rate for passengers in privately-owned vehicles with major violations that sets an ambitious and realistic goal based on past performance. (Recommendation 4)", "We provided a draft of this report to DHS for its review and comment. DHS provided comments, which are reproduced in appendix I. In its comments, DHS concurred with the four recommendations. DHS also provided technical comments, which we incorporated as appropriate.\nWith regard to the first recommendation that CBP update policies related to land POE inspections in accordance with OFO guidance, DHS stated that OFO has initiated a process to modernize handbooks, policy memoranda, and directives. With regard to the second recommendation that CBP analyze SIP results over time and at a level necessary to identify and address potentially reoccurring deficiencies at individual POEs, DHS stated that OFO plans to begin training on how to conduct this analysis so it may be conducted for 2021 SIP results. With regard to the third recommendation that CBP implement a policy to conduct periodic comprehensive analyses of covert test findings, DHS stated that CBP is in the process of writing a policy that will document procedures for comprehensive reporting, including periodic reviews of corrective actions taken to mitigate vulnerabilities. With regard to the fourth recommendation that CBP develop a new target for the land border interception rate, DHS stated that OFO will set a new target for fiscal year 2020 using data from the previous three fiscal years. If fully implemented, these actions will meet the intent of our recommendations.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of the Department of Homeland Security, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8777 or gamblerr@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, Kirk Kiester (Assistant Director), Heather May (Analyst in Charge), Carl Barden, Michele Fejfar, Eric Hauswirth, Susan Hsu, Richard Hung, Jeff Love, Mara McMillen, Sasan J. “Jon” Najmi, and Jonathan Tumin made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 2, 2, 1, 2, 3, 3, 1, 2, 3, 3, 3, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "h0_title h3_title", "h0_full h3_full", "h0_full h3_full", "h1_full", "h1_title", "h1_full", "h1_full", "h0_title h2_full h3_title", "h0_title h3_title", "h0_full h3_full", "", "", "h2_full", "", "", "h3_full", "", "", "", "" ] }

{ "question": [ "How does U.S. Customs and Border Protection deal with passenger vehicles, pedestrians, and commercial vehicles that arrive at U.S. land ports of entry?", "Why hasn't the CBP updated is policies?", "What benefits could CBP get from updating its policies?", "How could CBP's Self-Inspection Program enhance the analysis of inspection activities at land POEs?", "What benefits could CBP gain from analyzing noncompliance at individual POEs over time?", "What is the purpose of CBP's three comprehensive assessments?", "What could CBP do to improve the analysis of aggregated results?", "How does CBP assess its efforts to detect illegal activity at land POEs?", "What is the one performance measure that CBP does not accurately measure?", "How could a more ambitious and accurate measure help the CBP?", "What is the CBP?", "What about the CBP was GAO asked to inspect?", "What is contained within the report that GAO created for CBP?", "What methods did GAO use to review CBP?" ], "summary": [ "U.S. Customs and Border Protection (CBP) has processes for inspecting passenger vehicles, pedestrians, and commercial vehicles at U.S. land ports of entry (POE). These processes include reviewing travel documents, screening against law enforcement databases, and using canines and X-ray equipment (see figure below).", "However, because CBP has not updated many of its policies—in a few cases for almost 20 years—they do not always reflect changes in technology or processes, such as those for conducting searches and handling fentanyl.", "By reviewing and updating policies, CBP could help ensure officers have guidance needed to consistently and properly perform inspections.", "CBP has various mechanisms at the port, field office, and national levels to monitor inspection activities at land POEs, but opportunities exist to enhance analysis of the results from its national level Self-Inspection Program (SIP) and covert operational testing. The SIP is an annual self-assessment that POEs are to conduct to determine compliance with CBP policies. CBP analyzes the results of the SIP annually to identify systemic compliance issues across CBP that year; however, it does not analyze noncompliance at individual POEs over time.", "CBP analyzes the results of the SIP annually to identify systemic compliance issues across CBP that year; however, it does not analyze noncompliance at individual POEs over time. By analyzing these data, CBP could better identify and address deficiencies at individual POEs.", "In addition, CBP has produced three comprehensive assessments, which analyzed aggregated results for certain types of covert tests, such as fraudulent document tests, conducted at land POEs in fiscal years 2013, 2014, and 2018.", "However, CBP has not done so for other types of tests, such as canine contraband detection tests, conducted from fiscal years 2013 through 2018. By implementing a policy for periodically conducting such analyses, CBP could identify vulnerabilities, trends, and best practices occurring more broadly.", "CBP uses various sets of measures to assess its efforts to detect illegal activity at land POEs.", "CBP performance measures generally reflect the key attributes of effective measures, but CBP does not set an ambitious and realistic target for one measure. CBP's target for the land border interception rate—the estimated percentage of major violations in privately-owned vehicles that CBP intercepts out of the projected total number of major violations—is lower than the actual reported rate for fiscal years 2015 through 2018.", "A more ambitious target for the interception rate would better encourage CBP to review past performance of inspection activities that impact the measure and challenge CBP to identify ways to improve performance .", "CBP, within the Department of Homeland Security (DHS), is the lead federal agency charged with a dual mission of facilitating the flow of legitimate travel and trade at the nation's borders while keeping terrorists and their weapons, criminals and their contraband, and inadmissible aliens out of the country.", "GAO was asked to review CBP's process for inspecting passenger vehicles, pedestrians, and commercial vehicles at land POEs to secure the border.", "This report examines to what extent CBP (1) has processes and policies for inspections, (2) monitors inspection activities, and (3) has measures to assess its efforts to detect illegal activity of passengers, pedestrians, and commercial vehicles at land POEs.", "To address these questions, GAO analyzed CBP documents and data related to inbound inspections; interviewed officials; and observed operations at a non-generalizable sample of seven land POEs, selected to reflect a range of traffic volumes and geographic locations, among other things." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, 2, -1, -1, 1, -1, -1, 1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 0, 0, 0, 0 ] }

{ "title": [ "", "Existing Legal Barriers to Private Lawsuits Against Social Media Providers", "First Amendment: State Action Requirement", "Section 230 of the CDA", "Section 230(c)(1)", "Section 230(c)(2)", "First Amendment Limits on Government Regulation of Social Media Content", "Background Principles: First Amendment Protections Online", "Social Media Sites: Providing a Digital Public Square", "Social Media Sites as Company Towns", "Social Media Sites as Broadcasters or Cable Providers", "Broadcasters", "Cable Television", "Treating Social Media Like Broadcast or Cable", "Social Media Sites as Editors", "Considerations for Congress" ], "paragraphs": [ "O ne of the core purposes of the First Amendment's Free Speech Clause is to foster \"an uninhibited marketplace of ideas,\" testing the \"truth\" of various ideas \"in the competition of the market.\" Social media sites provide one avenue for the transmission of those ideas. The Supreme Court has recognized that the internet in general, and social media sites in particular, are \"important places\" for people to \"speak and listen,\" observing that \"social media users employ these websites to engage in a wide array of protected First Amendment activity.\" Users of social media sites such as Facebook, Twitter, YouTube, or Instagram can use these platforms to post art or news, debate political issues, and document their lives. In a study conducted in early 2018, the Pew Research Center found that 68% of U.S. adults use Facebook, 35% use Instagram, and 24% report using Twitter. These sites not only allow users to post content, they also connect users with each other, allowing users to seek out friends and content and often recommending new connections to the user. On most social media platforms, users can then send content to specific people, or set permissions allowing only certain people to view that content. Through human curation and the use of algorithms, these platforms decide how content is displayed to other users. In curating this content, social media sites may also edit user content, combine it, or draft their own additions to that content. These platforms are generally free to users, and make revenue by selling targeted advertising space, among other things. Thus, social media sites engage in a wide variety of activities, at least some of which entail hosting—and creating—constitutionally protected speech.\nSocial media companies have recognized their role in providing platforms for speech. To take one example, in a September 2018 hearing before the Senate Select Committee on Intelligence, the founder and Chief Executive Officer of Twitter, Jack Dorsey, repeatedly referred to Twitter as a \"digital public square,\" emphasizing the importance of \"free and open exchange\" on the platform. Critically, however, social media sites also have content-moderation policies under which they may remove certain content. Further, these sites determine how content is presented: who sees it, when, and where. As one scholar has said, social media sites \"create rules and systems to curate speech out of a sense of corporate social responsibility, but also . . . because their economic viability depends on meeting users' speech and community norms.\" Speech posted on the internet \"exists in an architecture of privately owned websites, servers, routers, and backbones,\" and its existence online is subject to the rules of those private companies. Consequently, one First Amendment scholar predicted ten years ago that \"the most important decisions affecting the future of freedom of speech will not occur in constitutional law; they will be decisions about technological design, legislative and administrative regulations, the formation of new business models, and the collective activities of end-users.\"\nSocial media companies have come under increased scrutiny regarding the type of user content that they allow to be posted on their sites, and the ways in which they may promote—or deemphasize—certain content. A wide variety of people have expressed concern that these sites do not do enough to counter harmful, offensive, or false content . At the same time, others have argued that the platforms take down or deemphasize too much legitimate content. In the September 2018 hearing referenced above, Sheryl Sandberg, the Chief Operating Officer of Facebook, expressed the difficulty of determining what types of speech would violate company standards barring hate speech. Both Dorsey and Facebook founder and Chief Executive Officer Mark Zuckerberg have been asked to respond to allegations of political bias in their platforms' content moderation decisions at hearings before House and Senate committees. Commentators and legislators alike have questioned whether social media sites' content policies are living up to the free speech ideals they have espoused. As a result, some, including Members of Congress, have called for regulation of social media platforms, focused on the way those companies police content.\nIn light of this public policy debate, this report begins by outlining the current legal framework governing social media sites' treatment of users' content, focusing on the First Amendment and Section 230 of the Communications Decency Act of 1996 (CDA). As explained below, under existing law, lawsuits predicated on these sites' decisions to remove or to host content have been largely unsuccessful because of (1) doctrines that prevent the First Amendment from being applied to private social media companies, and (2) Section 230 of the CDA, which often protects social media companies from being held liable under federal or state laws for these decisions. The debate over whether the federal government should fill this legal vacuum has raised the question as to whether and to what extent the federal government can regulate the way social media sites present users' content, either to require these sites to take down, restrict access to, or qualify certain types of content, or, on the other hand, protect users' rights to post content on those sites. Such government regulation would constitute state action that implicates the First Amendment. While the issue largely remains an open question in the courts, the First Amendment may provide some protection for social media companies when they make content presentation decisions, limiting the federal government's ability to regulate those decisions. The extent of any free speech protections will depend on how courts view social media companies and the specific action being regulated.\nAccordingly, the bulk of this report explores how the First Amendment applies to social media providers' content presentation decisions. Looking to three possible analogues drawn from existing First Amendment law, the report explores whether social media companies could be viewed in the same way as company towns, broadcasters, or newspaper editors. The report also explains the possible regulatory implications of each First Amendment framework as Congress considers the novel legal issues raised by the regulation of social media.", "Under current federal law, social media users may face at least two significant barriers if they attempt to sue a social media provider for its decisions about hosting or limiting access to users' content. The first, which likely applies only to lawsuits predicated on a platform's decision to remove rather than allow content, is the state action requirement of the First Amendment. The state action doctrine provides that constitutional free speech protections generally apply only when a person is harmed by an action of the government, rather than a private party. The second legal barrier is the CDA's Section 230, which offers broad immunity to \"interactive computer service\" providers. Section 230(c)(1) provides immunity from any lawsuit that seeks to hold a service provider liable for publishing information that was created by an \"information content provider,\" effectively protecting social media sites from liability for hosting content. By contrast, Section 230(c)(2) provides immunity for sites that take good faith action to restrict access to content that the provider or users deem \"obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.\" Thus, federal law does not currently provide a recourse for many users who would like to challenge a social media site's decision to ban or restrict content, or to host content—and may affirmatively bar liability in certain circumstances.", "The Free Speech Clause of the First Amendment provides that \" Congress shall make no law . . . abridging the freedom of speech\" and applies to the \" State[s] \" through the Fourteenth Amendment. Thus, the First Amendment, like other constitutional guarantees, generally applies only against government action. As the Supreme Court has said, \"while statutory or common law may in some situations extend protection or provide redress against a private corporation or person who seeks to abridge the free expression of others, no such protection or redress is provided by the Constitution itself.\" However, the Supreme Court has, in limited circumstances, allowed First Amendment claims to proceed against seemingly private parties that abridge protected speech.\nThe clearest example of the Court extending the First Amendment to apply to the actions of a private party comes from Marsh v. Alabama , where the Court held that the First Amendment prohibited the punishment of a resident of a company-owned town for distributing religious literature. While the town in question was owned by a private corporation, \"it ha[d] all the characteristics of any other American town,\" including residences, businesses, streets, utilities, public safety officers, and a post office. Under these circumstances, the Court held that \"the corporation's property interests\" did not \"settle the question\" : \"[w]hether a corporation or a municipality owns or possesses the town[,] the public in either case has an identical interest in the functioning of the community in such manner that the channels of communication remain free.\" Consequently, the corporation could not be permitted \"to govern a community of citizens\" in a way that \"restrict[ed] their fundamental liberties.\" The Supreme Court has described Marsh as embodying a \"public function\" test, under which the First Amendment will apply if a private entity exercises \"powers traditionally exclusively reserved to the State.\"\nSince Marsh was issued in 1946, however, it has largely been limited to the facts presented in that case. The Supreme Court extended the Marsh decision in 1968: in Amalgamated Food Employees Union v. Logan Valley Plaza , the Court held that a private shopping mall could not prevent individuals from peacefully picketing on the premises, noting similarities between \"the business block in Marsh and the shopping center\" at issue in that case. However, the Court subsequently disclaimed Logan Valley in Hudgens v. NLRB , rejecting the idea that \"large self-contained shopping center[s]\" are \"the functional equivalent of a municipality.\" Instead, the Court held that in Hudgens , where a shopping center manager had threatened to arrest picketers for trespassing, \"the constitutional guarantee of free expression ha[d] no part to play.\" As a result, the picketers \"did not have a First Amendment right to enter this shopping center for the purpose of advertising their strike.\" In another decision in which the Supreme Court held that the First Amendment did not prevent a shopping center from banning the distribution of handbills, the Court distinguished Marsh by noting that \"the owner of the company town was performing the full spectrum of municipal powers and stood in the shoes of the State.\" By contrast, the disputed shopping center had not assumed \"municipal functions or power.\" The fact that the shopping center was generally open to the public did not qualify as a \"dedication of [the] privately owned and operated shopping center to public use\" sufficient \"to entitle respondents to exercise therein the asserted First Amendment rights.\"\nApart from the factual circumstances presented by the company town that exercises powers \"traditionally\" and \"exclusively\" held by the government, the Court has sometimes applied the First Amendment against private parties if they have a \"sufficiently close relationship\" to the government. Such circumstances may exist where a private company \"is subject to extensive state regulation\"—although government regulation alone is not sufficient to establish the state action requirement. Instead, the inquiry in such a case is \"whether there is a sufficiently close nexus between the State and the challenged action of the regulated entity so that the action of the latter may be fairly treated as that of the State itself.\" In a 2001 case, the Supreme Court held that a state athletic association, while \"nominally private,\" should be subject to First Amendment standards because of \"the pervasive entwinement of public institutions and public officials in its composition and workings.\"\nSome plaintiffs have argued that various internet companies, including some social media sites, should be treated as state actors subject to the First Amendment when those companies take down or restrict access to their speech. Courts have rejected these claims. Many of these decisions have involved relatively terse applications of existing Supreme Court precedent. In a few cases, however, federal district courts have explored the application of these state action cases in more detail.\nFirst, lower courts have repeatedly held that social media sites do not meet the \"exclusive public function test\" and are not akin to a company town. In so holding, courts have recognized that, under prevailing Supreme Court case law, private actors are not \"state actors subject to First Amendment scrutiny merely because they hold out and operate their private property as a forum for expression of diverse points of view.\" Accordingly, they have held that the mere fact that social media providers hold their networks open for use by the public is insufficient to make them subject to the First Amendment. Courts have rejected plaintiffs' efforts to characterize the provision of a public forum or \"the dissemination of news and fostering of debate\" as public functions that were traditionally and exclusively performed by the government.\nFor example, in Cyber Promotions v. American Online (AOL) , a district court rejected the argument that \"by providing Internet e-mail and acting as the sole conduit to its members' Internet e-mail boxes, AOL has opened up that part of its network [to the public] and as such, has sufficiently devoted this domain for public use.\" The court said that \"[a]lthough AOL has technically opened its e-mail system to the public by connecting with the Internet, AOL has not opened its property to the public by performing any municipal power or essential public service and, therefore, does not stand in the shoes of the State.\" The challengers in that case, a company that had been blocked from sending unsolicited advertisements via email, also argued that AOL performed an exclusive public function because the company had \"no alternative avenues of communication . . . to send its e-mail to AOL members.\" The judge rejected this claim as well, concluding that the company did have alternative avenues to send its advertising to AOL members, including other places on the internet as well as \"non-Internet avenues.\" Similarly, in Prager University v. Google LLC , a district court held that by operating YouTube, \"a 'video-sharing website,'\" and then restricting access to some videos, Google had not \"somehow engaged in one of the 'very few' functions that were traditionally 'exclusively reserved to the State.'\"\nTrial courts have also held that social networks have failed to meet the joint participation, nexus, and entwinement tests for state action. In Cyber Promotions , the court held that there was no joint participation because the government was not involved in AOL's challenged decision. Another trial court, in Quigley v. Yelp, Inc. , similarly concluded joint participation did not exist between various social media sites and the government where the plaintiff failed to show that the state participated in the specific actions challenged in the lawsuit. That court also rejected an argument that there was \"a pervasive entwinement between defendants and the government because the government maintains accounts on the defendants' websites, and uses their websites to communicate with citizens.\" Even assuming that this allegation was true, the court held that this was not \"the sort of entwinement that . . . converts a private party's actions to state action,\" observing that the government did not participate \"in the operation or management of defendants' websites,\" but only used these sites \"in the same manner as other users.\"\nAccordingly, lower courts have uniformly concluded that the First Amendment does not prevent social media providers from restricting users' ability to post content on their networks. However, the Supreme Court has not yet weighed in on this subject, and as will be discussed in more detail below, a number of legal commentators have argued that, notwithstanding these trial court decisions, courts should view social media platforms as equivalent to state actors, at least when they perform certain functions.", "A constitutional injury is not the only type of harm that a social media user might suffer as a result of a social network's decisions about user content, and litigants have brought a wide variety of claims challenging these sorts of decisions. For example, plaintiffs have argued that sites' decisions to remove or restrict access to their content constituted unfair competition under the Lanham Act, discrimination under the Civil Rights Act of 1964, tortious interference with contractual relationships, fraud, and breach of contract. Other plaintiffs have attempted to hold online platforms liable for harm stemming from the sites' decisions not to remove content, claiming, for example, that by publishing certain content, the sites committed defamation or negligence, or violated state securities law. However, many of these suits are barred by the broad grant of immunity created by the CDA's Section 230.\nSection 230, as seen in the text box above, distinguishes between \"interactive computer services\" and \"information content providers.\" An interactive computer service is \"any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server.\" Courts have considered online platforms such as Facebook, Twitter, and Craigslist to be \"interactive computer service\" providers. An information content provider is \"any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service.\"\nSection 230 contains two primary provisions creating immunity from liability. First, Section 230(c)(1) specifies that interactive service providers and users may not \"be treated as the publisher or speaker of any information provided by another information content provider.\" Second, Section 230(c)(2) states that interactive service providers and users may not be held liable for voluntarily acting in good faith to restrict access to objectionable material. Section 230 preempts state civil lawsuits and state criminal prosecutions to the extent that they are \"inconsistent\" with Section 230. It also bars certain federal civil lawsuits, but, significantly, not federal criminal prosecutions. Section 230(e) outlines a few exemptions: for example, Section 230 immunity will not apply in a suit \"pertaining to intellectual property\" or in claims alleging violations of certain sex trafficking laws.", "Section 230, and particularly Section 230(c)(1), distinguishes those who create content from those who provide access to that content, providing immunity to the latter group. An entity may be both an \"interactive computer service\" provider and an \"information content provider,\" but the critical inquiry for applying Section 230(c)(1) is whether, with respect to the particular actions alleged to create liability, the service provider developed the underlying content.\nCourts have held that an interactive computer service provider may be subject to suit if it is also acting as a content provider. Frequently, the application of Section 230(c)(1) immunity turns not on the type of suit that is being brought—that is, for example, whether it is a suit for libel or for breach of contract —but on whether the facts establish that the interactive computer service provider was merely a publisher of another's content, or whether the service provider itself created or developed content. Courts have generally held that a site's ability to control the content posted on its website does not, in and of itself, transform an interactive computer service into an internet content provider. As one court said, \"a website does not create or develop content when it merely provides a neutral means by which third parties can post information of their own independent choosing online.\" A service provider may still be immune from suit under Section 230(c)(1) even if it makes small editorial changes to that content.\nConversely, a \"website operator\" can be liable for \"content that it creates itself, or is 'responsible, in whole or in part' for creating or developing.\" Even if the service provider does not itself solely create the content, Section 230 immunity might be unavailable if the service provider \"augment[s] the content.\" For example, one state court held that, even assuming that Snapchat was a provider of interactive computer services, a plaintiff's claim against the company could proceed where the alleged harm was caused by a \"filter,\" or a graphic overlay on a user's photo, that was created by Snapchat itself. Because the plaintiff sought \"to hold Snapchat liable for its own conduct,\" the court held that \"CDA immunity does not apply.\"\nSome courts have applied a \"material contribution test,\" asking whether a service provider \"materially contribute[d] to the illegality\" of the disputed content, or \"in some way specifically encourage[d] development of what is offensive about the content.\" Thus, for example, a federal appellate court concluded that Roommates.com, a site that \"match[ed] people renting out spare rooms with people looking for a place to live,\" was not wholly immune from claims that it had violated laws prohibiting housing discrimination. The court concluded that Roommates.com could be subject to suit for discrimination because the site required all users to respond to questions about their sex, family status, and sexual orientation by selecting among preset answers to those questions, and to state their \"preferences in roommates with respect to the same three criteria.\" Accordingly, in the court's view, as to these questions and answers, Roommates.com was \"more than a passive transmitter of information provided by others; it becomes the developer, at least in part, of that information.\" Each user's personal page was \"a collaborative effort between [Roommates.com] and the subscriber.\" This rendered it the \"'information content provider' as to the questions\" and the answers.", "Although courts frequently consider the immunity in Section 230(c)(1) and Section 230(c)(2) together, as one \"Section 230\" shield, the text of these provisions suggests they cover distinct circumstances. Section 230(c)(1) applies more broadly, to any suit in which the plaintiff seeks to hold the provider liable as the publisher of another's information. By contrast, Section 230(c)(2) applies only to good-faith, voluntary actions by a provider—or a third party assisting providers—to restrict access to \"obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable\" content.\nThere is an important difference in the language of the two provisions: as noted, Section 230(c)(2) requires a service provider to act in good faith for immunity to apply; Section 230(c)(1) does not contain a similar requirement. While courts frequently apply Section 230 to dismiss lawsuits premised on a service provider's decision to remove or restrict access to another's content, they are somewhat less likely to dismiss lawsuits where the good-faith requirement is involved, because a plaintiff who properly pleads and presents evidence regarding a lack of good faith creates a question of fact that may prevent the court from summarily dismissing the case. One trial court concluded that there was a question as to Google's good faith where the plaintiff alleged that Google was \"selectively enforcing\" a stated policy, and that the policy itself was \"entirely pretextual.\" Another trial court concluded that a company had sufficiently alleged bad faith where it argued that Google had \"falsely accused\" it of violating Google's stated policy, and that Google \"sought to punish [the company] because it\" refused to allow Google to embed advertising in the company's video.\nOne view is that Section 230(c)(2) applies when a provider \" does filter out offensive material,\" while Section 230(c)(1) applies when providers \" refrain from filtering or censoring the information on their sites.\" At least one federal trial judge has noted that interpreting Section 230(c)(1) to bar suits in which a plaintiff seeks to hold a service provider liable for removing the plaintiff's own content would \"swallow[] the more specific immunity in (c)(2).\" The court explained that:\nSubsection (c)(2) immunizes only an interactive computer service's \"actions taken in good faith.\" If the publisher's motives are irrelevant and always immunized by (c)(1), then (c)(2) is unnecessary. The Court is unwilling to read the statute in a way that renders the good-faith requirement superfluous.\nLawsuits directly challenging a website's decision to restrict or remove content, rather than to publish it, often do invoke Section 230(c)(2). Thus, courts have considered the application of Section 230(c)(2), rather than Section 230(c)(1), in lawsuits involving the removal of an app from the Google Play Store, the removal of websites from Google's search results, the removal of videos from YouTube, and decisions to filter certain IP addresses or email addresses. However, this distinction between filtering content and publishing content does not always play out so neatly in the courts, and other decisions have applied Section 230(c)(1) immunity to bar suits that are grounded in an interactive service provider's decision to restrict content.\nThere is one additional circumstance under which Section 230(c)(2) immunity, as opposed to Section 230(c)(1) immunity, may apply. Section 230(c)(2)(B) protects those providers or users of computer services who \"enable or make available to information content providers or others technical means to restrict access to\" objectionable material. This provision may protect, for example, \"providers of programs that filter adware and malware.\" This immunity may apply even where an interactive computer service is not a publisher entitled to immunity under Section 230(c)(1).\nThus, as a whole, Section 230 offers broad immunity to \"interactive computer service\" providers when a litigant seeks to hold them liable for publishing, or not publishing, a user's content. Section 230(c)(1) provides immunity from any lawsuit that seeks to hold a service provider liable for publishing information that was created by an \"information content provider,\" effectively protecting social media sites from liability for hosting content. And Section 230(c)(2) provides immunity for sites that take good faith action to restrict access to content that the provider or users deem \"objectionable.\" Consequently, to the extent that private litigants or state governments would have been able to hold social media companies liable under existing law for their decisions regarding presenting or restricting access to user content, those suits have largely been barred under Section 230.", "As discussed above, courts have often dismissed lawsuits attempting to hold social media providers liable for regulating users' content, whether because the court concludes that the First Amendment does not apply to the actions of these private actors or because the court holds that Section 230(c)(2) of the CDA bars the lawsuit. Additionally, Section 230(c)(1) may bar lawsuits that seek to hold these platforms liable because of their decisions to publish certain content. Particularly because of Section 230, there are few, if any, federal or state laws that expressly govern social media sites' decisions about whether and how to present users' content. Consequently, users' ability to post speech on social media platforms is governed primarily by the private moderation policies created by these companies.\nIn response to broader public policy concerns about how social media entities are policing user content, some commentators and legislators have proposed federal regulation both to protect users' ability to speak freely on those platforms and to require these platforms to take down, deemphasize, or clarify certain content. While the First Amendment, as discussed above, may not apply in disputes between private parties, a federal law regulating internet content decisions would likely qualify as state action sufficient to implicate the First Amendment. After all, the First Amendment provides that \" Congress shall make no law . . . abridging the freedom of speech.\"\nOnce state action is established, the next consideration is to what extent the First Amendment protects social media platforms' content moderation decisions. Stated another way, the relevant question is when social media providers can assert that government regulation infringes on their own speech. Perhaps most obviously, if a social media site posts content that it has created itself, the site may raise First Amendment objections to a law expressly regulating that speech. Social media providers may also argue that they are exercising protected speech rights when they are choosing whether to publish content that was originally created by users and when they make decisions about how to present that content. However, the fact that a law affects speech protected by the First Amendment does not necessarily mean that it is unconstitutional. As explained below, the First Amendment allows some regulation of speech and does not prohibit regulation of conduct.", "While the First Amendment generally protects the \"freedom of speech,\" its protections do not apply in the same way in all cases. Not every government regulation affecting content posted on social media sites would be analyzed in the same way. A court's analysis would depend on a number of factors.\nFirst, a court would inquire into the nature of the precise action being regulated, including whether it is properly characterized as speech or conduct. Laws that target conduct and only incidentally burden speech may be permissible. But \"speech\" is not always easy to identify. Lower courts have held that computer code and programs may be entitled to First Amendment protection, so long as they communicate \"information comprehensible to human beings.\" Courts have also concluded that in some circumstances, domain names might constitute protected speech. And more generally, the Supreme Court has said that \"inherently expressive\" conduct can receive First Amendment protections.\nIf a law does regulate speech, a court would consider the type of speech being regulated to determine how closely to scrutinize the regulation. For example, a court may ask whether that speech is commercial and, as such, deserving of less protection under the First Amendment. Advertisements posted on social media sites would likely qualify as commercial speech. If speech is not purely commercial and is instead, for example, political advocacy, that speech may receive greater protection. Certain categories of speech receive even less protection than commercial speech. For example, the Supreme Court has said that states may prohibit speech advocating violence if that \"advocacy is directed to inciting or producing imminent lawless action and is likely to incite or produce such action.\" Thus, certain types of threatening or violent speech posted on social media may not be entitled to First Amendment protection. However, perhaps in light of the fact that it can be difficult to determine whether speech is protected, the Court has sometimes held that criminal statutes targeting disfavored speech must include a mental state requirement. For example, in United States v. X-Citement Video , the Court noted that, with respect to a federal law prohibiting the distribution of child pornography, criminal liability turned on \"the age of the performers\"—as did First Amendment protection for the materials, given that \"nonobscene, sexually explicit materials involving persons over the age of 17 are protected by the First Amendment.\" Accordingly, although the statute was unclear on this point, the Court held that the law applied only if a person distributing such materials knew that the performers were underage.\nEven if a statute does target a category of speech that is traditionally proscribable, it may still be invalid if it is overbroad, in the sense that it prohibits a substantial amount of protected speech, as well. Thus, for example, in Ashcroft v. Free Speech Coalition , the Supreme Court held that a federal statute prohibiting \"sexually explicit images that appear to depict minors\" was unconstitutionally overbroad. The statute encompassed pornography that did \"not depict an actual child,\" prohibiting images that were \"created by using adults who look like minors or by using computer imaging.\" Thus, the Court held that the statute violated the First Amendment because it \"proscribe[d] a significant universe of speech that is neither obscene . . . nor child pornography,\" as those two categories had been defined in prior Supreme Court cases.\nA court would also look to the nature of the regulation itself, and primarily whether it is content-neutral, or whether it instead discriminates on the basis of content or viewpoint, subjecting that law to strict scrutiny. The Court has said that \"a speech regulation is content based if the law applies to particular speech because of the topic discussed or the idea or message expressed.\" In a strict scrutiny analysis, the government must prove that the \"restriction 'furthers a compelling interest and is narrowly tailored to achieve that interest.'\" If a regulation is content-neutral, which is to say, \"justified without reference to the content of the regulated speech,\" a court employs an intermediate scrutiny analysis, asking whether the restriction is \"narrowly tailored to serve a significant governmental interest\" and \"leave[s] open ample alternative channels for communication of the information.\" Accordingly, for example, a federal court of appeals held in Universal City Studios, Inc. v. Corley that government restrictions on posting or linking to decryption computer programs did regulate speech protected by the First Amendment, but ultimately upheld those restrictions as permissible content-neutral regulations.\nThese first two inquiries are distinct, although they do overlap. If a statute targets speech rather than conduct, it is likely that it will target that speech based on its content, and therefore will not be content-neutral. And by contrast, a statute that targets conduct will likely be content-neutral on its face. In Universal City Studios, Inc. , the court held that the challenged government regulations were content-neutral because they \"target[ed] only the nonspeech component\" of the prohibited actions by focusing on the \"functional\" aspects of computer code that operate without any human involvement. It is possible, though, that a law targeting speech would nonetheless be content-neutral. For example, the Court has said that \"a prohibition against the use of sound trucks emitting 'loud and raucous' noise in residential neighborhoods is permissible if it applies equally to music, political speech, and advertising.\"\nA court might also look to the particular nature of the medium being regulated, asking whether there are special characteristics that might justify greater regulation. The Supreme Court has said that \"[e]ach medium of expression . . . must be assessed for First Amendment purposes by standards suited to it, for each may present its own problems.\" The Court has been willing to extend First Amendment protections that historically applied to speech communicated in traditional public forums such as streets and sidewalks to new mediums for communication, including video games and the internet. But the Court has also recognized that the principles developed \"in the context of streets and parks . . . should not be extended in a mechanical way to the very different context of\" newer media. While the Court has characterized social media as \"the modern public square,\" it has not fully clarified what standards should apply to government regulation of that medium—particularly with respect to social media platforms' roles as hosts for others' speech.\nThe Supreme Court said in Reno v. ACLU that when considering government regulation of \"the Internet\" in general, factors that had previously justified greater regulation of other media did not apply. In that case, the Court held unconstitutional two provisions of the CDA that criminalized the transmission of certain \"indecent\" or \"patently offensive\" material to minors over the internet. The Court rejected the government's argument that the regulation was permissible because the internet is analogous to broadcast media, where the Court has permitted greater regulation of speech. The Court noted that unlike the broadcast industry, \"the vast democratic fora of the Internet\" had not traditionally \"been subject to the type of government supervision and regulation that has attended the broadcast industry,\" and said that \"the Internet is not as 'invasive' as radio or television.\" Accordingly, the Court stated that there was \"no basis for qualifying the level of First Amendment scrutiny that should be applied to this medium.\" However, as will be discussed in more detail below, some scholars have argued that Reno , decided in 1997, does not specifically address government regulation of modern social media sites, which may present unique concerns from those discussed in Reno .", "Social media sites provide platforms for content originally generated by users. In that capacity, social media sites decide whether to host users' content and how that content is presented, and may alter that content in the process. Whether these editorial functions are \"speech\" protected by the First Amendment presents an especially difficult question. As one federal appellate court noted, \"entities that serve as conduits for speech produced by others\" may \"receive First Amendment protection\" if they \"engage in editorial discretion\" when \"selecting which speech to transmit.\" On the other hand, the court said, such an entity might not be \"a First Amendment speaker\" if it indiscriminately and neutrally transmits \"any and all users' speech.\"\nSome have argued that social media sites' publication decisions are protected under the First Amendment. Until recently, academic debate focused largely on whether the algorithms employed by search engines to retrieve and present results are properly characterized as the speech of those search engines. One scholar argued that search engines' publication activities meet at least one of the criteria necessary to qualify for First Amendment protection: these sites are publishing \"sendable and receivable substantive message[s]\"—or, in other words, they are communicating content. Another scholar countered this argument by saying that indexing search results is not equivalent to communicating protected ideas, arguing that to be entitled to First Amendment protections, content must be \"adopted or selected by the speaker as its own.\"\nThere are not many court decisions evaluating whether a social media site, by virtue of reprinting, organizing, or even editing protected speech, is itself exercising free speech rights. While a few federal courts have held that search engine results and decisions about whether to run advertisements are speech protected by the First Amendment, these decisions are, so far, limited to trial courts and therefore not precedential beyond the facts of those cases. This relative dearth of cases is likely due in large part to the fact that, as discussed above, Section 230 of the CDA bars a significant number of lawsuits that seek to hold social media providers liable for publishing others' content, often making it unnecessary to consider whether the First Amendment protects these publication decisions. Section 230 has sometimes been described as an attempt to protect the freedom of speech on the internet, suggesting that its displacement of the First Amendment is an implicit consequence of Section 230's speech-protective nature. In other words, Section 230 creates immunity even where the First Amendment might not.\nDue to the lack of case law examining the issue, commentators have largely analyzed the question of whether a social media site's publication decisions are protected by the First Amendment by analogy to other types of First Amendment cases. At least one scholar has argued that there are three possible frameworks a court could apply to analyze governmental restrictions on social media sites' ability to moderate user content. The first analogy would treat social media sites as equivalent to company towns. Under this scenario, social media sites would be treated as state actors who are themselves bound to follow the First Amendment when they regulate protected speech. The second possible framework would view social media sites as analogous to special industries like common carriers or broadcast media, in which the Court has historically allowed greater regulation of the industries' speech in light of the need to protect public access for users of their services. The third analogy would treat social media sites like news editors, who generally receive the full protections of the First Amendment when making editorial decisions.\nIt is likely that no one analogy can account for all social media platforms, or all activities performed by those platforms. Some social media platforms may exercise more editorial control over user-generated content than others, and any given social media company performs a wide variety of different functions. Consequently, determining which line of case law is most analogous will likely depend on the particular activity being regulated.", "As discussed in more detail above, although the First Amendment generally applies only to government action, the Supreme Court has held that in limited, special circumstances, private actors should be treated as the government and must comply with constitutional standards when interacting with others. The archetypal case is that of the company town: in Marsh v. Alabama , the Supreme Court held that the residents of a company-owned town—a town that was functionally identical to any ordinary town, but for the fact of its ownership—were entitled to the protections of the First Amendment when distributing religious literature on the streets and sidewalks in that town. Courts have largely held that, under existing Supreme Court precedent, social media providers do not meet the First Amendment's state action requirement.\nCommentators have argued, however, that dicta in Supreme Court cases may suggest that social media sites should be treated differently. As an initial matter, there is language in Marsh suggesting that privately owned property may be subject to the First Amendment if it is opened for public use:\nOwnership does not always mean absolute dominion. The more an owner, for his advantage, opens up his property for use by the public in general, the more do his rights become circumscribed by the statutory and constitutional rights of those who use it. Thus, the owners of privately held bridges, ferries, turnpikes and railroads may not operate them as freely as a farmer does his farm. Since these facilities are built and operated primarily to benefit the public and since their operation is essentially a public function, it is subject to state regulation.\nAt least one scholar has argued that, with respect to online forums, \" Marsh should be expanded and read functionally.\" He suggests that courts should ask whether a given online space is the \"functional equivalent\" of a traditional public forum and should engage in a First Amendment analysis that treats private ownership as \"one factor\" when balancing \"the autonomy rights of property owners against the expressive rights of property users.\" But courts, by and large, have rejected the broader implications of this language in Marsh , and the Supreme Court has held that the mere fact that a private space is open to the public is not sufficient to \"entitle\" the public to the protections of the First Amendment in that space.\nAnother scholar, however, has argued that notwithstanding \"this more narrow conception of the public function exception,\" social media sites should still be treated as equivalent to the state under Marsh . He claims that social media sites perform a \"public function\" under Marsh by \"providing a space that has the primary purpose of serving as a forum for public communication and expression, that is designated for that purpose, and that is completely open to the public at large.\" In his view, \"[s]ince managing public squares and meeting places is something that has traditionally been done by the government, social network websites therefore serve a public function that has traditionally been the province of the state.\" As mentioned above, however, trial courts have declined to extend Marsh to social media sites, disagreeing that the provision of a public forum or \"the dissemination of news and fostering of debate\" are public functions that were traditionally and exclusively performed by the government.\nOthers have argued that a more recent Supreme Court decision, Packingham v. North Carolina , might \"signal a shift\" in the state action analysis. In Packingham , the Court struck down a North Carolina law that prohibited a registered sex offender from accessing any \"commercial social networking Web site where the sex offender knows that the site permits minor children to become members or to create or maintain personal Web pages.\" Critically, the Court stated that \"cyberspace\" is today \"the most important place[] . . . for the exchange of views\" protected by the First Amendment, analogizing Facebook, LinkedIn, and Twitter to traditional public forums and characterizing social media sites as \"the modern public square.\" In light of the importance of these forums, the Court concluded that the statute was too broad and not sufficiently tailored to serve the government's asserted interest.\nSome have suggested that, if the Court views social media as \"the modern public square,\" it may be more willing to say that social media companies \"count as state actors for First Amendment purposes.\" Indeed, Justice Alito declined to join the majority opinion in Packingham because he was concerned about the scope of the Court's \"musings that seem to equate the entirety of the internet with public streets and parks.\" He argued that this broader language was \"bound to be interpreted by some\"—erroneously, in his view—as limiting the government's ability to \"restrict . . . dangerous sexual predators\" from some activities online. At least one court, however, has rejected some of the broader implications of this case, noting that \" Packingham did not, and had no occasion to, address whether private social media corporations like YouTube are state actors that must regulate the content of their websites according to the strictures of the First Amendment. Instead, . . . Packingham concerned whether North Carolina ran afoul of the First Amendment . . . .\"\nIf social media sites were treated as state actors under the First Amendment, then the Constitution itself would constrain their conduct when they act to restrict users' protected speech. Under this framework, Congress could enact legislation to remedy violations of free speech rights by social media entities. For instance, Title III of the Civil Rights Act of 1964 authorizes the Attorney General to bring a civil action against governmental facilities that deny a person equal access \"on account of his race, color, religion, or national origin,\" essentially granting the Attorney General the power to sue to enjoin certain acts that would violate the Fourteenth Amendment's Equal Protection Clause. To take another example, 42 U.S.C. § 1983 allows any person who has been deprived by a state actor \"of any rights, privileges, or immunities secured by the Constitution\" to bring certain civil actions to vindicate those rights in court.\nBy contrast, commentators have argued that under this framework, the problems associated with social media sites hosting too much speech—that is, problems caused by the dissemination of things like misinformation and hate speech—would be exacerbated. If these companies were considered equivalent to state actors and their sites were seen as equivalent to traditional public forums, their ability to regulate speech would be relatively circumscribed. And in turn, so would the government be limited in its ability to require these platforms to take down certain types of content, if that content qualified as protected speech. Thus, one scholar predicted that under this framework, \"[a]ll but the very basest speech would be explicitly allowed and protected—making current problems of online hate speech, bullying, and terrorism, with which many activists and scholars are concerned, unimaginably worse.\"\nHowever, to the extent that a federal regulation infringed on speech properly attributed to the social media sites, rather than their users—and this speech could include not only content originally generated by the social media companies, but also their editorial decisions about user-generated content—it could implicate an open First Amendment question. State and local governments are constrained by the First Amendment when they interact with individuals, but the Supreme Court has never squarely resolved whether states and municipalities could themselves assert First Amendment rights against the federal government. At least one scholar has argued that the First Amendment should protect government speech in certain circumstances. And in a 2015 case, the Supreme Court said that a private party could not force a state to include certain messages in its own speech, suggesting that governments do have some right to speak for themselves. On the other hand, Justice Stewart argued in a 1973 concurring opinion that the government has no First Amendment rights, significantly, maintaining that the Court should not treat broadcasters as state actors because it would \"simply strip\" them of their First Amendment rights. Lower courts have largely followed Justice Stewart's view and assumed that state actors may not claim the protection of the First Amendment. Accordingly, it is possible that treating social media sites like state actors would \"strip [them] of their own First Amendment rights.\"", "Alternatively, courts could analogize social media sites to certain industries, like broadcast media, where the Supreme Court has traditionally allowed greater regulation of protected speech. These cases have their roots in the common law doctrines related to common carriers. Historically, a common carrier is an entity that \"holds itself out to the public as offering to transport freight or passengers for a fee.\" Often, these companies received government licenses authorizing their operations. Common carriers have traditionally been subject to heightened legal duties and generally could not refuse paying customers. Some of these common law doctrines have been incorporated into modern regulation of communications industries: federal statutes treat providers of telecommunications services as common carriers that are subject to certain requirements, and authorize the regulation of radio and television broadcasters. While acknowledging that these companies are private entities who do retain First Amendment rights, the Supreme Court has nonetheless allowed some regulation of these rights, in light of the heightened government interests in regulating such entities. As one federal appellate court has put it, the general \"absence of any First Amendment concern\" with \"equal access obligations\" in this area \"rests on the understanding that such entities, insofar as they are subject to equal access mandates, merely facilitate the transmission of the speech of others rather than engage in speech in their own right.\" However, courts have not treated all entities equated to common carriers identically.", "In Red Lion Broadcasting Co. v. FCC , the Supreme Court approved of a specific application of the Federal Communication Commission's (FCC's) \"fairness doctrine.\" The FCC rule challenged in Red Lion required broadcasters to give political candidates a reasonable opportunity to respond to any personal attacks published by the broadcaster or to any editorials in which a broadcaster endorsed or opposed particular candidates. The broadcasters argued that these regulations violated the First Amendment, abridging \"their freedom of speech and press\" by preventing them from \"exclud[ing] whomever they choose\" from their allotted frequencies.\nThe Supreme Court noted the unique nature of the broadcast industry, stating that due to \"the scarcity of radio frequencies,\" \"it is idle to posit an unabridgeable First Amendment right to broadcast comparable to the right of every individual to speak, write, or publish.\" This is why, the Court said, it had previously allowed regulations of broadcast media—namely, a licensing system—that might otherwise violate the First Amendment. The Court emphasized that \"[i]t is the right of the viewers and listeners, not the right of the broadcasters, which is paramount,\" highlighting \"the right of the public to receive suitable access to social, political, esthetic, moral, and other ideas and experiences.\" Ultimately, the Court held that \"[i]n view of the scarcity of broadcast frequencies, the Government's role in allocating those frequencies, and the legitimate claims of those unable without governmental assistance to gain access to those frequencies for expression of their views,\" the challenged regulations were constitutional.\nIn subsequent cases, the Supreme Court has reaffirmed that \"of all forms of communication, it is broadcasting that has received the most limited First Amendment protection.\" The Court has recognized that broadcasters do engage in speech activity protected by the First Amendment, most notably when a broadcaster \"exercises editorial discretion in the selection and presentation of its programming.\" The Court has said that \"[a]lthough programming decisions often involve the compilation of the speech of third parties, the decisions nonetheless constitute communicative acts.\" Notwithstanding this conclusion, however, the Court has said that in this area, when evaluating broadcasters' First Amendment claims, it will \"afford great weight to the decisions of Congress and the experience of the [FCC].\"", "Significantly, the Supreme Court has declined to extend this special deference to government regulation of broadcasters to other forms of media. For example, in Turner Broadcasting Systems v. FCC , the Court concluded that the \"less rigorous\" First Amendment scrutiny that applies to broadcast regulation should not be extended to the \"regulation of cable television.\" The Court was considering the FCC's \"must-carry\" regulations, which required cable television broadcasters to set aside a portion of their channels for the transmission of local broadcast television stations. The Court said that cable television \"does not suffer from the inherent limitations,\" in terms of the scarcity of frequencies, \"that characterize the broadcast medium,\" consequently concluding that the \"unique physical characteristics of cable transmission . . . . do not require the alteration of settled principles of our First Amendment jurisprudence.\" Accordingly, the Court has subjected laws that restrict cable providers' protected speech to greater scrutiny than restrictions on broadcast media .\nBut the Court noted in a subsequent decision that \"[c]able television, like broadcast media, presents unique problems . . . which may justify restrictions that would be unacceptable in other contexts.\" And in Turner Broadcasting itself, the Court did cite \"special characteristics of the cable medium\" to justify applying a lower level of scrutiny. The Court recognized that \"[r]egulations that discriminate among media, or among different speakers within a single medium, often present serious First Amendment concerns\" that trigger strict scrutiny. But notwithstanding this general rule, the Court explained that \"heightened scrutiny is unwarranted where,\" as with the must-carry provisions, the \"differential treatment is 'justified by some special characteristic of' the particular medium being regulated.\" Courts have sometimes interpreted Turner Broadcasting to mean that at least certain types of regulations on cable television will receive less scrutiny than, for example, a regulation affecting speech in a traditional public forum.\nUltimately, however, the Turner Broadcasting Court cited two justifications for applying intermediate scrutiny, rather than strict scrutiny, to the FCC's must-carry provisions, making it unclear which rationale the Court relied on to uphold the regulations. Prior to its discussion of cable's special characteristics, the Court concluded that intermediate scrutiny was appropriate because the must-carry provisions were \"content-neutral restrictions that impose[d] an incidental burden on speech.\" The Court noted that while the rules did \"interfere with cable operators' discretion . . . , the extent of the interference [did] not depend upon the content of the cable operators' programming.\" Although the must-carry provisions did \"distinguish between speakers,\" that discrimination was \"based only upon the manner in which speakers transmit their messages to viewers, and not upon the messages they carry,\" and, therefore, the rules were content-neutral on their face. Thus, it is somewhat unclear to what extent the Court's decision to apply intermediate scrutiny in Turner Broadcasting rested on \"special characteristics of the cable medium\" and to what extent it depended on a more overarching First Amendment principle regarding content neutrality.", "While the Supreme Court has identified \"unique problems\" that may justify greater regulation of broadcast and cable, it has expressly held that the factors that justify more extensive regulation of the broadcast media \"are not present in cyberspace.\" In Reno v. ACLU , decided in 1997, the Court said that the internet had not historically \"been subject to the type of government supervision and regulation that has attended the broadcast industry,\" that the internet was not \"as 'invasive' as radio or television\" because a person had to take affirmative action to receive a particular communication on the internet, and that the internet could \"hardly be considered a 'scarce' expressive commodity.\" Consequently, in the Court's view, the factors that justified \"qualifying the level of First Amendment scrutiny that should be applied to\" broadcast media did not apply to the internet. In Reno , the Court ultimately held that two provisions of the CDA that criminalized speech based on its content were unconstitutionally vague and overbroad.\nSeveral legal scholars have argued that, contrary to the Court's conclusion in Reno , the internet is analogous to traditional broadcast media and therefore should be subject to greater regulation. Scholars have argued that as the internet has developed, it has \"reproduce[d] the traditional speech-hierarchy of broadcasting\": \"small, independent speakers [are] relegated to an increasingly marginal position while a handful of commercial giants capture the overwhelming majority of users' attention and reemerge as the essential gateways for effective speech.\" Thus, as one scholar argued, \"the hold of certain platforms\" over \"certain mediums of speech\" has \"created scarcity.\" Further, especially as compared to the internet in the late 1990s, when Reno was decided, the internet is \"now more invasive in everyday life\"—arguably more invasive even than television and radio. Another commentator has claimed that rather than traditional broadcast media, search engines might be more analogous to cable providers. In her view, search engines, \"like cable companies,\" \"provide access to the speech of others\" but also \"exercise some degree of editorial discretion over whom they provide access to.\" The analogy may be extended to social media sites, as well, because, like search engines, they also exercise editorial discretion regarding who can post and view content on their sites, and regarding how user-generated content is presented.\nOne lower court rejected these arguments, with respect to search engines, in Zhang v. Baidu .com, Inc . In that case, the plaintiffs argued that Baidu, a Chinese search engine, had violated federal and state civil rights laws by blocking \"from its search results . . . information concerning 'the Democracy movement in China' and related topics.\" Baidu argued that its decisions to block these search results were protected by the First Amendment. The judge noted that \"some scholars\" had argued that under Turner Broadcasting , search-engine results should receive a \"lower level of protection.\" However, in the court's view, the First Amendment \"plainly shield[ed]\" the search engine from this particular lawsuit because the plaintiff's own suit sought \"to hold Baidu liable for, and thus punish Baidu for, a conscious decision to design its search-engine algorithms to favor certain expression on core political subjects over other expression on those same political subjects.\" Accordingly, the court said that \" Turner 's three principal rationales for applying a lower level of scrutiny to the must-carry cable regulations—namely, that cable companies were mere conduits for the speech of others, that they had the physical ability to silence other speakers, and that the regulations at issue were content-neutral—[we]re inapplicable\" to the case before it. The court concluded that Baidu was acting as more than a conduit for others' speech, at least according to the plaintiffs' allegations, that Baidu lacked \"the physical power to silence anyone's voices,\" and that a judicial decision penalizing \"Baidu precisely because of what it does and does not choose to say\" would not be content-neutral.\nIf courts treated social media sites like broadcast media or like cable providers, they would be more likely to uphold government regulation of social media providers. As a preliminary inquiry, a court would likely ask what regulations could be justified by specific characteristics of the regulated medium. If a court believed that the internet in general, or social media in particular, shared relevant characteristics with either traditional broadcast media or with cable providers, then it would be more likely to allow the types of regulations that have traditionally been permitted in those contexts. Thus, a court might ask whether social media sites, like cable companies, exercise a \"bottleneck monopoly power\" or whether, like broadcast television or radio, social media platforms suffer from a \"scarcity\" problem in terms of the number of platforms for speech or are so \"invasive\" as to justify regulation to address these problems. Related, courts might also ask whether the regulations are intended to increase the amount of information or expression available to the public. Thus, if social media sites present distinct problems that threaten the use of the medium for communicative or expressive purposes, courts might approve of regulations intended to solve those problems—particularly if those regulations are content-neutral. These same types of considerations would likely apply both to regulations requiring these platforms to carry certain content and to those requiring the platforms not to carry certain content. But, at least for the time being, without an intervening change in the law, lower courts seem likely to follow Reno and conclude that there is \"no basis for qualifying the level of First Amendment scrutiny that should be applied to\" the internet.", "The third analogy courts might use to analyze whether social media sites moderating user content are exercising protected speech rights is that of the newspaper editor. In Miami Herald Publishing Co. v. Tornillo , the Supreme Court held that when newspapers \"exercise . . . editorial control and judgment,\" such as choosing what \"material [will] go into a newspaper,\" and making \"decisions . . . as to limitations on the size and content of the paper, and treatment of public issues and public officials,\" they are exercising free speech rights protected by the First Amendment. The Court in that case was considering the constitutionality of a state law that gave political candidates the \"right to reply to press criticism\" of the candidate. A newspaper challenged this statute, arguing that forcing it to print content that it would not otherwise publish violated the First Amendment. The government argued that its law was necessary due to the fact that relatively few news outlets exercised essentially a \"monopoly\" on \"the 'marketplace of ideas.'\" The regulation, in the state's view, \"[e]nsure[d] fairness and accuracy\" and \"provide[d] for some accountability.\"\nThe Supreme Court unanimously rejected this argument, noting that while \"press responsibility\" may be a \"desirable goal,\" it was \"not mandated by the Constitution\" and could not \"be legislated.\" The state law impermissibly \"exact[ed] a penalty on the basis of the content of the newspaper\" by forcing newspapers to spend money to print the replies and by \"taking up space that could be devoted to other material.\" Further, the Court held, \"[e]ven if a newspaper would face no additional costs to comply with a compulsory access law and would not be forced to forgo publication of news or opinion by the inclusion of a reply,\" the law violated the First Amendment \"because of its intrusion into the function of editors.\" Because newspapers exercise \"editorial control and judgment,\" the Court said, they are \"more than a passive receptacle or conduit for news, comment, and advertising,\" and instead engage in protected speech.\nThe Court has recognized this First Amendment protection for editorial judgments outside the context of newspapers, stating more generally that \"compelling a private corporation to provide a forum for views other than its own may infringe the corporation's freedom of speech.\" For example, the Supreme Court said in Arkansas Educational Television Commission v. Forbes that \"[w]hen a public broadcaster exercises editorial discretion in the selection and presentation of its programming, it engages in speech activity.\" And in Pacific Gas & Electric Co . v. Public Utilities Commission , the Court recognized that a utility company had a First Amendment interest in selecting the content contained in its monthly newsletter. The Court said in Pacific Gas & Electric Co. that a state regulatory commission could not require the utility to grant access to entities who disagreed with the utility's views. This regulation infringed on the utility company's First Amendment rights by compelling it \"to assist in disseminating the speaker's message\" and by requiring it \"to associate with speech with which [the company] may disagree,\" forcing the company to respond to those arguments.\nTo take another example, in Hurley v. Irish-American Gay, Lesbian and Bisexual Group of Boston , the Court held that the private organizers of a parade had a First Amendment right to exclude the Irish-American Gay, Lesbian and Bisexual Group of Boston (GLIB) from the parade. GLIB had sued the parade organizers, arguing that their exclusion violated Massachusetts's antidiscrimination laws by barring them from a public accommodation on the basis of sexual orientation, and state courts had agreed that GLIB's exclusion violated state law. The parade organizers, however, claimed that the parade was an expressive activity and that forcing them to include GLIB's speech in the parade violated their First Amendment rights. The Supreme Court held first that a parade did qualify as \"protected expression,\" even though most of the speech in the parade was not that of the organizers themselves. The Court said that \"a private speaker does not forfeit constitutional protection simply by combining multifarious voices, or by failing to edit their themes to isolate an exact message as the exclusive subject matter of the speech.\" As an example, the Court noted that \"[c]able operators . . . are engaged in protected speech activities even when they only select programming originally produced by others.\" Accordingly, the Court concluded that the selection of parade participants was protected activity under the First Amendment.\nConsequently, in the Hurley Court's view, characterizing the parade as a public accommodation under the state's antidiscrimination law \"had the effect of declaring the sponsors' speech itself to be the public accommodation,\" and this exercise of state power \"violate[d] the fundamental rule of protection under the First Amendment, that a speaker has the autonomy to choose the content of his own message.\" GLIB argued that this application of the state's public accommodation law should be upheld under Turner Broadcasting , claiming that the parade organizers, \"like a cable operator,\" were \"merely a conduit for the speech of participants in the parade rather than itself a speaker.\" The Court disagreed, saying that unlike the cable operators, \"GLIB's participation would likely be perceived as\" a decision of the parade organizers that GLIB's \"message was worthy of presentation and quite possibly of support as well.\" The better analogy, in the Court's view, was to a newspaper. The Court said that viewers understand that cable programming consists of \"individual, unrelated segments that happen to be transmitted together,\" but in contrast, \"the parade's overall message is distilled from the individual presentations along the way, and each unit's expression is perceived by spectators as part of the whole.\"\nBy contrast, the Supreme Court has rejected the application of Tornillo in cases where compelling a private entity to grant access to third parties would not affect the entity's own speech. First, in PruneY ard Shopping Center v. Robins , a private shopping center, PruneYard, had \"a policy not to permit any visitor or tenant to engage in any publicly expressive activity,\" and pursuant to that policy, asked a number of students distributing pamphlets and seeking signatures on petitions to leave. In a suit brought by the students, the California Supreme Court held that PruneYard's action violated state law, holding that the students \"were entitled to conduct their activity on PruneYard property.\" PruneYard argued that this decision violated their own free speech rights, claiming that \"a private property owner has a First Amendment right not to be forced by the State to use his property as a forum for the speech of others.\" The Court rejected this argument, noting that the government was not forcing PruneYard itself to espouse any specific views, and that PruneYard could \"expressly disavow any connection with\" any particular message. The Court said that under the circumstances, \"[t]he views expressed by members of the public\" would \"not likely be identified with those of the owner.\"\nThe Court distinguished Tornillo on similar grounds in Rumsfeld v. Forum for Academic and Institutional Rights, Inc. (FAIR) . In that case, a group of law schools represented by FAIR protested the Solomon Amendment, which specified \"that if any part of an institution of higher education denies military recruiters access equal to that provided other recruiters, the entire institution would lose certain federal funds.\" Prior to the passage of the Solomon Amendment, some law schools had restricted military recruiting on campus on the basis that the military, through its \"policy on homosexuals in the military,\" violated the schools' nondiscrimination policies. FAIR argued that forcing the schools to \"disseminate or accommodate a military recruiter's message\" violated their First Amendment rights. The Court first noted that the Solomon Amendment primarily regulated conduct and only incidentally compelled speech, in the form of recruiting assistance such as sending emails or posting notices.\nFurther, the Court held that \"accommodating the military's message does not affect the law schools' speech, because the schools are not speaking when they host interviews and recruiting receptions.\" Distinguishing Hurley , the Court said that \"[u]nlike a parade organizer's choice of parade contingents, a law school's decision to allow recruiters on campus is not inherently expressive.\" The Court said that \"the expressive component\" of the schools' decisions to bar military recruiters was \"not created by the conduct itself but by the speech that accompanies it.\" Instead, as in PruneYard , the Court said that \"[n]othing about recruiting suggests that law schools agree with any speech by recruiters,\" noting that the schools remained free to state that they disagreed with the military's policies.\nA number of federal trial courts have applied Tornillo to hold that search engines exercise editorial judgment protected by the First Amendment when they make decisions about whether and how to present specific websites or advertisements in search results. For example, in Zhang v. Baidu.com, Inc. , the trial court noted that when search engines \"retrieve relevant information from the vast universe of data on the Internet and . . . organize it in a way that would be most helpful to the searcher,\" they \"inevitably make editorial judgments about what information (or kinds of information) to include in the results and how and where to display that information.\" Ultimately, the court held that the plaintiff's \"efforts to hold Baidu accountable in a court of law for its editorial judgments about what political ideas to promote cannot be squared with the First Amendment.\"\nIn line with this view, some scholars have maintained that search engine results represent protected speech because search engines make editorial judgments, \"reporting about others' speech\" in a way that \"is itself constitutionally protected speech. Others have pointed out, however, that such actions would likely be protected only insofar as they do communicate something to listeners. Thus, some scholars have argued that search results—at least if those results are automated \"and experienced as 'objective'\"—would not be protected under the First Amendment because the \"dominant function\" of these results \"is not to express meaning but rather to 'do things in the world'; namely, channel users to websites.\" On this issue, the court in Zhang , said that, given governing Supreme Court precedent, \"the fact that search engines often collect and communicate facts, as opposed to opinions, does not alter the analysis\": \"As the Supreme Court has held, 'the creation and dissemination of information are speech within the meaning of the First Amendment. Facts, after all, are the beginning point for much of the speech that is most essential to advance human knowledge and to conduct human affairs.'\" Reaching the same result through different reasoning, a different district court held that Google's \"PageRanks,\" which rank \"the relative significance of a particular web site as it corresponds to a search query,\" were protected under the First Amendment as subjective opinions.\nCommentators have argued that Tornillo should apply when, for example, Facebook promotes certain viewpoints over others, as Facebook is exercising editorial judgment about how to present constitutionally protected speech. The trial court's opinion in Zhang suggests that social media sites would be engaging in protected speech insofar as they, like search engines, \"make editorial judgments about what information (or kinds of information)\" to display \"and how and where to display that information.\" On the other hand, the Supreme Court's decision in FAIR suggests that under some circumstances, an entity's decision \"to allow\" third parties to use their platforms might not be expressing a particular view. As with search results, one critical question may be whether the content presentation decisions themselves are communicative or expressive, or whether instead they only take on an expressive meaning when combined with other speech.\nRelated to the question of whether content presentation decisions themselves are expressive, one possible argument against extending the editorial analogy to social media sites is that users would be unlikely to attribute users' speech to the social media sites. In Tornillo itself, the Court held that the newspapers' editorial judgments were protected under the First Amendment without expressly analyzing whether readers would attribute the published content to the newspaper. One significant factor in the Supreme Court's various decisions about whether to extend First Amendment protection to the groups hosting others' speech was whether listeners would be likely to attribute that speech to the host, such as the parade organizer, in Hurley , the shopping center, in PruneY ard , or the law schools, in FAIR .\nAccordingly, courts may be less likely to conclude that social media sites' decisions regarding users' content are protected by the First Amendment if third parties would be unlikely to attribute users' speech to the social media sites themselves. Whether third parties would attribute user-generated content to social media platforms will likely depend on the particular site or activity being regulated. In particular, where platforms aggregate or alter user-generated content, users may be more likely to see that as the platforms' speech. If the sites aggregate user-generated content, courts may ask, as in Hurley , whether viewers would understand that content to \"consist of individual, unrelated segments\" that are \"neutrally presented,\" or whether instead viewers would understand that each segment \"is understood to contribute something to a common theme,\" and that the aggregate communicates an \"overall message.\" Accordingly, if a site aggregates content into a single story, courts might hold that the sites are acting as more than a mere \"conduit for speech produced by others.\" By contrast, if a site published all user content without restrictions, users' communications, like \"the views expressed by members of the public\" in PruneY ard , might not reasonably be \"identified\" as the views \"of the owner.\" So far, the trial court decisions extending the editorial analogy to search engines have not analyzed this issue in significant detail.\nIf social media sites were considered to be equivalent to newspaper editors when they make decisions about whether and how to present users' content, then those editorial decisions would protected by the First Amendment. Any government regulation of those protected editorial functions that forced social media sites to host content that they would not otherwise transmit, or otherwise restricting those sites' \"autonomy to choose the content\" of their \"own message,\" would likely be subject to strict scrutiny. Similarly, regulations requiring social media providers not to publish protected speech on the basis of the speech's content, or punishing them for publishing that speech, might also be subject to strict scrutiny. To satisfy strict scrutiny, the government must show that the speech restriction \"furthers a compelling interest and is narrowly tailored to achieve that interest.\" Government actions are unlikely to be upheld if a court applies strict scrutiny. Nevertheless, the Supreme Court has, in rare instances, said that the government may \"directly regulate speech to address extraordinary problems, where its regulations are appropriately tailored to resolve those problems without imposing an unnecessarily great restriction on speech.\"\nAdditionally, even if a court held that social media sites' editorial decisions are protected under the First Amendment, it might review a government regulation affecting those decisions under a lower level of scrutiny if the regulation is content-neutral. Even in a traditional public forum, the government may impose \"reasonable time, place and manner restrictions\" on speech. Thus, for example, the Supreme Court has said that while the government may regulate noise by \"regulating decibels\" or \"the hours and place of public discussion,\" it may not bar speech solely \"because some persons were said to have found the sound annoying.\" Accordingly, courts may uphold government regulations if they have only an incidental effect on speech, \"serve a substantial governmental interest,\" and do not \"burden substantially more speech than is necessary to further that interest.\"", "The permissibility of federal regulation of social media sites will turn in large part on what activity is being regulated. To the extent that federal regulation specifically targets communicative content—that is, speech—or social media platforms' decisions about whether and how to present that content, that regulation may raise constitutional questions. While the Supreme Court has not yet weighed in on the question, lower courts have held that when search engines make decisions regarding the presentation of search results, they are exercising editorial functions protected as speech under the First Amendment. If this reasoning were to be extended to social media sites' decisions regarding the presentation of users' content, Congress's ability to regulate those decisions would be relatively limited.\nHowever, even assuming that Congress were to regulate the protected speech of social media companies, this would not necessarily doom a regulation. If, for example, the particular speech being regulated is commercial speech, such as advertisements, the regulation would likely be evaluated under a lower level of scrutiny. In addition, the Court has recognized certain, relatively limited categories of speech that can be more readily regulated: \"For example, speech that is obscene or defamatory can be constitutionally proscribed because the social interest in order and morality outweighs the negligible contribution of those categories of speech to the marketplace of ideas.\" But even with respect to these categories of speech, the government may violate the First Amendment if it engages in further content or viewpoint discrimination within that category. Thus, the Supreme Court has said as an example that while \"the government may proscribe libel,\" \"it may not make the further content discrimination of proscribing only libel critical of the government.\" In addition, if the law imposes criminal liability, the Court may require a mental state requirement, so that, for example, the government has to prove that the defendant knew the speech was obscene.\nCourts will also apply a lower level of scrutiny to content-neutral regulations. A content-neutral law that regulates only \"the time, place, or manner of protected speech\" may be constitutional if it is \"narrowly tailored to serve a significant governmental interest.\" If a law is not only content-neutral but also focused primarily on regulating conduct, imposing only an incidental burden on speech, a court will uphold the regulation if \"it furthers an important or substantial governmental interest; if the governmental interest is unrelated to the suppression of free expression; and if the incidental restriction on alleged First Amendment freedoms is no greater than is essential to the furtherance of that interest.\" Thus, for example, in Turner Broadcasting , the Supreme Court held that the FCC's must-carry provisions should be reviewed under an intermediate standard, rather than under strict scrutiny, because the rules were content-neutral: their application did not depend on \"the content of the cable operators' programming\" or the messages of the speakers carried. And in FAIR , the Court upheld the Solomon Amendment under intermediate scrutiny after concluding that the law regulated conduct that was not \"inherently expressive\" and only incidentally burdened speech. The Court said that the law did \"not focus on the content of a school's recruiting policy,\" but on \"the result achieved by the policy.\"\nAdditionally, if Congress highlights \"special characteristics\" of social media to justify heightened regulation, courts may be more willing to uphold those regulations. Although the Supreme Court in Reno rejected certain \"special justifications\" that the government argued should allow greater regulation of the internet at large, some have argued that special characteristics of social media might justify limited regulation to address those issues, particularly if those justifications are distinct from the ones rejected in Reno , or if there is evidence that conditions have changed since that decision was issued. To date, however, no courts have found that such special justifications exist, let alone approved of regulations addressing those issues.\nFinally, Congress may consider how any new regulation would fit into the existing legal framework of the CDA's Section 230. Section 230 creates immunity from most civil lawsuits that seek to treat service providers as the \"publisher or speaker\" of content created by another, and also provides that interactive service providers may not be held liable for taking good faith action to restrict access to content that the provider or users deem \"obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable.\" Insofar as any new federal regulations would subject social media providers to liability for publishing content created by users, or for restricting access to that content, those regulations might conflict with Section 230, and Congress may consider expressly setting out the relationship between those new regulations and Section 230. As a general principle of law, courts are reluctant to imply that new statutes repeal prior laws unless the \"two statutes are in 'irreconcilable conflict,' or . . . the latter act covers the whole subject of the earlier one and 'is clearly intended as a substitute.'\" Accordingly, if a new law does not explain how it relates to Section 230, courts will attempt to read the statutes harmoniously, giving effect to both.\nIf Congress were to create an express exception from Section 230, one issue would be determining the proper scope of that exception, so that Congress is allowing liability only for certain specific activity that it is seeking to discourage. Section 230 was enacted, in part, in response to a trial court decision ruling that an internet service provider should be considered a \"publisher\" of defamatory statements that a third party had posted on a bulletin board that it hosted, and could therefore be subject to suit for libel. Critical to the court's decision was the fact that the service provider had moderated its message boards, qualifying the site as a publisher for purposes of the libel claim in the view of the court. By specifying that no provider of an interactive computer service \"shall be treated as the publisher or speaker\" of another's content, Congress sought, among other things, to overturn this decision. A number of Representatives, including one of the bill's sponsors, said at the time that they wanted to ensure that \"computer Good Samaritans\" would not \"tak[e] on liability\" by regulating offensive content. As discussed, courts subsequently interpreted this provision to bar liability for a wide variety of legal claims, not solely suits for defamation. Section 230, enacted in 1996, has often been described as central to the development of the modern internet. One scholar asserted that \"no other sentence in the U.S. Code . . . has been responsible for the creation of more value than that one.\" Therefore, while Congress may want to modify this broad immunity, it is important to first understand how that immunity currently operates, and why it was created in the first place." ], "depth": [ 0, 1, 2, 2, 3, 3, 1, 2, 2, 3, 3, 4, 4, 4, 3, 1 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h1_full", "h1_full", "h1_title", "", "h1_full", "h0_title h2_full h4_title h3_title", "h4_full", "h3_full h2_full h4_full h0_title", "h0_full h3_full h2_full", "h3_title", "", "", "h3_full", "h0_full h3_full", "" ] }

{ "question": [ "How does free speech relate to social media?", "What social media sites' roles are being questioned?", "What countermeasures are being questioned?", "How do these relate to complaints about restrictions?", "What is the relationship between federal law and social media?", "How do lawsuits against social media sites generally proceed?", "Why do lawsuits relating to free speech and social media fail?", "What blanket protection does social media generally have in lawsuits?", "What regulation has been argued for social media sites?", "Why is this potentially problematic?", "How could government regulation affect the providers of social media?", "How might social media sites and their decisions be protected?", "How has this argument been previously evaluated in court?", "How else can social media sites' protections be compared?", "How could social media sites be treated as state actors?", "How would this control the social media sites?", "How could social media sites be treated as special industries?", "Why would this potentially increase restrictions?", "How would this change rulings on social media sites?", "How could social media sites be treated as news editors?", "How would this increase protections of social media sites?", "How have search engines abided by this framework?", "Why won't all of social media be evaluated under one framework?", "What protections are social media sites most likely to revive?", "How does the First Amendment address different types of speech?", "What speech is less likely to be protected?", "Why might the First Amendment not cover social media at all?" ], "summary": [ "As the Supreme Court has recognized, social media sites like Facebook and Twitter have become important venues for users to exercise free speech rights protected under the First Amendment.", "Commentators and legislators, however, have questioned whether these social media platforms are living up to their reputation as digital public forums.", "Some have expressed concern that these sites are not doing enough to counter violent or false speech.", "At the same time, many argue that the platforms are unfairly banning and restricting access to potentially valuable speech.", "Currently, federal law does not offer much recourse for social media users who seek to challenge a social media provider's decision about whether and how to present a user's content.", "Lawsuits predicated on these sites' decisions to host or remove content have been largely unsuccessful, facing at least two significant barriers under existing federal law.", "First, while individuals have sometimes alleged that these companies violated their free speech rights by discriminating against users' content, courts have held that the First Amendment, which provides protection against state action, is not implicated by the actions of these private companies.", "Second, courts have concluded that many non-constitutional claims are barred by Section 230 of the Communications Decency Act, 47 U.S.C. § 230, which provides immunity to providers of interactive computer services, including social media providers, both for certain decisions to host content created by others and for actions taken \"voluntarily\" and \"in good faith\" to restrict access to \"objectionable\" material.", "Some have argued that Congress should step in to regulate social media sites.", "Government action regulating internet content would constitute state action that may implicate the First Amendment.", "In particular, social media providers may argue that government regulations impermissibly infringe on the providers' own constitutional free speech rights.", "Legal commentators have argued that when social media platforms decide whether and how to post users' content, these publication decisions are themselves protected under the First Amendment.", "There are few court decisions evaluating whether a social media site, by virtue of publishing, organizing, or even editing protected speech, is itself exercising free speech rights.", "Consequently, commentators have largely analyzed the question of whether the First Amendment protects a social media site's publication decisions by analogy to other types of First Amendment cases. There are at least three possible frameworks for analyzing governmental restrictions on social media sites' ability to moderate user content.", "First, using the analogue of the company town, social media sites could be treated as state actors who are themselves bound to follow the First Amendment when they regulate protected speech.", "If social media sites were treated as state actors under the First Amendment, then the Constitution itself would constrain their conduct, even absent legislative regulation.", "The second possible framework would view social media sites as analogous to special industries like common carriers or broadcast media.", "The Court has historically allowed greater regulation of these industries' speech, given the need to protect public access for users of their services.", "Under the second framework, if special aspects of social media sites threaten the use of the medium for communicative or expressive purposes, courts might approve of content-neutral regulations intended to solve those problems.", "The third analogy would treat social media sites like news editors, who generally receive the full protections of the First Amendment when making editorial decisions.", "If social media sites were considered to be equivalent to newspaper editors when they make decisions about whether and how to present users' content, then those editorial decisions would receive the broadest protections under the First Amendment. Any government regulations that alter the editorial choices of social media sites by forcing them to host content that they would not otherwise transmit, or requiring them to take down content they would like to host, could be subject to strict scrutiny.", "A number of federal trial courts have held that search engines exercise editorial judgment protected by the First Amendment when they make decisions about whether and how to present specific websites or advertisements in search results, seemingly adopting this last framework.", "Which of these three frameworks applies will depend largely on the particular action being regulated.", "Under existing law, social media platforms may be more likely to receive First Amendment protection when they exercise more editorial discretion in presenting user-generated content, rather than if they neutrally transmit all such content.", "In addition, certain types of speech receive less protection under the First Amendment.", "Courts may be more likely to uphold regulations targeting certain disfavored categories of speech such as obscenity or speech inciting violence.", "Finally, if a law targets a social media site's conduct rather than speech, it may not trigger the protections of the First Amendment at all." ], "parent_pair_index": [ -1, -1, 1, 2, -1, -1, 1, 1, -1, 0, -1, 2, 2, -1, -1, 0, -1, 2, 2, -1, 5, 5, -1, -1, -1, 2, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4 ] }

{ "title": [ "Background", "OMB and the Federal CIO Established the Federal Data Center Consolidation Initiative", "With an Expanded Definition, OMB’s Reported Inventory of Federal Data Centers Has Grown", "OMB’s IT Reform Plan Sets Important Milestones for Data Center Consolidation", "GAO Has Previously Reported on Federal Data Center Consolidation Efforts", "Agencies Updated Inventories and Plans, but Key Elements Are Still Missing", "Agencies Continue to Report Significant Planned Facility Reductions and Cost Savings", "Asset Inventories Are Still Not Complete", "Agencies Updated Consolidation Plans, but Most Plans Are Not Complete", "Selected Agencies Have Incomplete Schedules and Cost Estimates", "Selected Agencies’ Master Program Schedules Are Not Complete", "Selected Agencies’ Cost Estimates Are Not Reliable", "OMB Developed a Model to Help Agencies Plan Consolidations, but Does Not Require Its Use", "Agencies Have Experienced Consolidation Successes and Continue to Report Challenges", "Agencies Continue to Report Consolidation Challenges, but the Types of Challenges Are Evolving", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Assessment of Agencies’ Completion of Key Consolidation Planning Elements, Arranged by Agency", "Department of Agriculture", "Appendix III: Comments from the Department of Agriculture", "Appendix IV: Comments from the Department of Homeland Security", "Appendix V: Comments from the Department of the Interior", "Appendix VI: Comments from the Department of Veterans Affairs", "Appendix VII: Comments from the Department of Commerce", "Appendix VIII: Comments from the Department of Energy", "Appendix IX: Comments from the Department of Health and Human Services", "Appendix X: Comments from the Department of Labor", "Appendix XI: Comments from the National Science Foundation", "Appendix XII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "While the term “data center” can be used to describe any room used for the purpose of processing or storing data, as defined by OMB in 2010, a data center was a room greater than 500 square feet, used for processing or storing data, and which met stringent availability requirements. Other facilities were classified as “server rooms,” which were typically less than 500 square feet and “server closets,” which were typically less than 200 square feet.\nSeveral factors led OMB to urge agencies to consolidate federal data centers. According to OMB, the federal government had 432 data centers in 1998; more than 1,100 in 2009; and 2,094 in July 2010. Operating such a large number of centers places costly demands on the government. While the total annual federal spending associated with data centers has not yet been determined, OMB has found that operating data centers is a significant cost to the federal government, including hardware, software, real estate, and cooling costs. For example, according to the Environmental Protection Agency (EPA), the electricity cost to operate federal servers and data centers across the government is about $450 million annually. According to the Department of Energy (Energy), data center spaces can consume 100 to 200 times as much electricity as standard office spaces. Reported server utilization rates as low as 5 percent and limited reuse of these data centers within or across agencies lends further credence to the need to restructure federal data center operations to improve efficiency and reduce costs. In 2010, the Federal CIO reported that operating and maintaining such redundant infrastructure investments was costly, inefficient, and unsustainable.", "Concerned about the size of the federal data center inventory and the potential to improve the efficiency, performance, and environmental footprint of federal data center activities, in February 2010 OMB, under the direction of the Federal CIO, announced FDCCI. This initiative’s four high-level goals are to promote the use of “green IT” by reducing the overall energy and real estate footprint of government data centers; reduce the cost of data center hardware, software, and operations; increase the overall IT security posture of the government; and shift IT investments to more efficient computing platforms and technologies.\nAs part of FDCCI, OMB required 24 departments and agencies that participate on the Chief Information Officers Council (see table 1) to submit a series of documents that ultimately resulted in a data center consolidation plan.\nIn addition to an initial data center inventory and preliminary consolidation plan, the departments and agencies were to provide the following:\nAn asset inventory baseline, which was to contain more detailed information and serve as the foundation for developing the final data center consolidation plans. The final inventory was also to identify the consolidation approach to be taken for each data center.\nA data center consolidation plan, which was to be incorporated into the agency’s fiscal year 2012 budget and was to include a technical roadmap and approach for achieving the targets for infrastructure utilization, energy efficiency, and cost efficiency.\nIn October 2010, OMB reported that all of the agencies had submitted their plans. OMB also announced plans to monitor agencies’ consolidation activities on an ongoing basis as part of the annual budget process.\nFurther, starting in fiscal year 2011, agencies were required to provide an annual updated data center asset inventory at the end of every third quarter and an updated consolidation plan (including any missing elements) at the end of every fourth quarter. Agencies were further required to provide a consolidation progress report at the end of every quarter.\nTo manage the initiative, OMB designated two agency CIOs as executive sponsors to lead the effort within the Chief Information Officers Council.\nAdditionally, the General Services Administration (GSA) has established the FDCCI Program Management Office, whose role is to support OMB in the planning, execution, management, and communication for FDCCI. In this role, GSA collected the responses to OMB-mandated document deliveries and reviewed the submissions for completeness and reasonableness. GSA also sponsored three workshops on the initiative for agencies and facilitated a peer review of the initial and final data center consolidation plans.", "“…a data center is…a closet, room, floor or building for the storage, management, and dissemination of data and information and computer systems and associated components, such as database, application, and storage systems and data stores [excluding facilities exclusively devoted to communications and network equipment (e.g., telephone exchanges and telecommunications rooms)]. A data center generally includes redundant or backup power supplies, redundant data communications connections, environmental controls…and special security devices housed in leased,…owned, collocated, or stand-alone facilities.”\nOMB, Implementation Guidance for the Federal Data Center Consolidation Initiative (Washington, D.C.: Mar. 19, 2012).", "In December 2010, OMB published its 25-Point Implementation Plan to Reform Federal Information Technology Management as a means of implementing IT reform in the areas of operational efficiency and large scale IT program management. Among the 25 initiatives, OMB has included two goals that relate to data center consolidation: 1. By June 2011, complete detailed implementation plans to consolidate at least 800 data centers by 2015. 2. By June 2012, create a governmentwide marketplace for data center availability.\nTo accomplish its first goal, OMB required each FDCCI agency to identify a senior, dedicated data center consolidation program manager. It also launched a Data Center Consolidation Task Force comprised of the data center consolidation program managers from each agency. OMB officials stated that this task force is critical to driving forward on individual agency consolidation goals and to meeting overall federal consolidation targets. OMB has also created a publicly available dashboard for observing agencies’ consolidation progress.\nTo accomplish its second goal, OMB and GSA launched a governmentwide data center availability marketplace in June 2012. This online marketplace is intended to match agencies that have extra capacity with agencies with increasing demand, thereby improving the utilization of existing facilities. The marketplace will help agencies with available capacity promote their available data center space. Once agencies have a clear sense of the existing capacity landscape, they can make more informed consolidation decisions.", "We have previously reported on OMB’s efforts to consolidate federal data centers. In March 2011, we reported on the status of the FDCCI and noted that data center consolidation makes sense economically and is a way to achieve more efficient IT operations, but that challenges exist. For example, agencies reported facing challenges in ensuring the accuracy of their inventories and plans, providing upfront funding for the consolidation effort before any cost savings accrue, integrating consolidation plans into agency budget submissions (as required by OMB), establishing and implementing shared standards (for storage, systems, security, etc.), overcoming cultural resistance to such major organizational changes, and maintaining current operations during the transition to consolidated operations. We further reported that mitigating these and other challenges will require commitment from the agencies and continued oversight by OMB and the Federal CIO.\nIn July 2011, we reported that agency consolidation plans indicate that agencies anticipated closing about 650 data centers by fiscal year 2015 and saving about $700 million in doing so. However, we also found that only one of the 24 agencies submitted a complete inventory and no agency submitted complete plans. Further, OMB did not require agencies to document the steps they took, if any, to verify the inventory data. We noted the importance of having assurance as to the accuracy of collected data and specifically, the need for agencies to provide OMB with complete and accurate data and the possible negative impact of that data being missing or incomplete. We concluded that until these inventories and plans are complete, agencies may not be able to implement their consolidation activities and realize expected cost savings. Moreover, without an understanding of the validity of agencies’ consolidation data, OMB could not be assured that agencies are providing a sound baseline for estimating consolidation savings and measuring progress against those goals. Accordingly, we made several recommendations to OMB, including that the Federal CIO require that agencies, when updating their data center inventories, state what actions have been taken to verify the inventories and to identify any associated limitations on the data. We also recommended that the Federal CIO require that agencies complete the missing elements in their consolidation plans and in doing so, consider consolidation challenges and lessons learned. We also made recommendations to the heads of agencies to complete the information missing from their inventories and plans.\nIn response to our recommendations, OMB took several actions. Beginning in fiscal year 2011, in addition to the updated inventories due at the end of every third fiscal quarter, agencies are required to submit an updated consolidation plan by the end of every fourth fiscal quarter. Along with the updated plan, agencies are required to submit a signed letter from their CIOs, attesting to the completeness of the plan, stating what actions were taken to verify the inventory, and noting any limitations of inventory or plan data. The inclusion of this performance information will continue to be important to OMB as it makes decisions on how best to oversee the ongoing federal data center consolidations. By gathering this understanding of the validity and limitation on agencies’ data, OMB will be better assured that agencies are providing a sound baseline for estimating savings and accurately reporting progress against their goals. The extent to which agencies have completed information missing from their inventories and plans is discussed in the following section.\nMore recently, in February 2012, we updated our March 2011 work and reported that although OMB had taken steps to ensure the completion of agencies’ consolidation plans, a preliminary analysis indicated that not all plans were complete. Also, in April 2012, we reported on the progress OMB and federal agencies made in implementing the IT Reform Plan, including one action item associated with data center consolidation. We reported that this goal was only partially completed, based on our conclusion that not all of the agencies’ updated data center consolidation plans included the required elements.", "As discussed earlier, OMB required agencies to submit an updated data center inventory that included information on each center and its assets by the end of June 2011, and an updated consolidation plan that included key information on the agencies’ consolidation approach by the end of September 2011. OMB subsequently issued revised guidance on the mandatory content of the data center inventories and consolidation plans, in May 2011 and July 2011, respectively. While the revised inventory guidance asked for different information from what was requested in 2010, it still required agencies to report on specific assets within individual data centers, as well as information about each specific data center. The revised guidance on consolidation plans was similar to the 2010 guidance, but included several additional requirements. Specifically, in addition to continuing to require information on key elements such as goals, approaches, schedules, cost-benefit calculations, and risk management plans, the revised guidance also required agencies to address the data verification steps, consolidation progress, and cost savings. Table 2 compares the original and revised requirements for key elements to be included in agency inventories and plans.\nWhile all agencies submitted updated inventories and plans in 2011, most of the agencies’ documents are still not complete. As required, all 24 agencies submitted their inventories in June 2011 and all but 2 submitted their updated consolidation plans in September 2011. The Social Security Administration (SSA) submitted its updated consolidation plan in October 2011 and the Department of Defense (Defense) submitted an updated consolidation plan in November 2011. However, of the 24 agencies’ submissions, only 3 of the inventories are complete and only 1 of the plans is complete. For example, while all 24 agencies report on their inventories to some extent, 8 agencies provide only partial information on the new category of physical servers and 17 provide only partial information on the new category of IT facilities and energy usage. Additionally, in their consolidation plans, 13 agencies do not provide a full master program schedule, 17 agencies do not provide full cost-benefit analysis results, and 21 agencies do not include all required cost savings information. In the absence of important information such as schedules and cost estimates, agencies are at risk of not realizing key FDCCI goals such as anticipated cost savings and improved infrastructure utilization.", "While agencies’ inventories and goals have changed since we last reported on FDCCI, agencies continue to report plans to significantly reduce the number of their centers and to achieve cost savings. Last year, we reported that as of April 2011, 23 agencies identified 1,590 centers (using the large data center definition) and established goals to reduce that number by 652. Our most recent analysis of 24 agencies’ documentation indicates that as of September 2011, agencies identified almost 2,900 total centers, and established plans to close over 1,185 of them by 2015. The new total number of data centers includes 648 large centers (500 square feet or more), 1,283 smaller centers (less than 500 square feet), and 966 centers of undetermined size.undetermined size are primarily comprised of 936 Defense facilities, a list of which was provided in a format that did not allow for an analysis of the The centers of size of the centers. An OMB official attributed the change in the number of large centers reported to agencies’ improvements in data quality.\nTable 3 contains a further breakdown of actual and planned closures by calendar year, for both large and smaller centers.\nThe number of facilities in agencies’ inventories has changed over time, and will likely continue to evolve. For example, in July 2011, we reported that agencies reported having 1,590 large centers in their inventories, whereas they now report only 648. There are multiple reasons for these fluctuations. Some agencies have reported confusion over the evolving definition of “data center,” while officials from other agencies told us that some facilities have been reclassified or dropped from the inventory as more was learned about the facilities. Additionally, agencies have reported that their inventory totals are in a constant state of flux and changing on a regular basis as a result of their efforts to gather and refine information about data center inventories.\nMost agencies also continued to report expected savings from FDCCI. Specifically,\nNineteen agencies reported anticipating more than $2.4 billion in cost savings and more than $820 million in cost avoidances, between 2011 and 2015. Additionally, as we also reported in 2011, actual savings may be even higher because 14 of these agencies’ projections were incomplete.\nOne agency does not expect to accrue net savings until 2017.\nOne agency does not expect to attain net savings from its consolidation efforts.\nThree agencies did not provide estimated cost savings.\nWhile we recognize that agencies’ planned savings of over $2.4 billion may grow as agencies complete their cost and savings assessments, the President’s budget for fiscal year 2013 states that FDCCI is expected to realize $3 billion in savings by 2015. This reflects a $600 million dollar disparity between what agencies are reporting and what OMB is expecting. Such a disparity highlights the need for agencies to continue to develop and refine their savings projections, in order to make clear an accurate picture of the goals to be realized by the governmentwide consolidation initiative.", "In our July 2011 report, we recommended that agencies complete the missing elements from their inventories. Further, as part of FDCCI, OMB required agencies to update their data center inventories at the end of the third quarter of every fiscal year. In guidance provided to the agencies, the 2011 updated inventories were to address five key elements for each data center: (1) physical servers, (2) virtualization, (3) IT facilities and energy, (4) network storage, and (5) data center information. One information category from 2010, IT software assets, was no longer required. Table 4 provides a detailed description of each of the five key elements.\nHowever, not all of the agencies used the revised format. Specifically, 21 of the 24 agencies submitted inventories in OMB’s updated format and 3 agencies (the Department of Agriculture (Agriculture), the Office of Personnel Management (OPM), and the Small Business Administration (SBA)) used the former format. Officials from all 3 agencies stated that they thought they were using the correct format at the time. Further, these officials said they plan to submit information consistent with OMB’s revised inventory template in the future.\nThe confusion by selected agencies on which templates to use is due, in part, to a change in how OMB distributed its new guidance. While in prior years the Federal CIO wrote letters to agency CIOs and OMB posted its guidance on the FDCCI website, in conveying the direction to use a new template in spring 2011, the Federal CIO did not write letters to agency CIOs and OMB did not post its latest guidance online. Instead, the Federal CIO and OMB relied on more informal means, such as the FDCCI task force meetings, to disseminate the new guidance. Although the task force serves as an important communications conduit for FDCCI, the confusion we identified among agencies on which template to use demonstrates that the task force was not effective as the sole means of communication with the agencies. In providing guidance and direction, task force communications could be enhanced by leveraging other existing resources, such as sending letters from the Federal CIO to agency CIOs and posting the guidance on the initiative’s website.\nIn assessing agencies’ inventories, we rated an element as complete if the agency provided all of the information required for the element, partial if the agency provided some, but not all, of the information for the element, and incomplete if the agency did not provide the information required for the element. A partial rating could result if an agency did not provide any information for selected facilities or if the agency did not fill in selected fields for its facilities. For example, both an agency providing data on two of five facilities and an agency providing incomplete data on energy usage across facilities would receive partial ratings.\nOf the 21 inventories in the new format, only 3 contain complete data for all five of the required elements. Additionally, while all agencies provide at least partial inventory data for all five elements, one agency provides complete information for four of the five eight agencies provide complete information for three of the five three agencies provide complete information for two of the five elements, two agencies provide complete information for one of the five elements, and four agencies do not have any complete elements in their inventories.\nFigure 1 provides an assessment of the completeness of agencies’ inventories, by key element, and a discussion of the analysis of each element follows the figure. In addition, a detailed summary of each agency’s completion of key elements is provided in appendix II.\nPhysical servers. Thirteen agencies provide complete information on their physical servers and 8 agencies provide partial information. For example, the Department of Education (Education) provides complete information on its total rack count and counts of types of servers, while the Department of Health and Human Services (HHS) provides complete counts of individual servers, but partial information on total rack count. Additionally, the Department of Justice (Justice) provides partial information for both its total rack count and types of servers.\nVirtualization. Seventeen agencies provide complete information on their virtualization and 4 agencies provide partial information. For example, HUD, the Departments of State (State) and Veterans Affairs (VA), and the National Science Foundation (NSF), all provide complete information on their virtual host count and virtual operating system count. In contrast, the Departments of Defense, Homeland Security (DHS), Justice, and GSA provide partial information for both of those same elements.\nIT facilities and energy. Four agencies provide complete information on their IT facilities and energy, while 17 provide partial information. For example, the Nuclear Regulatory Commission (NRC) and SSA fully provide such information as total data center power capacity and average data center electricity usage. However, VA fully reports on total data center power capacity, but partially on average data center electricity usage and total IT data center power capacity. Further, the Department of Labor (Labor) partially reports on total data center IT power capacity and average data center electricity usage and does not report any information on total data center power capacity.\nNetwork storage. Fourteen agencies provide complete information on their network storage and 7 provide partial information. For example, the Departments of Commerce (Commerce) and Transportation (Transportation), EPA, the National Aeronautics and Space Administration (NASA), and the U.S. Agency for International Development (USAID) all fully report on their total and used network storage. Other agencies, such as Defense, HHS, and State partially report information in each of those two categories.\nData center information. Three agencies provide complete information on their individual data centers, while 18 provide partial information. For example, HUD and SSA both fully report on data center-specific information such as data center type, gross floor area, and target date for closure. Other agencies, such as Energy and VA fully report on gross floor area and closure information, but partially report data center costs. Also, agencies such as Defense and DHS report partial information in all categories.\nPart of the reason the agencies’ inventories remain incomplete stems from challenges in gathering data center power information, a key component of the IT facilities and energy component, and more broadly, problems providing good quality asset inventories, as OMB requires. These challenges are discussed in more detail later in this report. Because the continued progress of FDCCI is largely dependent on accomplishing goals built on the information provided by agency inventories, it will be important for agencies to continue to work on completing their inventories, thus providing a sound basis for their savings and utilization forecasts.", "In addition to the agencies’ inventories, we previously recommended and OMB required agencies to update their consolidation plans to address any missing elements. OMB’s revised guidance on the contents of the consolidation plans retains key elements from its prior guidance and adds requirements to discuss steps taken to verify inventory and plan data, consolidation progress, and consolidation cost savings. OMB has previously reported on the importance of agencies’ consolidation plans in providing a technical road map and approach for achieving specified targets for infrastructure utilization, energy efficiency, and cost efficiency. Table 5 provides a detailed description of each of these elements.\nAll 24 agencies submitted consolidation plans to OMB, but only 1 agency has a complete plan. For the remaining 23 agencies, selected elements are missing from each plan. For example, among the 24 agencies, all provide complete information on their qualitative impacts, but only 9 provide complete information on their quantitative goals. Further, 23 agencies specify their consolidation approach, but only 5 indicate that a full cost-benefit analysis was performed for the consolidation initiative. In many cases, agencies submitted some, but not all, of the required information. Figure 2 provides an assessment of the completeness of agencies’ consolidation plans, by key element, and a discussion of each element follows the figure. In addition, a detailed summary of each agency’s completion of key elements is provided in appendix II.\nQuantitative goals. Nine agencies provide complete savings and utilization forecasts, 13 agencies provide partial forecasts, 1 agency does not provide any information, and an official from 1 agency said that this element did not apply. For example, Agriculture and Labor were rated as providing partial forecasts because they provide complete savings forecasts, but incomplete utilization forecasts. State and NRC were rated as providing partial forecasts because they both provide incomplete savings and utilization forecasts. Some agencies identified reasons for not having completed these forecasts. Specifically, a Department of the Interior (Interior) official told us that it was not cost effective to gather the missing information, so it was not included. Officials from other agencies, such as Labor and NRC, told us of data quality problems or that their data centers lacked the ability to gather the required information. Further, a HUD official stated that the department did not have any quantitative goals because their consolidation effort was completed in 2005.\nQualitative impacts. All 24 agencies fully describe the qualitative impacts of their consolidation initiatives. For example, Commerce’s plan describes goals such as controlling data center costs and shifting IT investments to more efficient computing platforms and technologies. Additionally, NASA reports that the consolidation effort will provide access to cost and power-efficient data centers that will meet all of the agency’s computing needs, as well as transform the data center environment, in part through virtualization and the use of cloud services. Further, SBA describes goals such as reducing the amount of physical resources consumed by technology systems and modernizing and updating agency systems.\nSummary of consolidation approach. Twenty-three agencies include a summary of the agencies’ consolidation approaches and an official from 1 agency said that this element did not apply. For example, Defense describes the department’s reference architecture for use in guiding the consolidation effort and also provides examples of how the Air Force and the Army are approaching aspects of their respective consolidations. Additionally, State’s plan details how the department will consolidate all domestic data centers into four enterprise data centers. Additionally, a HUD official stated that this element was not applicable because the department’s consolidation effort was completed in 2005.\nScope of consolidation. Twenty-two agencies’ plans include a well- defined scope for data center consolidation, 1 provides partial information on the scope of their consolidation efforts, and 1 does not provide this information. Specifically, the agencies that provide this information list the data centers included in the consolidation effort and what consolidation approach will be taken for each center. For example, EPA lists the 25 facilities for which either the servers will be moved or the site will be decommissioned. Similarly, Justice lists the 36 centers that will be either consolidated or decommissioned. However, Labor only partially addresses consolidation scope because it only provides information on about half of its data centers. According to an agency official, the centers that have been addressed constitute the bulk of the agency’s computing power, but that the remaining facilities will be addressed in a later phase of the consolidation effort, the timing for which has not yet been determined. Additionally, Defense has not defined its consolidation scope. A Defense consolidation program official stated that the department was still working to better understand the full inventory for all departmental components.\nHigh-level timeline. Twenty-two agencies include a high-level timeline for consolidation efforts, 1 agency includes partial information on its timeline, and 1 does not provide a timeline. For example, Justice and EPA both provide the year for which action will be taken on their centers to be consolidated and NRC lists the years its three centers will be consolidated before they are replaced by NRC’s new data center. In contrast, Labor provides a timeline for about half of its data centers, and Defense does not provide a timeline because it has not fully defined the scope of its consolidation effort.\nPerformance metrics. Eighteen agencies identify specific performance metrics for their consolidation programs, 1 agency provides partial information on its metrics, 4 agencies do not identify specific metrics, and an official from 1 agency said that this element did not apply. Specifically, Agriculture’s plan defines several key performance indicators such as the numbers of applications moved and physical servers eliminated. Additionally, several agencies, such as Commerce, Defense, and NSF, provide consolidation performance metrics based on quantitative savings and utilization goals. As an example of an agency with partial metrics, Education identifies metrics based on its savings goals, but is missing information on its progress in meeting utilization goals. Additionally, DHS and NRC do not identify any performance metrics. Officials from both DHS and NRC agreed that their agencies did not have such measures when their plans were published, but noted that the required metrics had since been developed or that they now have the resources to develop them. Further, a HUD official stated that this element was not applicable because the department’s consolidation effort was completed in 2005.\nMaster program schedule. Nine agencies reference a completed master program schedule, 13 agencies do not reference such a schedule, and officials from 2 agencies said that this element did not apply. For example, HHS, VA, and GSA discuss their master program schedules, but other agencies, such as State and EPA do not reference schedules in their plans. State officials noted that the department has a schedule, but that it was not included in their consolidation plan due to a miscommunication. They stated that it would be included in their next plan update. Some agencies, such as Defense and Labor, are working to develop their schedules or will develop them in the future. A Defense official told us that the department has drafted a combined data center consolidation and cloud computing master schedule that is expected to be approved by the end of September 2012. Officials from Energy told us that their consolidation schedule existed, but that it was part of a larger departmental effort and did not provide detail down to the individual data center level. Officials from OPM questioned the utility of a master program schedule for relatively limited consolidation efforts. Two agencies reported that this requirement was not applicable to their situation. Specifically, officials from Education stated that this requirement was not applicable because of the small scale of their agency’s consolidation efforts. Additionally, a HUD official stated that this element was not applicable because the department’s consolidation effort was completed in 2005.\nCost-benefit analysis. Five agencies provide results from a complete cost-benefit analysis that encompasses their entire consolidation initiative, 10 agencies provide only selected elements of a cost-benefit analysis, and 7 agencies do not provide a cost-benefit analysis. This element did not apply to 2 agencies. For example, Commerce details full annualized cost and savings estimates through fiscal year 2015, while other agencies, such as HHS and Interior provide only partial information. Specifically, HHS addresses projected savings, but not costs, and Interior acknowledges that an analysis has not yet been completed. Some agencies, such as Defense and Energy, plan to complete a cost-benefit analysis in the future. Officials from Transportation told us that the department was working on a new cost-benefit analysis, as the department no longer felt comfortable with their original savings projections. An Education official noted that the department’s consolidation did not cost anything and that although data will be moved out of the department’s one server room to be consolidated by the end of 2012, the facility would still operate as a network center. Additionally, a HUD official stated that this element was not applicable because the department’s consolidation effort was completed in 2005.\nRisk management plan. Eighteen agencies reference a consolidation risk management plan and require that risks be tracked, 4 agencies partially address risk management, and 2 agencies do not address risk management. For example, DHS describes its Data Center Services Project Risk Management Plan, including how risks are identified, assessed, and mitigated throughout the development life cycle. Additionally, Transportation addresses how its risk management plan identifies and tracks risks in three categories: people, process, and technology and administration. In contrast, agencies such as Energy and Interior are rated as partial because they are continuing to develop their risk management processes. An Interior official told us that the department’s plan is scheduled to be completed by June 2012. Officials from both OPM and SBA acknowledged that their consolidation plans did not address a risk management plan, but noted that risk was either being managed as part of individual projects or within a larger context within their respective organizations.\nCommunications plan. Twenty-two agencies consider a communications plan for the agencies’ consolidation initiatives, 1 agency does so partially, and 1 agency does not. For example, HHS describes a series of organizational responsibilities for gathering and reporting project information, as well as communicating with other departmental stakeholders. Additionally, GSA describes how its communications approach ensures that stakeholders both within and outside of the agency are kept informed as to consolidation progress. The Department of the Treasury (Treasury) partially addresses its communications plan, noting that it is maintained as part of a larger departmental effort. OPM makes no such reference. Further, an official from OPM told us that a communications plan was not as critical for a small agency.\nInventory and plan verification. Fifteen agencies fully describe the steps taken to ensure that inventories and plans were complete and accurate, and 9 agencies partially do so. For example, State describes how information was gathered and validated, addresses several limitations, and attests to the documents’ completeness. Additionally, EPA describes how information was validated, describes limitations on inventory data, and attests to the currency of the agency’s plans. However, other agencies, such as Agriculture, HUD, and SSA are rated as having partially completed this element because they note that information was validated, but do not address data limitations or the completeness of both the inventory and plan. A HUD official told us that the department was unaware of this requirement and agreed to consider what could be said in the next plan update. An SSA official acknowledged that this information was meant to be included, but was inadvertently omitted.\nConsolidation progress. Eleven agencies fully report on progress meeting consolidation goals, 11 agencies do so partially, and this element does not apply to 2 agencies. Specifically, Justice addresses progress against consolidation goals, discusses consolidation challenges, and references consolidation successes, such as integrating lessons learned from other organizations. VA similarly describes progress against goals and challenges, and also notes the department’s reliance on commercial and public best practices while updating its consolidation plan. However, both Education and NASA are rated as partially completing this element because they discuss progress against goals, but do not present specific successes or challenges. A NASA official agreed that this information was not included, but stated that the agency was aware of situations that addressed both categories of information. Additionally, a HUD official stated that this element was not applicable because the department’s consolidation effort was completed in 2005. OPM officials stated that the agency followed OMB’s original guidance when completing their updated consolidation plan, which did not include a requirement for reporting on consolidation progress.\nCost savings. Only 1 agency fully reports on consolidation cost savings, while 13 agencies do so partially, and 8 do not. This element does not apply to two other agencies. Specifically, Commerce discusses net savings, future savings, budgetary impacts, and that the consolidation effort did not incur any unexpected costs. In contrast, HHS and Justice address net and future savings, but not budgetary impacts or unexpected costs. Additionally, other agencies do not include this information for various reasons. Notably, a Defense official told us that it was challenging to gather savings information from all the department’s components. An NSF official told us the information was not included because the agency had not yet realized any cost savings and so, had nothing to report. However, the agency expected to have more to report in the future. Additionally, a HUD official stated that this element was not applicable because the department’s consolidation effort was completed in 2005. Further, as with reporting on consolidation progress, OPM officials stated that they followed OMB’s original guidance, which did not include a requirement relating to cost savings.\nIn the continued absence of completed consolidation plans, agencies are at risk of implementing their respective initiatives without a clear understanding of their current state and proposed end state. For example, OMB intends for agencies’ master program schedules to provide an agencywide plan drawn from detailed implementation schedules for each data center. However, only nine agencies have fully completed this activity. Further, OMB intends agencies’ cost-benefit analyses to assess planned investments and cost savings calculations on a year-by-year basis, thus capturing realistic estimates of funding needed or savings realized from the closing of facilities and associated reduction in energy use. Nonetheless, only five agencies have completed such a study. Without completing this information, agencies may not realize anticipated cost savings, improved infrastructure utilization, or energy efficiency. The importance of these two practices is further discussed in the following section.", "OMB requires both a master program schedule and a cost-benefit analysis as key elements of agencies’ consolidation plans, but none of the agencies we evaluated had complete schedules or cost estimates. A comprehensive schedule is an important foundational element for initiative planning and provides a road map for systematic project execution. A credible cost-benefit analysis, which is one type of cost estimate, is a key tool for management to use in making informed decisions and includes information such as relative benefits and the effect and value of cost trade-offs. However, of five agencies (Agriculture, DHS, Interior, Transportation, and VA) selected for further analysis, none had a schedule or cost estimate that was fully consistent with best practices. Of the five agencies, two did not have schedules at all and one agency had previously completed a cost estimate but no longer had confidence in those calculations and therefore, planned to do a new cost-benefit analysis. OMB is sponsoring the development of a standardized cost model that could help agencies provide future estimates based on a common set of assumptions, estimates, and calculations.", "The success of a program depends in part on having an integrated and reliable master schedule that defines when and how long work will occur and how one activity is related to another. A program schedule provides not only a road map for systematic project execution but also the means by which to gauge progress, identify and resolve potential problems, and promote accountability at all levels of the program. A schedule also provides a time sequence for the duration of a program’s activities and furthers an understanding of both the dates for major milestones and the activities that drive the schedule. Our research has identified four select attributes of properly sequenced schedule activities that are essential for a reliable schedule network. Table 6 provides a detailed description of these attributes.\nOf the five agencies selected, three agencies (Agriculture, VA, and DHS) provided their consolidation master program schedules and two agencies (Interior and Transportation) did not provide a master program schedule that we could evaluate. Of the three agencies that provided schedules, Agriculture and VA provided a single master schedule and DHS provided 4 schedules representing different aspects of the department’s future consolidation plans. However, none of these agencies’ schedules is fully compliant with the four attributes, although each agency was at least partially consistent with these practices. Table 7 provides an assessment of the agencies’ consistency with the four attributes of properly sequenced schedule activities. A discussion of the analysis of each characteristic follows the table.\nIdentified dependencies. None of the three agencies’ schedules is fully consistent with this practice. Specifically, two of DHS’s schedules have activities missing predecessors, successors, or both. Additionally, almost half of Agriculture’s activities, and almost 40 percent of VA’s, have a similar condition.\nNo dangling activities. Two of the three agencies are consistent with this practice and one agency is partially consistent. For example, neither schedule for Agriculture or VA has any dangling activities. In contrast, two of DHS’s four schedules do not have dangling activities, while the remaining two do have such activities.\nNo start-to-finish links. Two of the three agencies’ schedules are consistent with this practice and one agency’s schedule is partially consistent. Both of Agriculture and VA’s schedules are consistent with this practice and have no start-to-finish links. However, while three of DHS’s schedules do not have start-to-finish links, one schedule does.\nNo summary links. One of the three agencies was consistent with this practice, one agency was partially consistent, and one agency was not consistent. Specifically, Agriculture’s schedule does not have any summary links, while only one of DHS’s schedules meets the same condition. Three of DHS’s schedules include summary links, as does VA’s schedule.\nDepartment officials gave a variety of reasons why their respective department did not provide documentation of a completed master program schedule:\nAn Agriculture official told us that the department had a detailed schedule for every individual closure, but that because those projects are not necessarily linked to one another, there was no need to link these activities in a master schedule. However, leading practices demonstrate that even a summary master schedule should be a roll- up of lower-level schedules and reflect milestones that are automatically calculated through the established network logic between planned activities. A schedule with proper logic can predict impacts on the project’s planned finish date of, among other things, misallocated resources, delayed activities, external events, scope changes, and unrealistic deadlines.\nDHS’s consolidation program manager stated that the department provided separate schedules because schedules are developed for individual facilities when placed under contract for closure. However, leading practices show that a program schedule should include the entire required scope of effort, including the effort necessary from all government, contractors, and other key parties for a program’s successful execution from start to finish. The DHS consolidation program manager acknowledged that the schedules in question were developed by contractors and that the department plans to incorporate the suggested best practices as appropriate.\nA VA official told us that because some of the tasks in the department’s schedule are expected to start on particular dates to ensure funding is available for the project task, they do not have predecessor tasks. While this can be a permissible step when the schedule constraints are clearly identified, the VA official was able to provide some, but not all, of those constraints. The VA official further told us that unnecessary tasks and constraints have since been removed from the department’s schedule.\nInterior officials stated that the department’s master program schedule was not yet complete.\nTransportation’s consolidation program manager stated that the department does not have a master program schedule dedicated to the FDCCI. Rather, the consolidation effort appears as a task on the department’s master IT projects schedule.\nIn the absence of program schedules constructed in accordance with scheduling best practices, the agencies we evaluated are at risk of moving forward with their consolidation efforts despite having incomplete information that defines when and how long work will occur and how activities are related to each other.", "We have reported that the ability to generate a reliable cost estimate, such as a cost-benefit analysis, is a critical function necessary to support OMB’s capital programming process. Such estimates should also include information on the benefits of the project. Without such estimates, agencies are at risk of experiencing cost overruns, missed deadlines, and performance shortfalls. Our research has identified a number of best practices that are the basis of effective program cost estimating and should result in reliable and valid cost estimates that management can use for making informed decisions. Table 8 provides a detailed description of the four characteristics of a high-quality and reliable cost estimate.\nOf the five agencies selected, four (Agriculture, DHS, Interior, and VA) provided supporting documentation used to calculate the cost estimates found in the agencies’ consolidation plans and one (Transportation) did not. Transportation officials explained that they were no longer confident in their prior estimates and they planned to undertake a new cost-benefit analysis in 2012. None of the four agencies’ estimates was fully compliant with best practices, although all of the estimates were at least minimally consistent with these practices. Table 9 provides an assessment of the estimates’ consistency with the characteristics of a reliable cost estimate. A discussion of the analysis of each characteristic follows the table.\nComprehensive. None of the estimates are fully consistent with this practice, although all four estimates satisfy about half of the criterion for this practice. For example, Agriculture includes most related costs and estimate assumptions, but does not include a work breakdown structure. Similarly, Interior includes most related costs and estimate assumptions, but also does not include a work breakdown structure.\nWell-documented. None of the estimates fully satisfy this practice. Specifically, one estimate satisfies most, but not all, of the practice, one estimate satisfies about half of the criterion for the practice, and two estimates satisfy a few of the criterion for the practice. For example, Interior documents its technical baseline but does not fully document how the estimate was developed. VA describes how its calculations were performed and discusses the estimate’s technical baseline, but satisfied only half of the criteria describing how the estimate was performed.\nAccurate. None of the estimates fully satisfied this practice. One estimate satisfied about half of the practice and three estimates satisfied some of the practice. For example, Agriculture’s estimate is partially based on historical estimates, but has not been updated since March 2009. Additionally, while DHS updated its estimate in July 2011, it did not adjust for inflation or document variations between planned and actual costs.\nCredible. None of the estimates fully satisfied this practice. One estimate satisfied about half the practice and three estimates satisfied some of the practice. For example, DHS addressed some aspects of a risk and uncertainty analysis, but did not conduct an estimate sensitivity analysis. Conversely, VA addressed some aspects of an estimate sensitivity analysis, but did not conduct a risk and uncertainty analysis. Neither agency conducted an independent cost estimate.\nAgency officials gave a variety of reasons for why their cost estimates were not complete. For example, the Agriculture CIO indicated that the department’s estimate was performed several years ago by a contractor and additional documentation was difficult to acquire. Additionally, Interior’s consolidation program manager stated that the department was in the process of revising its cost estimate using OMB’s cost model, but the effort was not yet complete. Further, Interior’s consolidation plan describes several efforts to estimate costs that the department ultimately did not include in their plan and indicates that the department will address this in a future deliverable. In May 2012, Interior officials stated that they recently provided this information to OMB. VA officials stated that they did not provide previous cost estimate documentation because the department expected to revise its cost estimate using new information regarding cost assumptions and that this information would affect life- cycle cost estimates. The DHS consolidation program manager noted that the department is now taking a different approach towards cost estimates through the use of enterprisewide contracts. Regarding Transportation, although it reported FDCCI-related estimated savings of over $26 million in its 2010 plan, the department’s updated consolidation plan states that the original cost estimates were no longer relevant and the department is in the process of conducting a new estimating effort that was not completed in time for the plan’s submission. Further, in March 2012, a department official confirmed that Transportation no longer felt comfortable with the original savings estimate and that planned cost savings were being reevaluated. The official further stated the department intends to complete a new cost-benefit analysis.\nBetween the five agencies that we reviewed, there are plans to consolidate 375 data centers of all sizes. In the absence of reliable cost estimates, these five agencies are exposed to the types of risks that we have reported to be recurring problems in our program reviews—namely cost overruns, missed deadlines, and performance shortfalls. Because of the importance of a high-quality cost estimate to consolidation efforts as significant as these, it will be important for these agencies to work to improve their cost estimates, thus providing information on which management can make well-informed decisions as the agencies move towards their 2015 targets.", "To assist agencies in their data center consolidation efforts, the FDCCI Data Center Consolidation Task Force developed a standard Total Cost of Ownership (TCO) model in order to provide a comprehensive tool to help to inform consolidation decision making, model consolidation paths, and assist with the development of cost savings figures and funding needs. OMB provided the model to agencies for voluntary use starting in January 2012, noting that it is intended to provide a uniform and consistent method to derive agency cost savings figures and a modeling and simulation tool to inform consolidation decisions.\nAt a high level, agencies load their raw agency inventory data into the spreadsheet-based model to develop three outputs: an “as is” view of current costs; a 5-year projection of costs based on maintaining current equipment and facilities at current growth rates; and a 5-year projection of costs, including equipment and facilities counts, based on the agency’s planned data center closure and efficiency targets.\nThe model relies on a number of built-in assumptions—based on best practices in the public and private sectors and grouped into categories such as facilities, hardware, and software—to provide its outputs. The model also recognizes some limitations, such as an inability to capture costing data for individual facilities and an inability to recognize individual costs for hardware and software. To compensate, the model applies universal values for such information, while recognizing the inaccuracies this may cause in some costing elements. The model further allows agencies to adjust specific variables to input costs that are atypical or not already anticipated by the model. According to an official from the GSA program management office that maintains the cost model, while not intended to capture comprehensive program costs, the model does provide agencies with the ability to customize the input information to make it as comprehensive as they need it to be. As a result, agencies could use this tool to provide more consistent and reliable cost estimates. Moreover, the model provides standardized cost calculations, adjustment for inflation, and a scenario-analysis tool that agencies can use to analyze alternatives and develop plans. Thus, it can be used as a tool to help agencies improve their consolidation planning.\nOfficials from several agencies told us that they plan to use the TCO model in future cost estimating efforts. For example, a Transportation official told us that the department intends to use the model as it recalculates its cost-benefit estimate. Additionally, the Interior consolidation program manager stated that the department planned to use the model to determine power estimates. Officials from other agencies, such as SSA and EPA, told us that the model was being considered for future use.\nUse of the TCO model could provide more consistent and reliable cost estimates, but using the model is currently voluntary. In light of the limitations identified above in our review of the five agencies’ cost estimates, the deployment of a standardized tool for planning consolidation efforts could help ensure that agencies develop consistent and uniform projections. Until OMB requires agencies to use the model, agencies will likely continue to use a variety of methodologies and assumptions in establishing consolidation estimates, and it will remain difficult to summarize projections across agencies.", "Agencies reported experiencing multiple areas of success in their consolidation efforts. Specifically, 20 agencies identified 34 areas of success, with the number of agencies reporting a particular success ranging from 9 to 1. However, only 3 successes were identified by multiple agencies and, of those, 2 represent over 45 percent of the total reported successes. Four agencies—Justice, Transportation, NSF, and SSA—did not report any successes. Table 10 details the reported successes as well as the number of agencies identifying that area of success; the two most common areas are further discussed after the table.\nVirtualization is a technology that allows multiple, software-based machines with different operating systems, to run in isolation, side-by- side, on the same physical machine. Cloud computing is an emerging form of computing that relies on Internet-based services and resources to provide computing services to customers, while freeing them from the burden and costs of maintaining the underlying infrastructure. OMB suggests both technologies as agency approaches, along with decommissioning and consolidation. Nine agencies reported that focusing on virtualization and cloud computing have proven successful for their consolidation efforts.\nThe Interior consolidation program manager cited virtualization as the department’s greatest consolidation success, noting the efforts of the department’s Bureau of Indian Affairs as an example. Specifically, Interior has documented virtualization as a key enabler in the efforts of the bureau to close data centers. After closing 11 data centers in fiscal year 2011, the bureau turned its attention to remote sites with more than three servers. Through virtualization, the bureau was able to reduce all remote sites to either one or two physical servers. Additionally, on a site-by-site basis, other application and database servers were either virtualized or migrated to one of two primary bureau data centers. In doing so, the bureau’s virtualization effort reportedly produced over $114,000 in cost avoidance savings for fiscal year 2011, is expected to produce over $66,000 in savings for fiscal year 2012, and is planned to produce further savings of $66,000 annually. Table 11 details reductions and savings that the bureau has already realized and plans for the future.\nOther agencies also reported virtualization as a key factor in being able to realize resource reductions. For example, EPA officials told us that the agency was using virtualization to optimize their IT infrastructure. In 2011, the agency virtualized over 360 servers, increasing the agency’s virtualization by 6 percent. In 2012, the agency plans to consolidate and virtualize email hosting services, allowing the agency to decommission 14 percent (or over 300) of its physical servers, and migrate the agency’s email gateways to cloud services. In one EPA facility, the agency will migrate over 100 servers from eight server rooms to one primary data center. Additionally, NRC reports that it used virtualization to exceed its 2011 goals for Windows server reductions. Specifically, the agency was able to exceed its goal of reducing 13 servers and actually reduced 33 physical servers, a reduction of more than 10 percent from its baseline of 288 servers. Further, OPM officials reported that within 15 months, the agency was able to increase the virtualization of its Windows servers from 15 percent to 50 percent, resulting in cost savings for the agency.\nOther agencies reported on the less tangible, but still significant, importance of virtualization to their efforts. An Education official told us that the department’s biggest success has come from focusing on virtualization, rather than physical consolidation. DHS reported that the increased implementation of virtualization will reduce the overall costs of the department’s migration and postmigration operations. Further, officials from Labor told us that they expect virtualization to have an impact on the results of their consolidation, but that they had not yet documented any of those results.\nOfficials from three agencies also shared with us the advantages of moving their organizations to cloud services. Specifically, a DHS official told us that the department’s cloud services technology was becoming operational and as a result, costs savings were becoming evident versus traditional consolidation. Whereas 2 years ago, the department had nothing in the cloud, a large percentage of services were now moving in that direction. The official specifically noted a DHS component that was originally only going to move to its own physical infrastructure, but was now joining with other components because of the benefits of moving services to the cloud. A HUD official stated that the department’s successes were related to higher efficiency and utilization of computing and storage resources. Essentially, HUD embarked on a cloud-like solution—by means of the department’s existing outsourcing contract— before cloud computing really existed as a service. As a result, the official noted that the department has been receiving a number of benefits such as green IT, regular technology refreshes, and high utilization of resources. A second HUD official noted that the department has been rated across the government as having the third-highest computing utilization and the second-most efficient use of storage capacity. Further, and as mentioned earlier, an EPA official noted that the migration of EPA’s email gateways to cloud services will enable the agency to decommission 14 percent (over 300) of the agency’s physical servers.\nEight agencies reported consolidation successes that had been realized through agencies working together, both within and outside of their department, to identify consolidation opportunities. For example, several of the agencies that reported success with virtualization, as discussed earlier, also reported working with other departmental components as a key enabler of resulting savings. Specifically, Interior reported that as part of the department’s closing of 11 Bureau of Indian Affairs data centers in fiscal year 2011, two facilities were consolidated with other Interior bureaus, resulting in a reduction of 43 of the bureau’s 65 servers and producing immediate cost avoidance savings of over $114,000. Defense noted the willingness of its components to adopt the departmental strategy of first looking to the Defense Information Systems Agency for application and data hosting before pursuing any other options. Further, a SBA official told us that one success from the consolidation effort was that agencies have been looking for ways to work together. Specifically, the official cited the SBA’s effort to reach out to another agency in order to craft an interagency agreement to work together and move part of their operations into the hosting agency’s systems. A second agency official noted that because of this, the hosting agency has contacted SBA to make sure that it included SBA’s needs in its planning and requests. Additionally, a DHS official told us that departmental components were joining together to move services to the cloud.\nThere were also reported successes in working with external agencies. For example, VA reported that the department was successful in working with the Defense Information Systems Agency on an agreement to consolidate mission critical enterprise IT systems into the agency’s Defense Enterprise Computing Centers. The department noted that considerable cost savings could be realized by entering into such an interagency agreement, as opposed to leasing from a commercial site, for mission critical health record systems. Additionally, a HHS official similarly reported that the department’s Indian Health Service, which has small data centers that cannot close because of communication difficulties in their locations, recognized that Interior’s Bureau of Indian Affairs had a data center in close proximity to an Indian Health Service facility. Consequently, the service was able to share space with the bureau and consolidate one of its data centers and the service is now looking for similar opportunities that will allow HHS to consolidate further. Further, Labor officials told us that the department was consolidating small server rooms in regional offices to co-located facilities and that this approach was expected to reduce costs.\nThe consolidation successes experienced by agencies indicate that aspects of FDCCI are moving forward as planned. Further, almost half of these reported accomplishments directly relate to key tenets of OMB’s plans for the initiative, demonstrating that OMB has developed a consolidation road map that provides realistic means by which agencies can achieve their goals.", "In 2011, we reported on the challenges that agencies were facing during data center consolidations. These included challenges related to FDCCI as well as those that were cultural, funding related, operational, and technical. In 2012, agencies have continued to report many of the same challenges, have reported new challenges, and have stopped reporting challenges they previously identified. As we found in 2011, some challenges are more common than others. Specifically, the number of agencies reporting a particular challenge range from 15 to 1. Additionally, 25 challenges reported in 2011 were not reported in 2012. Two agencies, HUD and NSF, did not report any challenges. Table 12 details the reported challenges, the numbers of agencies experiencing that challenge, and identifies the challenges no longer being reported by agencies. The table is followed by a discussion of the most prevalent challenges.\nAgencies reported seven challenges that are specific to FDCCI, including obtaining power usage and providing good quality asset inventories, both as required by OMB. Specifically, 15 agencies reported that obtaining power usage information was a challenge, which is less than the 19 agencies that reported this challenge last year. For example, a NASA official told us that the agency only had one data center (out of 79) that was fully metered, but that the agency was working to establish metering capabilities at several more locations. An SBA official told us that the agency was still working to complete a power audit, but that it was questionable whether such an audit would be worth the amount of work required to install separate power meters in leased facilities. A USAID official reported that none of the agency’s facilities were metered and that the agency was not a landlord for any of its facilities, making power information difficult to obtain. Further, 10 agencies reported that providing good quality inventories was a challenge, which is more than the 4 agencies that reported this challenge last year. For example, an EPA official told us that the agency had trouble determining cost information for its server rooms because most were facilities within office spaces and which were part of larger federal leases or within GSA buildings. As a result, EPA focused their efforts on facilities greater than 500 square feet. Additionally, a Defense official reported that that gathering and verifying inventory information for an organization the size of the department was challenging.\nAgencies reported three cultural challenges to data center consolidation, including accepting cultural change that is part of consolidation and obtaining enterprise buy-in to the consolidation effort. One of the most prevalently reported cultural challenges, accepting cultural change, was cited by 5 agencies, which is 10 fewer agencies than last year. For example, Energy found that there was a perceived need for each facility or departmental organization to have “ownership” of their own data centers and server rooms in order to support their business or mission needs. Justice recognized that moving from the department’s current environment to a more unified, standardized, and cost-efficient approach for providing data center services requires change and consequently, efforts were underway to drive more significant consolidation. Another commonly reported cultural challenge was obtaining enterprise buy-in to the consolidation effort, which was reported by 5 agencies—an increase from the single agency that reported this last year. For example, DHS reported their consolidation effort to be a multistakeholder operation that required immense amounts of coordination and found that delays and issues arose when various stakeholders maintained differing visions, expectations, and commitment to the effort. Further, NRC reported that one of its main challenges was managing the level of coordination required by the number of internal and external entities involved in planning and the related activities that need to happen simultaneously.\nAgencies reported two funding challenges: acquiring the funding needed for consolidation and identifying cost savings to be realized by consolidation. Nine agencies reported challenges with acquiring funding, which is slightly fewer than the 11 agencies that reported this challenge last year. For example, Energy reported that the department had little or no funding available to invest in data center measurement systems, server utilizations assessments, or consolidation projects. Additionally, both Justice and Transportation reported challenges in providing upfront funding for consolidation efforts before cost savings accrue. Two agencies reported challenges with identifying cost savings, a decrease from the 9 agencies that reported this challenge last year. For example, an Interior official noted that the department would likely not be able to report on savings for 2011 because most bureaus absorbed the cost of consolidation within their budgets. Although site-specific plans were required by the department, most did not address costs. Additionally, an SSA official noted that the agency currently had too many uncertainties surrounding its consolidation effort to perform a cost-benefit analysis.\nAgencies reported eight operational challenges, including difficulties with procurement and technology and resource constraints, neither of which had been reported in 2011. Three agencies encountered challenges with procurement, including DHS, which had to create a team to streamline projects through the department’s procurement process. GSA reported encountering construction contracting challenges on all three of the agency’s calendar year 2011 data center consolidations. These contract challenges included: vendors that could not meet award schedules, nonresponsive vendors, and long lead times for some IT equipment. To counter such delays, GSA increased the time allotted for planned contracting efforts and vendor delivery schedules. Additionally, two agencies reported challenges with technology and resource constraints. Specifically, EPA reported encountering minor delays in consolidation plan execution due to such constraints and NRC reported another of its main challenges to consolidation being available resources and the impact on its critical path to consolidation, which is the timely completion of the agency’s new headquarters building.\nAgencies reported only one technical challenge to consolidation, planning a migration strategy. Specifically, this was reported by seven agencies, an increase from the two agencies that reported this in 2011. For example, Transportation’s consolidation plan notes that in the department’s organization, it is a long process to identify possible consolidations, present them to management, then to users, and then work the technical side of migrations. Transportation’s plan also noted that application mapping is a very difficult and time-consuming activity, but cannot be skipped in a successful completion of a migration. Further, an Education official told us that the department had to develop a two- step approach for migrating files after encountering technical issues with an earlier migration effort. Finally, Commerce reported in its consolidation plan that detailed consolidation planning was critical due to the number of moving parts and potential impact on applications and customers.\nAs we have previously reported, one approach agencies can use to manage challenges such as the ones described above is through risk management processes. In 2011, we reported that less than half of the agencies included a discussion of risk management in their data center consolidation plans. As we stated earlier, 18 of the agencies, or 75 percent, now fully address risk management. By addressing consolidation risk, agencies have better positioned themselves to manage the challenges they have identified.\nIn any significant IT initiative, it is important that both successes and challenges be highlighted. In the case of FDCCI, a success highlights approaches and strategies that are helping agencies to meet their consolidation targets and fulfill the intent of the initiative. Conversely, a challenge identifies an area where agencies are struggling to meet the requirements and intent of this governmentwide effort. The two most reported consolidation successes are both key tenets of OMB’s FDCCI: the use of virtualization and cloud services, and working with other agencies to find consolidation opportunities. Alternately, the three most reported challenges directly impact the ability of FDCCI to meet its goals: gathering power usage information, developing good quality data center inventories, and acquiring the funding needed for consolidation. In light of how closely the successes and challenges reported by agencies relate to FDCCI, it will be important for OMB to continue to provide leadership and guidance to the initiative. This includes, as we have previously recommended, utilizing the existing accountability infrastructure of the Data Center Consolidation Task Force to assess agency consolidation plans to ensure they are complete and to monitor the agencies’ implementation of their plans.", "With agencies reporting having closed 286 data centers by the end of 2011 and planning to close an additional 346 centers by the end of 2012, the data center consolidation initiative is expected to realize about $2.4 billion in cost savings through 2015. OMB now requires agencies to annually update both their data center inventories and their consolidation plans and has expanded the required content of both. However, agencies’ consolidation and savings goals continue to be built on incomplete inventories and plans. To better ensure that FDCCI improves governmental efficiency and achieves promised cost savings, we are reiterating our prior recommendation to the department secretaries and agency heads of the 24 departments and agencies participating in the federal data center consolidation initiative to fully complete their consolidation inventories and plans expeditiously.\nAs OMB refines its approach to the data center consolidation initiative, it provides updated guidance to agencies. However, three agencies did not learn of the most recent changes in OMB’s required formats, in part because the guidance was provided in meetings and not in a formal letter from the Federal CIO to agency CIOs or disseminated on the website where all prior guidance had been disseminated. Until OMB uses more structured mechanisms to disseminate its guidance, it runs the risk that agencies will not learn of important changes in format or approach.\nAdditionally, basic consolidation plan requirements, such as the need for schedules and cost estimates, are still unmet by almost 70 percent of the agencies. Among the five agencies selected for a detailed review, none of the agencies’ master schedules and estimates were completed in a manner consistent with best practices. For example, none of the agencies was able to demonstrate that its cost estimates were accurate, credible, or comprehensive. OMB’s cost of ownership model should help address a number of planning concerns. As more agencies use the model, OMB can use the model to ensure consistent planning and reporting on consolidation efforts across FDCCI. However, agencies’ use of the model is still voluntary. Until OMB requires agencies to use the model, it may miss opportunities to ensure consistency among agencies and it will remain difficult to summarize projections across agencies.\nAs the federal consolidation effort matures, agencies are beginning to realize successes. These constructive experiences, which stem from OMB’s recommended consolidation strategies, indicate that FDCCI is moving in the right direction. However, as agencies work towards their consolidation goals, many continue to report challenges related to gathering the necessary technical information and funding the consolidation itself. While these challenges are consistent with those reported in the past, over 25 previous challenges were no longer reported by the agencies. Such a dynamic environment reinforces the need for agencies to remain in communication in order to facilitate knowledge sharing and transfer and for OMB to continue to provide leadership and guidance.", "In addition to reiterating our prior recommendation to agencies to complete the missing elements of their inventories and plans, we are making two recommendations to OMB. Specifically, we recommend that the Director of OMB direct the Federal CIO to ensure that all future revisions to the guidance on data center consolidation inventories and plans are defined in OMB memorandum and posted to the FDCCI public website in a manner consistent with the guidance published in 2010, and ensure agencies utilize OMB’s Total Cost of Ownership model as a standardized planning tool across the consolidation initiative.\nIn addition, we recommend that the Secretaries of Agriculture, Homeland Security, Interior, Transportation, and Veterans Affairs direct their component agencies and their data center consolidation program managers to implement recognized best practices when completing required program schedules and cost-benefit analyses.", "We received comments on a draft of our report from OMB, the 5 agencies to which we made recommendations, and the other 19 agencies mentioned in the report. Specifically, OMB and the 5 agencies to which we made recommendations either agreed with, or had no comment on, the recommendations and the other 19 agencies had no specific comments on our recommendations. Multiple agencies also provided technical comments, which we incorporated as appropriate. Each agency’s comments are discussed in more detail below.\nIn oral comments, OMB officials, including the Deputy Federal CIO and staff from the Office of E-government and Information Technology and the Office of the General Counsel, stated that they generally agreed with, and described planned actions to implement, our recommendations. These officials also provided technical comments, which we have incorporated as appropriate.\nIn written comments, Agriculture’s Acting CIO stated that the department concurred with the content of the report and had no comments. The department offered no comments on our recommendations. The department also provided technical comments, which we have incorporated as appropriate. Agriculture’s written comments are provided in appendix III.\nIn written comments, DHS’s Director of the Departmental GAO/OIG Liaison Office concurred with our recommendation, commented on the current and planned state of the department’s consolidation efforts, and outlined actions the department plans to take to implement our recommendation and update its data center inventory and consolidation plan. The department also provided technical comments, which we have incorporated as appropriate. DHS’s written comments are provided in appendix IV.\nIn written comments, Interior’s Assistant Secretary for Policy, Management and Budget stated the department concurred with the report’s finding and recommendations, commented on the current status of the department’s consolidation efforts, and described the department’s plans to develop savings and cost avoidance projections. The department also provided technical comments, which we have incorporated as appropriate. Interior’s written comments are provided in appendix V.\nIn comments provided via e-mail, Transportation’s Deputy Director of Audit Relations wrote that the department had no comments on the draft. The department offered no comments on the recommendations.\nIn written comments, VA’s Chief of Staff stated that the department generally agreed with our conclusions, concurred with our recommendation, and described planned actions to address our recommendation. The department also provided technical comments, which we have incorporated as appropriate. VA’s written comments are provided in appendix VI.\nIn written comments, Commerce’s Acting Secretary concurred with the report’s general findings as they applied to the department and with the specific reporting on the department’s consolidation plan. Commerce’s written comments are provided in appendix VII.\nIn comments provided via e-mail, an audit liaison from Defense’s Office of the CIO wrote that the department had no comments on the report.\nIn comments provided via e-mail, an official from Education’s Office of the Secretary wrote that the department had no comments on the report.\nIn written comments, the Director of Energy’s Corporate IT Project Management Office stated that the department concurred with the findings reported for Energy and noted steps being taken by the department to address a consolidation challenge discussed in our report. The department also elaborated on facilities that we cited as not having been reported in Energy’s FDCCI inventory. Energy’s written comments are provided in appendix VIII.\nIn written comments, HHS’ Assistant Secretary for Legislation stated our report was an accurate representation of the department’s 2011 data center inventory and consolidation plan and outlined actions the department plans to take to complete missing inventory and plan elements. HHS’ written comments are provided in appendix IX.\nIn comments provided via e-mail, a HUD audit liaison wrote that the department had no comments or concerns regarding the report.\nIn comments provided via e-mail, an official from Justice’s Office of the CIO wrote that the department had no comments on the report.\nIn written comments, Labor’s Assistant Secretary for Administration and Management stated that the department did not have any comments on the draft to contribute. Labor’s written comments are provided in appendix X.\nIn comments provided via e-mail, an official from State’s Office of the Chief Financial Officer wrote that the department had no comments on the report.\nIn comments provided via e-mail, Treasury’s Deputy Assistant Secretary for Information Systems agreed with our report. The department also provided technical comments, which we have incorporated as appropriate.\nIn written comments, the Director of EPA’s Office of Technology Operation and Planning provided technical comments, which we have incorporated as appropriate. The agency did not comment on the report’s findings.\nIn comments provided via e-mail, an official from GSA’s GAO/IG Audit Response Division wrote that the agency had no comments on the report.\nIn comments provided via e-mail, the team lead for NASA’s GAO/OIG Audit Liaison wrote that the agency was providing no comments on the report.\nIn written comments, NSF’s CIO stated that the agency generally agreed with our characterization of their consolidation plan, but disagreed with our assessment of the agency’s master program schedule. The CIO asserted that we were provided with such a schedule, while also acknowledging that the schedule was inherently less detailed than those of agencies and departments with multiple components, but that it identified all NSF consolidation activities in the format and level of detail prescribed by OMB. However, OMB’s guidance on master program schedules states that such schedules are to be created from the detailed implementation schedules provided by data center managers, as well as driven by related federal government activities, such as OMB reporting and budgeting. While we acknowledge that NSF’s consolidation scope is less than that of some agencies, the high-level timeline presented as a master program schedule consists only of a single line item that states the fiscal year when NSF’s data center will be decommissioned. Further, this timeline does not include any of the detailed implementation activities or key baseline milestones required by OMB. As such, we believe our evaluation is reasonable and appropriate. NSF’s written comments are provided in appendix XI.\nIn comments provided via e-mail, the NRC OIG and GAO Liaison wrote that the agency had reviewed the report and had no comments. The liaison also provided an update on NRC’s plans to move to a single data center.\nIn comments provided via e-mail, an official from OPM’s Office of Internal Oversight and Compliance wrote that the agency had no comments on the report.\nIn comments provided via e-mail, the program manager for SBA’s Office of Congressional and Legislative Affairs provided technical comments, which we have incorporated as appropriate.\nIn comments provided via e-mail, a SSA audit liaison wrote that the agency had no comments on the report.\nIn comments provided via e-mail, an official from USAID’s Office of the Chief Financial Officer wrote that the agency had no comments on the report.\nWe are sending copies of this report to interested congressional committees; the secretaries and agency heads of the departments and agencies addressed in this report; and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staffs have any questions on the matters discussed in this report, please contact me at (202) 512-9286 or pownerd@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix XII.", "Our objectives were to (1) evaluate the extent to which agencies have updated and verified their data center inventories and data center consolidation plans, (2) evaluate the extent to which selected agencies have adequately completed key elements of their consolidation plans, and (3) identify agencies’ notable consolidation successes and challenges.\nFor this governmentwide review, we assessed the 24 departments and agencies (agencies) that were identified by the Office of Management and Budget (OMB) and the Federal Chief Information Officer (CIO) to be included in the Federal Data Center Consolidation Initiative (FDCCI). Table 13 lists these agencies.\nTo evaluate the agencies’ updated data center inventories and consolidation plans, we reviewed OMB’s guidance and identified key required elements for each type of document. We compared agency consolidation inventories and plans to OMB’s required elements, and identified gaps and missing elements. We rated each element as “Yes” if the agency provides complete information; “Partial” if the agency provides some, but not all, of the information; and “No” if the agency does not provide the information. We followed up with agencies to clarify our initial findings and to determine why parts of the inventories and plans were incomplete or missing, as applicable. We also compared our findings with those reported in 2011. To assess the reliability of the data agencies provided in their data center inventories and plans, we reviewed the letters agencies were required to submit attesting to the completeness and reliability of their inventories and plans, we interviewed agency officials about the actions taken to verify their data, and reviewed those results against our past reviews of agency inventories and plans. We concluded that the data were sufficiently reliable for our purposes, which was to report on the completeness of the inventories and plans.\nGAO-11-565. each practice as having been fully, partially, or not addressed. We discussed our findings with agency officials to determine why the schedules did not address all aspects of the best practices. To assess the agencies’ cost estimates, we compared documentation supporting the cost and savings estimates found in the agencies’ consolidation plans with relevant best practices. These practices include ensuring that each estimate is comprehensive, well-documented, accurate, and credible. In doing so, for each estimate, we rated each practice as having been met, substantially, partially, minimally, or not met. We also discussed our findings with agency officials to determine why the estimates did not address all aspects of the best practices. To assess the reliability of the data the five agencies provided in their master program schedules and cost estimates, we reviewed the schedules and estimates, compared them to our guidance on scheduling and estimating, and interviewed officials about how the schedules and estimates were constructed. We concluded that the schedules and estimates were generally unreliable and our report includes findings related to those assessments. The results of our evaluation at these five agencies cannot be generalized to other agencies.\nTo identify the key successes and challenges encountered by agencies in consolidating data centers, we reviewed agency consolidation plans and interviewed agency officials. We then determined which successes and challenges were encountered most often. To assess the reliability of cost savings data reported by Interior, we confirmed that the information was included in the department’s updated consolidation plan, which the Interior CIO attested was assessed and determined to be accurate and complete. In doing so, we concluded that the quality of the information was sufficient for our purposes.\nWe conducted this performance audit from September 2011 to July 2012, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "As part of its data center consolidation initiative, OMB required 24 federal departments and agencies to submit an updated data center inventory and consolidation plan. Key elements of the inventory were to include, for each data center, information on physical servers, virtualization, IT facilities and energy, network storage, and data center information. However, 3 agencies reported their inventories based on 2010 guidance, in which case they included information for each data center on IT hardware, IT software, facilities/energy/storage, and geographic location.\nKey elements of the updated plan were to include information on quantitative goals, qualitative impacts, consolidation approach, consolidation scope, timeline, performance metrics, master schedule, cost-benefit analysis, risk management, consideration of a communications plan, inventory and plan verification, consolidation progress, and cost savings.\nFor each of the agencies, the following sections provide a brief summary of the agencies’ goal for reducing the number of data centers, and an assessment of the completeness of their inventories and plans, as compared to what we reported in 2011. In the case of agencies that reported using the new inventory format, we have related the old key elements, where possible. Agencies that reported using the old format are directly compared to their previous results.\nThe following information describes the key that we used in tables 14 through 37 to convey the results of our assessment of the agencies’ compliance with OMB’s requirements for the FDCCI. ● – the agency provides complete information for this element. ◐ – the agency provides some, but not all, aspects of the element. ○ – the agency does not provide information for this element.", "Agriculture plans to consolidate from 95 data centers (40 large and 55 small) to 27 centers (8 large and 19 small) by December 2015. However, the agency’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 2 key elements and provides partial information for the remaining 2 elements.\nAdditionally, in its consolidation plan, Agriculture provides complete information for 9 of the 13 elements evaluated and provides partial information for the remaining 4 elements. An Agriculture official stated that the agency is dependent on component agencies to report complete inventory information. The official also stated the agency intended to provide the missing utilization plan information, as well as greater discussion of consolidation challenges in future consolidation plan updates. Table 14 provides our assessment of Agriculture’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of Commerce (Commerce) plans to consolidate from 55 data centers (33 large and 22 small centers) to 30 data centers (21 large and 9 small centers) by December 2015. However, Commerce’s asset inventory remains incomplete, while its consolidation plan is now complete. In its asset inventory, the agency provides complete information for 3 key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, Commerce provides complete information for all 13 elements evaluated. A Commerce official stated that energy information is incomplete due to the lack of metering in its facilities and the inability of data center providers to supply agency-specific energy usage and cost information. Table 15 provides our assessment of Commerce’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of Defense (Defense) plans to consolidate from 936 data centers to 392 by December 2015. However, Defense’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides partial information for all 5 key elements. Additionally, in its consolidation plan, Defense provides complete information for 5 of the 13 elements evaluated, provides partial information for 3 elements, and does not provide information for 5 elements. A Defense official stated that the agency’s next inventory update would include more complete information. In addition, the official stated that it was a challenge for Defense to collect all of the required information because of the scope and size of the agency’s consolidation effort. Table 16 provides our assessment of Defense’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of Education (Education) plans to consolidate from five data centers (three large and two small centers) to four data centers (three large and one small center) by December 2012. However, Education’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 3 key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, Education provides complete information for 8 of the 13 elements evaluated, provides partial information for 2 elements, and does not provide information for 1 element. Education officials stated that 2 elements were not applicable because of the small scope of the agency’s effort. Table 17 provides our assessment of Education’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of Energy (Energy) plans to consolidate from 56 data centers (26 large and 30 small centers) to 50 data centers (21 large and 29 small centers) by December 2015. However, Energy’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 3 key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, Energy provides complete information for 8 of the 13 elements evaluated, provides partial information for 3 elements, and does not provide information for 2 elements. An Energy official stated that the agency’s next inventory update would include more complete information. In addition, the official stated that a risk management plan was under development and that the agency planned to work with OMB’s cost model to formulate better cost and savings information. Table 18 provides our assessment of Energy’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of Health and Human Services (HHS) plans to consolidate from 181 data centers (43 large and 138 small centers) to 145 data centers (36 large and 109 small centers) by December 2015. However, HHS’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 1 key element and provides partial information for the remaining 4 elements. Additionally, in its consolidation plan, HHS provides complete information for 11 of the 13 elements evaluated and provides only partial information for the remaining 2 elements. An HHS official noted that it was difficult to gather every inventory element for all of its data centers. Table 19 provides our assessment of HHS’s compliance with OMB’s requirements in 2010 and 2011.\nDHS plans to consolidate from 101 data centers (40 large and 61 small data centers) to 37 data centers (3 large and 34 small centers) by December 2015. However, DHS’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides partial information for all 5 elements. Additionally, in its consolidation plan, DHS provides complete information for 10 of the 13 elements evaluated, provides partial information for 2 elements, and does not provide information for 1 element. DHS officials stated that the completeness of inventory information has improved since 2011 and that they have developed performance metrics. They also noted that they do not expect to fully realize their cost savings until consolidation activities are complete. Table 20 provides our assessment of DHS’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of Housing and Urban Development (HUD) has achieved its goal of consolidation prior to the start of the FDCCI and does not plan further consolidation of its existing base of contracts. Since 2005, the agency has operated in a fully outsourced infrastructure mode with two vendors providing consolidated departmental IT operations in hosting, storage, data transport, user environments, and systems integration, with off-site disaster recovery provided by one vendor. The agency’s asset inventory is complete, but its consolidation plan is not. Specifically, HUD provides complete information for 5 of the 13 elements evaluated and provides partial information for 1 element. A HUD official stated that 7 elements were not applicable because the agency has reached its consolidated end-state architecture. Table 21 provides our assessment of HUD’s compliance with OMB’s requirements in 2010 and 2011.\nInterior plans to consolidate from 232 data centers (158 large and 74 small data centers) to 135 data centers (90 large and 45 small centers) by December 2015. However, Interior’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 3 key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, Interior provides complete information for 9 of the 13 elements evaluated, provides partial information for 3 elements, and does not provide information for 1 element. An Interior official stated that the agency expects to report more complete inventory information for the next inventory update and will report cost savings when it can more accurately estimate the agency’s expected savings. Table 22 provides our assessment of Interior’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of Justice (Justice) plans to consolidate from 105 data centers (33 large and 42 small centers and 30 centers of unknown size) to 66 data centers (27 large and 39 small centers and no centers of unknown size) by December 2015. However, Justice’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides only partial information for all 5 key elements. Additionally, in its consolidation plan, Justice provides complete information for 10 of the 13 elements evaluated, provides partial information for 2 elements, and does not provide any information for 1 element. A Justice official stated that the agency did not know it was required to report the missing inventory information, but that the agency had the information and would include it in the next inventory update. The official did not know when the agency’s savings and utilization goals would be updated. Table 23 provides our assessment of Justice’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of Labor (Labor) plans to consolidate from 89 data centers (20 large and 69 small centers) to 54 data centers (20 large and 34 small centers) by December 2015. However, Labor’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 2 key elements and provides partial information for the remaining 3 elements. Additionally, in its consolidation plan, Labor provides complete information for 4 of the 13 elements evaluated, provides partial information for 6 elements, and does not provide information for 3 elements. A Labor official stated that the agency had difficulty obtaining energy information because of the lack of metering in its facilities. The official also noted that cost information would not be available until the end of fiscal year 2012 while savings information would not be available until fiscal year 2013. Table 24 provides our assessment of Labor’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of State (State) plans to consolidate from 363 data centers (12 large and 351 small data centers) to 355 data centers (4 large and 351 small centers) by December 2015. According to agency officials, the 351 small data centers are located overseas and there are no current plans to consolidate these locations because of the resulting impact on information technology operations. However, State’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 1 key element and provides partial information for the remaining 4 elements. Additionally, in its consolidation plan, State provides complete information for 9 of the 13 elements evaluated, provides partial information for 3 elements, and does not provide information for 1 element. State officials stated that the agency focused on inventorying its larger domestic facilities and noted that it was difficult to capture inventory-related information, such as energy usage and costs, for its foreign posts. The officials added that State has since completed a cost-benefit analysis, the results of which would be included in the next update, and has developed detailed schedules for each year’s activities. Table 25 provides our assessment of State’s compliance with OMB’s requirements in 2010 and 2011.\nTransportation plans to consolidate from 328 data centers (33 large and 295 small centers) to 265 data centers (24 large and 241 small centers) by December 2015. However, Transportation’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 3 key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, Transportation provides complete information for 8 of the 13 elements evaluated, provides partial information for 3 elements, and does not provide information for 2 elements. A Transportation official stated that the agency did not expect to see significant improvements for the energy-related information because not all facilities have meters. The official added that it was a challenge for the agency to collect inventory data for its small data centers. Table 26 provides our assessment of Transportation’s compliance with OMB’s requirements in 2010 and 2011.\nThe Department of the Treasury (Treasury) plans to consolidate from 55 data centers (42 large and 13 small centers) to 40 data centers (29 large and 11 small centers) by December 2015. However, Treasury’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 2 key elements and provides partial information for the remaining 3 elements. Additionally, in its consolidation plan, Treasury provides complete information for 6 of the 13 elements evaluated, provides partial information for 4 elements, and does not provide information for 3 elements. A Treasury official stated that installing meters to gather all inventory power information would be cost prohibitive. In addition, the official stated that the agency is working to complete the missing plan elements, including the master program schedule, risk management plan, and communications plan. Table 27 provides our assessment of Treasury’s compliance with OMB’s requirements in 2010 and 2011.\nVA plans to consolidate from 97 data centers (51 large and 46 small centers) to 14 data centers (11 large and 3 small centers) by December 2015. However, VA’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 3 of the key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, VA provides complete information for 10 of the 13 elements evaluated, provides partial information for 2 elements, and does not provide any information for the remaining 1 element. A VA official stated that installing equipment to gather all inventory power information would be cost prohibitive. Another official stated that the agency would more fully report on cost savings in future versions of their consolidation plan. Table 28 provides our assessment of VA’s compliance with OMB’s requirements in 2010 and 2011.\nThe Environmental Protection Agency (EPA) plans to consolidate from 78 data centers (4 large and 74 small centers) to 53 data centers (4 large and 49 small centers) by December 2015. However, EPA’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 3 of the key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, EPA provides complete information for 10 of the 13 elements evaluated, provides partial information for 2 elements, and does not provide any information for the remaining 1 element. An EPA official stated that the agency planned to develop energy estimates for the missing inventory information and to work with OMB’s cost model to develop better cost and savings information. Table 29 provides our assessment of EPA’s compliance with OMB’s requirements in 2010 and 2011.\nThe General Services Administration (GSA) plans to consolidate from 21 data centers (21 large and no small centers) to 9 data centers (9 large and no small centers) by December 2015. However, GSA’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides partial information for all 5 key elements. Additionally, in its consolidation plan, GSA provides complete information for 10 of the 13 elements evaluated and provides partial information for the 3 remaining elements. A GSA official stated that the agency had now completed all missing IT facilities and energy information, but that there were continuing difficulties in calculating savings information due to changing schedules and lack of energy metering information for some GSA facilities. Table 30 provides our assessment of GSA’s compliance with OMB’s requirements in 2010 and 2011.\nThe National Aeronautics and Space Administration (NASA) plans to consolidate from 79 data centers (75 large and 4 small data centers) to 22 large data centers by December 2015. However, NASA’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 3 key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, NASA provides complete information for 10 of the 13 elements evaluated, provides partial information for 2 elements, and does not provide information for the remaining element. A NASA official stated that currently only one facility has power metering and, as a result, it is difficult to determine costs. The official also noted that NASA expects to reach its 2012 consolidation targets. Table 31 provides our assessment of NASA’s compliance with OMB’s requirements in 2010 and 2011.\nThe National Science Foundation (NSF) currently has only one onsite, centrally managed data center. Since 2007, the agency has been transitioning from owning and operating a data center to the use of commercial data center services and emerging cloud computing options. The agency’s plan is to complete transition of major legacy IT systems in a phased approach, with completion coinciding with the expiration of the NSF headquarters building lease, currently set for fiscal year 2014. The agency’s asset inventory is complete, but its consolidation plan is not. Specifically, NSF provides complete information for 10 of the 13 elements evaluated, provides partial information for 1 element, and does not provide information for 2 elements. An NSF official stated that the agency interpreted the guidance for consolidation progress and cost savings to apply only to ongoing or completed consolidations. However, the official noted that the agency would more fully report on these elements in future versions of its consolidation plan. Table 32 provides our assessment of NSF’s compliance with OMB’s requirements in 2010 and 2011.\nThe Nuclear Regulatory Commission (NRC) plans to consolidate from three data centers (three large and no small centers) to one large data center by December 2015. However, NRC’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 4 of the key elements and partial information for the remaining 1 element. Additionally, in its consolidation plan, NRC provides complete information for 8 of the 13 elements evaluated, provides partial information for 3 elements, and does not provide information for the remaining 2 elements. An NRC official stated that the agency planned to gather missing data center information and that the agency’s planned single data center would be able to provide much of NRC’s missing energy information. The official also stated that both performance metrics and a master program schedule have now been developed. Table 33 provides our assessment of NRC’s compliance with OMB’s requirements in 2010 and 2011.\nThe Office of Personnel Management (OPM) plans to consolidate from 4 data centers (one large and three small centers) to 3 centers (one large and two small centers) by December 2015. However, the agency’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 1 key element and provides partial information for the remaining 3 elements. Additionally, in its consolidation plan, OPM provides complete information for 6 of the 13 elements evaluated, provides partial information for 2 elements, and does not provide information for 3 elements. Two elements were determined to be not applicable to the agency. An OPM official stated that several missing elements, such as more detailed and complete inventory information and a summary of the agency’s cost-benefit analysis would be provided in future updates. The official also stated that the agency was not aware that it had to include consolidation progress and cost savings information in its updated consolidation plan. Another OPM official indicated the agency intended to provide information required by OMB’s guidance in the future. Table 34 provides our assessment of OPM’s compliance with OMB’s requirements in 2010 and 2011.\nThe Small Business Administration (SBA) plans to consolidate from four large data centers to two large centers by December 2015. However, the agency’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 2 key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, SBA provides complete information for 6 of the 13 elements evaluated, provides partial information for 2 elements, and does not provide information for the remaining 5 elements. SBA officials stated that several missing elements, such as performance metrics, a schedule, and a risk management strategy, were either developed after the plan’s completion or would be developed in the future. Table 35 provides our assessment of SBA’s compliance with OMB’s requirements in 2010 and 2011.\nThe Social Security Administration (SSA) has two large data centers and plans to replace one of them with a new facility. The agency expects the transition to begin in February 2015 and be complete in August 2016. However, SSA’s consolidation plan remains incomplete. In its asset inventory, the agency provides complete information for all 5 key elements. Additionally, in its consolidation plan, SSA provides complete information for 7 of the 13 elements evaluated, provides partial information for 4 elements, and does not provide information for the remaining 2 elements. An SSA official stated that the missing utilization plan elements and the plan verification information were unintentionally omitted and that those items would be included in the next update. Table 36 provides our assessment of SSA’s compliance with OMB’s requirements in 2010 and 2011.\nThe U.S. Agency for International Development (USAID) plans to consolidate from six data centers (two large and four small data centers) to two small data centers by December 2012. However, USAID’s asset inventory and consolidation plan remain incomplete. In its asset inventory, the agency provides complete information for 3 key elements and provides partial information for the remaining 2 elements. Additionally, in its consolidation plan, USAID provides complete information for 7 of the 13 elements evaluated, provides partial information for 4 elements, and does not provide information for the remaining 2 elements. A USAID official stated that missing server information would be included in the next inventory update and that the agency has completed a new cost- benefit analysis and taken steps to verify its inventory data. The official also said that power-related information is difficult to obtain since the agency leases its data centers. Table 37 provides our assessment of USAID’s compliance with OMB’s requirements in 2010 and 2011.", "", "", "", "", "", "", "", "", "", "", "", "In addition to the contact named above, individuals making contributions to this report included Colleen Phillips (Assistant Director), Justin Booth, Kathleen Lovett Epperson, Rebecca Eyler, Dave Hinchman, Fatima Jahan, Jason Lee, John Ockay, Karen Richey, and Jessica Waselkow." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 1, 1, 1, 1, 1, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_title", "", "", "", "h0_full", "h0_full", "h0_full", "h0_full", "h0_full", "h0_title h1_full", "h0_full h1_full", "h1_full", "h1_full", "h2_full", "h2_full", "h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How did September 2011 data show agency evaluation of centers?", "What happened when OMB required agency action on their data center work?", "What agencies didn't complete their information?", "Why did agencies report not completing necessary information?", "How had the GAO previously reported on agency action?", "What issues will continue as this recommendation isn't filled?", "How had OMB agencies failed to have necessary elements?", "What departments failed to provide full schedules?", "What departments failed to provide full costs?", "What failures might agencies experience due to their failures?", "How helpful will OMB's standards be to agencies?", "How well did consolidation proceed?", "What areas of success were there?", "What was the most prevalent success?", "What was reported beside successes?", "What were some common challenges?", "What were some less common challenges?", "What challenges changes from 2011 to 2012?", "What is it important that OMB provides?" ], "summary": [ "As of the most recent agency data submitted in September 2011, 24 agencies identified almost 2,900 total centers, established plans to close 1,186 of them by 2015, and estimated they would realize over $2.4 billion in cost savings in doing so.", "However, while the Office of Management and Budget (OMB) required agencies to complete missing elements in their data center inventories and plans by the end of September 2011, only 3 agencies submitted complete inventories and only 1 agency submitted a complete plan.", "For example, in their inventories, 17 agencies do not provide full information on their information technology facilities and energy usage, and 8 provide only partial information on their servers. Further, in their consolidation plans, 13 agencies do not provide a full master program schedule and 21 agencies do not fully report their expected cost savings.", "Officials from several agencies reported that some of this information was unavailable at certain facilities or that the information was still being developed.", "In a prior report, GAO recommended that agencies complete the missing elements from their inventories and plans.", "Until these inventories and plans are complete, agencies will continue to be at risk of not realizing anticipated savings, improved infrastructure utilization, or energy efficiency.", "OMB requires a master program schedule and a cost-benefit analysis (a type of cost estimate) as key requirements of agencies’ consolidation plans, but none of the five agencies GAO reviewed had a schedule or cost estimate that was fully consistent with the four selected attributes of a properly sequenced schedule (such as having identified dependencies), or the four characteristics that form the basis of a reliable cost estimate (such as being comprehensive and well-documented).", "For example, the Departments of Interior and Transportation did not have schedules and the Department of Agriculture’s schedule was consistent with three of four attributes.", "Additionally, cost estimates for the Departments of Homeland Security and Veterans Affairs were partially consistent with the four cost characteristics.", "In the absence of reliable schedules and estimates, these agencies are at risk of experiencing cost overruns, missed deadlines, and performance shortfalls.", "OMB has established a standardized cost model to aid agencies in their consolidation planning efforts, but use of the model is voluntary.", "Many federal agencies reported consolidation successes.", "Notably, 20 agencies identified 34 areas of success, although only 3 of those areas were reported by more than 1 agency.", "The two most-reported successes were focusing on the benefits of key technologies and the benefits of working with other agencies and components to identify consolidation opportunities.", "However, agencies have continued to report a number of the same challenges that GAO first described in 2011, while other challenges are evolving.", "For example, 15 agencies reported continued issues with obtaining power usage information and 9 agencies reported that their organization continued to struggle with acquiring the funding required for consolidation.", "However, other challenges appear to be less prevalent, including challenges in identifying consolidation cost savings and meeting OMB’s deadlines.", "Overall, 25 challenges that were reported in 2011 were no longer reported in 2012.", "In light of these successes and challenges, it is important for OMB to continue to provide leadership and guidance, such as—as GAO previously recommended—using the consolidation task force to monitor agencies’ consolidation efforts." ], "parent_pair_index": [ -1, -1, 1, 2, -1, 4, -1, 0, 0, -1, -1, -1, 0, 0, -1, 3, 3, 3, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 4, 4 ] }

{ "title": [ "Background", "ACV Program Is on Track to Meet Development Cost Goals with No Additional Schedule Delays", "ACV May Enter Production with Manufacturing Maturity That Does Not Meet Best Practices", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Defense", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact:", "Staff Acknowledgments:" ], "paragraphs": [ "The ACV is being developed as a partial or full replacement for the AAV, which is a tracked (non-wheeled) vehicle with capability to launch from ships to reach the shore carrying up to 21 Marines at a speed of up to approximately 6 knots. This speed effectively limits its range for traveling from ship to shore to no farther than 7.4 nautical miles. In order to upgrade the AAV to meet current threats and establish a path toward an enhanced platform, DOD and the Marine Corps implemented an incremental approach. The first step was to improve the AAVs’ protection from threats such as improvised explosive devices by installing enhanced armor and other equipment—referred to as survivability upgrades—efforts which are currently underway. The second step was to establish a plan to replace the AAV with a new vehicle, the ACV, which would develop and enhance capabilities in three incremental steps:\nACV 1.1 would be a wheeled vehicle that provides improved protected land mobility but limited amphibious capability. In operations, it is expected to be part of an amphibious assault through the use of a surface connector craft to travel from ship to shore. This increment would leverage prototypes, demonstration testing, and other study results from the previously suspended Marine Personnel Carrier program.\nACV 1.2 would have improved amphibious capability, including the ability to self-deploy and swim to shore. The development phase of the second ACV increment (ACV 1.2) is scheduled to begin in February 2019.\nACV 2.0 would focus on exploring technologies to attain higher water speed capability.\nThe ACV 1.1 program was initiated in 2014 and development of ACV 1.1 vehicles started in November 2015. The remainder of this report is focused on development and acquisition of the ACV 1.1, which we will refer to as ACV. The Marine Corps acquisition of the ACV employs a two- phase strategy for selecting a contractor to produce the ACV fleet. In the first phase, the program issued a solicitation for offerors to submit proposals and provided for award of multiple contracts for each contractor to design and develop 16 prototypes for performance assessment. In the second phase, referred to as the down-select process, after testing the prototypes, the Marine Corps intends to select a single contractor to continue into the start of production. The Marine Corps received five initial proposals and ultimately awarded contracts to BAE and SAIC to develop the ACV prototypes. The Marine Corps considered the ACV to be a substantially non-developmental item because both contractors’ designs were based on vehicles that were already in production and deployed by other militaries.\nFigure 1 depicts the BAE and SAIC prototype vehicles. After testing the prototypes, the Marine Corps plans to select a single contractor to continue into the production phase.\nThe first prototypes were delivered in January 2017 and have since been undergoing developmental, operational, and live fire testing.\nDevelopmental testing assesses whether the system meets all technical requirements and is used to: verify the status of technical progress, determine that design risks are minimized, substantiate achievement of contract technical performance, and certify readiness for initial operational testing. ACV developmental testing includes testing for sustainability, system survivability, and water and land mobility.\nOperational testing (assessment) is the field test, under realistic conditions, for the purpose of determining effectiveness and suitability of the weapons for use in combat by typical military users.\nLive fire testing is used to demonstrate vehicle capability against a range of ballistic and non-ballistic threats expected to be encountered in the modern battlefield, such as improvised explosive devices among others.\nIn January 2018 the Marine Corps started an operational assessment, which was scheduled to be completed in March 2018. The assessments consist of field tests, under realistic conditions, to inform the decision to enter production. Ongoing test results, including the operational assessment, will be used to inform the ACV June 2018 production decision.\nFigure 2 is a timeline of the ACV program’s progress and plans to full capability. The ACV program plans to produce at least 208 vehicles after exercising contract options for 2 years of low-rate production of 30 vehicles each year starting in 2018 and then exercise options for 2 years of full-rate production for the remaining 148 or more vehicles starting in 2020.\nIn addition to testing the prototype vehicles, the program is holding a production readiness review that started in November 2017 and according to program officials, they will keep the review open until April 2018. During this review, the program will determine whether the designs are ready for production and whether the contractors have accomplished adequate production planning to enter production. Officials from DCMA, which conducts contract performance oversight, have provided support in assessing production readiness. After receiving the proposals for the production down-select, the program will hold a system verification review in April 2018 to verify that the performance of the ACV prototypes meets capability requirements and performance specifications.\nThis report represents the last in the series of reports we are to issue in response to the fiscal year 2014 National Defense Authorization Act, which contains a provision that we review and report annually on the ACV program until 2018. Previously, In October 2015 we found that the Marine Corps made efforts to adopt best practices and minimize acquisition risk, including: adopting an incremental approach to update capabilities, using proven technologies, increasing competition, and awarding fixed-price incentive contracts for much of the development work.\nIn April 2017, we found that DOD’s life cycle cost estimate for ACV 1.1 of about $6.2 billion, fully or substantially met the criteria for the four characteristics of a high-quality reliable cost estimate. However, we also found that changes the Marine Corps made to the acquisition schedule — partly in response to a stop work order following a bid protest that was denied by GAO in March 2016 — raised acquisition risk by increasing the overlap between development activities, such as testing of the vehicles, with production. This is a risk we had identified in a previous report. As a result, we recommended that the Marine Corps delay the production decision until 2019. DOD did not concur with that recommendation.", "Costs for the development phase of ACV are on track to meet cost goals established at the start of development, based on a recent Navy estimate, the ACV program office, and reporting from the contractors. In September 2017, the ACV program’s Defense Acquisition Executive Summary Report for ACV provided a Navy cost estimate for development of $750.7 million, less than the $810.5 million baseline established at the start of development in November 2015. Program officials also indicated that the ACV program was on track to meet cost goals. They noted that the contractors have not contacted the government to negotiate an increase in billing prices, as of December 2017. Since both of the contractors have delivered all 16 of their required prototypes and the manufacturing of the prototypes is the largest anticipated portion of ACV development contract costs, most of the costs associated with the manufacturing of the prototypes have likely been realized.\nThe Marine Corps made efforts to reduce cost risk to the government by adopting a fixed-price incentive (firm target) contract type for the construction of the prototype vehicles. As we previously reported in October 2015, the Marine Corps planned to award hybrid contracts to each of the ACV development contractors, which would apply different pricing structures for different activities. The Marine Corps awarded the contracts in November 2015 as planned. Most critically, a fixed-price incentive contract type is being used for items in the contract associated with the manufacturing of the development prototypes, which was anticipated to be the largest portion of ACV development contract costs. Under this contract type, the government’s risk is generally limited to the contract’s price ceiling. Incentive contracts are appropriate when a firm- fixed-price contract is not appropriate and the required supplies can be acquired at lower costs by relating the amount of profit or fee to the contractor’s performance.\nAccording to Federal Acquisition Regulation, since it is usually to the government’s advantage for the contractor to assume substantial cost responsibility and appropriate share of the cost risk, fixed-price incentive contracts are preferred over cost-reimbursement incentive contracts when contract costs and performance requirements are reasonably certain. The fixed-price incentive (firm target) contract type provides for adjusting profit and establishing the final contract price by application of a formula based on the relationship of total final negotiated cost to total target cost. The final price is subject to a price ceiling, negotiated at the outset. If the final negotiated cost exceeds the price ceiling, the contractor absorbs the difference. As we also previously reported, however, the Marine Corps received a waiver to forgo the establishment of a certified Earned Value Management System for the ACV program, which reduces the regularly-available cost, schedule, and performance data available for the program to review.\nThe ACV program office and DOD also indicated that they anticipate production costs will be within goals established at the start of development, though key production costs have not yet been determined. The program’s development contracts with the two competing contractors contain fixed-price incentive options for 4 years of production. The pricing of the production vehicles will not occur, however, until DOD makes a production decision in June 2018 and negotiates the final terms and exercises the production option with one of the contractors.\nThe Marine Corps has made no major changes to the ACV acquisition schedule since we previously reported on the program in April 2017. In that report we found that the production decision was moved from February to June 2018 after a stop work order was issued to the contractors in response to a bid protest from a vendor that was not selected for one of the ACV development contracts. A senior program official emphasized the importance of keeping the ACV acquisition on schedule because the capability it provides is complementary to a broader set of capability updates across multiple platforms that the Marine Corps is in the process of procuring.", "The ACV program office is in the process of conducting tests and assessments to determine if the program is on track to meet the criteria to enter production, but program officials told us the Navy—which has the authority to approve major acquisition milestone decisions for the program—may choose to start low-rate production without meeting established best practices for manufacturing maturity. At the start of development, DOD established criteria for entering production in areas such as capability performance and the status of the contractors’ manufacturing readiness to manufacture the ACV vehicles. Leading up to the production decision, the program is engaged in a number of activities such as the operational assessment and production readiness review to inform the decision to start production. The production readiness review has a critical role in informing the decision to enter production because it represents an opportunity for the program to determine the maturity of the contractor’s manufacturing process and assess potential risks related to cost, schedule, or performance. Our previous reviews about manufacturing best practices found that identifying manufacturing risks early in the acquisition cycle and assessing those risks prior to key decision points, such as the decision to enter production, reduces the likelihood of cost growth and potential delays.\nThe ACV program has used the DOD Manufacturing Readiness Level (MRL) Deskbook to identify levels of manufacturing capability and establish targets for minimal levels of manufacturing readiness at specific acquisition milestones. The ratings are applied to various risk areas such as design, materials, process capability and control, and quality management. Table 1 shows the basic MRL definitions provided by the Joint Defense Technology Panel.\nThe MRL Deskbook recommends that a program is expected to demonstrate a MRL of 8 by the time of the low-rate production decision. However, GAO’s previously identified best practices for managing manufacturing risks recommend programs reach a higher level—MRL- 9— for the risk area of process capability and control before entering low- rate production. At MRL-9, a program is expected to have its applicable manufacturing processes in statistical control. The MRL Deskbook recommends that a program achieve an MRL-9 at the start of full-rate production.\nThe Marine Corps has eliminated manufacturing capability as a criterion for consideration in the down-select production decision. In the solicitation issued to the two competing contractors for the production decision in December 2017, the Marine Corps identified two criteria that would be considered to determine the winner of the down-select competition for the production decision. They are, in descending order of importance: (1) technical performance of the prototype vehicles and (2) the contractors’ submitted cost proposals. Previously, the ACV acquisition strategy and development contracts identified five criteria for the selection process, with manufacturing capability as the second most important factor (behind technical performance). The development contracts stipulated that the government reserved the right to adjust the factors and their order of importance prior to the release of the solicitation for the production down- select decision. Program officials said that narrowing the down-select factors to performance test results and cost was in line with the original intent of the program to use the best value tradeoff process described in the Federal Acquisition Regulation and that the revised criteria were appropriate for a non-developmental item such as the ACV.\nWhile the program removed manufacturing capabilities from its criteria for selecting the contractor for production, ACV program officials are still assessing manufacturing readiness to support their production decision. Program officials stated that they could enter production at a lower level of manufacturing readiness than DOD guidance or GAO identified best practices suggest. The program started a production readiness review in November 2017 to determine the contractors’ respective manufacturing maturity. According to program officials, they will keep the review open until April 2018, at which point the program will make a determination about the contractors’ manufacturing readiness levels. The program office confirmed that the ACV criterion for entering production is to achieve an MRL-8 but noted that it is possible that the program could choose to enter into production without an overall MRL-8. Program officials stated that if there are any specific risk areas that are assessed below that threshold, the program office will define the risk and make a recommendation to the Navy for entry into production based on whether or not they consider the risk acceptable.\nTo help inform its determination, program officials said that they will review the manufacturing readiness assessments produced by the contractors, as well as reviews by the DCMA, which is responsible for assisting with contract oversight. Because the two contractors were still in competition at the time of the release of this report, we are unable to publicly report additional, more detailed, information about production readiness or performance tests. However, we have previously found that programs with insufficient manufacturing knowledge at the production decision face increased risk of production quality issues, cost growth, and schedule delays.\nEntering the production phase of the ACV acquisition with manufacturing readiness levels lower than those recommended by DOD guidance and GAO-identified best practices would increase the likelihood of outcomes associated with insufficiently mature manufacturing capabilities, such as production quality issues and schedule delays. The Marine Corps has already been authorized funding to start production and plans to exercise options in 2018 to produce 30 vehicles for the first year of low-rate production. However, the Marine Corps has two upcoming decisions that would provide opportunities to refocus on manufacturing readiness for the ACV—specifically the decision to enter into the second year of low-rate production in 2019 for 30 vehicles, and the decision to enter the first year of full-rate production in 2020 and acquire 56 of the remaining 148 vehicles. Acquiring additional vehicles before ensuring sufficient manufacturing maturity could raise the risk that the contractor may not be sufficiently prepared for continued production, which could result in delays in delivery of acceptable vehicles or additional costs to the government.", "The Marine Corps has long identified the need for the enhanced capabilities envisioned through the ACV program and is nearing the potential production of such a vehicle. Following the cancellation of the EFV program after the expenditure of $3.7 billion, the ACV program represents an opportunity to follow a better acquisition approach. It is too early to determine whether the contractors will meet targets for production readiness by the time of the production decision, but the program office is considering entering production without meeting the recommended manufacturing maturity levels established by DOD or GAO-identified best practices.\nWe have already identified the ACV program as adopting an aggressive acquisition schedule in which the amount of concurrent developmental testing and production is more than typical acquisition programs. In fiscal year 2018, Congress authorized funding for the program to start production, but the decision to enter a second year of low-rate production and the decision to start full-rate production represent opportunities for the ACV program to verify the manufacturer has achieved a sufficient level of readiness before commencing production of the bulk of vehicles. If the Marine Corps does not take steps to ensure that the contractor’s manufacturing readiness is sufficiently mature, as demonstrated through MRLs, prior to committing to additional production beyond the first year of low-rate production, there is an increased risk for production quality issues, cost growth, and schedule delays.", "We are making two recommendations to DOD.\nThe Secretary of the Navy should take steps to ensure that the Marine Corps not enter the second year of low-rate production until after the Marine Corps has determined that the contractor has achieved an MRL of at least an 8 for all risk areas. (Recommendation 1)\nThe Secretary of the Navy should take steps to ensure that the Marine Corps not enter full-rate production until the Marine Corps has determined that the contractor has achieved an MRL of at least 9 for all risk areas. (Recommendation 2)", "We provided a draft of this product to DOD for comment. In its comments, reproduced in appendix I, DOD partially concurred with GAO’s recommendations.\nDOD agreed that manufacturing readiness should be assessed prior entering both the second year of low-rate production and the start of full- rate production, and plans to do so. DOD acknowledged that the MRL Deskbook provides best practices for identifying risks, but noted that the ACV program is not required to follow it. DOD noted that it may be reasonable to proceed into manufacturing at lower MRLs, if steps to mitigate identified risks are taken. However, DOD disagreed that not demonstrating a specified MRL for any individual risk area, in itself, should delay the start of either production milestone. DOD expressed concern that delaying subsequent years of production, if MRLs are not at the levels recommended, could lead to counterproductive breaks in production.\nWe agree that adopting the MRL Deskbook is not required by DOD and represents best practices to minimize production risk. However, we also believe that demonstrating the MRL levels recommended in the MRL Deskbook for all risk areas mitigates increased risk associated with the aggressive schedule pursued by the ACV program—about which we have previously expressed concerns. We believe our recommendation to achieve an overall MRL-8 by the second year of low-rate production is a reasonable goal, considering it gives the ACV program an additional year after the point at which the MRL Deskbook recommends reaching MRL- 8—the start of low-rate production. In addition, ensuring that all manufacturing readiness risk areas are at MRL-9 for the start of full-rate production, as recommended by best practices in the MRL Deskbook, would help further alleviate risks associated with the program’s aggressive schedule. We appreciate the DOD concerns about delaying subsequent years of production if MRLs have not reached those identified in the best practices in the MRL Deskbook, but note that not doing so increases the likelihood of production quality issues that could lead to cost growth and schedule delays in future years. Therefore, we made no changes to the recommendations in response to the comments.\nWe are sending copies of this report to interested congressional committees; the Secretary of Defense; the Under Secretary of Defense for Acquisition and Sustainment; the Secretary of the Navy; and the Commandant of the Marine Corps. This report also is available at no charge on GAO’s website at http://www.gao.gov.\nShould you or your staff have any questions on this report, please contact me at (202) 512-4841 or ludwigsonj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report GAO staff who made key contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, Bruce H. Thomas (Assistant Director), Matt Shaffer (Analyst in Charge), Pete Anderson, Alexandra Jeszeck, Jennifer Leotta, Roxanna Sun, and Marie Ahearn made key contributions to this report." ], "depth": [ 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h0_full h1_full", "h0_full", "h2_full h1_full", "", "", "h2_full h1_full", "", "", "", "" ] }

{ "question": [ "How is ACV 1.1 on track?", "How is the estimate of ACV cost being measured?", "What data supports this?", "How strictly has the ACV adhered to schedule?", "What is the production timeline for the ACV?", "What versions may follow the ACV 1.1?", "How will the production of ACV 1.1 proceed?", "How is the production of ACV 1.1 against regulations?", "What is manufacturing maturity?", "What is the DOD guide of MRLs?", "What had the GAO previously found on manufacturing maturity and practices?", "How will the Marine Corps proceed production of the ACV 1.1?", "What will proceeding with this action cause?", "What action did the GAO recommend regarding the ACV 1.1?", "How did the DOD respond to GAO recommendations?", "What was the GAO's response to the DOD?" ], "summary": [ "The first version of the Amphibious Combat Vehicle (ACV 1.1) is on track to meet development cost goals with no additional anticipated delays for major acquisition milestones.", "With regard to costs, the development phase of ACV 1.1 is on pace to not exceed cost goals that were established at the start of development, based on a recent Navy estimate, the ACV program office, and reporting from the contractors.", "For example, a September 2017 program progress review reported a Navy estimate of the cost of development at $750.7 million, less than the $810.5 million baseline established at the beginning of development.", "With regard to schedule, the ACV program has made no major changes to the acquisition schedule since GAO previously reported on the program in April 2017.", "ACV 1.1 program officials are in the process of preparing to down-select to a single contactor and enter low-rate production in June 2018, start a second round of low rate production the following year, and begin full-rate production in 2020.", "ACV 1.1 may be followed by the acquisition of other versions (ACV 1.2 and ACV 2.0) with advanced capabilities such as higher water speeds.", "The ACV program is preparing to start production of ACV 1.1, which includes determining that the contractors' manufacturing capabilities are sufficiently mature.", "However, program officials are considering entering production with a lower level of manufacturing maturity than called for in Department of Defense (DOD) guidance or GAO identified best practices.", "The ACV program measures manufacturing maturity with manufacturing readiness levels (MRL) for risk areas such as design, materials, process capability and control, and quality management.", "DOD guidance for weapons acquisition production recommends that programs achieve an MRL of 8 across all risk areas before entering low-rate production and that a program achieve an MRL of 9 at the start of full-rate production.", "GAO's previous reviews about manufacturing best practices found that achieving manufacturing maturity and identifying production risks early in the acquisition cycle and assessing those risks prior to key decision points, such as the decision to enter production, reduces the likelihood of quality issues, cost growth, and delays.", "The Marine Corps contract option for producing the first round of low-rate production for ACV 1.1 will be exercised after June 2018; the contract also contains additional options for production vehicles.", "Making the decisions to proceed with the second round of low-rate production and for the start of full-rate production before meeting called-for levels of manufacturing readiness criteria increases the risk that ACV 1.1 will witness delays and increased costs.", "GAO recommends the Marine Corps (1) not enter the second year of low-rate production for ACV 1.1 until after the contractor has achieved an overall MRL of 8 and (2) not enter full-rate production until achieving an overall MRL of 9.", "DOD partially concurred with both recommendations, but noted that it is reasonable to proceed at lower MRL levels if steps are taken to mitigate risk.", "GAO made no changes to its recommendations in response to these comments." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, -1, -1, 1, -1, -1, -1, 5, -1, -1, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 4, 5, 5, 5 ] }

{ "title": [ "", "Overview", "EB-5 Classification Requirements", "Investment of Capital", "A New Commercial Enterprise", "Job Creation", "Regional Center Program", "What is a Regional Center?", "The EB-5 Petition Process", "EB-5 Admissions", "Economic Impact", "Policy Issues", "Application and Petition Processing", "USCIS Expertise", "Measuring Economic Impacts", "Fraud and Security Risks", "Data Collection", "Targeted Employment Area (TEA) Determinations", "Legislation in the 114th Congress", "Proposed Changes to the Regional Center Program", "Proposed General Changes", "Target Employment Areas", "Potential New Programs", "Appendix. Additional EB-5 Visa Data" ], "paragraphs": [ "", "Congress created several nonimmigrant and immigrant visa categories as a way to increase investment and job creation in the United States. There are two nonimmigrant investor visa categories, the E-1 visa for treaty traders and the E-2 visa for treaty investors. For immigrants, there is one investor visa category, the EB-5 visa, which is the fifth employment preference immigrant visa category. The EB-5 visa was created through the Immigration Act of 1990 ( P.L. 101-649 ). The goal of the EB-5 category is to attract new foreign capital investment to the United States and generate employment. The category provides individual foreign national investors and their derivatives lawful permanent residence (LPR) in the United States when they invest a specified amount of capital in a new commercial enterprise that creates at least 10 jobs.\nIn general, individuals receiving EB-5 visas are granted a conditional residence status. After approximately two years they must apply to remove the conditionality from their residency status. If they have met the visa requirements (i.e., invested and sustained the required money and created the required jobs), the foreign national receives full LPR status. If the foreign national investor has not met the requirements or does not apply to have the conditional status removed, his or her conditional LPR status is terminated, and, generally, the foreign national is required to leave the United States, or will be placed in removal proceedings.\nSome Members of Congress contended during discussions around the creation of the visa that potential immigrants would be \"buying their way in\" to the United States. Others maintained that the program's requirements would protect its integrity. The Senate Judiciary Committee report on the originating legislation stated that it \"is intended to provide new employment for U.S. workers and to infuse new capital into the country, not to provide immigrant visas to wealthy individuals.\"\nIn 1992, Congress created the Regional Center Program, an additional pathway for foreign national investors to obtain an EB-5 visa. Unlike the EB-5 visa category, which does not expire, the Regional Center Program is temporary and is scheduled to expire on September 30, 2016. By investing through a regional center, foreign national investors are subject to different requirements pertaining to the measure of job creation, and are unlikely to be involved in the management of the commercial enterprise. For each fiscal year, approximately 7.1% (roughly 10,000) of the total employment-based visas (140,000) are available for EB-5 investors and their derivatives, of which 3,000 are reserved for entrepreneurs investing in \"targeted employment areas\" (TEA), and 3,000 are reserved for those participating in the Regional Center Program.\nThe upcoming expiration date of the Regional Center Program has renewed congressional focus on the EB-5 visa category. Questions include whether the Regional Center Program should be extended or made permanent, and if so should it be modified, or should it be allowed to expire.\nThere are additional concerns that Congress may consider with respect to the EB-5 visa category as a whole. For example, the required amounts of capital have not changed since the program was created in 1990. This has raised questions about whether the amounts should be adjusted, and what effect increasing the amounts would have on the number of applicants. Some have also raised concerns about fraud in the program, including possible national security concerns. Thus, Congress may choose to evaluate the oversight of the EB-5 category and the fraud detection mechanisms used during EB-5 adjudications. Other issues that have been raised include the capacity of U.S. Citizenship and Immigration Service (USCIS, part of the Department of Homeland Security (DHS)) to handle the complexity of regional center designations and EB-5 petition adjudications, the need for more data collection, the measurement of the visa's economic impacts, and state determinations of targeted employment areas.\nThis report begins with a discussion of the EB-5 visa's requirements and an overview of the Regional Center Program. It then provides information on the EB-5 application (petition) process, admissions, and the economic impacts of the visa. Next, the report reviews policy issues surrounding the visa and the Regional Center Program, specifically application processing, USCIS expertise, the measurement of economic impacts, fraud and security risks, data collection, and the determination of targeted employment areas. The report concludes with a summary of current legislation on the EB-5 visa and the Regional Center Program in the 114 th Congress. The Appendix provides additional data on the visa.", "The EB-5 visa classification for foreign investors is based on three components: (1) investment of capital, (2) a new commercial enterprise, and (3) job creation. Currently, there are two different pathways for lawful permanent resident (LPR) status through the EB-5 visa category, the standard visa and the Regional Center Program. The overwhelming majority of investors invest through the Regional Center Program. Both pathways have the same requirements with respect to the amount of capital required to be invested and the minimum number of jobs to be created, but they differ in the measure of job creation. In addition, the role of the investor in the enterprise tends to differ between the two pathways.", "A foreign national must invest at least $1,000,000 in a new commercial enterprise to qualify for the EB-5 visa. If the immigrant decides to invest in a designated \"targeted employment area,\" (TEA) the required minimum is $500,000. For both investment pathways, capital can include non-cash contributions, but the immigrant investor must establish that he/she is the legal owner of the capital and that it was obtained through lawful means. Additionally, the entire investment must be \"at risk\" for the purpose of generating a return.", "A commercial enterprise is \"any for-profit activity formed for the ongoing conduct of lawful business,\" such as a sole proprietorship, partnership, holding company, joint venture, corporation, business trust, or other publicly or privately owned entity. A new commercial enterprise is one established after November 29, 1990. If the commercial enterprise was established before November 29, 1990, the immigrant investor's capital must have been used to expand or restructure/reorganize the enterprise. Applicants are also allowed to invest funds in \"troubled businesses.\" The immigrant investor must be engaged in the management of the commercial enterprise through policy formation, daily managerial responsibilities, or direct management.", "In order to meet the requirements for the EB-5 visa, the foreign national's investment capital must create a minimum of 10 jobs in the new commercial enterprise. The EB-5 visa has three different measures of job creation.\n1. If an immigrant invests in a troubled business, directly or through a regional center, rather than creating new jobs, he/she can show that they have preserved jobs for at least two years, in lieu of creating new jobs. 2. Investments made in a new commercial enterprise in a non-regional center context must create 10 jobs within the commercial enterprise. (Such jobs are called direct or payroll jobs.) 3. For new commercial enterprises located within a regional center, the 10 new jobs required can be created directly or indirectly (i.e., employees not working directly for the commercial enterprise).", "The Regional Center Program was originally authorized in the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act in 1992. Since its creation, the program has been reauthorized several times and is set to expire on September 30, 2016. The program was established as a pilot to achieve the economic growth and job creation goals of the immigrant investor statute by encouraging immigrants to invest in commercial enterprises located within economic units known as \"regional centers.\" In order to receive investment from foreign nationals wishing to obtain EB-5 status, a regional center must be designated as such by USCIS. Regional centers are intended to provide a coordinated focus of foreign investment toward specific geographic regions (see section entitled \" What is a Regional Center? \" for a detailed discussion). In other words, regional centers pool the investments of multiple EB-5 investors.\nThe Regional Center Program differs from the standard EB-5 visa in three ways ( Table 1 ). First, although both pathways require individual investors to create at least 10 jobs, in the regional center context indirect job creation may be counted instead of or in addition to direct job creation. Second, unlike the standard EB-5 visa, foreign nationals investing in a regional center are unlikely to be involved in the management and daily activities of the commercial enterprise. Third, the EB-5 visa category is permanent, while the Regional Center Program is temporary. As previously mentioned, the program is set to expire on September 30, 2016.\nForeign nationals may invest in any of the regional centers that are currently approved to qualify for their conditional LPR status. Also, investments may be both within a regional center and a TEA. Although a regional center does not have to be in a TEA, almost all foreign nationals applying for EB-5 status invest with regional centers whose defined boundaries constitute a TEA. (See Figure 1 .)", "Regional centers are defined as \"any economic unit, public or private, which is involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment.\" More simply, the term \"regional center\" refers to an entity (often a limited partnership or a limited liability corporation) where investment from multiple foreign nationals can be pooled to fund a broad range of projects within a specific geographic area. Regional centers can be privately owned, publicly owned (operated by a city, county, state, or economic development agency), or a public-private partnership. There are many different models for regional centers, such as the lending model, where the new commercial enterprise is a lending entity that provides loans to those (e.g., U.S. citizens) seeking funding for business activities, such as new construction or expansions of their operations. Regional centers can also use an equity model, where pooled EB-5 investments are used to purchase equity stakes in a project company (i.e., job-creating entity). In addition, regional centers have been created for direct investment to build a variety of projects, such as hotels, a ski resort, convention centers, arenas, and retail and mixed use developments. Certain state (e.g., Hawaii) and local governments have also established their own regional centers.\nSince the inception of the Regional Center Program in 1992, the number of USCIS-approved regional centers has increased substantially. From FY2007 to FY2009, it rose more than three-fold, from 11 to 72. As of January 4, 2016, there were 790 approved regional centers across the United States. However, not all regional centers have received investment from foreign nationals wishing to immigrate under the EB-5 visa category. Additionally, as of January 5, 2016, USCIS had terminated the participation of 39 regional centers from the Regional Center Program.\nIn the last decade, the use of regional centers among immigrant investors has also grown substantially. Figure 1 displays the distribution of EB-5 grantees investing through (1) the standard program in a non-TEA, (2) the standard program in a TEA, and (3) through a regional center. The proportion of immigrant investors using regional centers, specifically those in a TEA, has been increasing, especially since FY2007. In FY2006, investments in regional centers in a TEA were responsible for approximately 12% of the visas used; by FY2014 they represented 97% of the visas used.", "The EB-5 petition/application process, which is largely administered by USCIS, requires various steps before an individual can obtain his/her full (i.e., unconditional) LPR status. Individuals who are admitted to the United States on the basis of EB-5 visas are granted a conditional resident status. After approximately two years they can apply to remove the conditionality if they have met the visa requirements (i.e., invested and sustained the required investment and created the required jobs).\nFor a foreign national investor, the first step of the process consists of filing USCIS Form I-526, Immigrant Petition by Alien Entrepreneur . At this point, a foreign national has to prove that he/she meets the requirements for EB-5 classification, including that the capital being invested came from a legitimate source, and that he/she has presented a valid business plan or showed that the investment will go to a USCIS-certified regional center. Once the I-526 is approved, the foreign national would need to obtain a visa from the Department of State (DOS) to enter the United States if he/she is not currently in the country, or adjust status with USCIS if he/she is. Individuals not in the United States file Form DS-260 Application for Immigrant Visa and Alien Registration with DOS and individuals within the United States file Form I-485 Application to Register Permanent Residence or Adjust Status with USCIS. At this stage, DOS and USCIS also check that the foreign national is not inadmissible under the grounds of inadmissibility of the Immigration and Nationality Act (INA). Those who adjust status within the United States receive their conditional residence once the I-485 is approved. Those who receive a visa from DOS receive their conditional residence once they are admitted into the United States.\nIn FY2004, the number of EB-5 visas granted to new arrivals (60) and the number granted to those who adjusted their status (69) were roughly equal. This ratio has shifted as the growth in visas granted to new arrivals outpaced the number granted to those who adjusted their status, as seen in Figure 2 . As a result, by FY2014 visas to new arrivals accounted for 86% of EB-5 admissions.\nAn investor can petition to remove the conditional status after approximately two years by filing Form I-829 Petition by Entrepreneur to Remove Conditions on Permanent Resident Status . If the I-829 is approved, the conditionality on the residency of the immigrant investor and his/her derivative family members is removed. If the investor did not meet the requirements to adjust to full LPR status, the investor (and his/her family members who immigrated together) must depart from the United States or adjust to another immigration status. USCIS will issue a notice-to-appear (NTA) to foreign nationals who do not apply to have the conditional status removed or who are denied adjustment to full LPR status.\nPetition denial rates have fallen significantly since the early 2000s, as displayed in Figure 3 . For the I-526, the denial rate fell from 82% in FY2001 to 11% in FY2015. For the I-829, the rate fell from 52% in FY2000 to 1% in FY2015. It is likely that the large increase and then decrease in denials is due in part to the altered i nterpretations by the former Immigra tion and Naturalization Service (INS) of the EB-5 require ments that took place in late 1997 and 1998 . In December 1997, the INS General Counsel's office issued a legal opinion discussing the legality of certain business arrangements for EB-5 purposes. Then during 1998, INS issued four precedential decisions that restricted eligibility for the EB-5 category overall . Among other changes, these decisions barred previously acceptable investment mechanisms (e.g ., pooled investment), increased the documentation required to show lawful source s of funds, and changed the rules for determining that investment occurs in a TEA . The INS applied these decisions retroactively. In 2002, t he 21 st Century Department of Jus tice Appropriations Act ( P.L. 107-273 ) provided remedies f or those affected by INS' 1998 decision s by allowing investors affected by the retroactive changes to apply to re-establish eligibility for an EB-5 visa.\nAt the end of FY2015, there were 17,367 pending I-526 petitions and 4,049 pending I-829 petitions. As of January 31, 2016, the processing times were 16.3 months for the I-526 and 16.9 months for the I-829.", "E ach year approximately 10,000 EB-5 visas are available for investors and their derivatives . In the program's early years only a small percentage of available EB-5 visas were being utilized , with the exception of a rise in FY 1997 . Although numerous possible explanations for the overall low admis sion levels in earlier years exist, the notable drop in admissions in FY1998 and FY1999 is due in part to the altered i nterpretations by the former INS of the qualifying requirements that took place in 1998. In 2002, in addition to providing remedies f or some of those affecte d by INS' 1998 decision s , P.L. 107-273 provided some clarification of the requirements in order to pr omote an increase in petitions. P ossibly as a result, after FY2003 there were substantial increases in EB-5 visa admissions. From FY2003 to FY2005, the number of EB-5 visas issued grew five-fold (from 64 to 346), and then increased by seven-fold by FY2010 (to 2,480). From FY2010 to FY2013, the number of EB-5 visas issued increased again by nearly three-fold (to 8,543) ( Figure 4 ).\nAs the allotment for EB-5 visas includes derivatives, the total number of immigrants admitted through the investor visa program does not reflect the actual number of investors. On average, individual immigrant investors (principal investors) accounted for approximately one-third of all those granted EB-5 visas. On average, each investor has had approximately two derivatives granted conditional LPR status along with them over the time period examined.\nTable 2 lists the top 10 EB-5 visa receiving countries in FY2014. China ranks at the top of investor visa recipient countries, with its citizens accounting for approximately 84% (8,156) of all EB-5 visas granted in FY2015. With respect to other EB-5 visa recipient countries in FY2015, Vietnam had the second largest number of EB-5 visas granted, at approximately 3% (280), and Taiwan had the third largest amount of visas at approximately 1% (139).\nFrom FY2009 to FY2014, China has experienced the greatest growth in EB-5 visas issued, as illustrated in Figure 5 . China was granted 1,970 in FY2009 and 9,128 in FY2014 (though the number decreased to 8,156 visas in FY2015). In addition, for FY2014 the maximum number of visas available for Chinese applicants was reached in August 2014. Furthermore, there is a backlog in processing EB-5 visas. As of April 2016, the Department of State was processing visas for Chinese applicants whose petitions had been approved in February 2014.", "Measurement of the EB-5's economic impact on the U.S. economy has resulted in a wide variety of estimates. The EB-5 visa category was created as a way to increase investment and job creation in the U.S. economy. In 2010, USCIS commissioned ICF International, a private consulting firm, to estimate the impact of EB-5 investments on the U.S. economy. The study used a sample of immigrants whose initial investment occurred between 2001 and 2006. It found that EB-5 investments and the economic activity that resulted from them added $700 million to the U.S. gross domestic product (GDP), with the real estate industry sector experiencing the largest impact. This study also found that the visa helped create an estimated 12,000 annual jobs in the United States. The study also estimated that the EB-5 visa classification allowed the federal government to accrue an additional $100 million, and state and local governments, an additional $62 million in tax revenue. Additionally, USCIS commissioned the U.S. Department of Commerce to conduct a new study on the visa's economic impacts.\nUSCIS has also reported its estimates of the visa's creation of investment and jobs. The agency stated that from FY1990 to FY2014, the EB-5 visa has generated more than $11.2 billion in investments and at least 73,730 jobs. Additionally, USCIS reported in February 2016, that as of October 1, 2012, at least $8.7 billion was invested in the U.S. economy and an estimated 35,140 jobs were created through EB-5 visa investments.\nOther non-federal organizations, some of which were commissioned by advocacy organizations, have conducted their own economic analysis of the visa's economic impacts. In 2014, the Brookings Institution estimated that the EB-5 visa created 85,500 full-time jobs and contributed $5 billion in direct investment to the United States since its inception. A 2015 report by U.S. Policy Metrics/Hamilton Place Strategies, commissioned by the EB-5 Investment Coalition (an advocacy organization for EB-5), estimated that from 2005 to 2013 the EB-5 visa generated a minimum of $5.2 billion in investment. The study also noted that in 2013 alone, the visa brought in at least $1.6 billion in investment and, assuming each investment's minimum requirement was met, created 31,000 jobs. Invest in the USA (an EB-5 trade association) commissioned the Alward Institute for Collaborative Science to conduct a peer reviewed study on the impacts of the EB-5 visa. They estimated that EB-5 associated regional center spending contributed $3.58 billion to the U.S. GDP and created over 41,000 jobs in FY2013. These 2013 estimates of EB-5 investments into the economy represent less than 0.1% of the U.S.'s $16.7 trillion GDP.", "In recent years, efforts have been made by USCIS to promote investment by foreigners in the United States economy and to close perceived loopholes for visa exploitation. Some of the issues that have been discussed are the processing of applications, USCIS' expertise and ability to oversee the EB-5 visa, the need for accurate measurement of the visa's economic impact, fraud and security concerns, and TEA determinations. The following sections review these issues and, where applicable, discuss changes USCIS has made to address them.", "An on-going issue within the EB-5 program is the processing times for EB-5 applications (both for the regional center designation and the petitions for foreign national investors), and the impact of these potential delays on the investors and project developers. As of January 31, 2016, the application adjudication times were 13.6 months to apply for EB-5 status (Form I-526), 16.9 months to remove conditionality from LPR status (Form I-829), and 9 months to apply to become a regional center (Form I-924). Stakeholders have complained that the time period from applying for a regional center designation to actually receiving investment (currently approximately 22.6 months) is too long which can negatively impact investment projects. EB-5 stakeholders have also stated that USCIS needs to adjudicate EB-5 and regional center applications in a more predictable manner, noting that the EB-5 program faces competition from other countries with more predictable and speedy immigrant investor program. The USCIS Ombudsman has made recommendations make the EB-5 adjudication process more transparent, consistent, and timely.", "In drawing attention to some of the issues with the EB-5 visa, some have called into question whether USCIS is the right agency to manage the visa classification or whether USCIS should be required to consult or partner with other agencies regarding its EB-5 responsibilities. In taking on the EB-5 program and the Regional Center Program, the INS mission of providing immigration and naturalization services was extended. Notably, the EB-5 program involves complexities including analysis of business plans and economic forecasting models which require specialized expertise. Some lawmakers were aware while creating the EB-5 program that the INS did not have all the expertise needed to implement the visa category and recommended the agency work with other agencies that have the necessary skills. Even after the creation of USCIS in 2003, there were still concerns about whether that agency had the expertise to adjudicate EB-5 petitions. For example, in 2013, the Department of Homeland Security Office of Inspector General (DHS OIG) suggested that USCIS improve its coordination with the Department of Commerce, the Department of Labor's Bureau of Labor Statistics, and the Securities and Exchange Commission in order to leverage their expertise to its advantage during the adjudication process.\nThe Government Accountability Office (GAO) reported improvements in USCIS's economic analysis of EB-5 applications that resulted from its hiring of an additional 22 economists to review business plans, economic analysis, and organizational documents for regional center projects. As of February 2016, the Immigrant Investor Program Office (IPO) was staffed with 110 employees, which included 60 adjudication officers, 28 economists, and 22 additional staff responsible for the direct support and management of the program. USCIS also updated and enhanced its employee training curriculum, which currently includes ongoing training, in order to improve consistency in adjudication process and compliance with statutes, regulations, and policies.", "In the past, USCIS has estimated the EB-5's impact through calculating total job creation and foreign investment. This was done by multiplying the number of EB-5 visas granted by the visa category's minimum requirements ($500,000 investment and 10 jobs created). DHS OIG and GAO reported that these estimates of the program's impact could lead to either understatement or overstatement of certain economic benefits. For example, some investors create more than 10 jobs and/or invest over $500,000. Using visa minimums would therefore underestimate their impact and would not accurately capture the investors' true contribution to the economy. Additionally, the underlying assumptions in these estimations are that each approved visa was actually used and that all foreign investors fulfilled their capital and job creation requirements. If that assumption does not hold, USCIS could therefore be overestimating the impact of the program. USCIS' lack of comprehensive, longitudinal studies on the economic impact of regional centers could also limit its ability to measure impact over time or any impacts that may manifest later. Though such research would be beneficial to understanding the program's impact, USCIS is not mandated by statute to develop comprehensive assessments of the overall benefits of the investor visa program.\nIn 2013, a DHS OIG report stated that \"USCIS is unable to demonstrate the benefits of foreign investment into the U.S. economy.\" The report identified how USCIS' limited authority had played a part in the agency's inability to accurately measure the impact of the EB-5 visa. For example, in a regional center context, where foreign funds contribute to an investment pool that also contains funds from non-EB-5 investors (e.g. U.S. citizens), EB-5 investors can take credit for all jobs created, regardless of the proportion of the investment pool that was actually contributed by EB-5 investors or which investment in the pool was primarily responsible for the job creation. In other words, all the jobs created by the project funded by EB-5 and non-EB-5 investors are credited to EB-5 investors, not only the pro-rated portion that represents the amount of EB-5 investment. Therefore, in these situations USCIS does not have the ability to determine if EB-5 investors were responsible for the creation of jobs, making it difficult for the agency to fully capture the economic impact of the program.\nSince FY2013, USCIS economists have been provided with data from the Regional Input-Output Modeling System (RIMS II) to estimate job creation. USCIS and Department of Commerce economists and industry and academic experts consider RIMS II to be a valid method to verify job creation estimates. GAO noted that \"RIMS II data is a reasonable methodology to verify job creation as permitted in law and program regulation.\" As of FY2015, Immigrant Investor Program Office (IPO) managers estimate that 95% of EB-5 program petitioners used economic models to estimate job creation and 90% of them used RIMS II in their applications to USCIS. However, RIMS II cannot determine the location of jobs created, therefore making it difficult to know whether jobs are created in TEAs.", "In comparison to other immigration visas, GAO found that EB-5 faces the risk of fraud in three unique respects that stem from its investment components. First, immigrant investors must provide evidence that their investment funds were obtained through lawful means. It can be difficult, however, for USCIS to verify the sources, especially with the use of overseas counterfeit documentation or self-reporting that cannot always be verified with foreign banks.\nSecond, the potential for large financial gains through the EB-5 visa may motivate regional center operators and intermediaries to take advantage of foreign investors. Some immigrant investors primarily interested in the immigration benefits of EB-5 may accept lower rates of return or may not adequately research an investment decision. U.S. Securities and Exchange Commission (SEC) officials reported over 100 tips, complaints, and referrals on possible security fraud violations concerning the EB-5 visa from January 2013 to January 2015, and just over half were referred for further investigation. Furthermore, from February 2013 to December 2015, SEC filed 19 cases involving EB-5 offerings, of which almost half involved fraud allegations.\nLastly, the EB-5 visa classification is susceptible to the appearance of favoritism and special access. A DHS OIG report identified the risk of internal and external influence on the EB-5 visa, listing USCIS' lack of protocols to document inquiries, decision making, and responses to external parties who inquired about EB-5 activities as a key issue. In March 2015, DHS OIG released a report prompted by USCIS employee complaints on the management of the EB-5 visa. After the report's issuance, the DHS Secretary asked Congress to help increase the security and integrity of the visa. USCIS subsequently issued a new ethics and integrity protocol for EB-5 that addresses application processing and stakeholder communication.\nWith respect to regional centers, when there is a risk to national security or fraud is found, USCIS opines that it lacks explicit statutory authority to deny or terminate centers. For example, USCIS can deny immigration benefits to individual immigrants who are considered to be a national security threat, but the agency has interpreted the Immigration and Nationality Act (INA) as not being applicable to regional centers because they are pooling funds from investors rather than seeking an immigrant benefit or visa. Furthermore, USCIS lacks the authority to deny or terminate a regional center's participation in EB-5 based solely on fraud or national security concerns. Such participation can only be terminated if the regional center fails to submit required information or it is no longer promoting economic growth. USCIS officials have noted that this statutory limitation is a \"major challenge and requires a significant amount of time to link findings [of fraud or national security concerns] to the statutory criteria,\" for terminating a regional center.\nUSCIS has conducted risk assessments to identify, analyze, and establish solutions for issues surrounding fraud. In 2015, in response to congressional and USCIS requests, the DHS Office of Intelligence and Analysis updated the EB-5 visa's 2012 risk assessment in a classified report. In addition to conducting risk assessments on an \"as needed\" basis, USCIS reported to GAO that it conducts regular oversight work and collaborates with other enforcement agencies that may uncover fraud, such as the Federal Bureau of Investigation (FBI), Securities and Exchange Commission (SEC), and Immigration and Customs Enforcement's (ICE's) Homeland Security Investigations (HSI). EB-5 fraud risks are always evolving, and more opportunities for fraud exist with increasing numbers of visas being granted. GAO noted that \"planned regular or updated future risk assessments could help better position USCIS to identify, evaluate, and address fraud risks given the potential for changing conditions.\" DHS officials have stated that they plan to complete a risk assessment by September 2016 and to continue to conduct at least one annually.\nA 2013 Homeland Security Investigations (HSI) memorandum requested by DHS assessed EB-5's vulnerabilities, specifically \"concerns that this particular visa program [EB-5] may be abused by Iranian operatives to infiltrate the United States.\" The memo, which used data from 2012, identified seven main areas of vulnerability with the visa: export of sensitive technology and economic espionage, use of force by foreign government agents and espionage, use by terrorists, investment fraud by regional centers, investment fraud by investors, fraud conspiracies by investors and regional centers, and illicit finance and money laundering. The memo noted EB-5 petitioners are not required to \"establish significant and verifiable background for program eligibility,\" creating a national security risk. It found there are \"no safeguards that can be put in place that will ensure the integrity of the program.\" Nonetheless, this memo was written before the creation of the Immigrant Investor Program Office (IPO), and these risks may have been addressed.\nGAO noted that USCIS restructured and centralized the EB-5 visa by moving its California operations to Washington, DC, in an effort to increase the agency's fraud detection and response capabilities. This has also allowed USCIS to expand the scope of its background checks and increase the number of databases against which it checks petitioners and applicants. In that same year, USCIS also established a fraud specialist unit within its Fraud Detection and National Security (FDNS) unit specifically for the EB-5 visa. FDNS also reported hiring more fraud specialists with skillsets particularly critical to fraud prevention. FDNS has also begun to provide specialized fraud training for employees and has implemented an \"EB-5 University\" that provides monthly presentations on different fraud-related topics relevant to the adjudication process. USCIS has improved its communication and collaboration with law enforcement agencies such as the SEC, ICE, HSI, and the FBI, to whom it refers cases of potential fraud, criminal activity, or national security threats. The SEC has also worked to educate EB-5 investors through its Office of Investor Education and Advocacy (OIEA).", "GAO has identified limitations in USCIS' collection of information. Addressing these could assist in its assessment and detection of fraud. For example, USCIS relies heavily on paper-based documentation and does not fully transfer information into their electronic databases or do so in a standardized manner. These practices can make it difficult to search for certain information, especially when attempting to identify fraud through the tracking of irregularities or trends. USCIS expects to implement a new program, the Electronic Immigration System (USCIS ELIS), which aims to improve the collection of applicant information through electronic forms. However, as of March 2016, only two of approximately 90 types of immigration forms were available for on-line filing, and it is estimated that the system will be completed in 2019 (over four years later than expected).\nThough they are limited in number and scope, FDNS does currently conduct site visits to projects that IPO staff has found to be of material concern. GAO reported that USCIS, SEC, and HSI officials and members of the national industry association representing regional centers agreed that expanding site visits would increase the program's integrity. USCIS reports that they plan on expanding their random site visit program to the EB-5 program in FY2016.\nMoreover, USCIS is required by statute to interview immigrant investors within 90 days of submitting Form I-829, but the agency also has the authority to waive that requirement. Interviews can be a method to collect corroborating information on whether investors meet program requirements and whether the project may involve fraud. GAO reported that USCIS believes that interviews at the I-829 stage could provide important information and expects to begin conducting them in the near future. At this time, USCIS has not conducted any interviews with immigrant investors submitting the I-829 petition. However, reportedly USCIS is finalizing its I-829 interview process and plans to begin conducting interviews in the third quarter of FY2016.", "As noted above, a majority of investments made in the EB-5 program are being directed to targeted employment areas (TEA). The reduced capital investment minimum required for immigrant investors in TEAs was meant to increase investment in areas of greater need. State governments may designate a TEA by identifying a particular geographic or political subdivision as an area of high unemployment (at least 150% of the national average rate). USCIS defers to the state to determine a high unemployment TEA's geographical or political subdivision boundaries but can review the state's methodologies and data.\nState designation of TEAs due to high unemployment has been criticized as lenient, without clear direction, and inconsistent across states. For instance, USCIS' deference to states' determinations of the boundaries for high unemployment TEAs has allowed for variation across states in how they designate such an area. Furthermore, TEAs can be created through the linking of several census tracts, therefore allowing wealthier tracts linked to tracts with high unemployment to form a TEA. Some believe that this practice can accommodate commuting patterns and provide states with the choice as to what area fits their economic needs. Others have contended that this allows for gerrymandering and permits developers to obtain the TEA designation without actually developing and directly investing in the neediest areas.", "As previously mentioned, in December 2015 the Regional Center Program was reauthorized through September 30, 2016, by the Consolidated Appropriations Act of 2016 ( P.L. 114-113 ). The pending expiration of the program renewed attention on it and legislation has been introduced in the 114 th Congress related to the EB-5 visa category. The following bills would modify the Regional Center Program and the EB-5 visa in general: the American Entrepreneurship and Investment Act ( H.R. 616 ), the EB-JOBS Act ( H.R. 3370 ), the EB-5 Integrity Act ( H.R. 4530 / S. 2415 ), and American Job Creation and Investment Promotion Reform Act of 2015 ( S. 1501 ). In addition, H.R. 3370 and the Jobs in America Act ( H.R. 3987 ) would create a new visa category, similar to the EB-5 category, for foreign national entrepreneurs. On February 2, 2016, the Senate Judiciary Committee held a hearing on the Regional Center Program and S. 1501 ; however, none of the other bills have received action.", "Several of the bills ( H.R. 4530 / S. 2415 , H.R. 3370 , S. 1501 ) would seek to place more controls and requirements on regional centers, including delineating application requirements, establishing a sanction system, expanding reporting requirements, and prohibiting persons who have been convicted of certain crimes from participating in a regional center. In addition, H.R. 4530 / S. 2415 and S. 1501 would create an EB-5 Integrity Fund in the Treasury, from fees on regional centers and those applying for a regional center designation to fund oversight of regional centers. Similarly, H.R. 3370 would create an EB-5 fund to administer and operate the program. H.R. 3370 , H.R. 4560 / S. 2415 , and S. 1501 would also expand DHS's authority to terminate a regional center designation.\nH.R. 4530 / S. 2415 and S. 1501 would create rules and mandate the establishment of channels through which applicants (or their representatives) for a regional center designation or LPR status could discuss case-specific information. S. 1501 would require USCIS to set fees for the applications at a level so that they would be adjudicated in a statutorily specified period of time, establish premium processing for regional center designation applications, and allow DHS to prioritize petitions filed under the Regional Center Program over all other immigrant petitions. H.R. 616 would set maximum processing times of 180 days for regional center application determinations and immigrant investor petitions. H.R. 3370 would establish premium processing for foreign national investors applying for EB-5 status.\nH.R. 4530 / S. 2415 and S. 1501 would specify how an investor demonstrates that the investment capital was obtained from a \"lawful source through lawful means,\" and set procedures for how foreign national investors are to be treated if the regional center in which they were investing lost its designation. Lastly, H.R. 616 , H.R. 3370 , H.R. 4560 , and S. 2415 would permanently authorize the Regional Center Program, while S. 1501 would extend its authorization to September 30, 2020.", "H.R. 3370 and S. 1501 would increase capital investment minimums and tie the investment minimum amounts to the Consumer Price Index (CPI-U). S. 1501 would allow a foreign national who has invested the requisite capital for at least 24 months before being admitted to the United States to receive full LPR status (i.e., not conditional status). H.R. 616 and H.R. 3370 would allow the Secretary of DHS to delegate some authority for the administration of the EB-5 category to the Department of Commerce. In addition, H.R. 616 would remove derivatives from the numerical limitations imposed on the EB-5 visa and eliminate the visa category's per-country quotas.", "With respect to TEAs, H.R. 3370 would expand the definition of a TEA to include a county that has had at least a 20% decrease in population since 1970, an area established for the purpose of a state or federal economic development incentive program, and an area within the geographic boundaries of any military installation closed pursuant to a base closure law. The bill would also provide an allocation of visas for the different types of TEAs. S. 1501 would change the manner in which a TEA is defined, including providing a methodology for determining high unemployment areas for the purposes of designating a TEA. Like S. 1501 , H.R. 616 would increase the number of visas set aside for TEAs from 3,000 to 5,000; but it would specify that TEA designations by the states are to be granted deference by DHS.", "H.R. 3370 would create a new visa category (EB-6) similar to the EB-5 category for foreign nationals who (1) wish to start a new commercial enterprise with a specified amount of money from qualified investors or venture capital funds; or (2) have already started and are managing a new commercial enterprise that employs a specified number of persons. H.R. 3987 would create a new visa category (EB-6) for foreign nationals who have received investment to start a new commercial enterprise, and for foreign nationals on H-1B visas who have an advanced degree in science, technology, engineering, or math (STEM) and meet other requirements. Similar to the EB-5 category, under H.R. 3370 and H.R. 3987 , the entrepreneurs would initially receive conditional LPR status, and after two years they would need to have created a certain number of jobs to be converted to full LPR status. Under H.R. 3370 , the EB-5 visa would be exempt from the numerical limits.", "" ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 1, 2, 2, 3, 2, 3 ], "alignment": [ "h5_title h0_title h2_title h4_title h3_title h1_title h6_title", "h0_full h2_full h6_full h1_full", "h0_title", "h0_full", "", "", "h2_full", "h2_full", "", "h1_full", "", "h5_title h4_title h3_title", "h3_full", "h3_full", "h3_full", "h4_full", "h4_full", "h5_full", "h6_full", "", "h6_title", "h6_full", "h6_full", "" ] }

{ "question": [ "Why was the immigrant investor visa created?", "Why is the immigrant investor visa referred to as EB-5?", "How does the EB-5 impact foreign nationals?", "What capital is needed to provide LPR status?", "What is the availability of the EB-5s?", "What was the EB-5 usage in Asia?", "What was the breakdown of the Asian investors?", "How was the Regional Center (Pilot) Program established?", "What are regional centers?", "What is the purpose of the Regional Center (Pilot) Program?", "What is the difference between Regional Center (Pilot) Program and EB-5?", "How has the use of both programs grown?", "Why are delays in EB-5 applications problematic?", "Why has the USCIS's ability been questioned?", "How has this been followed up by DHS OIG?", "What measure has the USCIS struggled with?", "How has the reporting of the USCIS been questioned?", "What risks does the visa category contain?", "How is the EB-5 at larger risk than some other visas?", "What kinds of risks are amplified?", "How has the USCIS addressed the EB-5's risks?", "How could reporting assist the USCIS in fraud detection?", "How has state's power been a concern?", "How is this related to gerrymandering?", "What is another way states could use their power to benefit the state?", "How will the future of the Regional Center Program be decided?", "How might the Regional Center Program and EB-5 change?", "What concerns might be addressed?", "What new visa category might be created?" ], "summary": [ "The immigrant investor visa was created in 1990 to benefit the U.S. economy through employment creation and an influx of foreign capital into the United States.", "The visa is also referred to as the EB-5 visa because it is the fifth employment preference immigrant visa category.", "The EB-5 visa provides lawful permanent residence (i.e., LPR status) to foreign nationals who invest a specified amount of capital in a new commercial enterprise in the United States and create at least 10 jobs.", "The foreign nationals must invest $1,000,000, or $500,000 if they invest in a rural area or an area with high unemployment (referred to as targeted employment areas or TEAs).", "There are approximately 10,000 visas available annually for foreign national investors and their family members (7.1% of the worldwide employment-based visas are allotted to immigrant investors and their derivatives).", "In FY2015, there were 9,764 EB-5 visas used, with 93% going to investors from Asia.", "More specifically, 84% were granted to investors from China and 3% were granted to those from Vietnam.", "In 1992, Congress established the Regional Center (Pilot) Program, which created an additional pathway to LPR status through the EB-5 visa category.", "Regional centers are \"any economic unit, public or private, which [are] involved with the promotion of economic growth, including increased export sales, improved regional productivity, job creation, and increased domestic capital investment.\"", "The program allows foreign national investors to pool their investment in a regional center to fund a broad range of projects within a specific geographic area.", "The investment requirement for regional center investors is the same as for standard EB-5 investors. Unlike the standard EB-5 visa category, which does not expire, the Regional Center Program is set to expire on September 30, 2016.", "As the use of EB-5 visas has grown, so has the use of the Regional Center Program. In FY2014, 97% of all EB-5 visas were issued based on investments in regional centers.", "In addition, some EB-5 stakeholders have voiced concerns over the delays in processing EB-5 applications and possible effects on investors and time sensitive projects.", "Furthermore, some have questioned whether U.S. Citizen and Immigration Services (USCIS) has the expertise to administer the EB-5 program, given its embedded business components.", "The Department of Homeland Security's Office of the Inspector General (DHS OIG) has recommended that USCIS work with other federal agencies that do have such expertise, while USCIS has reported that it has taken steps internally to address this issue.", "USCIS has also struggled to measure the efficacy of the EB-5 category (e.g., its economic impact).", "USCIS methodology for reporting investments and jobs created has been called into question by both the DHS OIG and the U.S. Government Accountability Office (GAO).", "Furthermore, some have highlighted possible fraud and threats to national security that the visa category presents.", "In comparison to other immigrant visas, the EB-5 visa faces additional risks of fraud that stem from its investment components.", "Such risks are associated with the difficulty in verifying that investors' funds are obtained lawfully and the visa's potential for large monetary gains, which could motivate individuals to take advantage of investors and can make the visa susceptible to the appearance of favoritism.", "USCIS has reported improvements in its fraud detection but also feels certain statutory limitations have restricted what it can do.", "Additionally, GAO believes that improved data collection by USCIS could assist in detecting fraud and keeping visa holders and regional centers accountable.", "Lastly, the authority of states to designate TEAs has raised concerns.", "Some have pointed to the inconsistency in TEA designation practices across states and how it could allow for possible gerrymandering (i.e., all development occurs in an area that by itself would not be considered a TEA).", "Others contend that the current regulations allow states to determine what area fits their economic needs and allow for the accommodation of commuting patterns.", "In addition to the issues discussed above, Congress may consider whether the Regional Center Program should be allowed to expire, be reauthorized, or made permanent, given its expiration on September 30, 2016.", "In addition, Congress may consider whether any modifications should be made to the EB-5 visa category or the Regional Center Program.", "Legislation has been introduced in the 114th Congress that would, among other provisions, amend the program to try to address concerns about fraud, and change the manner in which TEAs are determined.", "Other bills would create an EB-5-like visa category for foreign national entrepreneurs who do not have their own capital but have received capital from qualified sources, such as venture capitalists." ], "parent_pair_index": [ -1, -1, -1, 2, -1, -1, 1, -1, 0, -1, 2, -1, -1, -1, 1, -1, -1, -1, -1, 1, -1, -1, -1, 0, -1, -1, -1, 1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 3, 3, 3, 3, 3, 5, 5, 5, 5, 5, 6, 6, 6, 6, 6, 7, 7, 7, 8, 8, 8, 8 ] }

{ "title": [ "", "Background", "Overview of the Federal Student Loan Programs", "H.R. 5715 and S. 2815", "The Ensuring Continued Access to Student Loans Act", "Increased Borrowing Limits for Unsubsidized Stafford Loans to Undergraduate Students", "Repayment of Parent PLUS Loans", "Extenuating Circumstances for Individuals with Adverse Credit to Borrow PLUS Loans", "Lender-of-Last-Resort Loans", "Student Eligibility for LLR Loans", "Institution-Wide Student Qualification for LLR Loans", "Requirements Applicable to LLR Lenders and Guaranty Agencies", "Advances of Federal Capital to Guaranty Agencies for LLR Loans", "Mandatory Funding for LLR Advances to Guaranty Agencies", "Temporary Authority for the Secretary to Purchase FFEL Program Loans", "Sense of Congress on Access to Student Loans", "Academic Competitiveness and SMART Grants" ], "paragraphs": [ "", "During the first several months of 2008, a number of lenders curtailed or ceased their participation in the Federal Family Education Loan (FFEL) program, citing reasons that include difficulties in raising capital through the securitization of student loan debt and reductions in lender subsidies enacted under the College Cost Reduction and Access Act of 2007 (CCRAA; P.L. 110-84 ). Concerns were raised that if lender participation in the FFEL program decreased substantially or if a substantial portion of lenders ceased lending to students who attend certain institutions of higher education, large numbers of students might face difficulty in obtaining FFEL program loans. Concerns were also raised about access to borrowing opportunities for students who have come to rely on private (non-federal) student loans because they have exhausted their eligibility for federal student loans.\nLegislation pertaining to federal student loans was active in the 110 th Congress. On October 27, 2007, the CCRAA was enacted, which made numerous changes to the federal student loan programs. On April 14, 2008, in response to concerns about the continued availability of FFEL program loans, the House Committee on Education and Labor reported H.R. 5715 ( H.Rept. 110-583 ), the Ensuring Continued Access to Student Loans Act of 2008 (ECASLA). On April 17, 2008, the bill was passed by the House of Representatives. Action on the House bill closely followed introduction of S. 2815 , the Strengthening Student Aid for All Act, in the Senate on April 3, 2008. Both bills would amend the HEA to address concerns about the continued availability of federal student loans. On April 30, 2008, the Senate amended and passed H.R. 5715 ; and on May 1, 2008, the House approved H.R. 5715 , as amended and passed by the Senate. On May 7, H.R. 5715 was enacted as P.L. 110-227 . The ECASLA grants temporary authority to the Secretary of Education (the Secretary), until July 1, 2009, to purchase student loans previously made under the FFEL program. It also makes other changes to the FFEL, William D. Ford Federal Direct Loan (DL), and American Competitiveness Grant programs (discussed below).\nLater in the 110 th Congress, the Higher Education Opportunity Act (HEOA; P.L. 110-315 ) was enacted to amend, extend, and establish new programs under the Higher Education Act. The HEOA includes several amendments to provisions that had been enacted under the ECASLA. Most recently, the temporary authority of the Secretary of Education to purchase FFEL program loans was extended through July 1, 2010, under P.L. 110-350 .", "The federal government operates two major student loan programs: the FFEL program, authorized under Title IV, Part B of the Higher Education Act (HEA), and the DL program, authorized under Title IV, Part D of the HEA. These programs make available loans to undergraduate, graduate and professional students, and the parents of undergraduate dependent students, to help them finance the costs of postsecondary education. Together, these programs constitute the largest source of direct aid supporting students' postsecondary educational pursuits. In award year (AY) 2008-2009, it is estimated that these programs will provide $72 billion in new loans to students and their parents.\nUnder the FFEL program, loan capital is provided by private lenders, and the federal government guarantees lenders against loss through borrower default, death, permanent disability, or, in limited instances, bankruptcy. Under the DL program, the federal government provides the loans to students and their families, using federal capital (i.e., funds from the U.S. Treasury). The two programs rely on different sources of capital and different administrative structures, but essentially disburse the same set of loans: Subsidized Stafford Loans and Unsubsidized Stafford Loans for undergraduate, graduate and professional students; PLUS Loans for graduate and professional students and parents of undergraduate dependent students; and Consolidation Loans through which borrowers may combine their federal student loans into a single loan payable over a longer term, which varies according to the combined loan balance.\nThe loans made through the FFEL and DL programs are low-interest loans, with maximum interest rates for each type of loan established by statute. Subsidized Stafford Loans are need-based loans and are only available to students demonstrating financial need. The Secretary pays the interest that accrues on Subsidized Stafford Loans while borrowers are in school, during a six-month grace period, and during authorized periods of deferment. Unsubsidized Stafford Loans and PLUS Loans are non-need-based loans and are available to borrowers without regard to their financial need. Borrowers are fully responsible for paying the interest that accrues on these loans.", "In the 110 th Congress, bills were introduced in the Senate ( S. 2815 ) and the House ( H.R. 5715 ) to amend the HEA to ensure the continued availability of federal student loans. These bills were designed to address a separate set of issues than bills that had been passed by the Senate ( S. 1642 ) and the House ( H.R. 4137 ) to reauthorize the HEA. In both S. 2815 and H.R. 5715 , a number of amendments would affect loans made under both the FFEL and DL programs, while other amendments would apply only to the FFEL program.\nAs introduced, both S. 2815 and H.R. 5715 would have amended the HEA to increase borrowing limits for Unsubsidized Stafford Loans; delay the start of repayment for parent borrowers of PLUS Loans; update procedures for ensuring the availability of lender-of-last-resort (LLR) loans under the FFEL program; and authorize the Secretary to purchase loans previously made under the FFEL program. S. 2815 would have also amended the HEA to establish a negative expected family contribution (EFC) for use in need analysis, a change intended to broaden student eligibility for need-based federal student aid. In contrast, H.R. 5715 , as introduced in the House, contained language to amend the HEA to extend eligibility to borrow PLUS Loans, under extenuating circumstances, to individuals with adverse credit, if their adverse credit was the result of being no more than 180 days delinquent on home mortgage payments. Finally, H.R. 5715 also expressed a sense of Congress that institutions such as the Federal Financing Bank, the Federal Reserve, and Federal Home Loan Banks, in consultation with the Secretaries of Education and the Treasury, should consider using available authorities to assist in ensuring continued access to federal student loans.", "On May 7, 2008, H.R. 5715 , the Ensuring Continued Access to Student Loans Act of 2008, was enacted as P.L. 110-227 . It amends the HEA by\nincreasing annual and aggregate borrowing limits for Unsubsidized Stafford Loans to undergraduate students; delaying the start of repayment for parent borrowers of PLUS Loans; extending eligibility for individuals with adverse credit to borrow PLUS Loans, under extenuating circumstances; revising procedures for ensuring the availability of lender-of-last-resort (LLR) loans under the FFEL program; temporarily authorizing the Secretary to purchase loans previously made under the FFEL program at no net cost to the federal government; and expanding eligibility for aid provided through American Competitiveness (AC) Grants and Science and Mathematics Access to Retain Talent (SMART) Grants.\nThe Ensuring Continued Access to Student Loans Act of 2008 also expresses a sense of Congress that institutions such as the Federal Financing Bank, the Federal Reserve, and Federal Home Loan Banks, in consultation with the Secretaries of Education and the Treasury, should consider using available authorities to assist in ensuring continued access to federal student loans for students and their families; and that any action taken by these entities should not limit the Secretary's authority with regard to the LLR program, nor the Secretary's authority to purchase loans previously made under the FFEL program. The ECASLA also requires the Government Accountability Office (GAO) to evaluate the impact that increases in federal student loan limits may have on tuition, fees, room and board, and on the borrowing of private (non-federal) student loans.\nThe remainder of this report provides a brief overview of amendments made to the HEA under the Ensuring Continued Access to Student Loans Act of 2008 to address the continued availability of access to federal student loans. The report also identifies instances in which ECASLA amendments were further amended by other laws (e.g., the HEOA).", "The amounts students may borrow in need-based Subsidized Stafford Loans and non-need-based Unsubsidized Stafford Loans are constrained by statutory loan limits. One set of limits applies to the annual and aggregate amounts students may borrow in Subsidized Stafford Loans. Another set of limits applies to the total annual and aggregate amounts students my borrow in combined Subsidized Stafford Loans and Unsubsidized Stafford Loans (hereafter, referred to as total Stafford Loans). The terms and conditions for Subsidized Stafford Loans are more favorable to students than for Unsubsidized Stafford Loans. As a form of need-based aid, the eligibility of students to borrow Subsidized Stafford Loans is contingent on their demonstrating financial need. In contrast, students may qualify to borrow Unsubsidized Stafford Loans without regard to their financial need.\nBoth annual and aggregate loan limits vary by student dependency status and educational level. In any year, a student may borrow Subsidized Stafford Loans in amounts up to the lesser of (a) the applicable annual Subsidized Stafford Loan limits, or (b) the student's unmet financial need. In any year, a student may borrow total Stafford Loans in amounts up to the lesser of (a) the applicable annual total Stafford Loan limits, or (b) the amount remaining after subtracting other financial assistance the student is expected to receive, from the cost of attendance (COA) at the school the student attends. Aggregate loan limits constrain the amounts students may borrow in Subsidized Stafford Loans and total Stafford Loans, overall.\nUntil the enactment of the ECASLA, the same annual Subsidized Stafford Loan limits and total Stafford Loan limits applied to dependent undergraduate students for each comparable educational level. However, annual total Stafford Loan limits that were higher than annual Subsidized Stafford Loan limits applied to independent undergraduate students, graduate and professional students, and dependent undergraduate students whose parents are unable to obtain PLUS Loans, for each comparable educational level. In most instances, loan limits were established by statute; however, aggregate total Stafford Loan limits for independent undergraduate students, graduate students and professional students had been set by the Secretary according to regulation.\nThe ECASLA amended annual and aggregate borrowing limits for total Stafford Loans for dependent undergraduate students, independent undergraduate students, and dependent undergraduate students whose parents are unable to obtain a PLUS Loan, effective for loans first disbursed on or after July 1, 2008. Technical changes to these amended loan limits were made under the HEOA. Amended loan limits are presented in Table 1 .\nIn general, effective July 1, 2008, annual total Stafford Loan limits were increased by $2,000 above previously applicable loan limits for undergraduate students enrolled in degree or certificate programs. With this change, annual total Stafford Loan limits were for the first time made greater than the corresponding annual Subsidized Stafford Loan limits for dependent undergraduate students enrolled in degree or certificate programs. Annual total Stafford Loan limits were also increased by $2,000 for independent undergraduate students enrolled in a preparatory coursework necessary for enrollment in an undergraduate degree or certificate program.\nEffective July 1, 2008, aggregate total Stafford Loan limits for undergraduate dependent students were increased by $8,000, from $23,000 to $31,000. For independent undergraduate students, and dependent undergraduate students whose parents are unable to obtain a PLUS Loan, the ECASLA established a statutory aggregate total Stafford Loan limit of $57,500, which is an increase of $11,500 above the previously applicable limit of $46,000, which had been specified by regulation.\nFinally, the ECASLA requires the Comptroller General to conduct a five-year study to evaluate the impact of increases in federal student loan limits on prices for tuition, fees, room and board; and on the borrowing of private (non-federal) student loans. Interim and follow-up reports on results of the study must be provided to the House Committee on Education and Labor and the Senate Committee on Health, Education, Labor, and Pensions.", "Prior to the enactment of the ECASLA, PLUS Loans made to parents, graduate students, and professional students entered repayment upon the loan being fully disbursed, with repayment commencing within 60 days. (In contrast, Stafford Loans enter repayment the day after six months following the borrower ceasing to be enrolled in school on at least a half-time basis, with the first payment being due within the next 60 days.) Nonetheless, borrowers of PLUS Loans have been eligible to defer repayment of their loans for a variety of reasons, to include while they are enrolled in school. However, deferments have not been available to parent borrowers of PLUS Loans for the period while the dependent student on whose behalf the loan was made is enrolled in school.\nThe ECASLA amended the HEA to permit borrowers of parent PLUS Loans to extend the period between disbursement and the commencement of repayment. Effective July 1, 2008, parent borrowers of PLUS Loans were granted the option of delaying the commencement of repayment until six months after the date the dependent student on whose behalf the PLUS Loan was made ceases to carry at least a half-time workload. (In accordance with this amendment, deferments would remain available only during periods when the borrower, as opposed to the student on whose behalf the loan was made, meets the conditions required to qualify.) Under the HEOA, the terms and conditions of PLUS Loans were further amended to permit parent borrowers to request a deferment for any period during which the student on whose behalf the loan was borrowed would qualify for a deferment. This change applies to loans for which the first disbursement is made on or after July 1, 2008.\nInterest begins accruing on PLUS Loans when the loan is first disbursed. Parent borrowers who delay the commencement of repayment have the option of paying the interest as it accrues or having accrued interest capitalized (i.e., added to the principal balance of the loan) no more frequently than quarterly. Failure to pay the interest as it accrues may increase the principal balance of a loan above the amount initially borrowed.", "To be eligible to borrow PLUS Loans, individuals may not have an adverse credit history, as determined pursuant to regulations promulgated by the Department of Education (ED). Under regulations promulgated by ED prior to the enactment of the ECASLA, lenders were required to obtain at least one credit report on all applicants for PLUS Loans; and unless extenuating circumstances existed, lenders were required to consider an applicant to have an adverse credit history if the applicant was 90 days or more delinquent on a debt payment; or if, within the past five years, the applicant \"has been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a Title IV debt.\" Regulations have also required lenders to retain a record of the basis for determining that extenuating circumstances existed for any borrower, such as an updated credit report, or documentation from the creditor that the borrower has made satisfactory arrangements to repay the debt.\nThe ECASLA amended the HEA to specify certain extenuating circumstances under which eligible lenders may extend PLUS Loans to individuals who otherwise would have been determined to have adverse credit histories. This amendment permitted eligible lenders to determine that extenuating circumstances existed, if during the period from January 1, 2007, through December 31, 2009, an applicant was no more than 180 days delinquent on mortgage payments for a primary residence or medical bill payments; or if an applicant was no more than 89 days delinquent on any other debt payments. The HEOA further amended this provision, effective July 1, 2008, to specify that extenuating circumstances exist only if an applicant is no more than 180 days delinquent on mortgage payments for a primary residence or medical bills.", "Eligible borrowers have long been regarded as having an entitlement to obtain Stafford Loans; although they have not been regarded as having an entitlement to borrow PLUS Loans due to the requirement to be credit-worthy. State guaranty agencies must establish lender-of-last-resort programs through which loans must be made available to eligible students who are otherwise unable to obtain them from an eligible lender. In general, students become eligible to borrow LLR loans upon their receipt of no more than two rejected loan applications from eligible lenders. Students applying for LLR loans must not be subject to any additional eligibility requirements beyond what is otherwise required under the FFEL program and must receive a response from the LLR lender within 60 days of filing an application.\nA guaranty agency may designate an eligible lender as an LLR lender; or the guaranty agency itself may function as the lender-of-last-resort. An eligible lender serving as an LLR lender makes loans in the same manner it makes other FFEL program loans, using private capital. As an incentive for lenders to make LLR loans, the lender insurance percentage in the case of borrower default is 100% on LLR loans, as opposed to 97% in the case of other loans. A guaranty agency serving as an LLR lender may also make LLR loans using its available funds.\nIf a guaranty agency becomes unable to ensure that LLR loans are made available to eligible students—either by an LLR lender, or by making the loans itself—the HEA provides the Secretary with authority to take a range of actions to restore the availability of LLR loans. Prior to the enactment of the ECASLA, the HEA authorized the Secretary to make emergency advances of federal funds to guaranty agencies for purposes of making available LLR loans, if the Secretary determined that (a) borrowers eligible for Subsidized Stafford Loans were unable to obtain such loans; (b) that the guaranty agency had the capability to provide LLR loans, but could not do so without an advance of federal capital; and (c) that it would be cost-effective to advance such funds. The HEA also specified that the Secretary was authorized to make emergency advances of federal capital funds to another guaranty agency for purposes of making LLR loans, if the Secretary determined that the designated guaranty agency for a state did not have the capacity to make available LLR loans. However, while the statute authorized the Secretary to advance funds to guaranty agencies for purposes of making LLR loans, it did not clearly provide, nor identify, a source of funds for the Secretary to draw upon to make such advances. This ambiguity in the statute led to deliberation over the extent of the Secretary's authority to advance funds to guaranty agencies for purposes of making LLR loans.\nUnder the ECASLA, several amendments were made to the LLR program. These are briefly described below.", "Previously, the HEA specified that guaranty agencies had an obligation to ensure that LLR loans would be made available to students eligible to borrow Subsidized Stafford Loans, but who were unable to obtain them. In accordance with Department of Education regulations implementing the LLR program, a lender-of-last-resort would be required to make Subsidized Stafford Loans and Unsubsidized Stafford Loans available to students eligible to receive Subsidized Stafford Loans; and would be permitted to make Unsubsidized Stafford Loans and PLUS Loans available to other eligible borrowers. Under the ECASLA, the LLR program is amended to require guaranty agencies to make LLR loans available to students and parents who are eligible for, but unable to obtain, Subsidized Stafford Loans, Unsubsidized Stafford Loans, or PLUS Loans; or who attend an institution designated for institution-wide student qualification for LLR loans (described below).", "As noted above, under prior law, individual students became eligible to borrow LLR loans upon the receipt of two rejected loan applications. The ECASLA amended the LLR program to temporarily authorize the Secretary, through June 30, 2009, to also designate institutions for institution-wide participation in the LLR program, at an institution's request. P.L. 110-350 further extends this authority through June 30, 2010.\nIn order to designate an IHE for institution-wide participation, the Secretary may require an IHE to demonstrate that, despite due diligence, it has been unable to secure the commitment of FFEL program lenders to make loans to students attending the institution; demonstrate that the number or percentage of students attending the institution who are unable to obtain FFEL program loans exceeds a minimum threshold; and meet other requirements as determined appropriate by the Secretary. Institution-wide student qualification makes all students who attend the institution, and the parents of dependent students who attend the institution, eligible to borrow LLR loans.\nIn implementing this provision, ED is requiring institutions seeking designation for institution-wide student qualification for LLR loans to demonstrate that, through coordination with the guaranty agency designated for its state, the institution has made a minimum of three attempts to find eligible lenders willing to make conventional (non-LLR) FFEL program loans and that at least 80% of the students and parents of students at the institution have been unable to obtain conventional FFEL program loans. Institutions must provide documentation of this information to the guaranty agency. The guaranty agency will then forward this information, along with its opinion of the institution's eligibility, to ED, which will make a final determination.", "Statutory and regulatory provisions of the FFEL program establish the maximum interest rates and fees that may be paid by borrowers. Lenders in the FFEL program have often competed for borrowers by offering different packages of interest rate and fee discounts. To attract borrowers, lenders may pay origination fees or default fees without passing on the cost to students. Similarly, to attract loan business, guaranty agencies may opt to pay the default fee. In accordance with the ECASLA amendments, LLR lenders are prohibited from offering any borrower benefits on LLR loans (e.g., waiving or reducing origination or default fees, or reducing interest rates) that are more favorable to borrowers than the maximum interest rates, origination fees and default fees, and other terms and conditions applicable to FFEL program loans.\nCertain special requirements apply to guaranty agencies with respect to the operation of LLR program. Among these, guaranty agencies must ensure that information about the availability of LLR loans is provided to institutions of higher education in the states the guaranty agency serves. Also, under the LLR program, guaranty agencies are exempted from the otherwise applicable prohibition against providing inducements to FFEL program lenders to secure the designation of the guaranty agency as the insurer of its loans. The amendments to the LLR program enacted under the ECASLA make guaranty agencies and lenders subject to the prohibitions on inducements specified in the HEA at §§ 428(b)(3) and 435(d)(5), respectively. The amendments also prohibit guaranty agencies and lenders that operate as lenders-of-last-resort from advertising, marketing or promoting LLR loans, other than the provision of required information about LLR loans, to IHEs.\nThe ECASLA also requires the Secretary to review the Department's regulations on prohibited inducements by guaranty agencies to lenders; and, as necessary, to revise them to ensure that guaranty agencies do not engage in improper inducements with respect to the operation of the LLR program. The review was required to be completed within 90 days of enactment; and a report provided to House Committee on Education and Labor, and the Senate Committee on Health, Education, Labor, and Pensions within 180 days of enactment.", "As noted above, previously the Secretary was required to determine that certain conditions are met prior to advancing funds to guaranty agencies for purposes of making LLR loans. Under the ECASLA, provisions of the LLR program were revised to specify that the Secretary may advance funds to guaranty agencies for making LLR loans if (a) eligible borrowers are unable to obtain Subsidized Stafford Loans, Unsubsidized Stafford Loans, or PLUS Loans under the FFEL program, or an IHE has been designated for institution-wide qualification for LLR loans; (b) that the guaranty agency has the capability to provide LLR loans, but cannot do so without an advance of federal capital; and (c) that it would be cost-effective to advance such funds.", "Effective with enactment of the ECASLA, mandatory appropriations are provided for the Secretary to make emergency advances of federal funds to guaranty agencies for purposes of making loans as lenders-of-last-resort.", "The ECASLA amends the HEA to grant the Secretary temporary authority to purchase loans previously made under the FFEL program. The DL program is amended to authorize funding for the Secretary, in consultation with the Secretary of the Treasury, to purchase, or enter into forward commitments to purchase, Subsidized Stafford Loans, Unsubsidized Stafford Loans, and PLUS Loans (but not Consolidation Loans) first disbursed on or after October 1, 2003, and before July 1, 2009, upon arriving at a determination that there is an inadequate availability of capital to meet demand for new loans. P.L. 110-350 extends this temporary authority to apply to loans disbursed on or after October 1, 2003, and before July 1, 2010.\nThe Secretary may purchase loans only if doing so is determined to be in the best interest of the United States. In addition, the purchase of FFEL program loans, and the cost of servicing such loans, must be determined jointly by the Secretaries of Education and the Treasury, and the Director of the Office of Management and Budget (OMB) to result in no net cost to the federal government. The Secretaries of Education and the Treasury, and the Director of OMB are required to jointly publish a notice in the Federal Register that establishes the terms and conditions for purchasing FFEL program loans, that outlines the methodology and factors considered in determining the purchase price of loans, and that describes how loans will be purchased at a price that will result in no net cost to the government. The HEOA further amends the terms of purchase to specify that upon the purchase of loans by the Secretary, guaranty agencies shall cease to have any obligations, responsibilities or rights with respect to such loans, and the federal guarantee shall cease to be in effect with respect to defaults that occur on such loans after the date of purchase.\nLenders selling loans to the Secretary must use the proceeds from the sale to ensure their continued participation as lenders under the FFEL program and to originate new FFEL program loans. The Secretary may also enter into a contract with lenders to continue servicing loans purchased, if the cost of doing so would not exceed the cost to the government of otherwise servicing the loans, and if it is determined to be in the best interest of borrowers.\nOn May 21, 2008, the Secretary of Education issued a \"Dear Colleague\" letter briefly outlining the Secretary's initial plans to implement the authority granted under the ECASLA to purchase loans made under the FFEL program. The Secretary initially identified two options. Under the first option, the Loan Purchase Commitment program, ED would enter into agreements by July 1, 2009, to purchase FFEL program loans originated for the 2008-2009 academic year. ED would purchase loans \"at a price equal to the sum of (i) par value, (ii) accrued interest (net of Special Allowance Payments), (iii) the 1% origination fee paid to the Department, and (iv) a fixed amount of $75 per loan (used to defray the lender's estimated administrative costs).\" Lenders entering into agreements with ED for the purchase of their loans would have until September 30, 2009, to complete the sale. Upon completion of the sale of loans, ED would obtain control over loan servicing. This option has also come to be referred to as the Loan Purchase (\"Put\") program.\nUnder the second option, the Loan Participation Purchase program, ED would purchase \"participation interests\" in short-term trusts comprised of pools of FFEL program loans originated for the 2008-2009 academic year. The price of participation interests would be established at an amount determined to provide ED a yield equal to the commercial paper rate plus 50 basis points. ED would hold participation interests in short-term trusts of FFEL program loans until September 30, 2009, at the latest. Afterwards, trusts could refinance the loans in the private market, or sell the loans to ED under the first option. This option has also come to be referred to as the Purchase of Participation Interests (PPI) program.\nOn July 1, 2008, the Department of Education, the Department of the Treasury, and OMB published a notice in the Federal Register outlining the terms and conditions of the Department's authority to purchase loans under the ECASLA. This notice presents summaries of the terms and conditions of the Loan Purchase Commitment program and the Loan Participation Purchase program as well as an explanation of the methodology used to determine that the programs will result in no net cost to the government. On November 10, 2008, the Secretary announced the continuation of the Put and PPI programs for the 2009-2010 academic year.\nAlso on November 10, 2008, the Secretary announced plans to establish a program making all fully disbursed FFEL program loans made for the period between October 1, 2003, and July 1, 2009 (other than Consolidation Loans), eligible for transfer to Asset-Backed Commercial Paper (ABCP) Conduits. Under the ABCP Conduit program, an eligible lender trustee would create a pool of loans, called a conduit, into which other lenders would transfer ownership of their loans. Commercial paper, backed by the loans in the pool, would then be sold to private investors and the proceeds of the sale would be used to repay the lenders that had transferred their loans to the conduit. In order to ensure liquidity to the purchasers of the student loan ABCP, the Department of Education would enter into a forward purchase commitment, or \"Put\" option, with the eligible lender trustees that create ABCP Conduits. By entering into a forward purchase commitment, the Department would promise to purchase student loans held in the ABCP Conduit at a future date for a pre-arranged price. The terms and conditions, and pricing structure for the ABCP Conduit program are forthcoming and will be published by the Department in the Federal Register .\nOn November 18, 2008, as an additional measure to assist in ensuring the continued availability of student loans, the Secretary announced the short-term extension of the Loan Purchase (\"Put\") program to loans made for the 2007-2008 academic year. Under the program, the Department will purchase certain fully disbursed FFEL program loans (other than Consolidation Loans) made for the 2007-2008 academic year. Details of the extension of the Loan Purchase program will be published in the Federal Register ; however, in general, the Department will purchase these loans for 97% of the amount of principal and interest owed by the borrower. The Department intends to purchase up to $500 million in eligible loans made for the 2007-2008 academic year each week until the earlier of the implementation of the ABCP Conduit, or February 28, 2009.", "The ECASLA expresses a sense of Congress that institutions such as the Federal Financing Bank, the Federal Reserve, and Federal Home Loan Banks, in consultation with the Secretaries of Education and the Treasury, should consider using available authorities to assist in ensuring continued access to federal student loans. It also states that any action taken by such entities should not limit nor delay the Secretary's authority to implement the LLR program or the authority to purchase loans previously made under the FFEL program.", "The ECASLA requires all savings generated by the act to be used for Academic Competitiveness Grants, which are provided to students who are eligible for Pell Grants and who meet certain academic requirements. These grants, first established by the Deficit Reduction Act of 2005 ( P.L. 109-171 ), are comprised of two award types: Academic Competitiveness (AC) Grants for first- and second- year undergraduates who have completed a rigorous secondary school program; and SMART Grants for third- and fourth- year undergraduates majoring in certain fields of science, mathematics, or a critical foreign language.\nEffective July 1, 2009, the AC Grant and SMART Grant programs are amended to expand eligibility. For both programs, students will no longer be required to be United States citizens as a condition for eligibility. Also, students enrolled at least half-time will become eligible for both AC Grants and SMART Grants. (Prior to July 1, 2009, students must be enrolled full-time). For both programs, grants will be required to be awarded in the same manner as Pell Grants, and eligibility for awards will be based on a student's grade level as opposed to academic year.\nThe ECASLA amendments authorize AC Grants to be awarded to students enrolled in certificate programs at two-year and four-year degree-granting institutions. They also clarify eligibility requirements for awarding first-year AC Grants to students who attended private secondary schools or were home-schooled, as well as those who obtained college credit while in high school. The amendments make students eligible to receive SMART Grants for the fifth year of enrollment in five-year undergraduate programs. Finally, the amendments extend eligibility for SMART Grants to students who attend institutions that offer a single liberal arts curriculum leading to a baccalaureate degree under which students are not permitted by the institution to declare a major in a particular subject area, if their coursework and grade point average meet certain criteria." ], "depth": [ 0, 1, 2, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 3, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_title h2_full h1_full", "h0_full", "", "h2_title", "", "", "", "", "", "", "", "", "", "h2_full", "", "" ] }

{ "question": [ "How are federal student loans provided?", "What conditions protect lenders from loss?", "How does the DL program provide loans?", "What is the FFEL program?", "How does it compare to other federal student loan programs?", "How did changes in FFEL program lenders affect the program?", "What was the worry regarding the availability of FFEL loans due to this?", "What was a concern regarding student loan types?", "How was legislation changing federal student loans activated?", "What types of changes did the ECASLA make?", "What changes did the HEOA make?", "What secretarial ability was extended?", "What has the Secretary of Education done with this power?" ], "summary": [ "Federal student loans are made available under two major loan programs authorized under the Higher Education Act (HEA) of 1965, as amended: the Federal Family Education Loan (FFEL) program, authorized by Title IV, Part B, of the HEA; and the William D. Ford Federal Direct Loan (DL) program, authorized by Title IV, Part D, of the HEA.", "Under the FFEL program, private lenders make loans and the federal government guarantees lenders against loss due to borrower default, death, permanent disability, or, in limited instances, bankruptcy.", "Under the DL program, the federal government lends directly to students and their families, using federal capital (i.e., funds from the U.S. Treasury).", "The FFEL program is the successor program to the guaranteed student loan (GSL) program, originally enacted under Title IV, Part B, of the HEA.", "It is the older and larger of the two major federal student loan programs.", "During the first several months of 2008, a number of FFEL program lenders curtailed or ceased their participation in the FFEL program, citing reasons that include difficulties in raising capital through the securitization of student loan debt and reductions in lender subsidies enacted under the College Cost Reduction and Access Act of 2007 (CCRAA; P.L. 110-84).", "Concerns were raised that if lender participation in the FFEL program decreased substantially or if a substantial portion of lenders ceased lending to students who attend certain institutions of higher education (IHEs), large numbers of students might face difficulty in obtaining FFEL program loans.", "In addition, concerns were raised about access to borrowing opportunities for students who have come to rely on private (non-federal) student loans because they had exhausted their eligibility for federal student loans.", "Legislation pertaining to federal student loans was active in the 110th Congress. On October 27, 2007, the CCRAA was enacted, which made numerous changes to the federal student loan programs.", "On May 6, 2008, H.R. 5715, the Ensuring Continued Access to Student Loans Act of 2008 (ECASLA; P.L. 110-227) was enacted to grant the Secretary of Education temporary authority, through July 1, 2009, to purchase student loans made under the FFEL program and to make other programmatic changes.", "On August 14, 2008, the HEA was amended and extended under the Higher Education Opportunity Act (HEOA; P.L. 110-315). The HEOA amended certain provisions that had been enacted under the ECASLA.", "The temporary authority of the Secretary of Education to purchase FFEL program loans was extended through July 1, 2010, under P.L. 110-350.", "The Secretary of Education has established several loan purchase programs under the authority granted by the ECASLA, as amended." ], "parent_pair_index": [ -1, -1, -1, -1, 3, -1, 0, -1, -1, -1, -1, 2, 3 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 2 ] }

{ "title": [ "", "Domestic Situation", "Economic Challenges", "Security Concerns and Marijuana Legalization", "U.S.-Uruguayan Relations", "Trade and Investment", "Security Cooperation", "U.N. Security Council", "Peacekeeping Operations", "Guantanamo Bay Detainee Transfers53", "Outlook" ], "paragraphs": [ "U ruguay is a small nation of 3.4 million people located on the Atlantic coast of South America. The country emerged as an independent state in 1828 following a three-year war between Brazil and Argentina over control of the disputed territory. Uruguay has a long democratic tradition but experienced 12 years of authoritarian rule following a 1973 coup. During the dictatorship, tens of thousands of Uruguayan citizens were forced into political exile, 3,000-4,000 were imprisoned, and several hundred were killed or \"disappeared.\" The country restored civilian democratic governance in 1985 and is now considered to be one of the strongest democracies in the world. Uruguay has drawn increased congressional attention in recent years as a result of the country's controversial decisions to legalize cannabis and grant refugee status to six men who had been detained at the U.S. Naval Station at Guantanamo Bay, Cuba.", "President Tabaré Vázquez of the center-left Broad Front ( Frente Amplio ) coalition was inaugurated to a five-year term on March 1, 2015. This is his second term in office—he previously served as president from 2005 to 2010—and the third consecutive term in which the Broad Front holds the presidency and majorities in both houses of the Uruguayan General Assembly. The coalition holds 50 seats in the 99-member Chamber of Representatives and 15 seats in the 30-member Senate; Vice President Raúl Sendic, who presides over the Senate, provides the Broad Front with a 16 th vote in the upper chamber. Vázquez's initial election ended 170 years of political domination by the center-right National and Colorado parties.\nSince taking power in 2005, the Broad Front has maintained market-oriented economic policies while gradually expanding social welfare programs, establishing a more progressive tax system, and implementing union-empowering labor reforms. This policy mix, combined with a boom in international prices for Uruguay's agricultural commodity exports, produced several years of strong economic growth and considerable improvements in living standards.\nThe Broad Front also has enacted several far-reaching social policy reforms, some of which have been controversial domestically. The coalition has positioned Uruguay on the leading edge of lesbian, gay, bisexual, and transgender (LGBT) rights in Latin America by allowing LGBT individuals to serve openly in the military, legalizing adoption by same-sex couples, allowing individuals to change official documents to reflect their gender identities, and legalizing same-sex marriage. Additionally, the Broad Front has legalized abortion in the first trimester of pregnancy and has enacted legislation that legalizes and regulates every aspect of the cannabis market, from production to consumption (see \" Security Concerns and Marijuana Legalization ,\" below). President Vázquez and former President José \"Pepe\" Mujica (2010-2015) often have compared the Broad Front administrations to those of former President José Batlle y Ordóñez (1903-1907, 1911-1915), who strongly influenced Uruguay's trajectory in the 20 th century by pushing for labor protections, a comprehensive social welfare system, women's rights, and a strict separation between church and state.", "Uruguay has experienced significant economic growth and improvements in living standards over the past decade. The country's real gross domestic product (GDP) has grown by an average of 4.9% per year since 2005, and per capita GDP has nearly tripled from $5,263 in 2005 to $15,547 in 2015. The World Bank now classifies Uruguay as a \"high-income\" country. The poverty rate, which had spiked during a 1999-2002 economic and financial crisis, has fallen dramatically. Between 2004 and 2015, the percentage of Uruguayans living in poverty declined from 39.9% to 9.7%. Some groups continue to face more challenging circumstances, however, as nearly 22% of Afro-Uruguayans remain below the poverty line. In relative terms, Uruguay's middle class is the largest in Latin America, encompassing 60% of the population.\nAlthough President Vázquez sought to build on Uruguay's socioeconomic advancements with campaign pledges to improve the quality of the education system and create a Comprehensive National Care System to address the needs of infants, the disabled, and the elderly, he has spent much of his second term dealing with the country's deteriorating economic situation. Uruguay's economic growth decelerated to less than 1% in 2015, down from 3.2% in 2014 and 4.6% in 2013. The economy is expected to continue slowing in 2016, with 0.1% growth. The slowdown appears to be largely the result of external conditions, including declines in international prices for Uruguay's agricultural commodity exports and economic recessions in Argentina and Brazil, which are two of Uruguay's top trading partners as fellow members of the Common Market of the South (Mercosur) customs union.\nThe economic deceleration has depressed revenue collection and contributed to growing fiscal deficits. In 2015, Uruguay's annual deficit widened to 3.6% of GDP and general government gross debt climbed to 64.3% of GDP. The labor market has remained relatively strong, but between August 2014 and August 2016 unemployment increased from 6.7% to 7.7% and the labor force participation rate declined slightly. Despite this economic weakness and low international energy prices, annual inflation has risen above the Uruguayan Central Bank's target range of 3%-7%. Persistent high inflation is reportedly the result of various factors, including the depreciation of the Uruguayan p eso and the country's widespread practice of indexing wages to the cost of living.\nThe Vázquez Administration has taken steps to respond to these challenges. To reduce the fiscal deficit to 2.5% of GDP by 2019 and stabilize public-debt levels, the government has deferred some public spending and introduced a fiscal reform that aims to increase income taxes on middle- and high-income earners and to reduce corporate tax exemptions and tax evasion. The Vázquez Administration also has sought to reduce inflationary pressures by using its position on tripartite salary councils to hold down wage growth. At the same time, the government is attempting to boost economic growth by using public-private partnerships to invest $12 billion over four years in transportation, communications, energy, and port infrastructure.\nThese policy priorities have generated tension within the Broad Front. Some leftist legislators and a portion of the coalition's base opposes the Vázquez Administration's efforts to reduce government expenditures, increase taxes on middle-income earners, and limit cost-of-living wage adjustments. Some also oppose private-sector participation in public works. Vázquez has tried to convince Uruguayans that these policies are necessary to maintain the country's investment-grade credit rating, attract foreign investment, and keep inflation under control. Opponents have pushed back. In July 2016, for example, Uruguay's umbrella trade union, the PIT-CNT ( Plenario Inter s indical de Trabajadores-Convención Nacional de Trabajadores ), which is closely affiliated with the Broad Front, organized the largest general strike since the country's return to democracy to push for higher wages and a reversal of the government's austerity policies.\nPolls indicate that although most Uruguayans accept the Vázquez Administration's argument that economic adjustments are necessary, many are unsatisfied with the government's management of the economy. This discontent, combined with rising security concerns, has taken a toll on Vázquez's approval rating. Between July 2015 and October 2016, the percentage of Uruguayans approving of Vázquez's performance in office fell from 51% to 33% and the percentage of Uruguayan's disapproving of Vázquez's performance increased from 20% to 45%.", "Uruguay has some of the strongest and most trusted criminal justice institutions in Latin America and is among the safest countries in the region. Nevertheless, perceptions of insecurity have increased in recent years, along with rates of crime and violence. Uruguay experienced a 5% increase in robberies and an 8% increase in homicides in 2015. Although crime rates remain low by Latin American standards, Uruguayans consistently rank crime as one of the top problems facing their country. Security analysts and Uruguayan officials have linked much of the criminality to small-scale drug trafficking and gang activity.\nIn response, the Vázquez Administration has increased police patrols in areas where crime is most concentrated and committed more resources to social development programs that provide opportunities to youth at risk of being recruited by gangs or other criminal elements. Additionally, the government has continued efforts under way since 2010 to incorporate new technologies and equipment into policing and investigatory practices, including expanded video surveillance, the use of geospatial technology to identify crime locations and deploy police resources, and the establishment of a DNA bank and a fingerprint-identification system.\nUruguayan officials argue that the country's cannabis-legalization initiative also will improve security conditions by taking a market worth an estimated $30 million-$40 million out of the hands of drug traffickers and improving the government's ability to address the negative social, economic, and health impacts of drug use. The law, enacted in December 2013, allows Uruguayan citizens who are at least 18 years of age to register with the government to grow up to 480 grams of marijuana per year, purchase up to 40 grams of marijuana per month from licensed dispensaries, or join smoking clubs that provide marijuana for members. The law also empowers a new government agency to regulate the entire cannabis production chain, including planting, cultivation, harvesting, processing, storage, distribution, and sales. At the same time, the law provides for educational and health efforts to prevent and treat problematic drug use. Uruguay decriminalized all drug possession for personal use in 1974.\nAlthough much of the marijuana legalization law has been implemented, the Uruguayan government is still finalizing a key component—sales to registered users at licensed dispensaries. This step has proven challenging, as only 50 of the country's 1,200 pharmacies had registered with the government to sell marijuana as of August 2016. Moreover, most of those pharmacies are concentrated in the Montevideo metropolitan region, potentially leaving large portions of the country without a single dispensary. Many pharmacies reportedly are concerned that marijuana sales could generate security problems or damage their image among socially conservative clients. Polls have consistently found that about 60% of Uruguayans are opposed to the legalization initiative. Despite these challenges, sales are expected to begin before the end of 2016.\nOnce implementation is complete, the Uruguayan government will face several challenges as it attempts to supplant the illegal marijuana market. Although state-regulated marijuana is expected to be competitive in price and superior in quality compared to illegal marijuana, the Uruguayan government has acknowledged that it may not be able to satisfy demand when sales first begin. Even once a sufficient supply of state-regulated marijuana exists, some users may turn to the black market to sidestep government caps on purchases. Additionally, many marijuana users may be hesitant to register with the government. According to a 2015 study of frequent marijuana users in Montevideo, 40% of those surveyed stated that they were unlikely to register. Some were concerned about the confidentiality of their information, some were philosophically opposed to the registry, and some did not think there was anything to be gained by registering. The extent to which legalization will impact the finances of drug traffickers and dealers likely will depend on the Uruguayan government's ability to bring marijuana users into the state-regulated market.\nDuring the debate over legalization, opponents warned that legalization would lead to increased consumption of marijuana and other drugs. Proponents, on the other hand, argued that creating legal channels for marijuana sales could facilitate efforts to treat those with the most problematic consumption habits and prevent Uruguayans from coming into contact with more dangerous drugs, such as \" pasta base ,\" a highly addictive cocaine derivative that some observers have linked to rising crime rates. In 2014 (the most recent year for which data are available), 9.3% of Uruguayans reported they had consumed marijuana in the previous year, up from 8.3% in 2011. It is unclear if the legalization initiative played a role in the increase, however, because marijuana consumption had been growing steadily since 2001. Increased marijuana consumption does not appear to have led to increased consumption of other drugs. In 2014, 1.6% of Uruguayans reported using cocaine in the previous year, down from 1.9% in 2011.", "U.S.-Uruguayan relations are strong and have grown closer in recent years. Some analysts predicted that bilateral relations would deteriorate following the Broad Front's assumption of power, given ideological opposition to working with the United States by some sectors of the coalition. However, those predictions have not been borne out. Over the past decade, the United States and Uruguay have forged closer trade and investment ties and have worked together to promote stability and security in Latin America and around the world. Since taking office for a second term, President Vázquez has expressed his desire to continue forging closer relations with the United States by strengthening and building upon the various bilateral cooperation mechanisms currently in place.", "Commercial ties between the United States and Uruguay have grown considerably over the past decade. In 2007, during President Vázquez's first term, the countries signed a Trade and Investment Framework Agreement (TIFA), which ensures ongoing consultations on issues such as trade facilitation, food safety, intellectual property rights, trade in services, and government procurement. Although President Vázquez and then-President George W. Bush initially sought to negotiate a free trade agreement, internal pressure from the more leftist sectors of the Broad Front and external pressure from fellow members of Mercosur ultimately led the Uruguayan government to pursue the TIFA instead.\nIn his second term, President Vázquez has placed increased emphasis on improving Uruguay's access to international markets. He has pushed for the conclusion of a free trade agreement between Mercosur and the European Union and recently initiated negotiations for a bilateral free trade agreement with China. Some members of the Vázquez Administration also have expressed support for a free trade agreement with the United States. The majority of the Broad Front remains opposed to such an agreement, however, and U.S. officials have indicated that the United States is now focused on concluding regional trade agreements, such as the Trans-Pacific Partnership, which Uruguay could potentially join at a later date. It also remains unclear if the ascension to power of more market-oriented governments in Argentina and Brazil will lead Mercosur to emphasize forging trade agreements as a bloc and/or to relax its rules to allow members to pursue bilateral trade agreements. Uruguay pulled out of a potential Trade in Services Agreement with the United States and more than 20 other nations in September 2015 after the Broad Front overwhelmingly voted in favor of withdrawing from the negotiations.\nTotal U.S.-Uruguayan merchandise trade has nearly doubled since 2006, growing from $994 million to $1.9 billion in 2015 (see Figure 2 ). Bilateral trade declined by 13% between 2013 and 2015, however, largely as a result of the slowing Uruguayan economy. In 2015, U.S. exports to Uruguay totaled $1.3 billion and U.S. imports from Uruguay totaled $605 million. Machinery, cosmetics, medical equipment, and pharmaceutical products were the top U.S. exports to Uruguay. Beef, leather, wood, medical equipment, and dairy products were the top U.S. imports from Uruguay. In 2015, the United States accounted for 8% of Uruguay's total trade and was Uruguay's fourth-largest trading partner behind China (16%), Brazil (16%), and Argentina (9%). Uruguay was the United States' 80 th -largest trading partner in 2015, accounting for 0.05% of total U.S. merchandise trade.\nUruguay traditionally has benefited from the Generalized System of Preferences (GSP) program, which provides nonreciprocal, duty-free tariff treatment to certain products imported from designated developing countries. Uruguayan imports will no longer be eligible for the GSP program as of January 1, 2017, however, since the Trade Act of 1974, as amended, ( 19 U.S.C. § 2462 ) requires the President to terminate a country's eligibility for the program if the World Bank classifies the country as \"high income.\" In 2015, Uruguay's duty-free imports to the United States under the GSP program were valued at $87 million, equivalent to about 14% of all U.S. imports from Uruguay.\nForeign direct investment has increased substantially since the United States and Uruguay signed a bilateral investment treaty in 2005. The accumulated stock of U.S. foreign direct investment in Uruguay increased from $609 million in 2005 to $1.6 billion in 2015. During the same time period, the accumulated stock of Uruguayan foreign direct investment in the United States increased from $88 million to $391 million. According to the U.S. Department of State, \"the government of Uruguay recognizes the important role foreign investment plays in economic development and maintains a favorable investment climate that does not discriminate against foreign investors.\" The State Department notes that Uruguay is strategically located between Mercosur's largest economies (Argentina and Brazil) and that the country's special import regimes make it a well-situated distribution center for U.S. goods into the region. The State Department also asserts that Uruguay's middle-class consumers make the country a good test market for U.S. products. About 120 U.S.-owned companies currently operate in Uruguay.", "Despite its small size, Uruguay plays an active role in promoting stability and security in the Western Hemisphere and around the world. Uruguay is a strong proponent of democracy and human rights, the peaceful resolution of disputes, international law, and multilateralism, and it often seeks to advance those values by serving as a consensus builder and mediator in international institutions. Partially as a result of Uruguay's international reputation, the nations of the Western Hemisphere elected Luis Almagro, Uruguay's former foreign minister, to a five-year term as Secretary General of the Organization of American States in 2015.\nAccording to the State Department, \"Uruguay's commitment to international engagement makes it an important U.S. partner\" in a variety of global efforts. Current areas of U.S.-Uruguayan security cooperation include collaboration on the U.N. Security Council and support for U.N. peacekeeping operations. The Uruguayan government also has supported the Obama Administration's efforts to close the detention center at the U.S. Naval Station at Guantanamo Bay, Cuba.", "In 2015, Uruguay won the support of the rest of Latin America and the Caribbean to secure one of the 10 non-permanent seats on the 15-member U.N. Security Council for the 2016-2017 term. Since joining the Security Council, Uruguay has emphasized promoting human rights and international humanitarian law, putting forward as its first draft resolution a measure to condemn attacks against medical facilities and humanitarian personnel in conflict zones. The Security Council adopted the measure unanimously as Resolution 2286 in May 2016. Uruguay also has used its seat on the Security Council to push for greater transparency regarding Security Council practices and a greater focus on the root causes of conflict. Uruguay has voted the same way as the United States on nearly every resolution that the Security Council has adopted in 2016.", "Reflecting the country's commitments to international law and peaceful dispute resolution, Uruguay is one of the largest per capita contributors of forces globally to U.N. peacekeeping missions. Since 1952, more than 45,000 Uruguayans have served under the U.N. flag and 34 have been killed while deployed. Uruguay currently has nearly 1,500 military troops, police, and advisers deployed to five countries, including nearly 1,200 as part of the U.N. Organization Stabilization Mission in the Democratic Republic of the Congo and nearly 260 as part of the U.N. Stabilization Mission in Haiti. The country also has established a National Peace Operations Training Institute ( Escuela Nacional de Operaciones de Paz de Uruguay ), which provides specialized peacekeeping training to Uruguayans and foreign students.\nThe United States has urged Uruguay to maintain its contributions to U.N. peacekeeping missions and has sought to strengthen Uruguay's peacekeeping capabilities. Over the past four years, the U.S. government has obligated $14.6 million in assistance for Uruguay through the Global Peace Operations Initiative, which aims to increase the international community's capacity to carry out U.N. peacekeeping missions (see Table 1 ). U.S. assistance has been used to provide pre-deployment training for Uruguayan peacekeepers and to strengthen and expand Uruguay's peacekeeping training center. U.S. assistance also has provided Uruguay with equipment, such as communications gear, vehicles, night-vision devices, aviation equipment, and patrol boots.\nThe United States also provides International Military Education and Training (IMET) aid to Uruguay, focused on strengthening Uruguay's peacekeeping, disaster response, and national defense capabilities. IMET appropriations for Uruguay totaled $427,000 in FY2013; $725,000 in FY2014; $550,000 in FY2015; and an estimated $500,000 in FY2016. The Obama Administration requested $500,000 in IMET aid for Uruguay in FY2017 to bolster the professionalization of the Uruguayan Armed Forces and their interoperability with the U.S. Armed Forces, foster stronger military-to-military ties, promote democratic values and respect for human rights, and enhance peacekeeping operations.", "In December 2014, Uruguay accepted six men who had been held for alleged terrorism links at the U.S. Naval Station at Guantanamo Bay, Cuba, since 2002. The interagency Guantanamo Review Task Force cleared all six men for transfer in 2010, and the State Department reportedly assured the Uruguayan government that \"there is no information that the [former detainees] were involved in conducting or facilitating terrorist activities against the United States or its partners or allies.\" Then-President Mujica, who himself was imprisoned for 14 years during the 1970s and 1980s for his activities with the Tupamaro guerilla movement, granted refugee status to the detainees to demonstrate support for President Obama's efforts to close the detention facility, which Mujica has referred to as a \"human disgrace.\"\nThe former detainees' integration into Uruguayan society has not gone as smoothly as the Uruguayan government hoped. Although a local union provided the former detainees with housing and the government provided them with a monthly stipend, the men (four Syrians, a Tunisian, and a Palestinian) reportedly struggled to adjust to the Spanish-speaking and largely secular country, which has a Muslim population of about 300. Several of the men carried out a three-week protest outside the U.S. embassy in Montevideo to demand financial compensation from the U.S. government for detaining them for more than 12 years without criminal charges or convictions. They concluded the protest in May 2015 after reaching an agreement with the Uruguayan government that reportedly provides them with additional housing and financial support in exchange for seeking language and job training. The former detainees' public displays of dissatisfaction and failure to integrate more quickly alienated many Uruguayans and reportedly led several Latin American governments that were on the verge of accepting other Guantanamo detainees to change their minds.\nAlthough some of the former detainees have begun to establish new lives in Uruguay, finding employment and starting families, one has engaged in several high-profile acts of protest over his situation. Jihad Ahmed Mujstafa Diyab, a 45-year-old Syrian citizen, has repeatedly criticized the Uruguayan government for not moving quickly enough to reunite him with his family. He maintains that he could never support his wife and children in Uruguay and has demanded to be transferred to Turkey, where his family fled as a result of the Syrian civil war, or another Middle Eastern nation. Diyab disappeared from Uruguay in June 2016, resurfacing nearly two months later in Venezuela, reportedly in an attempt to travel to Turkey. The Venezuelan government returned Diyab to Uruguay in August 2016, leading Diyab to launch a hunger strike. Diyab reportedly ended his hunger strike in October 2016 after receiving permission to travel to another—currently unnamed—country.\nSome Members of Congress have criticized the transfer of the six former detainees to Uruguay. These Members maintain that the former detainees are \"hardened fighters who've been trained as suicide bombers and document forgers\" and that the Obama Administration misled Uruguayan officials about the detainees' ties to terrorism. Some Members also are concerned that Uruguay's decision to grant the men refugee status has prevented the Uruguayan government from properly monitoring the former detainees or restricting their travel. Those concerns were exacerbated by the former detainees' protest outside the U.S. embassy and Diyab's temporary disappearance from Uruguay.\nThe apparent lack of restrictions on the former detainees' movement has led some Members to question whether the detainee transfers were conducted in accordance with U.S. law. The National Defense Authorization Act for FY2014 ( P.L. 113-66 ) required the Secretary of Defense to determine that steps would be taken to \"substantially mitigate the risk\" that transferred individuals would engage in activities that threaten the United States, U.S. citizens, or U.S. interests. Obama Administration officials maintain that Uruguay is \"taking steps to substantially mitigate the risk of the six detainees that were transferred to its custody,\" but officials have been unwilling to discuss those steps publicly.", "Uruguay historically was referred to as \"the Switzerland of South America,\" as scholars highlighted the country's peaceful and democratic tradition, comprehensive social safety net, and relatively high standard of living to differentiate Uruguay from its neighbors. That perceived exceptionalism began to fade by the middle of the 20 th century, as prolonged economic stagnation tore at the country's social fabric, generating increased class conflict and ultimately giving rise to an authoritarian government. Thirty years after the end of the dictatorship and fifteen years after a major economic crisis, Uruguay once again stands out in Latin America for its strong democratic institutions and comparatively prosperous and egalitarian society.\nThe center-left Broad Front coalition has benefitted politically from presiding over more than a decade of strong economic growth and improvements in living standards. It now faces a much tougher economic and political environment, however, as deteriorating economic conditions and fatigue with Broad Front governance have eroded popular support for the coalition. The difficult economic situation likely will limit President Vázquez's ability to enact far-reaching policy changes and could lead to increased disenchantment among his coalition's base. The Broad Front's chances of winning a fourth consecutive election likely will depend on the pace of Uruguay's economic recovery and the extent to which opposition political parties and their supporters are willing to unite for the 2019 elections.\nU.S-Uruguayan relations likely will remain strong in the coming years, bound together by shared values and common interests. Short-term commercial cooperation may focus on the removal of trade barriers under the TIFA; the conclusion of a bilateral social security agreement to eliminate double taxation and fill gaps in benefit protection for individuals who have worked in both countries; and Uruguay's entry into the Visa Waiver Program, which would allow temporary, visa-free travel by Uruguayan and U.S. citizens. Although Uruguay's exit from the GSP program in 2017 may generate renewed Uruguayan interest in entering into a bilateral or regional free trade agreement with the United States, significant sectors of the Broad Front are likely to remain opposed to such an accord. Cooperation on international affairs likely will continue as the countries support international peacekeeping efforts and collaborate on the U.N. Security Council and in other multilateral institutions. At the same time, Uruguay is likely to continue pursuing closer commercial and diplomatic ties with a range of other partners, including fellow members of Mercosur, the European Union, and China." ], "depth": [ 0, 1, 2, 2, 1, 2, 2, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h3_full h2_full h1_title", "h3_full h1_full", "h1_full", "h4_full h1_title h0_title", "h4_full", "h0_full h1_title h4_title", "h4_full", "h4_full", "h1_full", "h0_full" ] }

{ "question": [ "What is Uruguay?", "Why does Uruguay stand out in Latin America?", "How is this contradictory to assumptions based off its landmass?", "What attention has Uruguay drawn?", "How has marijuana-legalization attracted Congressional attention?", "How has some of Uruguay's refugees attracted Congressional attention?", "What related action is the Obama Administration criticized for?", "How did the administration respond to this evaluation?", "What powers control Uruguay?", "What are their general policies?", "What social policies has the Broad Front taken action on?", "What has been Vázquez's focus in his 2015 term?", "Why has Uruguayan economy fallen?", "What effects has the slowing economy had?", "How has Vázquez addressed economic challenges?", "What has been the result for the Vázquez Administration?", "How have U.S.-Uruguayan relations proceeded with the Broad Front's power?", "What agreements have the Us and Uruguay formed?", "What economic investment was occurring in 2015?", "What might the US and Uruguay collaborate on?", "Why is this likely?" ], "summary": [ "Uruguay is a small nation of 3.4 million people located on the Atlantic coast of South America between Brazil and Argentina.", "The country stands out in Latin America for its strong democratic institutions; high per capita income; and low levels of corruption, poverty, and inequality.", "As a result of its domestic success and commitment to international engagement, Uruguay plays a more influential role in regional and international affairs than its size might suggest.", "Uruguay has drawn increased congressional attention in recent years as a result of several high-profile and controversial decisions.", "Some Members of Congress are tracking the implementation of Uruguay's cannabis-legalization measure as they consider the implications of marijuana-legalization initiatives in a growing number of U.S. states.", "Uruguay's decision to grant refugee status to six individuals who had been detained at the U.S. Naval Station at Guantanamo Bay, Cuba, in 2014 also has drawn congressional scrutiny.", "Some Members contend that the Obama Administration failed to ensure that the Uruguayan government would take steps to \"substantially mitigate the risk\" of the transferred individuals engaging in activities that threaten the United States as required by the National Defense Authorization Act for FY2014 (P.L. 113-66).", "The Administration disputes that assertion.", "The center-left Broad Front (Frente Amplio) coalition has governed Uruguay since 2005, having won the presidency and legislative majorities in three consecutive elections.", "Since taking office, the coalition has pursued a social democratic policy mix that has combined market-oriented economic policies with progressive taxation, an expansion of the social welfare system, and union-empowering labor reforms.", "The Broad Front also has enacted several far-reaching social policy changes, legalizing abortion; expanding rights for lesbian, gay, bisexual, and transgender (LGBT) individuals; and legalizing and regulating Uruguay's marijuana market.", "President Tabaré Vázquez, who began his second nonconsecutive five-year term in March 2015, has spent much of his time in office dealing with Uruguay's deteriorating economic situation.", "After nearly a decade of strong growth, the Uruguayan economy has slowed dramatically as a result of softening global commodity prices and economic turbulence in Argentina and Brazil—Uruguay's main trading partners and fellow members of the Mercosur customs union.", "This economic weakness has depressed tax collection and contributed to growing fiscal deficits but has not brought down Uruguay's persistently high inflation.", "Vázquez has sought to address these economic challenges by reducing expenditures, increasing taxes, holding down wage increases, and investing in infrastructure through public-private partnerships.", "As economic growth has continued to slow in 2016 to an estimated 0.1%, the Vázquez Administration's approval rating has fallen to 33% and its disapproval rating has risen to 45%.", "U.S.-Uruguayan relations have strengthened over the past decade despite initial expectations by some analysts that ties would deteriorate following the Broad Front's assumption of power.", "The United States and Uruguay signed a bilateral investment treaty in 2005 and a Trade and Investment Framework Agreement in 2007.", "In 2015, the stock of U.S. foreign direct investment in Uruguay reached $1.6 billion and bilateral merchandise trade amounted to $1.9 billion.", "The United States and Uruguay also collaborate on efforts to address international security concerns.", "Uruguay is serving alongside the United States on the U.N. Security Council for the 2016-2017 term and is one of the largest per capita contributors globally to U.N. peacekeeping missions. The United States has provided more than $14.6 million in assistance to Uruguay over the past four years to bolster the country's peacekeeping capabilities." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 2, 3, -1, 0, -1, -1, -1, 1, -1, 3, -1, -1, -1, -1, 3 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 1, 3, 3, 3, 4, 4, 4, 4, 4, 6, 6, 6, 6, 6 ] }

{ "title": [ "", "Latin America and the Caribbean:Overview of U.S. Policy", "Four Priorities for the Region", "Continuity and Change in U.S. Policy", "Latin America's Increasing Independence", "Congressional Interest in Latin America and the Caribbean", "Overview", "Brazil", "Central America and the Caribbean: Citizen Security", "Colombia", "Cuba", "Haiti", "Mexico", "Venezuela", "Iran's Growing Relations in Latin America", "Organization of American States", "Key Events in 2012", "March 26-28, 2012: Pope Benedict XVI Visit to Cuba", "April 14-15, 2012: Summit of the Americas", "July 1, 2012: Mexican Elections", "October 7, 2012: Venezuelan Election", "Appendix. Hearings in the 112th Congress" ], "paragraphs": [ "", "U.S. interests in the Western Hemisphere are diverse, and include economic, political, security and humanitarian concerns. Geographic proximity has ensured strong economic linkages between the United States and the region, with the United States being the major trading partner and largest source of foreign investment for many countries. Free trade agreements (FTAs) have augmented economic relations with many countries in the region, including Mexico, Chile, Peru, Central America, and the Dominican Republic. Latin American nations, primarily Mexico and Venezuela, supply the United States with almost one-third of its imported crude oil. The Western Hemisphere is also the largest source of U.S. immigration, both legal and illegal, with geographic proximity and economic conditions being major factors driving migration trends. Curbing the flow of illicit drugs from Latin America and the Caribbean has been a key component of U.S. relations with the region and a major interest of Congress for almost two decades, and in recent years has included close security cooperation with Mexico as that country struggles to combat drug trafficking and related violence. With the exception of Cuba, the region has made enormous strides in terms of democratic political development over the past two decades, but the rise of undemocratic practices in several countries, especially Venezuela, has been a U.S. concern. The United States has often taken the lead in responding to natural disasters in the region, as was demonstrated once again in the aftermath of Haiti's catastrophic 2010 earthquake.", "The Obama Administration has set forth a broad framework for U.S. policy toward Latin America and the Caribbean centered on four pillars or priorities:\npromoting economic and social opportunity; ensuring citizen security; strengthening effective institutions of democratic governance; and securing a clean energy future.\nAccording to former Assistant Secretary of State for Western Hemisphere Affairs Arturo Valenzuela, these policy \"priorities are based on the premise that the United States has a vital interest in contributing to the building of stable, prosperous, and democratic nations\" in the hemisphere that can play an important role in dealing with global challenges. The Obama Administration has emphasized that its policy approach toward the region is one that emphasizes partnership and shared responsibility, with policy conducted on the basis of mutual respect through engagement and dialogue.\nExpanding economic opportunity focuses on one of the key problems facing Latin America: lingering poverty and inequality. At the end of 2010, some 177 million people in Latin America were living in poverty—31.4% of the region's population—while 70 million people or 12.3% lived in extreme poverty or indigence. These statistics reflect a significant improvement from 2002 when 44% of the region's population lived in poverty. Moreover, the 2010 statistics showed an improvement from 2009 when the region faced an uptick in poverty because of the global financial crisis. In addition to traditional U.S. development assistance programs focusing on health and education, expanding economic opportunity also has included programs such as: the Pathways to Prosperity Initiative launched in 2008, designed to help countries learn from each other's experiences through the exchange of best practices; and support for the Organization of American State's Inter-American Social Protection Network (IASPN), launched in 2009 to facilitate an exchange of information on policies, experiences, programs, and best practices in order to reduce social disparities and inequality and reduce extreme poverty.\nCitizen safety is one of the most important concerns among Latin Americans, with high levels of crime and violence (often associated with drug trafficking) a significant problem in many countries. The Central America-Mexico corridor is the route for 95% of South American cocaine entering the United States, while murder rates in several Central American and Caribbean countries are among the highest in the world and drug trafficking-related violence in Mexico has risen to unprecedented levels. U.S. support in this area includes a series of partnerships to help countries combat drug trafficking and organized crime such as the Mérida Initiative for Mexico, the Central American Regional Security Initiative (CARSI), and the Caribbean Basin Security Initiative (CBSI). The Colombia Strategic Development Initiative (CSDI) is designed to support Colombia's strategy in remote, but strategically important, areas by increasing the presence of civilian state economic and social development institutions.\nOver the past three decades, Latin America has made enormous strides in democratic political development, not only in terms of regular free and fair elections, but in terms of an improvement in respect for political rights and civil liberties. Despite this improvement, many countries in the region still face considerable challenges. Improving and strengthening democratic governance includes support to improve the capacity of state institutions to address citizens' needs through responsive legislative, judicial, law enforcement and penal institutions. It includes defending press freedoms and democratic rights, such as free and fair elections and the protection of minority rights. Most significantly, according to former Assistant Secretary Valenzuela, because democratic institutions are absolutely critical and because of the history of military and other coups in the region, hemispheric nations need to stand together collectively to ensure that elected democratic institutions are not interrupted.\nMany countries in Latin America and the Caribbean are vulnerable to climate change, which can have a negative effect on sustainable development and economic prosperity. Leaders in the region have committed to working together to address the challenges of climate change and to strengthen energy security. The Obama Administration advanced an Energy and Climate Partnership of the Americas (ECPA) in 2009 through which nations have committed themselves to strengthen inter-American collaboration on clean energy. ECPA includes voluntary bilateral and multi-country initiatives to promote clean energy, advance energy security, and reduce greenhouse gas emissions. Some of the initiatives involve international and regional organizations and the private sector.", "Substantial continuity characterizes U.S. policy toward the region under the Obama Administration, which has pursued some of the same basic policy approaches as the Bush Administration. Like the Bush Administration, the Obama Administration is providing significant anti-drug and security support to Colombia and significant support to Mexico and Central America to combat drug trafficking and organized crime through the Mérida Initiative and CARSI. In anticipation of a potential \"balloon effect\" of drug trafficking shifting to the Caribbean region, the Obama Administration also established the CBSI, the origin of which dates back to the Bush Administration. Implementing bills for FTAs with Colombia and Panama that were negotiated under the Bush Administration were officially introduced in early October 2011 after extensive work by the Administration to resolve outstanding congressional concerns related to both agreements, which were then approved by Congress. Just as the Bush Administration had, the Obama Administration has expressed support for comprehensive immigration reform, an especially important issue in U.S. relations with Mexico and Central America. In terms of Venezuela, it can be argued that the Obama Administration is following a policy similar to the latter years of the Bush Administration by attempting to avoid any unnecessary public spats with President Hugo Chávez, but at the same time speaking out with regard to concerns about undemocratic actions of the Venezuelan government as well as drug trafficking and terrorism concerns.\nDespite the continuity, the Obama Administration has made a number of changes that differentiate its policy from that of the Bush Administration. The Obama Administration has put an emphasis on partnership and multilateralism. It has also implemented several changes in Cuba policy by lifting restrictions on family travel and remittances, restarting semi-annual migration talks, and easing restrictions on other types of purposeful travel and remittances. At the same time, the Administration has continued to speak out about the poor human rights situation in Cuba and has repeatedly called for the release of a U.S. government subcontractor, Alan Gross, imprisoned since late 2009. The Administration has also increased development assistance to the region compared to that provided under the Bush Administration, although overall budget cutbacks could end up reducing both development and other types of foreign assistance to the region.\nIn some areas where there has been continuity in U.S. policy toward Latin America, there nevertheless has been a change of emphasis. For example, assistance to Mexico is shifting toward more support for rule of law programs (including police, judicial, and penal reform) and programs to help communities withstand the pressures of crime and violence. Another example is Colombia, where assistance has become more evenly balanced between enhancing rule of law, human rights and economic development programs on the one hand, and continuing efforts on security and drug interdiction on the other. Moreover, U.S. assistance levels to Colombia have begun to decline as the country is increasingly taking over responsibility for programs once funded by the United States.\nAssessments of U.S. policy toward Latin America during the Obama Administration offer a mixed picture. Some policy analysts have lauded the Administration for its emphasis on partnership and multilateralism; for deepening security cooperation with Mexico, Central America, and the Caribbean; for broadening relations with Colombia beyond counternarcotics and counterterrorism issues; and for a strong U.S. response to the earthquake in Haiti. On the other hand, some have urged the Administration to articulate a strategic vision and approach toward Latin America with a clearer explanation of why the region matters to the United States. Other critics of the Administration call for U.S. policy toward Latin America to be reshaped to support Mexico more strongly in its efforts against organized crime and to provide more sustained focus on Venezuela's conduct and activities. Some policy analysts maintain that the growing polarization of U.S. domestic politics is an additional impediment to productive engagement with the region.", "U.S. policy toward the Latin American region needs to be considered in the context of the region's increasing independence from the United States. The region has diversified its economic and diplomatic ties with countries outside the region—China, for example, has become a major trading partner for many countries in the region. Strong regional economic growth rates—6% in 2010 and 4.3% in 2011 —also has increased confidence in Latin America's ability to solve its own problems, and has lessened the region's dependency on the United States. The region's growing ideological diversity in recent years has also been a factor in the region's increased independence from the United States, as has the rise of Brazil as a regional and global power.\nSeveral Latin America regional integration organizations have been established in the past few years, a reflection of both the region's increasing independence and its growing internal cooperation. In December 2011, 33 hemispheric nations—excluding the United States and Canada—met in Caracas to establish the Community of Latin American and Caribbean States (CELAC) to boost regional integration and cooperation. While some observers have concerns that CELAC could be a forum for countries that have tense or difficult relations with the United States, others point out that strong U.S. partners in the region are also members. Some observers have predicted that CELAC could diminish the role of the Organization of American States (OAS), while others maintain that CELAC does not have a permanent staff or secretariat that could compete with the OAS. The organization reportedly will work in the areas of energy, science and technology, infrastructure, finance, and social development.\nSome observers contend that CELEC's establishment reflects declining U.S. influence in Latin America, but the United States still remains very much engaged in the region bilaterally and multilaterally through the OAS and its numerous affiliated organizations. In addition, the Summit of the Americas process remains an important mechanism for the United States to engage with Latin American nations at the highest level. While the April 2012 summit in Colombia displayed U.S. divergence from the region in terms of policy toward Cuba and a reconsideration of the region's anti-drug strategy, the meeting also included a variety of initiatives to deepen hemispheric integration and addresses key hemispheric challenges (also see \" April 14-15, 2012: Summit of the Americas \" below).\nOther regional organizations that have been established in recent years include the 12-member Union of South American Nations (UNASUR), established in 2008 (largely because of Brazil's influence) to promote political coordination in South America. It has served as a forum for dispute resolution. For example, the organization played a role in defusing tensions between Colombia and Venezuela in 2008, and helped resolve political conflicts in Bolivia in 2008 and Ecuador in 2010. Some analysts, however, have raised questions about UNASUR's overall efficacy, financial support, and ability to develop specialized capabilities and programs. Another regional grouping, the Venezuelan-led Bolivarian Alliance of the Americas (ALBA, originally established as the Bolivarian Alternative for the Americas), was launched by President Hugo Chávez in 2004 with the goals of promoting regional integration and socioeconomic reform and alleviating poverty. In addition to Venezuela, this eight-member group includes Bolivia, Cuba, Ecuador, and Nicaragua as well as the Caribbean island nations of Dominica, Antigua and Barbuda, and St. Vincent and the Grenadines. Some observers maintain that ALBA has lost its initial energy. Director of National Intelligence James Clapper maintained in February 2012 congressional testimony that ALBA was \"created in part to spread Chávez's influence in the region\" but \"is only muddling through.\"", "", "As in the previous Congress, legislative and oversight attention to Latin America and the Caribbean during the 112 th Congress focused on the continued increase in drug trafficking-related violence in Mexico and U.S. assistance to Mexico under the Mérida Initiative; efforts to help Central American and Caribbean countries contend with drug trafficking and violent crime; as well as continued counternarcotics and security support to Colombia, which still faces threats from armed actors. The earthquake that devastated Port-au-Prince in January 2010, combined with a cholera outbreak in the fall of 2010, continued to focus congressional attention on the enormous task of disaster recovery and reconstruction in Haiti. As in past years, debate over U.S. sanctions on Cuba, particularly restrictions on travel and remittances, remained a contentious issue with ongoing congressional debate over how to support change in one of the world's last remaining communist nations. Latin American nations, especially Mexico, which remained the leading source country of both legal permanent residents and unauthorized immigrants in the United States, were disappointed by what they viewed as a lack of effort in Congress on comprehensive immigration reform.\nThe U.S. government has spent billions of dollars in anti-drug assistance programs since the mid-1970s aimed at reducing the flow of Latin American-sourced illicit drugs (largely from the Andean region) to the United States. Most of these programs have emphasized supply reduction tools, particularly drug crop eradication and interdiction of illicit narcotics. Successes in one country or sub-region have often led traffickers to alter their cultivation patterns, production techniques, and trafficking routes and methods in order to avoid detection. Congress has influenced U.S. drug control policy in Latin America by appropriating certain types and levels of funding for counterdrug assistance programs and conditioning the provision of antidrug funding on the basis of human rights and other reporting requirements. Congress has also sought to ensure that counterdrug programs are implemented in tandem with judicial reform, anti-corruption, and human rights programs. In the 112 th Congress, numerous oversight hearings were held evaluating drug assistance programs—especially the Mérida Initiative in Mexico, CARSI in Central America, and CBSI in the Caribbean—and related domestic initiatives and border security efforts.\nAnother focus of congressional oversight in the 112 th Congress was the deterioration of democracy in several Latin American countries, including Nicaragua, where Daniel Ortega was re-elected in November 2011 in elections widely seen as seriously flawed, and Venezuela, where there have been concerns for several years about the deterioration of democratic institutions and threats to freedom of speech and press. Despite significant improvement in political rights and civil liberties in the region over the past three decades, in a number of countries weaknesses remain in the state's ability to deliver public services, ensure accountability and transparency, and advance the rule of law. The executive's abuse of power in several countries in the region has led to a setback in liberal democratic practices. The quality of democracy in Latin America is also being negatively affected by organized crime and violence; some governments have been unable to stem the wave of violence and to protect citizens, journalists, and elected officials.\nWith regard to energy, issues of congressional concern included declines in production as well as U.S. dependence on oil from the region. Latin American and Caribbean nations supplied the United States with almost one-third of U.S. crude oil imports in 2010—Mexico and Venezuela accounted for 12.5% and 9.9%, respectively. There have been concerns in recent years, however, about Mexico's declining oil production; the country's proven oil reserves are declining because of insufficient funds available for maintenance and exploration. Venezuela has vast proven oil reserves, the second largest in the world, but its production also has been in decline in recent years because of maintenance issues, natural decline of older fields, and compliance with Organization of Petroleum Exporting Countries (OPEC) production cuts. Venezuela remains a major supplier of crude oil to the United States (the fifth largest), but its U.S.-destined oil exports have declined as the country has diversified its trading partners and supplied significant amounts of oil at preferential prices to Caribbean and Central American nations, especially Cuba. Members of Congress expressed concern about the continued U.S. dependence on imported oil from Venezuela, although observers pointed out that the two countries are mutually dependent on the oil sector since a large portion of Venezuela's oil is refined in the United States. Another issue for Congress was Cuba's development of its offshore oil sector and the potential impact of an oil spill on the United States.\nWith regard to trade, the 112 th Congress conducted numerous hearings during the first session on the pending FTAs with Colombia and Panama, with implementing legislation for both agreements introduced and approved in October 2011. Congressional attention then turned to the implementation of those agreements, with the Colombia FTA entering into force on May 15, 2012, and the Panama FTA entering into force on October 31, 2012. Oversight on Colombia, which was the more controversial of the two agreements, focused on the country's commitments under an \"Action Plan Related to Labor Rights.\" Progress on U.S. negotiations with 10 Pacific rim countries for a Trans-Pacific Partnership (TPP) Agreement was also of congressional interest. Chile, Mexico, and Peru are among the TPP countries negotiating the trade agreement. Other trade issues related to Latin America included the safety of Mexican trucks operating in the United States (the two countries resolved the issue in 2011) and consideration of potential changes to U.S. cotton subsidies that would have allowed the United States to avoid retaliatory trade measures imposed by Brazil, and\nU.S. attention to terrorism in Latin America intensified in the aftermath of the September 2001 terrorist attacks on New York and Washington, with an increase in bilateral and regional cooperation. The State Department maintains that terrorism in the region today is largely perpetrated by terrorist organizations in Colombia and by the remnants of radical leftist Andean groups, while the threat of a transnational terrorist attack remains low for most countries in the hemisphere. Cuba has been on the State Department's list of state sponsors of terrorism since 1982, and both Cuba and Venezuela are on the State Department's annual list of countries determined to be not cooperating fully with U.S. antiterrorism efforts. There was increased congressional concern in 2012bout Iran's growing relations with several countries in the region, especially Venezuela, and related concerns about the activities of Hezbollah in the region. Both Hezbollah and Iran have been implicated in the bombing of two Jewish targets in Buenos Aires in the early 1990s. The State Department maintains that there are no known operational cells of either Al Qaeda or Hezbollah-related groups in the hemisphere, but it has concerns about the fundraising activities of these groups in the region.", "U.S. policy toward Brazil is in flux as policymakers seek to adjust to Brazil's role as an emerging center of influence. Brazil's economy is now the seventh largest in the world, and the country has utilized its economic clout to consolidate its power in South America and exert more influence on global matters. Consequently, U.S.-Brazilian engagement increasingly involves regional and international issues in addition to bilateral concerns. The changing relationship has occasionally frustrated U.S. officials as the two multicultural democracies' shared values have not always translated into common approaches to international affairs. In 2010 and 2011, for example, Brazil used its temporary seat on the U.N. Security Council to advocate engagement with internationally isolated regimes like Iran, Libya, and Syria, rather than sanctions, which it views as a prelude to armed conflict. Although some U.S. policymakers have expressed concerns about Brazil's foreign policy, they have continued to pursue cooperation on many issues. Collaboration on energy issues, especially biofuels development, has been a major focus of bilateral engagement, and the decision by Congress to allow a 54-cent-per-gallon duty on imported ethanol to expire at the end of 2011 removed a major barrier to further cooperation. U.S. policymakers have also sought to boost trade relations as Brazil's fast growing market is a potential destination for increased U.S. exports.\nKey Policy Issues in 2012: Congress maintained interest in Brazil in 2012 with several Members introducing potential legislation related to energy and trade; however, none of the bills advanced. H.R. 4621 , introduced in April, would have authorized negotiations with Brazil to obtain open and reciprocal market access for trade in ethanol products. Likewise, a bill introduced in September, H.R. 6539 , would have created a U.S.-Brazil Joint Commission on Commerce and Trade to address bilateral trade issues and promote commercial opportunities in both countries. Both versions of the 2012 farm bill, S. 3240 and H.R. 6083 , would have addressed issues in the long-running U.S.-Brazil cotton dispute through modifications of the U.S. cotton program.\nFor additional information, see CRS Report RL33456, Brazil-U.S. Relations , by [author name scrubbed]; and CRS Report RL32571, Brazil's WTO Case Against the U.S. Cotton Program , by [author name scrubbed].", "In recent years, U.S. policymakers have grown increasingly concerned about security conditions in Central America and the Caribbean. Although conditions vary by country, many nations in the region have struggled for years to deal with rising levels of crime and violence, which analysts have linked to factors such as widespread social exclusion, security force corruption, and impunity for the perpetrators of crime. These problems have been compounded by traffickers seeking to exploit the region's institutional weaknesses to transport illicit narcotics from producers in South America to consumer markets in the United States and Europe. The U.S. government has sought to counter these trends through the Central America Regional Security Initiative (CARSI) and the Caribbean Basin Security Initiative (CBSI). Both initiatives provide partner nations with equipment, training, and technical assistance to support immediate law enforcement and interdiction operations. They also fund efforts to strengthen the long-term capacities of governmental institutions to address security challenges and the underlying conditions that contribute to them. Congress has appropriated an estimated $496.5 million for CARSI since FY2008 and an estimated $203 million for CBSI since FY2010.\nKey Policy Issues in 2012: Congress continued to closely track security developments and support U.S. assistance efforts in Central America and the Caribbean during 2012. The Senate Caucus on International Narcotics Control, for example, held a hearing on U.S.-Caribbean security cooperation and issued a report on the subject. Both houses of Congress expressed continued support for CARSI and CBSI in their annual foreign aid appropriations measures, H.R. 5857 ( H.Rept. 112-494 ) and S. 3241 ( S.Rept. 112-172 ). Congress chose not to act on either bill, however, so funding for the two initiatives is being provided through a continuing resolution, P.L. 112-175 , until March 27, 2013. Congress also closely tracked human rights conditions in the two sub-regions, and placed some security assistance to Honduras—a country of particular concern—on hold.\nFor additional information, see CRS Report R41731, Central America Regional Security Initiative: Background and Policy Issues for Congress , by [author name scrubbed] and [author name scrubbed]; CRS Report RL34112, Gangs in Central America , by [author name scrubbed]; and Latin America and the Caribbean: Illicit Drug Trafficking and U.S. Counterdrug Programs , coordinated by [author name scrubbed].", "A key U.S. ally in the region, Colombia has endured internal armed conflict for nearly half a century. In recent years, the Colombian government, in close cooperation with the United States through a strategy known as Plan Colombia, has reestablished government control over much of its territory, reduced poverty, and made significant headway in combating drug trafficking and terrorist activities. Colombia's achievements in improved citizen security and economic stability are notable, but some observers continue to raise concerns about human rights conditions in the country. Between FY2000-FY2012, Congress provided Colombia more than $8 billion in assistance. This support, provided through U.S. State Department and Department of Defense accounts, is gradually being reduced as programs are being turned over to Colombian control. Under current President Juan Manuel Santos, Colombia has been strengthening its trade relations with the United States and others, and improving its relationships with neighboring countries, including Venezuela and Ecuador. In October 2011, Congress approved implementing legislation for the U.S.-Colombia Free Trade Agreement (CFTA) with bipartisan support, despite continuing concerns about allegations of anti-trade union violence and related human rights and labor issues. In April 2012, when Colombia hosted the Summit of the Americas in Cartagena (see \" Key Events in 2012 \" below), the Obama Administration announced the CFTA would enter into force on May 15, 2012. Following its May entry into force, the trade agreement eliminated duties on 80% of U.S. exports to Colombia. Most remaining tariffs and barriers to bilateral trade will be eliminated within 10 years of implementation. In October 2012, formal peace talks with the country's dominant leftist guerrilla organization opened in Norway and are continuing in Cuba.\nKey Policy Issues in 2012 : Congressional interest in Colombia centered on trade, human rights, counternarcotics and security. After entry into force of the U.S. Colombia-Free Trade Agreement, some Members of Congress continued to monitor Colombia's compliance with the \"Action Plan Related to Labor Rights\" announced prior to the trade agreement's passage. Policymakers also considered U.S. assistance to Colombia with its ongoing counternarcotics, counterterrorism, judicial reform, economic development, and human rights components. In House and Senate FY2013 foreign aid appropriations bills, there was broad support for the Obama Administration's FY2013 request of $332 million for Colombian foreign assistance. Late in 2012, Members of Congress monitored the progress of the peace negotiations between the government and leftist guerrilla forces and their effect on security conditions in Colombia.\nFor additional information, see CRS Report RL32250, Colombia: Background, U.S. Relations, and Congressional Interest , by [author name scrubbed]; CRS Report RL34470, The U.S.-Colombia Free Trade Agreement: Background and Issues , by [author name scrubbed]; and CRS Report RL34759, U.S.-Colombia Free Trade Agreement: Labor Issues , by [author name scrubbed].", "Since the early 1960s, U.S. policy has consisted largely of isolating Cuba through a variety of strong economic sanctions. A second policy component has consisted of support measures for the Cuban people, including U.S.-sponsored broadcasting and support for democracy and human rights activists. After Fidel Castro's stepping down from power in 2006 because of poor health and the economic goals of the Raúl Castro government that could significantly alter Cuba's state economic model, a number of observers called for a new approach aimed at influencing the Cuban government and society through increased contact and engagement. Others maintain that despite Cuba's release of many political prisoners, the human rights situation remains poor with thousands of short-term detentions. They contend that easing U.S. sanctions without concrete political reform would facilitate the survival of the communist regime. The Obama Administration has relaxed various restrictions on travel and remittances to Cuba, most significantly for Cuban families, but the Administration has continued to express concern about the poor human rights situation. Moreover, a key impediment to improved relations since late 2009 has been Cuba's imprisonment of U.S. Agency for International Development (USAID) subcontractor Alan Gross, who was working on USAID-funded democracy projects in Cuba. (Also see \" March 26-28, 2012: Pope Benedict XVI Visit to Cuba \" below.)\nKey Policy Issues in 2012: Strong congressional interest on Cuba continued in 2012. Policy issues of sustained congressional interest included the country's human rights situation; the status of Cuba's offshore oil development and oil prevention and response capability; funding for U.S. government democracy and human rights projects; funding for Radio and TV Martí broadcasting to Cuba; and the continued imprisonment of Alan Gross. In terms of legislative action, S.Res. 366 , approved in February, condemned the Cuban government for the death of democracy activist Wilman Villar Mendoza after a hunger strike; S.Res. 525 , approved in July, honored prominent Cuban dissident Oswaldo Payá, killed in a car accident; and S.Res. 609 , approved on December 5, 2012, called for the release of Alan Gross. While Congress did not complete action on FY2013 foreign aid appropriations legislation, funding for Cuba democracy programs and Cuba broadcasting was continued through March 27, 2013 by a continuing appropriations resolution ( P.L. 112-175 ).\nFor additional information, see CRS Report R41617, Cuba: Issues for the 112 th Congress , by [author name scrubbed]; CRS Report RL31139, Cuba: U.S. Restrictions on Travel and Remittances , by [author name scrubbed]; and CRS Report R41522, Cuba's Offshore Oil Development: Background and U.S. Policy Considerations , by [author name scrubbed].", "In the almost three years since the January 2010 earthquake that devastated much of Haiti and killed an estimated 316,000 people, the overarching goal of U.S. assistance there has been to help Haiti \"build back better.\" U.S. assistance focuses on four key sectors, in alignment with Haiti's national plan for reconstruction and development: 1) infrastructure and energy; 2) governance and rule of law; 3) health and other basic services; and 4) food and economic security. Major accomplishments include removal of rubble at a much faster rate than in recent disasters elsewhere; the election of and transition to a new president and legislature; a coordinated response to an ongoing cholera epidemic and prevention of its outbreak in displaced persons camps in the capital; and increased agricultural production.\nNonetheless, there is widespread criticism that neither the disbursement of aid nor reconstruction is occurring quickly enough. There are many obstacles to more rapid recovery and reconstruction, including the concentration of damage in a densely populated urban area. Although an aid coordinating mechanism, the Interim Haiti Reconstruction Commission (IHRC), was criticized for being slow to get organized and approve programs, its term expired in October 2011, and about a year passed before the Haitian government created a committee to take over its coordinating duties in late 2012. The cholera epidemic that broke out in late 2010 further delayed the shifting of funds and efforts from emergency response to reconstruction programs and continues to require substantial resources.\nAnother obstacle is political fragility and instability. The already weak Haitian government suffered massive losses in infrastructure and personnel, and often seemed paralyzed with inaction after the disaster. Gridlock between President Michel Martelly- who took office in May 2011- and the legislature continue to make aid disbursal and development difficult. Former members of the Haitian army and would-be soldiers protesting in favor of reestablishing the army disrupted parliament; after one of their marches turned violent in May 2012, the government closed the ten old bases they had been occupying. Elections for one-third of the Senate and a variety of local officials are long overdue. Prime Minister Laurent Lamothe said in July 2012 that they would be held before the year's end, but as 2012 draws to a close, an election date has yet to be set.\nKey policy issues: The key congressional concerns in 2012 included whether U.S. aid to Haiti is being disbursed and implemented effectively. A related issue is corruption. Officials in Haiti and the Dominican Republic have been investigating corruption allegations linked to President Martelly, triggering protests against the President. Martelly has denied the charges. Other concerns included how best to continue to improve security in Haiti. By year's end, the Haitian government had turned its focus to further strengthening the Haitian National Police, as outlined in Haiti's national plan for development, and agreed upon by international donors. Plans for re-creation of an army, as initially proposed by President Martelly, appeared to be on the back burner, and envisioning a limited, emergency response role if one were to be revived. Some Members of Congress also expressed the desire to promote greater respect for basic human rights, including addressing the problem of gender-based violence. Congress was also concerned that U.S. aid programs further strengthen Haitian institutions of governance and rule of law, and that the overdue elections be held in a free, fair, and transparent manner.\nFor background information, see CRS Report R42559, Haiti Under President Martelly: Current Conditions and Congressional Concerns , by [author name scrubbed]; CRS Report R41689, Haiti's National Elections: Issues, Concerns, and Outcome , by [author name scrubbed]; and CRS Report R41023, Haiti Earthquake: Crisis and Response , by [author name scrubbed] and [author name scrubbed].", "Security issues have recently overshadowed immigration and trade in U.S. relations with Mexico, but newly-inaugurated President Enrique Peña Nieto hopes to refocus attention to economic matters. Since FY2008, Congress has appropriated $1.9 billion in anticrime and counterdrug assistance for Mexico as part of the Mérida Initiative, with the focus of aid gradually shifting from training and equipping security forces towards institution-building. Bilateral cooperation helped the Felipe Calderón Administration (December 2006-November 2012) arrest or kill record numbers of drug kingpins, but some 60,000 people may have died as a result of organized crime-related violence during its term in office. Concerns about the violence in northern Mexico prompted border security to return to the forefront of the bilateral agenda, as policymakers sought to make the border as secure and efficient as possible. As comprehensive immigration reform efforts stalled in the U.S. Congress, the enactment of tough state laws against illegal immigration concerned the Mexican government. In the economic realm, the U.S. and Mexican governments resolved a longstanding trade issue in 2011 involving the trucking provisions of the North American Free Trade Agreement and sought to improve North American competitiveness through regulatory cooperation. On June 18, 2012, President Obama announced that the nine countries involved in the negotiations for a Trans-Pacific Partnership (TPP) trade agreement had extended an invitation to Mexico to join the negotiations. The February 2012 signing of a Trans-Boundary Hydrocarbons Agreement for managing oil resources in the Gulf of Mexico could create new opportunities for bilateral energy cooperation.\nKey Policy Issues in 2012: Congress maintained an active interest in Mexico, with the agenda dominated by the country's security situation and the Mérida Initiative, human rights conditions, border security, economic issues, and the July 2012 elections and December 1, 2012 political transition (see \" Key Events in 2012 \" below.) The Obama Administration asked for $269.5 million in assistance for Mexico in its FY2013 budget request, including $234 million in Mérida assistance. Congress also held hearings and issued reports on how organized crime and government efforts to suppress it are affecting human rights and democracy in Mexico. Drug trafficking-related violence in northern Mexico kept border security on the agenda, with P.L. 112-93 increasing penalties for aviation smuggling; P.L. 112-127 tightening sentencing guidelines for building illicit border tunnels; and P.L. 112-205 providing statutory authority for the bilateral Border Enforcement Security Task Force (BEST) program. Congressional action did not occur on the Trans-Boundary Hydrocarbons Agreement, but may be required in 2013 for the agreement to take effect. Mexico's recent accession to the TPP negotiations has generated congressional interest. Congress has also monitored the policy positions taken by the incoming Peña Nieto administration, particularly in the security realm.\nFor additional information, see CRS Report RL32724, Mexico: Issues for Congress , by [author name scrubbed]; CRS Report R41349, U.S.-Mexican Security Cooperation: The Mérida Initiative and Beyond , by [author name scrubbed] and Kristin M. Finklea; CRS Report R41576, Mexico's Drug Trafficking Organizations: Source and Scope of the Rising Violence , by [author name scrubbed]; and CRS Report RL32934, U.S.-Mexico Economic Relations: Trends, Issues, and Implications , by [author name scrubbed].", "While historically the United States has had close relations with Venezuela, a major supplier of oil, friction in bilateral relations has risen over the past decade under the populist government of President Hugo Chávez. Among the concerns of U.S. policymakers have been the deterioration of human rights and democratic conditions, Venezuela's significant military arms purchases, lack of cooperation on anti-terrorism efforts, limited bilateral anti-drug cooperation, and Venezuela's relations with Cuba and Iran. In September 2012, President Obama issued the eighth annual determination (as part of the annual narcotics certification process) that Venezuela had \"failed demonstrably\" to meet its obligations under international counternarcotics measures. The State Department maintains that individual members of the Chávez government and security forces were credibly reported to have engaged in or facilitated drug trafficking activities. The United States has imposed financial sanctions on six current Venezuelan government and military officials for allegedly helping the Revolutionary Armed Forces of Colombia (FARC) with drug and weapons trafficking, including General Henry Rangel Silva, who Chávez appointed as defense minister in January 2012. The United States has also imposed sanctions on three Venezuelan companies for alleged support to Iran and on several Venezuelan individuals for providing financial support to Hezbollah (for more details, see \" Iran's Growing Relations in Latin America \" below).\nKey Policy Issues in 2012: In 2012, Congressional oversight on Venezuela continued on human rights, drug trafficking, and terrorism concerns, including the extent of relations with Iran. Venezuela's October 2012 presidential elections also focused some attention on the state of democracy in the country. President Chávez, who underwent significant treatment for two bouts of cancer in 2011 and 2012, won reelection to another six-year term by defeating unified opposition candidate Henrique Capriles Radonski by an 11% margin. (Also see \" October 7, 2012: Venezuelan Election \" below.) On December 8, 2012, however, Chávez announced that his cancer had returned, and that he supported Vice President Nicolás Maduro as his successor if he were unable to continue to lead the country. Several days later, Chávez returned to Cuba for surgery that was described as complicated. At year's end, Venezuela's political future appeared uncertain. While Congress did not complete action on FY2013 foreign aid appropriations legislation, U.S. funding for democracy programs in Venezuela was continued through March 27, 2013 by a continuing appropriations resolution ( P.L. 112-175 ).\nFor additional background, see CRS Report R40938, Venezuela: Issues for Congress , by [author name scrubbed].", "There has been concern among policymakers in recent years about Iran's growing interest in Latin America, particularly its relations with Venezuela. The personal relationship between Iranian President Mahmoud Ahmadinejad and Venezuelan President Hugo Chávez has driven the strengthening of bilateral ties, although there has been contention among policymakers over the extent and significance of Iran's relations with the region. A major rationale for Tehran's increased focus on Latin America has been Iran's efforts to overcome its international isolation, including efforts to circumvent U.S. and U.N. sanctions. To date, the United States imposed sanctions on two companies in Venezuela in 2008 because of connections to Iran's proliferation activities, while in May 2011, the United States imposed sanctions on Venezuela's state oil company for providing cargoes of a gasoline additive to Iran. Venezuela has played a key role in the development of Iran's expanding relations with other countries in the region, especially Bolivia, Ecuador, and Nicaragua. While Iran has promised significant investment in these countries, observers maintain that there is little evidence to show that such promises have been fulfilled. President Ahmadinejad's January 2012 trip to Venezuela, Nicaragua, Cuba, and Ecuador again increased concerns by some about Iran's efforts to forge ties with the region. In a July 2012 press interview, President Obama maintained overall concern about \"Iran engaging in destabilizing activity around the globe,\" but indicated that his \"sense is that what Mr. Chávez has done over the past several years has not had a serious national security impact on us.\" This was reiterated by the head of the U.S. Southern Command, General Douglas Fraser, who maintained that he does not see Venezuela as a \"national security threat,\" and that Iran's connection with Venezuela is primarily diplomatic and economic.\nAnother reason for U.S. concerns about Iran's deepening relations with Latin America is its support for the radical Lebanon-based Islamic group Hezbollah, a State Department-designated Foreign Terrorist Organization, which along with Iran is reported to have been linked to two bombings against Jewish targets in Argentina in the early 1990s. In recent years, U.S. concerns regarding Hezbollah in Latin America have focused on its fundraising activities among sympathizers in the region, particularly in the tri-border area of Argentina, Brazil, and Paraguay, and in Venezuela. The United States has imposed sanctions on individuals and companies in the region for providing support to Hezbollah.\nKey Policy Issues in 2012: Congress continued its strong oversight of Iran and Hezbollah in Latin America, with hearings on the issue in both houses. Congress took action by completing action on H.R. 3783 in December 2012, a measure requiring the Secretary of State to conduct an assessment within 180 days \"of the threats posed to the United States by Iran's growing presence and activity in the Western Hemisphere\" and submit to Congress the results of the assessment and a strategy to address Iran's growing hostile presence and activity in the region.\nFor additional background, see CRS Report RS21049, Latin America: Terrorism Issues , by [author name scrubbed] and [author name scrubbed]; and CRS Report RL32048, Iran: U.S. Concerns and Policy Responses , by [author name scrubbed].", "Since its foundation in 1948, the Organization of American States (OAS) has served as a forum through which the United States has sought to foster regional cooperation and advance U.S. priorities in the Western Hemisphere. Throughout much of the institution's history, OAS actions reflected U.S. policy as the other member states sought to closely align themselves with the dominant economic and political power in the region. This has changed to a certain extent over the past decade as Latin American and Caribbean governments have diversified their foreign relations and grown increasingly independent of the United States. In recent years, U.S. policymakers have expressed concerns about some of the organization's actions (or lack thereof), including the repeal of a 1962 resolution that had expelled Cuba from participation in the OAS, and what some consider the organization's insufficient support for democracy in nations such as Nicaragua and Venezuela. These and other issues have led some Members of Congress to assert that the OAS advances policies that run counter to U.S. interests, and that the United States should no longer fund the organization. Others maintain that OAS actions continue to closely align with U.S. priorities in most cases, and that U.S. policy should seek to strengthen the institution since it links the United States to the rest of the region at a time when many nations are intensifying relations with extra-regional powers and participating in multilateral organizations that exclude the United States.\nKey Policy Issues in 2012: Debate over the OAS continued in 2012 as Members of Congress engaged in their oversight responsibilities by responding to various developments in inter-American relations. Several Members reiterated their opposition to Cuban participation in the OAS after most of the leaders attending the sixth Summit of the Americas voiced support for Cuba's inclusion at future summits (see \" April 14-15, 2012: Summit of the Americas \" below). Some Members also spoke out against proposed reforms to the Inter-American Commission on Human Rights (IACHR), expressed concerns that the OAS is not fully pursuing its obligations under the Inter-American Democratic Charter, and called for corrective measures to address the organization's administrative and financial challenges.\nFor additional information, see CRS Report R42639, Organization of American States: Background and Issues for Congress , by [author name scrubbed].", "", "Pope Benedict XVI visited Cuba from March 26-28, 2012, the first papal visit since the visit of Pope John Paul II in 1998. The Pope's visit coincided with the 400 th anniversary of Our Lady of Charity (La Virgen de Caridad del Cobre), the patron saint of Cuba. After a trip to Mexico, the pontiff's visit to Cuba began in the eastern city of Santiago, where he celebrated mass in the Plaza of the Revolution, and visited the shrine of Our Lady of Charity in the town of El Cobre outside Santiago. The Pope then traveled to Havana, where he celebrated an outdoor mass in the Plaza of the Revolution and also met with church and Cuban government officials. While the purpose of the Pope's visit was pastoral (some 60% to 70% of Cubans are Catholic), the trip also highlighted the increased social and political profile of the Catholic Church in Cuba and its efforts in recent years to influence the Cuban government.\nCuba's Catholic Church became more openly critical of the Cuban government in 1993 when Cuban bishops issued a pastoral letter opposing limitations on freedom, excessive surveillance by state security, and imprisonment and harassment of dissidents. For many observers, the bishops' statement reflected a new era in which the Church would be more openly critical of the government. Pope John Paul elevated Archbishop of Havana Jaime Ortega to the position of Cardinal in 1994, which raised the profile of the Church in Cuba. Since then, Ortega has been widely commended for reinvigorating the Cuban Catholic Church—the role of Caritas Cuban, the Church's social assistance agency, has expanded throughout Cuba under Ortega. Cuban bishops have not refrained from speaking out on the need for change in Cuba, and Church publications have become a way for the Church to broaden the debate in Cuba on social and economic problems facing the country.\nBeginning in 2010, the Cuban Catholic Church under Cardinal Ortega took on a prominent role in engaging with the Cuba government over political prisoners. This led to the release of more than 125 prisoners, with the majority going to Spain. In anticipation of Pope Benedict's visit, the Cuban government pardoned almost 3,000 prisoners in late December 2011, although only seven were reported to be political prisoners. Today, there are reported to be at least 50 prisoners sanctioned for political reasons, although the government has continued to harass and intimidate dissidents and human rights activists with thousands of short-term detentions. The death of imprisoned hunger striker Wilman Villar Mendoza on January 19, 2012, again focused world attention on Cuba's continuing poor human rights situation.\nDuring his March 2012 trip to Cuba, Pope Benedict urged Cubans during his homily in Santiago \"to build a renewed and open society, a better society, one more worthy of humanity, and which better reflects the goodness of God.\" In Havana, the Pope invoked 19 th century Cuban priest Father Felix Varela (a candidate for sainthood) as someone who offers a \"path to a true social transformation ... to form virtuous men and women in order to forge a worthy and free nation.\" Emphasizing reconciliation, the Pope asserted that \"Cuba and the world need change, but this will occur only if each one is in a position to seek the truth and chooses the way of love, sowing reconciliation and fraternity.\" At the end of his visit, in reference to U.S. economic sanctions, the Pope criticized \"restrictive economic measures, imposed from outside the country,\" as an \"unfair burden to the Cuban people.\"\nSome Cuban dissidents, as well as some in the Cuban American community, criticized the Pope for not more forcefully confronting the Cuban government during his visit. The Pope did not meet with any dissidents or human rights activists during his visit or speak out about the increased government harassment surrounding his visit. As a result, some in the dissident community felt the church lost credibility as a result of the Pope's visit. Other dissidents, however, emphasize the record of the Cuban Catholic Church in supporting political prisoners and their families and for the support provided to the Ladies in White. They point to the church's role in opening space for increased public dialogue, including criticism of the government, on economic and social issues, through church publications.\nThe visit of Pope Benedict could provide the church with more space to speak out on significant economic, social, and political issues facing the country. Given that the Catholic Church is Cuba's largest independent civil society group, it is likely that it will continue to have a significant voice as Cuba confronts economic and political change in the years ahead.", "On April 14-15, 2012, 30 of the Western Hemisphere's 34 democratically elected leaders gathered in Cartagena, Colombia for the sixth Summit of the Americas. The Summits of the Americas, which have been held periodically since 1994, serve as opportunities for the hemisphere's leaders to engage directly with one another and discuss issues of collective concern. The theme of the Cartagena Summit was \"Connecting the Americas: Partners for Prosperity,\" and its official agenda focused on how physical integration and regional cooperation can assist the countries of the hemisphere in addressing the challenges of poverty and inequality, citizen security, natural disasters, and access to technology.\nThe hemisphere's leaders were unable to establish a consensus vision for the region and failed to produce a summit declaration as a result of several contentious issues that overshadowed the official agenda. Two issues that often divide the United States from other countries in the region, engagement with Cuba and U.S.-backed antidrug policies, were discussed extensively. All of the leaders present—with the exceptions of President Obama and Prime Minister Harper of Canada—reportedly voiced support for Cuba's inclusion at the next Summit of the Americas, which is scheduled to be held in Panama in 2015. On drug policy, the hemisphere's leaders agreed to commission a study from the Organization of American States (OAS) analyzing the results of current efforts and exploring new approaches that may be more effective. They also agreed to establish a new regional body to help coordinate efforts to combat transnational organized crime. With regards to the official agenda, the hemisphere's leaders issued a list of 47 commitments involving individual and cooperative efforts to reduce poverty and inequality, improve citizen security, mitigate the effects of natural disasters, integrate physical infrastructure, and expand access to information and technology.\nPresident Obama's actions at the Cartagena Summit suggest he intends to maintain the current direction of U.S. policy toward the region. He reiterated his pledge from the previous summit to seek partnerships of equality and mutual respect, but remained firmly opposed to changes in U.S. policies concerning Cuba and illicit drugs. Likewise, the new initiatives he introduced appear to be relatively limited in scale. The Small Business Network of the Americas initiative, for example, is designed to foster an interconnected network of business development centers to strengthen connections between the region's businesses and increase entrepreneurs' access to financing. Similarly, the Women's Entrepreneurship in the Americas initiative will utilize public-private partnerships to strengthen the skills and capacities of women entrepreneurs, as well as increase their access to financing and markets. As part of a third initiative, USAID's Innovation Fund of the Americas will solicit proposals and finance projects to find, test, support, and scale cost-effective solutions to the hemisphere's development challenges.", "On July 1, 2012, Mexico held federal (presidential and legislative) elections. Turnout reached record levels as 63% of eligible voters cast their ballots. Mexico's Federal Electoral Institute (IFE) conducted the elections with the oversight of the Federal Electoral Tribunal, which must certify the results by September 6, 2012. While some election observers assert that vote-buying and other irregularities marred the electoral process, observers from the Organization of American States generally praised IFE's handling of the elections.\nAs predicted, the centrist Institutional Revolutionary Party (PRI) that governed Mexico from 1929 to 2000 retook the presidency after 12 years of rule by the conservative National Action Party (PAN) and won a plurality in the Senate and Chamber of Deputies. PRI/Green Ecological Party (PVEM) candidate Enrique Peña Nieto, a former governor of the state of Mexico, won the presidential election, albeit by a smaller margin than polls had forecast. Peña Nieto captured 38.2% of the vote, followed by Andrés Manuel López Obrador of the Party of the Democratic Revolution (PRD) with 31.6%, Josefina Vázquez Mota of the PAN with 25.4%, and Gabriel Quadri of the National Alliance Party (PANAL) with 2.3%. The relatively narrow margin of Peña Nieto's victory, coupled with the fact that López Obrador has challenged the election results before the Electoral Tribunal, could complicate the transition period. And, while PAN President Felipe Calderón has pledged to work with the incoming administration, his party has joined the PRD in calling on authorities to investigate whether the PRI used any illicit finances to fund Peña Nieto's campaign. Peña Nieto is to take office for a six-year term on December 1, 2012.\nPolls predicted that the PRI might also capture a simple majority in one or both chambers of the Mexican Congress, a feat not accomplished since 1994. The PRI and the allied PVEM party failed to capture a simple majority in either house. As a result, the PRI will have to form cross-party coalitions in order to pass key reforms, particularly those requiring constitutional amendments. The PRI will most likely find support from the PANAL and possibly the PAN, which lost seats in the Chamber but retained a powerful bargaining position. The PRD-led coalition, which will now have more seats in the Chamber than the PAN and remains the third-largest force in the Senate, could complicate some reform efforts, including those aimed at increasing private participation in the energy sector, a key priority for Peña Nieto.\nSome Members of Congress may be concerned that the leadership changes resulting from the July 1, 2012, Mexican elections will significantly impact U.S.-Mexican relations, particularly now that the party controlling the presidency has changed. However, few analysts are predicting that the transition from PAN to PRI rule will result in seismic shifts in bilateral relations. During the campaign, Enrique Peña Nieto sought to reassure U.S. policy makers that a PRI administration would continue to combat organized crime, while also striving to reduce violence in Mexico. He also expressed support for increased bilateral and trilateral (with Canada) economic and energy cooperation. Since the elections, Peña Nieto has said that he is committed to \"having an intense, close relationship of effective [security] collaboration measured by results\" with the United States. President Obama has congratulated Peña Nieto on his victory and Assistant Secretary of State for Western Hemisphere Affairs Roberta Jacobson has said that U.S. officials \"look forward to working with him\" after he takes office.\nFor additional background, see CRS Report R42548, Mexico's 2012 Elections , by [author name scrubbed].", "In Venezuela's October 7, 2012 presidential race, President Chávez won reelection by a margin of 11%, receiving 55.07% of the vote compared to 44.31% for opposition candidate Henrique Capriles, according to the National Electoral Council. Chávez received almost 8.2 million votes, about 1.6 million more than Capriles, who received almost 6.6 million votes. President Chávez won all but two of Venezuela's 23 states, including a very narrow win Capriles's home state. Unlike the last presidential election in 2006, Venezuela did not host international observer missions. Instead, two domestic Venezuelan observer groups monitored the vote. Most reports indicate that election day was peaceful with only minor irregularities.\nA White House spokesman, while acknowledging differences with President Chávez, congratulated \"the Venezuelan people on the high level of participation, as well as on what was a relatively peaceful process.\" A State Department official added \"that the views of the more than 6 million people who voted for the opposition should be taken into account going forward.\"\nCredited with running an effective well-organized campaign that increased the strength of a unified opposition, Capriles accepted defeat and congratulated President Chávez, but also maintained that being president entails \"working to solve the problems of all Venezuelans.\" Capriles said that he would continue to serve the Venezuelan people. For the opposition, the election showed a significant strengthening of support – it received about 2.2 million more votes than in the last presidential election in 2006, and its share of the vote grew from almost 37% in 2006 to 44% in 2012.\nIf Capriles had won the presidency, he would have faced a National Assembly still dominated by Chávez supporters since the country's next legislative elections are not due until September 2015. Without legislative support, he would have faced difficulty in making significant policy changes. For the United States, however, an opposition victory would likely have reduced tensions in bilateral relations and allowed potential progress in the key areas of anti-drug and counterterrorism cooperation.\nFor President Chávez, the election was his fourth presidential victory. It affirmed his longstanding popular support as well as support for his government's array of social programs that have helped raise living standards for many Venezuelans. In his victory speech, President Chávez congratulated the opposition for their participation and civic spirit and pledged to work with them. At the same time, however, the president vowed that Venezuela would \"continue its march toward the democratic socialism of the 21 st century.\"\nWith Chávez's reelection, it is likely that there will be a deepening of statist economic policies, and some fear that there will be continued erosion of democratic institutions and practices. Under President Chávez, it is likely that relations with the United States will continue to be strained as the government continues to espouse an anti-U.S. agenda and close relations with Iran. On the other hand, Venezuela's role in supporting Colombia's peace process and its increased counternarcotics and security cooperation with Colombia could lead to an easing of tension in some aspects of U.S.-Venezuelan relations.\nPost-E lection Developments: Venezuela's political future became increasingly uncertain when President Chávez announced on December 8, 2012 that his cancer had returned, and that he supported Vice President Nicolás Maduro as his successor if he were unable to continue to lead the country. Several days later, Chávez returned to Cuba for surgery that was described as complicated. Chávez had undergone significant treatment in Cuba for two bouts of cancer in 2011 and earlier in 2012. Venezuela's Constitution (Article 233) calls for new elections within 30 days if Chávez died before being sworn into office in January 2013 or if he died or had to leave office permanently in the first four years of his new term. Venezuela's opposition would then have another opportunity to compete at the polls, and would be advantaged by not having Chávez on the ballot. In such a scenario, however, sympathy for Chávez could also engender support for a Chavista candidate aiming to protect Chávez's legacy and programs.\nFor additional background, see CRS Report R40938, Venezuela: Issues for Congress , by [author name scrubbed].", "" ], "depth": [ 0, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_title h3_title", "h0_full", "h0_full h3_full", "h1_full", "h2_title h3_title", "h3_full h2_full", "", "h3_full", "", "", "", "", "h3_full", "h3_full", "", "", "", "", "", "", "" ] }

{ "question": [ "Why are the US and Latin America linked?", "What goals of the Obama Administration relate to Latin America?", "How do these goal compare to past approaches?", "What impact has the administration had?", "Why is US policy in Latin America changing?", "Why is Latin American independence growing?", "What else is contributing to independence from the US?", "What is a sign that Latin America is less reliant on the US?", "What role does Congress play in Latin America?", "What was the 112th Congress focus in the regions?", "How did Congress focus change with the 2010 earthquake in Haiti?", "How do US relations extend to Cuba?", "How do US relations extend to Nicaragua and Venezuela?", "What concern relates to Iranian relations in Latin America?", "What is the goal of this report?", "How does this report address issues faced by the region and Congress?", "How does this report address current events of 2012", "What is the purpose of the appendix of this report?", "What further materials on the topic exist?" ], "summary": [ "Geographic proximity has ensured strong linkages between the United States and the Latin American and Caribbean region, with diverse U.S. interests, including economic, political and security concerns.", "U.S. policy toward the region under the Obama Administration has focused on four priorities: promoting economic and social opportunity; ensuring citizen security; strengthening effective democratic institutions; and securing a clean energy future.", "There has been substantial continuity in U.S. policy toward the region under the Obama Administration, which has pursued some of the same basic policy approaches as the Bush Administration.", "Nevertheless, the Obama Administration has made several significant policy changes, including an overall emphasis on partnership and shared responsibility.", "U.S. policy toward the region must also contend with a Latin America that is becoming increasingly independent from the United States.", "Strong economic growth has increased Latin America's confidence in its ability to solve its own problems.", "The region has also diversified its economic and diplomatic ties with countries outside the region.", "Over the past few years, several Latin American regional organization organizations have been established that do not include the United States.", "Congress plays an active role in policy toward Latin America and the Caribbean.", "Legislative and oversight attention to the region during the 112th Congress focused on the continued increase in drug trafficking-related violence in Mexico and U.S. assistance to Mexico under the Mérida Initiative; efforts to help Central American and Caribbean countries contend with drug trafficking and violent crime; as well as continued counternarcotics and security support to Colombia.", "The January 2010 earthquake that devastated Port-au-Prince, Haiti, continued to focus congressional attention on the enormous task of disaster recovery and reconstruction.", "As in past years, U.S. sanctions on Cuba, particularly restrictions on travel and remittances, remained a contentious issue in the debate over how to support change in one of the world's last remaining communist nations.", "Another area of congressional oversight was the deterioration of democracy in several Latin American countries, especially Nicaragua and Venezuela.", "Congressional concern also increased about Iran's growing relations in the region, especially with Venezuela, and about the activities of Hezbollah.", "This report provides an overview of U.S. policy toward Latin America and the Caribbean in 2012, including the Obama Administration's priorities for U.S. policy and a brief comparison of policies under the Obama and Bush Administrations.", "It then examines congressional interest in Latin America, first providing an overview, and then looking at selected countries and regional issues and key policy issues faced by Congress in 2012.", "The final section of the report analyzes several key events in the region that took place in 2012: the Pope's trip to Cuba in March, the sixth Summit of the Americas in April, Mexico's elections in July, and Venezuela's upcoming elections in October.", "An appendix provides a listing of hearings in the 112th Congress focused on Latin America.", "For additional information and access to over 30 CRS reports on the region, see the CRS Issues in Focus webpage on \"Latin America and the Caribbean.\"" ], "parent_pair_index": [ -1, -1, 1, 1, -1, -1, 1, -1, -1, 0, 0, -1, -1, -1, -1, 0, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Export Control System", "Export Control Reform Initiative", "Transshipment and Diversion", "Compliance Activities Address Illicit Transshipment Risk in Three Areas", "U.S. Agencies Vet Transactions Prior to Export", "Agencies Address Illicit Transshipment Risk by Analyzing Shipping Data and Monitoring End Use of Items", "Agencies Educate U.S. Exporters and Foreign Governments about Illicit Transshipment Risks, but One Program Is Largely Inactive", "Agencies Have Not Fully Assessed Potential Impact of Control List Reforms on Resource Needs for Compliance Activities", "Agencies Propose to Move Items from State to Commerce and to Introduce a New License Exception", "Agencies Have Not Fully Assessed Potential Impact of Control List Reforms on All Compliance Activities but Have Assessed the Estimated Resource Impact on License Review", "Agency Officials Identified Two Potential Risks of Reform for Compliance Activities, but Agencies Have Not Assessed Implications of These Risks on Resource Needs", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Scope and Methodology", "Appendix II: Descriptions of Compliance Activities", "Appendix III: License Application Review", "Appendix IV: List Maintenance", "Appendix V: End-Use Monitoring", "Appendix VI: Comments from the Department of Commerce", "GAO Comments", "Appendix VII: Comments from the Department of State", "Appendix VIII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "", "The current U.S. export control system seeks to limit sensitive items from falling into the wrong hands and, at the same time, allow legitimate trade to occur. The export control system is governed by a complex set of laws, regulations, and processes and multiple federal agencies administer its regulatory framework and ensure compliance. State and Commerce each have a role in U.S. export licensing. Generally, exporters may submit a license application to State if their items are controlled on the U.S. Munitions List (USML) or to Commerce if their items are controlled on the Commerce Control List (CCL) to receive export approval. Exemptions are permitted under various circumstances, such as allowing for the export of certain items to Canada without a license. Even though many dual-use items do not require a license for export to most destinations, they are still subject to U.S. export control laws. All items subject to the Export Administration Regulations (EAR), whether or not on the CCL, require exporters to comply with the EAR. As part of the application review process, State and Commerce consult with other agencies, including DOD. Exporters require a license for most arms exports. In 2010, Commerce processed 21,660 export licenses, and State processed 82,937 export licenses. Additionally, offices within State, Commerce, Treasury, and the Departments of Homeland Security and Justice conduct compliance activities to identify potential violations or prevent them before they occur; they also conduct export control enforcement activities to identify and penalize violations after they occur. When compliance activities, such as end-use checks, result in unfavorable determinations, Commerce or State may take further action, such as denying a license or referring involved entities to enforcement agencies for investigation and possible penalties. Enforcement also strives to prevent or deter the illegal export of defense and dual–use items, such as controlled components that were shipped to countries like Iran, which were later found in weapons and devices used against U.S. forces in Iraq. Export control enforcement activities include inspecting items to be exported, investigating potential export control violations, and pursuing and imposing criminal and administrative penalties against violators.\nThe imposition of economic sanctions has been a long-standing tool for addressing a range of national security threats. As of February 2012, OFAC maintains primary responsibility for administering more than 20 separate sanctions programs. These sanctions programs include (1) country-based programs that apply sanctions to an entire country—such as Iran, or Sudan; and (2) targeted, list-based programs that address individuals or entities engaged in specific types of activities such as terrorism, proliferation of weapons of mass destruction (WMD), or narcotics trafficking. For example, according to Treasury officials, they use the authorities under the International Emergency Economic Powers Act and Executive Order 13224 to designate those who provide support to terrorists, freezing any assets they have under U.S. jurisdiction and preventing U.S. persons from doing business with them.", "In August 2009, the President announced that he was directing a comprehensive review of the U.S. export control system. This review found that the U.S. export control system has a complicated structure with multiple agencies and control lists, which has led to jurisdictional confusion and hindered the ability of allies to cooperate with U.S. forces. In April 2010, the administration announced a reform framework that would create an export control system that is more effective, transparent, and predictable by creating a single control list, licensing agency, enforcement agency, and information technology system for licensing. The administration also found that licensing procedures and conditions are not consolidated or uniform across agencies, with various agencies monitoring and enforcing export controls.separate information systems, some of which are paper-based, which are not accessible to all agencies involved.\nThe current process relies on Our past work has highlighted the need for export control reform through reports to Congress and testimony at congressional hearings. Over the last decade, GAO has made a number of key findings and recommendations directed to State, Commerce, DOD, Homeland Security, Justice, and Treasury, to improve the U.S. export control system. Some of the issues we identified include a lack of systematic assessments, poor interagency coordination, and inefficiencies in the license application process.\nThe administration plans to begin implementing export control reforms through interim changes that can be carried out by regulation or executive order. Reforms requiring legislative action—creation of a single licensing agency, control list, and enforcement agency—will come last and had not been proposed as of March 2012. As of February 2012, the administration has taken steps to implement export control reform including proposing regulations to move controlled export items from the USML to the CCL, and clarifying which items pertain to each list, and establishing an Export Enforcement Coordination Center by executive order.", "In July 2010, a senior State official testified that transshipment hubs (i.e., countries or areas that function as major hubs for the legitimate trading and shipment of cargo) with weak controls on imports, exports, and reexports represent an important vulnerability to efforts to prevent illicit proliferation-related trade. Our previous work identified cases of illicit transshipment involving parties in UAE, Singapore, and Malaysia. As congressional attention focused on transshipment, members also raised concerns about the resources needed for compliance activities, domestically and overseas. For example, in the same July 2010 hearing, a member expressed concern that only one Commerce individual was stationed in the UAE to conduct end-use checks for dual-use exports.According to U.S. officials, Iran has obtained U.S. military and dual-use goods that have been illegally transshipped by firms and individuals through locations in numerous countries, including the UAE, Malaysia, and Singapore. The goods included components for U.S.-built fighter aircraft, electronics, and specialized metals. To address the problem, U.S. agencies have conducted undercover investigations to detect Iranian procurement networks, prosecuted criminal cases against at least 30 firms and individuals for transshipping or attempting to transship goods to Iran, and provided export control training and support to the UAE and other countries.", "U.S. agencies engaged in export controls use multiple compliance activities to reduce illicit transshipment risk. These activities include (1) vetting transactions prior to export by screening applications against four categories of lists of parties of concern, among other steps, (2) analyzing shipping data and monitoring end use of items, and (3) educating companies and foreign governments about the risks of illicit transshipment, although State’s outreach efforts have been largely inactive since 2008.", "To address illicit transshipment risks, agencies vet parties to transactions prior to export in three ways. First, agencies examine license applications to assess the transaction. Second, they vet individual parties to the transaction by, for example, confirming their credentials before issuing a license (a prelicense check). Third, agencies screen applicants to identify trusted end users for the Validated End-User (VEU) program.\nWhen deciding to approve or deny an export license application, Commerce and State evaluate it against several factors, including an assessment of all parties to the transaction and how the recipient plans to use the item. Commerce factors the risk of illicit transshipment into the license application review process through a risk assessment tool that assigns a weighted score to an application, based on the level of concern associated with the listed party, country, product, and exporter. A high score may prompt further investigation and an end-use check by Commerce or embassy officials. In technical comments on a draft of this report, Commerce stated that the risk assessment tool would affect the license review process only when Commerce determined that a prelicense check would be necessary. In those cases, Commerce incorporates transshipment risk in the license application review process by dividing countries into three categories of risk, with the third category including countries identified as transshipment points. Commerce’s list of highest risk countries includes 7 of the 13 transshipment countries in our review. For fiscal years 2008 through 2010, Commerce reviewed 63,304 license applications worldwide, 19,693 (31 percent) of which were for exports to the 13 transshipment countries we identified. It approved 84 percent of license applications for these transshipment countries, denied 1 percent, and returned 15 percent of the applications to exporters without taking action on them. Appendix III contains additional information on the number of license applications that Commerce and State reviewed for the 13 transshipment countries between fiscal years 2008 and 2010.\nState conducts a case-by-case review of export license applications against established criteria or “warning flags” for determining potential risk of exporting USML items to foreign recipients. As part of the license review process, State may conduct a prelicense end-use check to provide more information on the transaction before it acts on the license application. State’s guidance on conducting end-use checks (known as Blue Lantern monitoring) identifies three broad categories that may trigger an end-use check, including whether there are indicators for transshipment through multiple countries or companies. 2008 through 2010, State reviewed 164,998 license applications worldwide and 28,550 for exports to the 13 transshipment countries (17 percent of all applications). It approved 86 percent of license applications for these countries, denied 1 percent, returned without action 13 percent, and suspended or revoked 1 percent of preexisting licenses.\nTreasury does not review licenses for the 13 transshipment countries because none of these countries is an embargoed or sanctioned country.\nBlue Lantern end-use monitoring entails the prelicense, postlicense, or postshipment inquiries or “checks” undertaken to verify the legitimacy of a transaction and to provide “reasonable assurance” that the recipient complies with the requirements imposed by the U.S. government with respect to use, transfers, and security of defense articles and defense services; and that such articles and services are being used for the purposes for which they were provided.\nHowever, it assesses illicit transshipment risk when it licenses goods to several destinations, such as Iran and Sudan, in its administration of U.S. embargoes and sanctions. According to Treasury officials, OFAC screens end users in the license review process against the sanctions lists it administers because it assesses the risk of illicit transshipment or of reexport when placing individuals on these lists.\nCommerce, State, and Treasury each maintain several screening lists that inform the licensing process by providing information on entities of concern to licensing officers and the public. These lists encompass a range of designations including those related to proliferation of WMD, terrorism, and actions contrary to U.S. national security and foreign policy interests. We reviewed four categories of lists outlined in table 1 below.\nEntity List: Commerce’s considerations for additions to the Entity List include the end use of allegedly transshipped items. For example, on October 31, 2011, the End-User Review Committee added a firm located in Hong Kong and Singapore for diverting U.S.-origin items from Hong Kong to Iran. The diversion was part of the efforts of a larger procurement network that arranged for the transshipment of radio frequency modules from Singapore to Iran for use in improvised explosive devices found in Iraq. Placement of an individual’s name on the Entity List notifies exporters of a potential licensing requirement or a ban on exports. In August 2008, Commerce expanded criteria for addition to the Entity List to allow an entity to be placed on the list if there is reasonable cause to believe, based on specific and articulable facts, that the entity has been involved, is involved, or poses a significant risk of becoming involved in activities that are contrary to the national security or foreign policy interests of the United States. As of December 2010, at least 56 percent of the 359 entities on the Entity List were from the 13 transshipment countries in our review.\nUnverified List: The Commerce Unverified List is a public list that includes the names and countries of foreign entities that were parties to transactions for which Commerce could not conduct a prelicense check or postshipment verification (PSV) due to factors outside of U.S. government control. The list informs the licensing process by providing exporters with information about entities of concern. For example, we determined that, of the 36 persons or entities currently on the Unverified List, 78 percent are from the 13 transshipment countries we reviewed. When Commerce established the Unverified List in 2002, it advised exporters that the participation of a person on this list in any proposed transaction would raise a ‘‘red flag’’ for exporters under established guidance. Commerce stopped updating the Unverified List after it expanded the scope of the Entity List in August 2008 and is considering eliminating the Unverified List in 2012. Commerce officials said that they will review the Unverified List and assess the 36 entities currently on it against criteria for inclusion on the Entity List, transferring them, if warranted, on a case-by-case basis. Commerce will monitor the entities that are not transferred through its internal Watch List.\nState and Treasury Sanctions Lists: State and Treasury publish lists of individuals sanctioned under various statutes for activities relating to concerns ranging from nonproliferation to drug enforcement. Treasury officials indicated that both direct exports and transshipments from the United States to a sanctioned entity or to an embargoed country without authorization constitute diversion and are thus violations. For example, in December 2008, Treasury sanctioned an Iranian shipping line for facilitating the transport of cargo and employing deceptive shipping practices to advance Iran’s nuclear and missile programs. Additionally, Treasury designated the company’s subsidiaries in four transshipment countries—China, Malta, Singapore, and UAE. Of the 4,929 designations on the Specially Designated Nationals (SDN) list, 167 were from the 13 transshipment countries.\nState and Commerce Watch Lists: State and Commerce screen parties named in a license application against internal Watch Lists, which include participants added because of illicit transshipment risk. Specifically, Commerce and State both add names of entities identified through unfavorable end-use checks, including names of entities from transshipment countries, to the Watch Lists. According to State and Commerce, officials check all names on every export license application against their Watch Lists. As of September 2011, State’s Watch List contained 100,248 entities, of which 8,731 (about 9 percent) were from the 13 transshipment countries we reviewed. As of November 2011, the Commerce Watch List contained 36,849 active entities, of which 8,309 (about 23 percent) were from the 13 transshipment countries we reviewed. Appendix IV details the numbers of entities from each transshipment country listed on State and Commerce Watch Lists for 2011. To confirm that the results of end-use checks are incorporated into the license application review process, we analyzed a random, nongeneralizable sample of 21 State end-use checks and 56 Commerce end-use checks during our site visits in Hong Kong, Singapore, and the UAE. We submitted 11 unfavorable checks to State to determine the actions in response to the unfavorable determinations. State placed or updated the placement of 9 of the 11 entities identified in these unfavorable end- use checks on agency watch lists and referred 6 to State’s enforcement division for possible investigation. For Commerce, according to its Watch List guidance, all companies that receive unfavorable prelicense checks or PSVs are placed on the Watch List. However, for the 26 end-use checks with unfavorable results that we submitted to Commerce, we could not confirm that Commerce placed the names of the associated entities on its Watch List.\nAgencies may also conduct a prelicense check to verify the credentials of a party in advance of approving a license. A prelicense check may include a site visit to the proposed end user or consignee. Commerce and State may also seek the input of other agencies, particularly DOD, to vet transactions by reviewing end-user history and other factors.\nCommerce screens applicants for a variety of factors, including reexport, to identify trusted end users for the VEU program. The VEU is an export licensing framework that allows validated end users to receive eligible items on the Commerce Control List without a license. As of November 2011, Commerce conferred VEU status on 11 companies from 2 countries, China—one of the 13 GAO-designated transshipment countries—and India. The End-User Review Committee considers factors such as the entity’s record of compliance with U.S. export controls and its willingness to host on-site reviews by U.S. government personnel to ensure program compliance. Commerce also vets potential recipients of VEU authorizations with the law enforcement and intelligence communities. In addressing illicit transshipment risk, Commerce requires VEU applicants to adhere to conditions on diversion, retransfer, and reexport of specified items.", "To confirm exporters’ and recipients’ adherence to U.S. export control requirements, Commerce and State analyze shipping data and conduct end-use checks of items exported overseas. They use these activities to confirm compliance with export control requirements by verifying the end use of controlled items and by reviewing export documentation for potential violations.\nBoth Commerce and State analyze shipping information to identify illicit transshipments and other potential violations of export control laws. The Census Bureau maintains shipping information on U.S. exports in the Automated Export System, the primary instrument for collecting export trade data. The U.S. government requires exporters to file shipping information with the system for any items subject to Commerce or State control, whether they need licenses or are eligible for exceptions.\nCommerce uses data from the Automated Export System to determine exporter’s compliance with the EAR on items subject to licensing requirements, select candidates for end-use checks, and target other compliance and enforcement activities. In addition, Commerce used available Automated Export System and international Customs data to develop a methodology that assesses the potential risk of illicit diversion of items on the Commerce Control List. This methodology is part of a Commerce developed Transshipment Identification Strategy that also included the publication of seven best practices for preventing diversion through transshipment points. U.S. agencies have assessed a risk of illicit transshipment from Hong Kong to mainland China, from UAE to Iran, and from China to Iran.\nState also uses shipping information as part of its end-use monitoring program to identify illicit transshipments and other forms of diversion. Specifically, State officials said that they check shipping information against approved license applications for discrepancies when considering whether to initiate an end-use check and use such information to verify the exporter’s use of license exemptions. For example, in fiscal year 2009, State reported reviewing 35,000 shipments to Canada made under an exemption specific to that country. As a result of that review, State reported initiating eight end-use checks to verify the credentials of end users who were listed on State’s Watch List. State determined that the export in question did not result in a diversion. Like Commerce, State obtains shipping data from the Automated Export System maintained by the Census Bureau, pursuant to a Memorandum of Understanding with that organization. As the Memorandum of Understanding expired in November 2011, State and Census must complete a new Memorandum of Understanding for State to continue receiving this shipping data, according to a senior Census Bureau official. A State official stated that they continued to receive the shipping data between November 2011 and February 2012, but Census stopped providing this data, pending completion of a new Memorandum of Understanding, according to the Census Bureau official.\nCommerce and State address illicit transshipment risk by verifying the end use of controlled items. Guidance for both agencies identifies illicit transshipment as a factor to consider in assessing the need for end-use checks.\nCommerce may conduct an end-use check on any item subject to the EAR that is exported. Commerce’s authority to conduct PSV checks is established in the Export Administration Act of 1979, which provides the legal and administrative basis for U.S. controls on dual-use exports and is supplemented by the EAR. According to Commerce, PSV checks strengthen assurances that exporters, shippers, importers, and end users comply with the terms of export license and licensing conditions.\nCommerce conducts PSV checks to confirm that the dual-use item arrived at its destination and is being used as intended. Commerce Export Control Officers (ECO), special agents, or other U.S. government personnel visit companies overseas to meet with importers or end users in an attempt to verify the use and location of these items.\nOur analysis of end-use checks, where Commerce made a favorable or unfavorable determination, indicated that Commerce focused its efforts on transshipment countries; it conducted 57 percent of 1,412 end-use checks for fiscal years 2008 to 2010 in the 13 transshipment countries we reviewed. Of these checks, 33 percent were unfavorable. Appendix V provides additional data on end-use checks for the 13 transshipment countries. The three locations where we conducted site visits—Hong Kong, Singapore, and UAE—represented about 36 percent of Commerce end-use checks conducted globally for this period and nearly 62 percent of unfavorable determinations worldwide.\nTo address transshipment concerns in Southeast Asia, Commerce stationed an ECO in Singapore, with regional responsibilities in Malaysia, Indonesia, Thailand, and the Philippines to conduct end-use checks, among other duties. Commerce end-use check guidance indicates that ECOs should be aware of warning signals, including whether a consignee is aware of relevant restrictions to the reexport or retransfer of the item. For fiscal years 2008 through 2010, Commerce conducted 49 percent of all its end-use checks in five locations: UAE, Hong Kong, Singapore, Taiwan, and China. Moreover, Commerce determined that 62 percent of all unfavorable end-use checks for this period occurred in three of these locations: Hong Kong, the UAE, and Singapore.\nFor the purposes of this report, unlicensed exports include exports requiring no prior government review, including items subject to the EAR eligible for license exceptions. for 70 percent of all such checks worldwide. Figure 1 shows the numbers of Commerce PSVs conducted on unlicensed exports in the 13 transshipment countries.\nCommerce can conduct a PSV on any exported item for any reason related to a compliance concern, such as an enforcement investigation, intelligence information, or other information that analysts have available to them. Additionally, in technical comments on a draft of this report, Commerce stated that PSVs on licensed exports are more likely to result from commodity or regional concerns, including transshipment, which will prompt further scrutiny to ultimate or intermediate consignees even though they are known not to be the end user.\nBetween 2008 and 2010, 223 (94 percent) of the 238 Commerce unfavorable postshipment checks in transshipment countries were on unlicensed exports. Unfavorable postshipment checks on unlicensed exports in the 13 transshipment countries accounted for 88 percent of all unfavorable postshipment checks in these countries in 2008 and rose to 97 percent in 2010. (See fig. 2.)\nItems exported without a license may pose risks to U.S. national security, according to U.S. government officials. These items include those not on the CCL and those on the CCL that do not require a license to certain destinations. For example, agencies discovered that U.S. electronics components and devices were used to build improvised explosive devices that were deployed against Coalition forces in Iraq after they were illicitly transshipped to Iran through Hong Kong. According to Commerce officials, the U.S. government established an interagency task force consisting of several defense intelligence units, and Treasury’s Financial Crimes Enforcement Network, to address the threat posed by these devices.\nEAR items subject to license requirements have also been transferred without a license to unauthorized destinations through transshipment points. It is the policy of the U.S. government to facilitate U.S. exports to legitimate civilian end users in the People’s Republic of China (China), while preventing exports that would enhance the military capability of that country. Commerce officials stated that integrated electronic circuits have been diverted to China (a destination requiring a license for these items) through Hong Kong (where no license is required). A senior Commerce official stated that certain types of integrated electronic circuits contribute to China’s military advancement.\nThe Arms Control Export Act, as amended in 1996, requires, to the extent practicable, that end-use monitoring programs provide reasonable assurance that recipients comply with the requirements imposed by the U.S. government in the use, transfer, and security of defense articles and services. In addition, end-use monitoring programs are to provide assurances that defense articles and services are used for the purposes for which they are provided. Accordingly, under State’s monitoring effort known as the Blue Lantern program, State conducts end-use monitoring of direct commercial sales of defense articles and services and related technology. Specifically, a PSV is used (1) to confirm whether licensed defense goods or services exported from the United States have been received by the party named on the license and (2) to determine whether those goods have been or are being used in accordance with the provisions of that license.\nOur analysis of State end-use checks under its Blue Lantern program showed that State focused a smaller portion of its end-use checks on transshipment countries than did Commerce. According to U.S. and Hong Kong government officials, the risk of illicit transshipment of dual-use exports is higher than for military exports, in part because proliferators hide their relatively small number of proliferation-related transactions— most of which involve dual-use items—within a large volume of fast- moving commercial goods. For fiscal years 2008 through 2010, State conducted 26 percent of the total number of end-use checks in the 13 transshipment countries we reviewed; 22 percent of these checks were unfavorable. In conducting end-use checks, State guidance indicates that end-use check officers are required to determine that the proposed end user appears to be a reliable recipient of sensitive U.S. defense articles, technology, or services, and that the end user is familiar with U.S. restrictions with respect to use, transfer, or reexport. See appendix V for more detailed information on Commerce and State end-use checks.", "To educate companies and foreign governments about illicit transshipment risks, agencies have programs to review the internal controls of U.S. companies’ compliance programs, conduct outreach to U.S. companies and universities, and provide training to foreign governments.\nCommerce helps firms address illicit transshipment risk by conducting an informal review of firms’ compliance programs at the firms’ request. Commerce reviews the written procedures and internal controls for a company’s compliance program against Commerce’s Export Management Compliance Program guidelines to help it develop an internal control program that can thwart diversion of technologies to countries of concern. The Export Management Compliance Program guidance identifies indicators of risks posed by transshipment, such as insufficient compliance safeguards throughout the shipping process and unverified end destination addresses. In fiscal year 2010, Commerce conducted 18 reviews of corporate written compliance programs and conducted two 2-day and three 1-day seminars on developing an export management and compliance program in various U.S. cities.\nCommerce and State officially have outreach programs to educate industry on issues, including illicit transshipment risks. Commerce’s outreach program expanded in 2011 to increase its focus on illicit transshipment, but State’s program is largely inactive. Between January and November 2011, Commerce has conducted approximately 24 outreach events across the United States. Commerce has added a training session on its Best Practices for Preventing Unlawful Diversion of U.S. Dual-Use Items Subject to the Export Administration Regulations, Particularly through Transshipment Trade, published in August 2011, which identifies seven best practices that guard against diversion risk, particularly through transshipment. A Commerce official stated that, due to the ongoing risk of illicit diversion of controlled items subject to the EAR, Commerce has added the best practices component to outreach events.\nState’s program to visit companies has been largely inactive since 2008. This program had considered transshipment risks and was in place to determine whether companies were properly exercising their regulatory responsibility in licensing and compliance. State also used the information gathered from visits to adjust or revise U.S. regulations and practices. State visited more than 60 companies between October 2005 and September 2008. While State has made two such visits since 2008, the visits were made to companies due to ongoing enforcement actions, rather than mainly for outreach.\nState also addresses illicit transshipment risk by conducting export control training of foreign governments through its Export Controls and Border Security (EXBS) program. In determining the countries of focus for EXBS, State conducts country-by-country threat assessments to determine the points of greatest risk, assessing risk factors in a given country, including the risks of diversion, production, and proliferation. EXBS categorized as a diversion risk 9 of the 13 transshipment countries we examined; 7 of In fiscal years those countries are currently EXBS partner countries.2009 and 2010, EXBS conducted training in the UAE, which included a seminar on how to investigate, survey, detect, and interdict unauthorized transfers of items. EXBS announced in its 2011 Strategic Plan that transit and transshipment trade will be a priority, and EXBS will work with each shipment hub to build its capacity to target transit and transshipment cargo efficiently, without negatively affecting legitimate trade and competitiveness.", "State and Commerce have not fully assessed the potential impact of reforming the agency control lists and transferring items from State to Commerce on the resource needs of their compliance activities. Assessing impact includes analyzing the potential benefits and risks of the control list reforms, but the agencies lack information on how control list changes will impact their resource needs for conducting compliance activities. They expressed the view that some benefits would likely include a reduced compliance burden for industry and enhanced national security for the United States by focusing on items, destinations, and end users of concern. In the one assessment that it performed, Commerce estimated financial benefits of one regulatory change but did not assess any potential risks to compliance activities beyond licensing. In contrast, several compliance officials stated that risks could include the burden on Commerce’s and State’s capacity to monitor the end use of an increased number of items and the loss of information prior to export resulting from fewer license requirements. However, the agencies did not evaluate the implications of these risks on their resource needs.", "As an interim step to creating a single control list, the administration proposed revising the list of items controlled by Commerce and State. Thus, Commerce proposed a rule in July 2011 establishing a structure to move items from the USML to the CCL that the President has determined no longer need to be controlled on that list. As we previously reported, an interagency task force created export control criteria to determine the items and technologies that should be controlled by Commerce or State. A DOD-led interagency team is currently revising the lists so controlled items will be identified using objective criteria such as horsepower, speed, and accuracy rather than maintaining an item on the USML simply because, historically, its form and fit has associated it with a military item. Those items that do not remain on the USML after this review will move to Commerce’s jurisdiction. As of January 2012, State has proposed revisions to 5 of 20 categories of military items. The 5 categories include items such as tanks, aircraft, and submersible vessels. Proposed revisions to 4 of the 5 USML categories would change the USML controls on generic parts, components, accessories, and attachments that are specifically designed or modified for a defense article to control specific Items whose types of parts, components, accessories, and attachments.functions provide immediate tactical utility without modification will remain on the USML, while all other items would move to the CCL.\nThose items moved to the CCL may also become eligible for export for ultimate government end use to the destinations identified on a new license exception known as the Strategic Trade Authorization (STA). In June 2011, Commerce finalized this new license exception to allow exports of certain items without a license to countries determined to be low risk. These items would be subject to certain notification requirements. Specifically, the STA authorizes certain exports that Commerce now controls for multiple reasons to 36 destinations, many of which are NATO allies or export control regime participants. Further, the exception authorizes certain exports to an additional eight countries but limits the exception for items that Commerce now controls for national security reasons only. These countries include four transshipment countries that we reviewed, Hong Kong, Singapore, Malta, and Taiwan. The licensing exception imposes additional requirements, such as directing the exporter, reexporter, or transferor to exchange information with the recipient regarding the applicable control list category number, and stating that the export occurs under the STA exception to mitigate the risk of reexport to an unauthorized destination or end user.", "U.S. agencies have not fully assessed the potential impact that export control reform of control lists might pose for the resource needs of the range of compliance activities agencies undertake, as suggested by federal internal control standards and executive branch requirements. State and Treasury officials confirmed that they have not conducted such an assessment. In technical comments on a draft of this report, Commerce stated that it had conducted an assessment of compliance activities and that it is hiring eight dedicated compliance officers. However, Commerce provided no evidence of such an assessment. Moreover, Commerce’s fiscal year 2013 Congressional Budget Justification did not identify the need for compliance officers in its request for 24 additional licensing officers. Although the administration intends to move up to 30,000 license applications from State’s to Commerce’s jurisdiction, Commerce is targeting only 850 end-use checks in each of fiscal years 2013 and 2014, the same number it targeted for fiscal year 2012. Federal standards call for, among other things, a regulatory analysis to include the following three basic elements: (1) a statement of the need for the proposed action, (2) an examination of alternative approaches, and (3) an evaluation of the benefits and costs—quantitative and qualitative—of the proposed action and the main alternatives identified by the action. The evaluation of benefits and costs is to be informed by a risk assessment. In November 2011, Commerce’ s Inspector General identified Commerce’s need to ensure adequate resources to monitor compliance and to detect and prevent diversions of controlled technology in the context of export control reform as among its top management challenges for fiscal year 2012.\nRisk assessment is one of five standards for an internal control system that provides reasonable assurance that an organization will achieve effective and efficient operations, reliable financial reporting, and compliance with applicable laws and regulations. Commerce has not analyzed the impact of the reform on its compliance activities beyond estimating the number of State licenses that will move to its jurisdiction and potential resources needed to address them. State also has not assessed the risks of reform proposals on its compliance activities. According to a State official, current export control reform efforts are focused on revising the USML. The State official noted that, as items are moved from the USML to the CCL, the department will have better insight into potential impacts and will be able to assess resource needs.\nAgencies have stated some potential benefits for national security and for exporters as a result of reform. However, agencies did not provide an analysis supporting the expected benefits. According to agencies’ statements, the U.S. government would have greater interoperability with NATO and other allies; be able to focus its resources on sensitive technologies, destinations, and end users of higher risk than those found in NATO counterparts or other allies; and benefit from an enhanced defense industrial base by reducing the current incentives for foreign companies to avoid U.S. parts and components.\nState and Commerce documents identify the following four potential advantages to industry of moving items from the USML to the CCL: relief from more stringent USML requirements, such as registration fees and the need to obtain manufacturing and technical assistance agreements; reduction of license requirements; simplification of license application procedures; and increased availability of exceptions.\nCommerce assessed the potential impact of control list reform on its resources only for the compliance activity of license application review. Commerce documents indicate that, as of July 2011, it did not have the workforce in place to accommodate the 16,000 to 30,000 additional license applications estimated to result from the move of a significant number of items from the USML to the CCL without causing backlogs and delays. In March 2012, Commerce established a new office to adjudicate license applications and conduct other actions for items moved from the USML, and it has begun to solicit applicants to staff the office. Furthermore, according to a Commerce cost benefit analysis, the new STA license exception would help remove the burdens associated with applying for a license and reduce the uncertainty associated with the license application review process. Commerce’s Bureau of Industry and Security (BIS) estimated that approximately 2,300 licensed transactions would have been eligible for the STA exception in 2010. Therefore, BIS estimated that the public benefit to foregoing the license application review for those transactions eligible for the STA exception could result in a savings ranging from $1.5 million to $5.1 million per year. BIS also stated that the license exception would reduce uncertainty by removing the need for U.S. exporters to inform prospective buyers of U.S. technology that sales are contingent upon government approval for each transaction. BIS also estimated that the license exception would benefit the government by allowing Commerce to focus its licensing resources on transactions of greater risk than those eligible for the STA exception. BIS officials stated that the STA exception would not increase costs to the government.", "Although U.S. agencies have not fully assessed the risks and resource implications that reform of export control lists may present in implementing compliance activities, agency officials conducting those activities identified two potential risks. These include an increased workload at Commerce from the transfer of thousands of license applications from State’s to Commerce’s jurisdiction, as well as the loss of information from the licensing process prior to export. Neither Commerce nor State has conducted a detailed risk assessment of the impact of the reforms on any of the compliance activities they undertake besides licensing and their associated workforce needs. Standards for Internal Control in the Federal Government indicates that internal controls should provide for an assessment of the external and internal risks the agency faces and that management needs to address.\nA Commerce official also stated that a reduction in exports needing licenses would likely make compliance activities, such as end-use monitoring, more difficult because officials use export licenses for some of the information they rely on. Without such information, U.S. officials conducting end-use checks might need to expend more time and resources obtaining the needed information, according to the official. In fact, Commerce has focused more end-use checks on unlicensed items. We found that unlicensed exports may also pose resource implications for compliance activities concerning specific transshipment countries—Hong Kong, Singapore, and Taiwan. Items exported to these countries might be eligible to use a license exception for certain controlled items. Thus, some exports would avoid the need for prior government approval for each transaction. Commerce officials said that they might mitigate any risks that this might pose by shifting resources to target and increase compliance actions, such as outreach and shipping data analysis. In technical comments on a draft of this report, Commerce stated that it conducts end-use checks on unlicensed items now without significant difficulty and does not understand the basis for the conclusion that unlicensed exports may also pose resource implications for compliance activities concerning specific transshipment countries. However, BIS reported as recently as 2011 that it is considering requiring exporters to include additional information in the Automated Export System for unlicensed exports. Requiring this information, according to BIS, would allow it to determine more quickly the accuracy of a claimed use of authority to ship without a license or pursuant to a license exception, in some transactions. In addition, this information would enable BIS to target its end use checks of exports more effectively because it could select items of the greatest significance without extensive follow-up information from the exporter. By taking advantage of the additional information, BIS indicated that it could make more effective use of its enforcement resources.\nA State compliance official said that losing the information generated by license applications would make tracking entities and commodities that are at risk more difficult and resource intensive. State officials also noted that, if reform resulted in the removal of some license requirements for certain goods, then State would need to shift its emphasis on reviewing license application data to reviewing shipping data. Currently, most defense items require a license for export. However, in certain instances, arms may be exported without a license (i.e., under an exemption) but are still subject to the Arms Export Control Act. Fewer license requirements would mean that more compliance verification would need to be conducted after the item has shipped, thereby increasing the need for PSVs, according to the official.", "U.S. export control agencies generally address illicit transshipment risk in implementing their compliance activities, and Commerce, in particular, has focused on this risk by performing increased end-use checks in transshipment countries and on excepted or unlicensed items. Moreover, several of the agencies’ compliance activities are interdependent. For example, the results of unfavorable postshipment verifications provide entity names for agencies to add to the sanctions and Watch Lists, and Watch Lists provide names that should be flagged for further scrutiny during the license review process. Therefore, changes that affect one compliance activity may also affect others. Despite this interdependence of compliance activities, agencies have not fully assessed the potential impact of the reform initiative that licensing and control list reforms may pose for resource needs. The administration’s framework to reform U.S. export controls, with initial changes to Commerce and State control lists, may significantly affect the entire export control system. Moving numbers of items from State’s control list to Commerce’s list will shift the licensing burden for addressing concerns over misuse or diversion of these items in such countries from one agency to another. Moreover, control list reform may also shift the burden among various compliance activities in ways that cannot be anticipated without assessing the impact on resources of such changes for each activity.", "As the administration moves forward with its control list reforms, we recommend that the Secretaries of Commerce and State, in consultation with other relevant agencies, assess and report on the potential impact, including the benefits and risks of proposed export control list reforms, on the resource needs of their compliance activities, particularly end-use monitoring.", "We provided a draft of this report to Commerce, DOD, State, and Treasury for their review and comment. Both Commerce and State provided written comments, which we have reprinted in appendixes VI and VII, respectively. DOD and Treasury did not provide comments on the draft. Commerce and State also provided technical comments, which we incorporated in this report, as appropriate.\nCommerce and State agreed with our recommendation to assess and report on the potential impact of export control list reforms on the resource needs of their compliance activities. State said that it will be in a better position to evaluate the resource needs for compliance activities, to include end-use monitoring, as decisions are made on moving items from the USML to the CCL. It stated that its intent to dedicate all necessary resources to compliance activities commensurate with the requirements of a revised USML remains unchanged.\nCommerce stated that, to the extent that information is available, BIS has used licensing data, public comments, and interagency expertise to address both benefits and risks of moving items from the USML to CCL. However, Commerce provided no evidence that it completed such an assessment or that it assessed the benefits and risks of control list reform changes on the range of other compliance activities discussed in this report. Nonetheless, the availability of such information shows that such an assessment can be done.\nCommerce also stated that several references throughout this report refer to the USML as “more stringent” and state that the CCL “imposes fewer requirements than State’s controls.” Commerce said it would be more accurate to say that the CCL’s flexibility provides more options in protecting national security interests. However, State reported in its August 2011 Final Plan for Retrospective Analysis of Existing Rules that defense articles that do not require the stringent controls of the Arms Export Control Act will be moved to the jurisdiction of Commerce, where the licensing burden on exports can be dramatically reduced. Also, we reported in 2008 that, in most cases, Commerce’s controls over dual-use items are less restrictive than State’s controls over arms. Many items controlled by Commerce do not require licenses for export to most destinations, while State-controlled items generally require licenses for most destinations. Also, some sanctions and embargoes only apply to items on State’s U.S. Munitions List and not to those on the CCL.\nWe are sending copies of this report to the appropriate congressional committees; the Secretaries of Commerce, Defense, State, and the Treasury; and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-9601 or at melitot@gao.gov. Contact points for our offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VIII.", "In this review, we (1) examined how U.S. agencies use compliance activities to address the risk of illicit transshipment and (2) analyzed the extent to which U.S. agencies assessed the impact of the export control reform on the resource needs of compliance activities. Commerce provided us with transshipment-related information that it controls as being “For Official Use Only.” We have not included that sensitive information in this report but have instead incorporated it into a “For Official Use Only” report that is not publicly available. To examine how U.S. agencies use compliance activities to address the risk of illicit transshipment, we reviewed documents from the Departments of Commerce, State, the Treasury, and Defense, including guidance, staffing information, and Congressional Budget Justifications. We also interviewed officials at each agency. We then identified examples of cases for each compliance activity where agency documents or officials indicated that they implemented the compliance activity to address illicit transshipment risk. We also analyzed available data, including licensing statistics, numbers of end-use checks for 13 transshipment countries, numbers of designations on various lists for entities from the 13 GAO- designated transshipment countries, numbers of 13 transshipment countries that are partner countries for Export Control and Related Border Security program training, Department of Commerce correspondence to Validated End-User designees, and agency outreach materials for companies. We also reviewed relevant laws and regulations, interviewed U.S. and host country officials, and analyzed end-use monitoring and licensing data. To identify 13 transshipment countries, we examined prior GAO work on transshipment and external diversion; congressional testimony; countries with a Commerce Export Control Officer in place; input from the Departments of State, Commerce, Justice, and Homeland Security; countries with entities on either the Entity List or Unverified List; and a listing of the world’s busiest transshipment ports. We interviewed host government officials in Hong Kong and Singapore to obtain information on joint efforts with the U.S. government to mitigate illicit transshipment risks.\nIn examining the end-use monitoring compliance activity, we reviewed Departments of State and Commerce end-use monitoring activities through reviewing relevant program guidance, including State’s Blue Lantern Guidebook, and cables associated with selected end-use checks. We interviewed officials in State’s Directorate of Defense Trade Controls who administer the Blue Lantern program and reviewed export licenses. We also traveled to Singapore, Hong Kong, and the United Arab Emirates (UAE) to interview Blue Lantern points of contact and Commerce Export Control Officers. In examining State and Commerce end-use checks, we conducted an analysis of global end-use check data for fiscal years 2008–2010 and data on those checks conducted in transshipment countries. We also reviewed a random, nongeneralizable sample of end- use checks records during our overseas visits to Hong Kong, Singapore, and UAE, during which we obtained information from State and Commerce officials on how they conduct end-use checks. We reviewed 21 State Blue Lantern end-use checks from fiscal year 2009 and 2010 in Hong Kong and Singapore. Twelve of these 21 checks resulted in unfavorable determinations, and we confirmed that actions had been taken in 11 of those cases. For State end-use checks in UAE, we relied on a related GAO engagement (GAO-12-89) that reviewed State end-use monitoring in the UAE among other countries. We reviewed 56 Commerce end-use checks from fiscal year 2009 through the third quarter of 2011 in Hong Kong, Singapore, and UAE.the parties on the State and Commerce Watch Lists that were from the 13 transshipment countries we reviewed.\nWe determined that the licensing data, end-use check data, and Watch List data were sufficiently reliable for the purpose of describing how U.S. agencies use compliance activities to address the risk of illicit transshipment. For the Departments of State and Commerce licensing data, we interviewed knowledgeable agency officials in coordination with other ongoing GAO reviews of export controls. We also reviewed technical manuals related to both departments’ licensing databases and determined that they were both sufficiently reliable for us to report overall statistics for how many licenses were issued for fiscal years 2009 and 2010, around the world, and for the number of licenses issued in this time period for transshipment countries. For end-use monitoring data, we also interviewed agency officials, consulted agency manuals, and compared the number of checks we received with data published by the agency. We determined that the end-use check information provided by the agency was reliable for the purposes of describing how agencies monitor the end- use of items to address the risk of illicit transshipment. For State and Commerce Watch List data, we interviewed agency officials about the sources of information they incorporate into the Watch List and reviewed the guidance agencies use in updating the Watch List. We determined that the data was sufficiently reliable for the purpose of describing how agencies monitor the end-use of items to address the risk of illicit transshipment.\nTo analyze the extent to which agencies assessed the potential impact of the export control reform initiative for the resource needs of compliance activities, we reviewed the proposed export control reform initiatives, White House press releases on the export reform initiatives, relevant executive orders, Federal Register notices, comments from the public, relevant laws and regulations, and agency documentation and studies on the proposed impact of the reform initiative on their compliance activities. We interviewed agency officials and interagency and export control reform task force members to gather information on the proposed reform initiatives and agency assessments of the benefits and risks posed by those initiatives. To gather industry input into the potential impact of proposed Export Control Reform initiatives, we met with industry representatives from: (1) The Aerospace Industry Association, (2) The National Council on International Trade Development, (3) The National Association of Manufacturers, and (4) the American Chamber of Commerce in Singapore.\nWe conducted this performance audit from August 2010 to April 2012 in accordance with generally accepted government auditing standards. These standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Compliance activities provide information for exporters, licensing officials, and enforcement agencies to assess the validity of particular export transactions or to identify potential violations or prevent them before they occur. We identified eight export control compliance activities that the Departments of Commerce, State, and Treasury conduct to encourage compliance with export control laws and to prevent the diversion or misuse of exported items against U.S. allies or interests. Table 2 identifies and describes those eight compliance activities that are relevant to transshipment.", "When deciding whether to approve or deny an export license application, the Departments of State and Commerce evaluate it against several factors, including an assessment of all parties to the transaction and how the recipient plans to use the item. Table 3 shows the total number of Commerce and State license applications for fiscal years 2008 through 2010 worldwide and for the 13 transshipment countries that we reviewed, as well as their status for this period.", "U.S. export control agencies maintain lists that inform the licensing process by providing key information on entities of concern to licensing officers and the public. The top three locations with the most entities of concern, in order, were China, the UAE, and Hong Kong for the State Watch List and China, Hong Kong, and UAE for the Commerce Watch List. Figure 3 shows the numbers of parties on State’s and Commerce’s Watch Lists from the 13 transshipment countries that we reviewed. As of September 2011, State’s Watch List contained 100,248 parties, of which 8,731 (about 9 percent) were from the 13 transshipment countries we reviewed. As of December 2011, the Commerce Watch List contained 36,849 active entities, of which 8,309 (about 23 percent) were from the 13 transshipment countries we reviewed.", "For fiscal years 2008 through 2010, Commerce conducted about 57 percent of the total number of end-use checks in the 13 transshipment countries we reviewed. (See fig. 4.)\nFor fiscal years 2008 through 2010, State conducted about 26 percent of the total number of end-use checks in the 13 transshipment countries we reviewed; 22 percent of these checks were unfavorable (see fig. 5).", "Following are GAO’s comments on the Department of Commerce’s letter dated March 9, 2012.", "1. Commerce stated that its new Munitions Control Division will include 24 personnel; eight of these 24 will be compliance specialists who will work within the organization to monitor items shipped. These compliance specialists will work with enforcement analysts to identify entities to conduct both end-use checks overseas and U.S. company onsite audits. However, the rationale for these eight compliance specialists is unclear. Commerce’s fiscal year 2013 budget request listed only 24 licensing officers and Commerce did not provide us with any analysis to show that these would include specifically 8 compliance specialists. In addition, while the administration intends to move up to 30,000 license applications from State to Commerce’s jurisdiction, Commerce is targeting only 850 end-use checks for each fiscal year 2013 and 2014, which is the same number as for fiscal year 2012. 2. Commerce stated that, to the extent that information is available, BIS has used licensing data, public comments, and interagency expertise to address both benefits and risks of moving items from the USML to CCL. It stated that the benefits include moving less sensitive munitions items, mostly parts and components, to a more flexible licensing regime. However, Commerce provided no evidence that it completed an assessment of benefits and risks, nor that it assessed the benefits and risks of control list reform changes on the range of other compliance activities this report discussed. Nonetheless, the availability of such information shows that such an assessment can be done. 3. Commerce stated that our report makes several references to the USML as “more stringent” and that the CCL “imposes fewer requirements than State’s controls.” Commerce said it would be more accurate to say that the CCL’s flexibility provides more options in protecting national security interests. However, State reported in its August 2011 Final Plan for Retrospective Analysis of Existing Rules that defense articles that do not require the stringent controls of the Arms Export Control Act will be moved to Commerce’s jurisdiction, where the licensing burden on exports can be dramatically reduced. In addition, we reported in 2008 that, in most cases, Commerce’s controls over dual-use items are less restrictive than State’s controls over arms. Many items that Commerce controls do not require licenses for export to most destinations, while State-controlled items generally require licenses for most destinations. Also, some sanctions and embargoes only apply to items on State’s USML and not to those on the CCL.", "", "", "Thomas Melito, (202) 512-9601 or melitot@gao.gov.", "In addition to the individual named above, key contributors to this report were Joseph A. Christoff, Director (ret.); Jeff Phillips, Assistant Director; Richard G. Howland, Analyst-in-Charge; Mason Thorpe Calhoun; Alberto Leff; Elena McGovern; and Lynn Cothern. Martin de Alteriis, Justin Fisher, Mitchell Karpman, and Hai Tran provided assistance with design and methodology, statistics, data analysis, and technical expertise, respectively. Grace Lui provided legal support, Etana Finkler provided graphics support, and Joyce Evans, Jeremy Sebest, and Cynthia S. Taylor provided assistance in editing and report preparation.", "Export Controls: Proposed Reforms Create Opportunities to Address Enforcement Challenges. GAO-12-246. Washington, D.C.: March 27, 2012.\nPersian Gulf: Implementation Gaps Limit the Effectiveness of End-Use Monitoring and Human Rights Vetting for U.S. Military Equipment, GAO-12-89. Washington, D.C.: November 17, 2011.\nExport Controls: Improvements Needed to Prevent Unauthorized Technology Releases to Foreign Nationals in the United States. GAO-11-354. Washington, D.C.: February 2, 2011.\nDefense Exports: Reporting on Exported Articles and Services Needs to Be Improved. GAO-10-952. Washington, D.C.: September 21, 2010.\nPersian Gulf: U.S. Agencies Need to Improve Licensing Data and to Document Reviews of Arms Transfers for U.S. Foreign Policy and National Security Goals. GAO-10-918. Washington, D.C.: September 28, 2010.\nExport Controls: Observations on Selected Countries’ Systems and Proposed Treaties. GAO-10-557. Washington, D.C.: June 28, 2010.\nIran Sanctions: Complete and Timely Licensing Data Needed to Strengthen Enforcement of Export Restrictions. GAO-10-375. Washington, D.C.: March 4, 2010.\nExport Controls: Challenges with Commerce’s Validated End-User Program May Limit its Ability to Ensure That Semiconductor Equipment Exported to China is Used as Intended. GAO-08-1095. Washington, D.C.: October 27, 2008.\nDefense Trade: State Department Needs to Conduct Assessments to Identify and Address Inefficiencies and Challenges in the Arms Export Process. GAO-08-89. Washington, D.C.: January 8, 2008.\nNonproliferation: U.S. Efforts to Combat Nuclear Networks Need Better Data on Proliferation Risks and Program Results. GAO-08-21. Washington, D.C.: October 31, 2007.\nDefense Trade: Clarification and More Comprehensive Oversight of Export Exemptions Certified by DOD Are Needed. GAO-07-1103. Washington, D.C.: October 19, 2007.\nExport Controls: Challenges Exist in Enforcement of an Inherently Complex System. GAO-07-265. Washington, D.C.: December 20, 2006.\nExport Controls: Agencies Should Assess Vulnerabilities and Improve Guidance for Protecting Export-Controlled Information at Universities. GAO-07-70. Washington, D.C.: December 5, 2006.\nExport Controls: Improvements to Commerce’s Dual-Use System Needed to Ensure Protection of U.S. Interests in the Post-9/11 Environment. GAO-06-638. Washington, D.C.: June 26, 2006.\nDefense Trade: Arms Export Control System in the Post-9/11 Environment. GAO-05-234. Washington, D.C.: February 16, 2005.\nNonproliferation: Improvements Needed To Better Control Technology Exports For Cruise Missiles And Unmanned Aerial Vehicles. GAO-04-175. Washington, D.C.: January 23, 2004.\nExport Controls: Post-Shipment Verification Provides Limited Assurance That Dual-Use Items Are Being Properly Used. GAO-04-357. Washington, D.C.: January 12, 2004.\nDefense Trade: Better Information Needed To Support Decisions Affecting Proposed Weapons Transfers. GAO-03-694. Washington, D.C.: July 11, 2003.\nNonproliferation: Strategy Needed To Strengthen Multilateral Export Control Regimes. GAO-03-43. Washington, D.C.: October 25, 2002.\nExport Controls: Processes for Determining Proper Control of Defense- Related Items Needs Improvement. GAO-02-996. Washington, D.C.: September 20, 2002.\nExport Controls: Department of Commerce Controls over Transfers of Technology to Foreign Nationals Need Improvement. GAO-02-972. Washington, D.C.: September 6, 2002.\nLessons to Be Learned From the Country Export Exemption. GAO-02-63. Washington, D.C.: March 29, 2002.\nExport Controls: Clarification of Jurisdiction for Missile Technology Items Needed. GAO-02-120. Washington, D.C.: October 9, 2001." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 1, 1, 2, 2, 1 ], "alignment": [ "h0_title h2_title", "h0_full h2_full", "h2_full", "", "h0_full", "h0_full", "h0_full", "h0_full", "h1_full", "", "h1_full", "h1_full", "h2_full", "", "h1_full", "", "h2_full", "", "", "h0_full", "", "", "", "", "", "", "h2_full" ] }

{ "question": [ "What measure did US agencies use to increase protection on exported items?", "How do US agencies vet transactions?", "What results did the analysis of exports yield?", "What has been done to educate U.S. companies and foreign governments about the dangers of illicit transshipment?", "What impact do agencies suspect control list reforms may have?", "Would the anticipated impact of control list reforms be positive?", "Why can there be an unaccounted for negative effect of control list reforms ?", "What potential risks are the control list reforms suspected to have?", "How did the US address the issue of sensitive technologies being stolen by hostile entities.?", "What are the roles of the two departments in charge of addressing this problem?", "What do these two departments use to address this problem?", "How can sensitive American technologies fall into the wrong hands?" ], "summary": [ "U.S. agencies engaged in export controls use various compliance activities to prevent the diversion or misuse of exported items against U.S. interests or allies and reduce illicit transshipment risk. Compliance activities include (1) vetting transactions prior to export, (2) analyzing shipping data and monitoring the end use of items, and (3) educating companies and foreign governments about illicit transshipment risks.", "To vet transactions, agencies review license applications for the export of controlled items, consult multiple lists of entities known or suspected of violating export control laws or regulations, and screen foreign end users to determine their eligibility to receive items without a license. Agencies also review shipping records to identify patterns of abuse and to plan end-use checks—visiting foreign companies to verify the approved use and location of exported items on both licensed items and those eligible for export without a license.", "In the 13 transshipment countries, unlicensed exports accounted for about 94 percent of unfavorable end-use check determinations, which indicates that the end use or end user of an export were not appropriate. For example, some unlicensed items transshipped illicitly to Iran through Hong Kong were used to build improvised explosive devices used against Coalition troops in Iraq.", "To educate U.S. companies and foreign governments about illicit transshipment risks, Commerce and State review the internal controls of companies’ compliance programs; conduct outreach to U.S. companies to inform exporters of their responsibilities to comply with export control laws and regulations; and provide training to foreign governments.", "Agencies have not fully assessed the potential impact that control list reforms may pose for the resource needs of their compliance activities. Agencies estimate that Commerce will receive between 16,000 and 30,000 additional license applications as a result of proposed reforms to move less sensitive items from State to Commerce.", "Agency documents state that this step would allow them to focus resources on items most critical to national security and may make compliance easier for exporters because Commerce imposes fewer requirements than State’s controls.", "However, Commerce has not assessed the impact this added responsibility would have on its end-use check resource needs.", "Some agency officials suggested potential risks, such as an increased need for more end-use checks and the loss of information from reviewing exports through the licensing process prior to export.", "To protect its national security and commercial interests, the United States has implemented an export control system to limit sensitive technologies from falling into the wrong hands.", "The Department of State regulates U.S. defense exports and the Department of Commerce regulates dual-use exports that have commercial and military applications.", "Each agency uses a separate control list of items that may require a license to export. Agencies use compliance activities to prevent the diversion or misuse of exported items against U.S. interests or allies.", "Misuse can occur through illicit transshipment, the diversion of items from their origin through an intermediary country to an unauthorized destination." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 0, 0, 0, 0 ] }

{ "title": [ "Background", "DOD Has Initiated Actions to Address Elevated Levels of PFOS and PFOA in Drinking Water and Concerns with Firefighting Foam", "DOD Has Initiated Actions to Identify, Test, Address, and Respond to Orders from Regulators Regarding PFOS and PFOA in Drinking Water", "DOD Has Taken Steps to Address Health and Environmental Concerns with Its Firefighting Foam", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "EPA regulates drinking water contaminants by issuing legally enforceable standards under the Safe Drinking Water Act that generally limit the levels of these contaminants in public water systems. EPA has issued such regulations for approximately 90 drinking water contaminants. Public water systems, including the DOD public water systems that provide drinking water to about 3 million people living and working on military installations, are required to comply with EPA and state drinking water regulations.\nWhile EPA has not issued legally enforceable standards for PFAS in drinking water, the agency has monitored water systems in the United States for six types of PFAS chemicals—including PFOS and PFOA—in order to understand the nationwide occurrence of these chemicals. This monitoring effort was part of a larger framework established by the Safe Drinking Water Act to assess unregulated contaminants. Under this framework, EPA is to select for consideration from a list (called the contaminant candidate list) those unregulated contaminants that present the greatest public health concern, establish a program to monitor drinking water for unregulated contaminants, and decide whether or not to regulate at least 5 such contaminants every 5 years (called a regulatory determination).\nEPA’s regulatory determinations are to be based on the following three broad statutory criteria, all of which must be met for EPA to decide that a drinking water regulation is needed: the contaminant may have an adverse effect on the health of persons; the contaminant is known to occur or there is a substantial likelihood that the contaminant will occur in public water systems with a frequency and at levels of public health concern; and in the sole judgment of the EPA Administrator, regulation of such contaminant presents a meaningful opportunity for health risk reduction for persons served by public water systems.\nTo date, PFOS and PFOA are unregulated because EPA has not made a positive regulatory determination for these chemicals.\nEven when EPA has not issued a regulation, EPA may publish drinking water health advisories. In contrast to drinking water regulations, health advisories are nonenforceable. Health advisories recommend the amount of contaminants that can be present in drinking water—“health advisory levels”—at which adverse health effects are not anticipated to occur over specific exposure durations. Most recently, in May 2016 EPA issued lifetime health advisories for PFOS and PFOA. These advisories set the recommended health advisory level for each contaminant—or both contaminants combined—at 70 parts per trillion in drinking water. According to DOD, the department also considers information in these health advisories when determining the need for cleanup action at installations with PFOS and PFOA contamination.", "", "We reported in October 2017 that, following the release of EPA’s lifetime health advisory for PFOS and PFOA in May 2016, each of the military departments directed their installations to identify locations with any known or suspected prior release of PFOS and PFOA and to address any releases that pose a risk to human health—which can include people living outside DOD installations; and test for PFOS and PFOA in their drinking water and address any contamination above EPA’s lifetime health advisory level.\nWe further reported that, as of December 2016, DOD had identified 393 active or closed military installations with any known or suspected releases of PFOS or PFOA. Since we issued our report, DOD has updated that number to 401 active or closed installations, according to August 2017 data provided in a March 2018 report to Congress on the department’s response to PFOS and PFOA contamination.\nWe stated in our October 2017 report that the military departments had reported spending approximately $200 million at or near 263 installations for environmental investigations and response actions, such as installing treatment systems or supplying bottled water, as of December 2016.\nThe Air Force had identified 203 installations with known or suspected releases of PFOS and PFOA and had spent about $153 million on environmental investigations and response actions (accounting for about 77 percent of what the military departments had spent on PFOS and PFOA activities as of December 2016). For example, the Air Force reported spending over $5 million at Peterson Air Force Base in Colorado. During our visit to that installation in November 2016, officials showed us the current and former fire training areas that they were investigating to determine the extent to which prior use of firefighting foam may have contributed to PFOS and PFOA found in the drinking water of three nearby communities. Additionally, the Air Force had awarded a contract for, among other things, installing treatment systems in those communities.\nThe Navy had identified 127 installations with known or suspected releases of PFOS and PFOA and had spent about $44.5 million on environmental investigations and response actions (accounting for about 22 percent of what the military departments had spent on PFOS and PFOA activities as of December 2016). For example, the Navy reported spending about $15 million at the former Naval Air Station Joint Reserve Base Willow Grove in Pennsylvania. During our visit to that installation in August 2016, officials told us that the Navy was investigating the extent to which PFOS and PFOA on the installation may have contaminated a nearby town’s drinking water. At the time, the Navy had agreed to pay for installing treatment systems and connecting private well owners to the town’s drinking water system, among other things.\nThe Army had identified 61 installations with known or suspected releases of PFOS and PFOA and had spent about $1.6 million on environmental investigations (accounting for less than 1 percent of what the military departments had spent on PFOS and PFOA activities as of December 2016), but had not yet begun any response actions. At the time of our October 2017 report, the Army had not yet completed testing its drinking water for PFOS and PFOA.\nDOD’s March 2018 report to Congress provided updated information on actions taken (such as providing alternative drinking water or installing treatment systems) to address PFOS and PFOA in drinking water at or near military installations in the United States, as shown in figure 1 below. Specifically, DOD reported taking action as of August 2017 to address PFOS and PFOA levels exceeding those recommended in EPA’s health advisories for drinking water for people (1) on 13 military installations and (2) outside 22 military installations.\nWe reported in October 2017 that, in addition to actions initiated by DOD, the department also took action in response to state and federal regulators. DOD responded to four administrative orders requiring that DOD address PFOS and PFOA levels that exceeded EPA’s health advisory levels for drinking water. One order was issued by the Ohio Environmental Protection Agency at Wright-Patterson Air Force Base in Ohio, and three orders were issued by EPA at the former Pease Air Force Base in New Hampshire; Horsham Air Guard Station in Pennsylvania; and the former Naval Air Warfare Center Warminster in Pennsylvania. For example, at Wright-Patterson Air Force Base, levels of PFOS and PFOA that exceeded EPA’s lifetime health advisory levels were found at two wells on the installation in 2016. In response to the order from the Ohio Environmental Protection Agency, the Air Force closed drinking water wells, installed new monitoring wells, and provided bottled water to vulnerable populations on the installation. Additional details on each order and examples of actions by DOD to address the orders were reported on in our October 2017 report.\nAccording to DOD, it may take several years for the department to determine how much it will cost to clean up PFOS and PFOA contamination at or near its military installations. Additionally, DOD officials told us in September 2018 that they believe a legally enforceable EPA drinking water cleanup standard would ensure greater consistency and confidence in their cost estimates because such a standard would give them a consistent target to clean up to. In a January 2017 report on environmental cleanup at closed installations, we recommended that DOD include in future annual reports to Congress best estimates of the environmental cleanup costs for contaminants such as PFOS and PFOA as additional information becomes available. DOD implemented this recommendation by including in its fiscal year 2016 environmental report to Congress (issued in June 2018) an estimate of the costs to respond to PFOS and PFOA.", "In our October 2017 report, we found that DOD was taking steps to address health and environmental concerns with its use of firefighting foam that contains PFAS. These steps included restricting the use of existing foams that contain PFAS, testing DOD’s current foams to identify the amount of PFAS they contain, and funding research into the future development of PFAS-free foam that can meet DOD’s performance and compatibility requirements (see table 1). Some of these steps, such as limiting the use of firefighting foam containing PFAS, were in place. Others, such as researching potential PFAS-free firefighting foams, were in progress at the time of our review.\nDOD’s military specification for firefighting foam, which outlines performance and compatibility requirements, also requires that firefighting foam purchased by the department contain PFAS. We reported in October 2017 that, according to DOD, there was no PFAS-free firefighting foam that could meet DOD’s performance and compatibility requirements. As a result, the Navy—which is the author of the military specification— had no plans to remove the requirement for firefighting foam to contain PFAS. However, Navy officials told us during our review that if a PFAS- free foam were to be developed that could meet DOD performance and compatibility requirements the Navy would make any necessary revisions to the military specification at that time. Navy officials also said during our review that they were planning to revise the military specification to set limits for the amount of PFAS that are allowed in firefighting foam, following their testing on the amounts of PFOS, PFOA, and other PFAS found in foam used by DOD.\nIn June 2018, DOD reported to Congress that its military specification for firefighting foam was amended to set a maximum level of PFOS and PFOA (800 parts per billion). DOD officials told us in September 2018 this maximum level applies to the amount of those chemicals in firefighting foam concentrate before it is mixed and diluted with water to create firefighting foam. The DOD officials also said that 800 parts per billion is the lowest level of PFOS and PFOA that can be detected in firefighting foam concentrate by current testing methods and technologies, but DOD is working with foam manufacturers and laboratories to achieve lower detection limits. According to the June 2018 report, DOD plans to establish lower limits for PFOS and PFOA in firefighting foam in late 2018. The June 2018 report reiterated that, according to DOD, no commercially available PFAS-free foam has met the performance requirements of the military specification, and the report also stated that DOD-funded research efforts to develop a PFAS-free foam that can meet performance requirements are still ongoing.\nChairman Paul, Ranking Member Peters, and Members of the Subcommittee, this completes our prepared statement. We would be pleased to respond to any questions that you may have at this time.", "If you or your staff have any questions about this report, please contact us at Brian J. Lepore, (202) 512-4523 or leporeb@gao.gov or J. Alfredo Gómez, (202) 512-3841 or gomezj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Other individuals who made key contributions to this statement include Maria Storts (Assistant Director), Diane B. Raynes (Assistant Director), Michele Fejfar, Karen Howard, Richard P. Johnson, Mae Jones, Amie Lesser, Summer Lingard-Smith, Felicia Lopez, and Geoffrey Peck.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 2, 2, 1 ], "alignment": [ "h0_full", "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full", "h0_full h2_full h1_full", "" ] }

{ "question": [ "What did the GAO report on the DOD in 2017?", "What are PFOS and PFOA?", "What was EPA's response to the existence of those chemicals in drinking water?", "What did EPA's health advisories include?", "What did the GAO report in about the DOD in 2017?", "What has the DOD done to reduce the amount of PFAS produced by them?", "Has the DOD been successful up to date in eliminating PFAS use?", "What are the risks of exposure to PFOS and PFOA?", "What has the DOD done to address these risks?", "What did EPA discover about PFOS and PFOA?", "How was this statement created?", "What did the GAO do in order to prepare this report?", "What information was gathered about the DOD in this report and from what surces?" ], "summary": [ "GAO reported in October 2017 that the Department of Defense (DOD) had initiated actions to address elevated levels of perfluorooctane sulfonate (PFOS) and perfluorooctanoic acid (PFOA) in drinking water at or near military installations.", "PFOS and PFOA are part of a larger class of chemicals called per- and polyfluoroalkyl substances (PFAS), which can be found in firefighting foam used by DOD.", "In May 2016, the Environmental Protection Agency (EPA) issued nonenforceable drinking water health advisories for those two chemicals. Health advisories include recommended levels of contaminants that can be present in drinking water at which adverse health effects are not anticipated to occur over specific exposure durations.", "Health advisories include recommended levels of contaminants that can be present in drinking water at which adverse health effects are not anticipated to occur over specific exposure durations.", "GAO also reported in October 2017 that DOD was taking steps to address health and environmental concerns with its use of firefighting foam that contains PFAS.", "These steps included restricting the use of existing foams that contain PFAS; testing foams to identify the amount of PFAS they contain; and funding research on developing PFAS-free foam that can meet DOD's performance requirements, which specify how long it should take for foam to extinguish a fire and keep it from reigniting.", "In a June 2018 report to Congress, DOD stated that no commercially available PFAS-free foam has met DOD's performance requirements and that research to develop such a PFAS-free foam is ongoing.", "According to health experts, exposure to elevated levels of PFOS and PFOA could cause increased cancer risk and other health issues in humans.", "DOD has used firefighting foam containing PFOS, PFOA, and other PFAS since the 1970s to quickly extinguish fires and ensure they do not reignite.", "EPA has found elevated levels of PFOS and PFOA in drinking water across the United States, including in drinking water at or near DOD installations.", "This statement is largely based on a GAO report issued in October 2017 ( GAO-18-78 ).", "To perform the review for that report, GAO reviewed DOD policies and guidance related to PFOS and PFOA and firefighting foam, analyzed DOD data on testing and response activities for PFOS and PFOA, reviewed the four administrative orders issued by EPA and state regulators to DOD on addressing PFOS and PFOA in drinking water, visited seven installations, and interviewed DOD and EPA officials.", "This statement also includes updated information based on two 2018 DOD reports to Congress—one on PFOS and PFOA response and one on firefighting foam—as well as discussions with DOD officials." ], "parent_pair_index": [ -1, -1, 1, 1, -1, -1, 1, -1, 0, -1, -1, -1, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 9, 9, 9, 0, 0, 0, 2, 2, 2 ] }

{ "title": [ "", "National Security and the Congressional Interest1", "National Security Strategy", "Twenty-First Century Challenges to National Security", "The Role of the Economy in U.S. National Security5", "Other Roles of the Economy in National Security", "Macroeconomic Issues in National Security", "The Federal Deficit and Military Spending13", "Reducing the Federal Budget Deficit30", "Traditional Microeconomic Issues in National Security", "The Dedicated Defense Industry in the United States35", "Defense Acquisition and Contracting Processes40", "The Secretary of Defense's Approach to DOD Business Operations Reform", "Analysis48", "Base Closures and the Local Impact of Defense Spending49", "Economic Growth and Broad Conceptions of Security", "Human Capital", "College, K-12, and Early Childhood Education58", "Context", "Analysis", "Science, Technology, Engineering, and Mathematics Education69", "Context", "Analysis", "International Education and Exchange84", "Context", "Analysis", "Immigration103", "Context", "Analysis", "Research, Innovation, Energy, and Space", "Investing in Research119", "Context", "Analysis", "Transforming the Energy Economy132", "Context", "Analysis", "Space Capabilities142", "Globalization, Trade, Finance, and the G-20", "Instability in the Global Economy156", "Savings and Exports162", "Context", "Analysis", "Boosting Domestic Demand Abroad167", "The Role of China", "Will China Change its Economic Growth Model?", "Open Foreign Markets to U.S. Products and Services171", "Analysis", "Trade Enforcement", "Pending FTAs and Negotiations", "New Initiatives", "Alternative Views", "Build Cooperation with International Partners180", "Emerging-Market Representation in the International Financial Architecture", "U.S. Leadership in the G-20", "Deterring Threats to the International Financial System191", "Democracy, Human Rights, and Development Aid", "Democracy and Human Rights198", "Analysis", "Sustainable Development199", "Analysis", "International Science Partnerships as a Tool for Development205", "Context", "Analysis", "Conclusion" ], "paragraphs": [ "", "U.S. national security underpins the system in which Americans live. National security is essential to an environment and geographical space in which people can reside without fear. It consists, first, of physical security on both the international and domestic sides. This includes protection from threats external to the country and safety in the homeland. These generally are accomplished through hard power and homeland security efforts. Second, it consists of economic security—the opportunity and means for people to provide for their own well being under an economic system that is vibrant, growing, and accessible. Third, U.S. national security involves outreach through soft power in an attempt to win the \"hearts and minds\" of people across the globe. Soft power complements hard power, and, in cases, may substitute for it. Also, the myriad links between governments, businesses, and people across national borders means that American security increasingly depends on countries and activities in far flung places on the globe.\nTraditionally, the economy entered into the national security debate through four issues: the defense industrial base, base closures and program cuts, international economic sanctions, and export controls. These issues still garner much of the attention from the vantage point of the military. From the point of view of the nation as a whole, however, economic security takes on a broader meaning.\nThis report examines the role of the economy in national security from both macroeconomic and microeconomic points of view. The macroeconomic issues center on the budget and deficit reduction. The microeconomic issues focus on providing for the general well-being of the people and in supporting other components of national security. This report also examines the major sources of long-term economic growth and progress and policies that affect them. It further addresses the coordination of policies among nations, particularly the G-20, and foreign policies that affect human rights, the development of democracy, and U.S. economic assistance. This broad review of economics and national security illustrates how disparate parts of the U.S. economy affect the security of the nation and that security is something achieved not only by military means but by the whole of the American economy and how it performs. In national security, the economy is both an enabler and a constraint.\nThe economic issues related to national security are both broad and complex. In order to keep this report to a manageable length, this study takes the President's 2010 National Security Strategy as a beginning construct and largely limits the analysis to the issues raised there. The purpose of this report is to provide an overview of the economic contributors to national security as well as to furnish links to further resources. Issues, such as reducing the federal budget deficit, immigration, international trade, or innovation, are related to national security in ways that are too numerous and complex to address fully here. Further information can be found in the CRS reports cited or can be obtained by contacting the CRS analysts indicated.\nIn the United States, the renewed public debate over national security appears to be generated primarily by three global changes. The first is the nature of the external threat to physical security—the rise of terrorism and militant Islam. The second is the aftermath of the global financial crisis, particularly the large federal budget deficit and slow rate of recovery. The third is the growing presence of emerging nations, such as China, India, and Brazil, and the shift of economic power toward them. These changes have created gaps and trade-offs that arguably are undermining the sense of security of Americans. Some may say, \"What good is protection from a future threat, when I am unemployed because my job just went to China?\" Others may say, \"What good is a high salary, if I am dead in a terrorist attack?\nThis debate over national security reaches deep into the fiber of American society. It is not merely political theater, and it is receiving a fillip by the weakened U.S. economy. A vibrant, growing, and dominant economy can hide a multitude of problems. Even though wealth and economic means cannot guarantee U.S. security, it can buy a comfortable sort of insecurity.\nThe economic issue of the day now centers on what measures to take to return the economy to its long-term growth path and reduce the gap between the potential and actual levels of U.S. gross domestic product. If the economy were to grow faster, many of the constraints on the federal budget would be eased. There are two major schools of thought on this matter. The Keynesian approach to growth is to continue government deficit spending through the recession and initial recovery phase in order to offset lower consumption by households and reduced levels of investment by businesses. When the economy recovers, the deficit can be reduced. The supply side approach is to cut the federal budget deficit now because deficits may discourage investment by causing uncertainty about future policy changes that will be needed to restore fiscal balance. The supply side approach also attempts to keep taxes on entrepreneurs low in order to induce them to invest more in productive capacity and create more jobs. Each approach recognizes that the long-term security of the nation depends greatly on having a vibrant and growing economy.\nCongress plays a major role in each element of national security. Whether it be policies dealing with the military, economy, budget, education, economic growth, technology, international relations, or opening markets abroad, Congressional action is essential. Not only does Congress provide funding for these elements of national security, but it provides oversight, defines the scope of U.S. action, and provides a crucible in which U.S. policies are debated and often determined. Congress allocates the resources to respond to national security threats, and in so doing it plays a part in determining the relative strength of hard and soft power options and the roles individual agencies will play.", "The Goldwater-Nichols Department of Defense Reorganization Act of 1986 ( P.L. 99-433 ) required that the President provide a National Security Strategy (NSS) for Congress. This document presents the major national security concerns of the country and how the existing administration plans to deal with them. The George W. Bush Administration's issued its final NSS in March 2006, and in May 2010, the Obama Administration released its first NSS.\nThe 2010 NSS noted numerous world conditions, laid out a national security strategy, and set some goals, many of them economic. It began with three observations:\nthe world is now in a moment of transition, of sweeping change; globalization has both opened opportunities and intensified the dangers Americans face from terrorism, the spread of deadly technologies, economic upheaval, and changing climate; and even as the war in Iraq ends and the focus of military action has turned to Afghanistan, a superior military is necessary as the United States faces multiple threats from nations, nonstate actors, and failed states.\nThe NSS then laid out some goals, both military and economic, along with policies deemed necessary to ensure a safe and secure United States. Those related to the economy were:\nin order to build an America that is stronger, more secure, and able to overcome challenges while appealing to aspirations of people around the world, the United States must foster economic growth, reduce the federal budget deficit, educate our people, develop clean energy alternatives, pursue science and innovation, and build capabilities and alliances to pursue interests shared with other countries and peoples; the United States seeks an international order and cooperation with other nations that will counter violent extremism and insurgency, stop the spread of nuclear weapons, combat climate change, sustain global growth, and help countries feed themselves; and the United States will continue to advocate for and advance human rights, economic development, and democracy as a bulwark against aggression and injustice.", "The challenge of the twenty-first century is to adapt U.S. policy to account for how the world has changed. These changes can be highlighted by reviewing some traditional perceptions that helped shape U.S. security policy. During the latter half of the twentieth century, five large ideas seemed to have permeated politics in the Western world writ large:\npeaceful settlement of issues was better than going to war (no more world wars, although regional conflicts persisted); other countries would tolerate U.S. hegemony in exchange for keeping the peace; the United States and Europe could determine policy on most major international issues; the United States could assist countries to democratize because democracies were more likely than dictatorships to have shared values and to keep the peace; and Western culture was appealing and more universal than any other.\nThese fundamental ideas played a large role in shaping and maintaining U.S. national security first in a bipolar world shrouded in the Cold War and then in a more multi-polar system in which countries, such as China, have gained relative economic power and have brought a different set of interests and values to the table. While each of the above ideas has carried over to a certain extent into the twenty-first century, each also has eroded considerably.\nSimilarly, in the economic and financial realm, four large ideas or priorities helped shape both U.S. domestic and international economic policy:\nmarket capitalism was superior to socialism (high standards of living, vibrant entrepreneurs, and innovation were nourished best by free markets); security considerations trumped economics (e.g., wars had to be won even at high economic cost; U.S. retaliation against allies in trade disputes [such as those with Japan and South Korea] had to be tempered by its potential impact on alliance relationships); economic growth and employment were best fostered by monetary and fiscal policy rather than by industrial policies that \"picked winners and losers\"; and imbalances in trade and capital flows were largely self correcting (foreign exchange rates determined by capital markets and appropriate government fiscal and monetary policy would bring balance into international accounts).\nThese economic and financial precepts still hold sway, but they are being challenged by an evolving and demanding security and economic environment. The rise of the Asian model of development with mixed market and socialist economies, large state-owned enterprises in China and the Middle East, government intervention into foreign exchange markets, and overt protection of domestic industries from import competition along with chronically large trade deficits and rising national debt of the United States and many European nations have called most of these economic ideas into question. In the globalized and conflicted world of today, the United States may require a more nuanced and direct approach to the economy in order to ensure the long-term security of the nation.", "For several decades following World War II, providing national security was conceptually simple. The United States maintained the world's preeminent military backed by the world's largest economy and led the Western world by providing power-based leadership, serving as a beacon for democratic values, and maintaining a system of military alliances. The conventional wisdom was that Washington could provide security for the nation primarily by keeping Soviet bombs at bay and communist ideology from creeping across the planet. The economy always was there, both to fund the military and underpin the provision of economic security for households. Policies for economic growth and issues such as unemployment were viewed as domestic problems largely separate from considerations of national security.\nAs the world begins the second decade of the twenty-first century, the United States still has a preeminent military, large economy, strong alliances, and democratic values. However, the economy has come more into play because the country has long been accustomed to pursuing a \"rich man's\" approach to national security strategy. The United States could field an overwhelming fighting force and combine it with economic power and leadership in global affairs to bring to bear far greater resources than any other country against any threat to the nation's security.\nThe world, however, has changed, and with it so have the challenges of providing U.S. national security. Setting aside questions concerning the size, composition, and capability of the U.S. military, the economy enters into the debate on national security through three overlapping roles. The first is the economy as the source of funds, materiel, and personnel for the military. The second is the economy as a provider of economic security and well-being for Americans. The third is the economy as the foundation for interaction among countries and of building shared or competing interests. This includes the flow of wealth generated by trade that allows countries to build their military and financial power, in particular the steady flow of oil revenues into the Middle East and the large trade surplus by China. It also includes U.S. legitimacy and resource availability as it strives to help other countries develop and to foster human rights and democracy abroad.\nIn the United States, the domestic economic policy debate is divided into two major areas. The first centers on how to divide the existing economic pie or how to allocate existing economic resources among competing interests. This debate focuses on the macroeconomy, specifically on the level of the federal budget and its deficit; on the ability of the economy to fund both national defense and social programs and on issues such as savings, investment, and international trade. This deficit issue involves both cost and opportunity cost—both the size of the budget and the alternatives foregone by allocating funds to one use instead of another. It also revolves around whether current costs should be shifted to future generations by borrowing today to cover the federal budget deficit and expecting future taxpayers to repay the resulting debt.\nThe second issue is how to enlarge the existing pie or how to increase economic growth and productivity in order to generate more resources for all programs. Growth depends both on sufficient aggregate demand by households, businesses, and government and by growing and productive supply. Over the long-term, the growth of supply depends on the microeconomic side of the economy and includes science and technology, education, business methods, natural resource use, and other elements of the economy that generate economic activity and progress.\nFigure 1 provides a simplified overview of how the economy enters into national security considerations. National security is sought through a combination of hard power, soft power, and economic opportunity. The economy underpins each of these by providing funding, human and other resources, capital, products, and an appealing culture and economic model. The operation of the economy, in turn, relies on government fiscal, monetary, and industrial policies; on the quality and quantity of human resources; on progress in science and technology; and on the global economy through trade and capital flows.", "The issues in Figure 1 comprise the focus of this report and are those emphasized in the 2010 National Security Strategy . The economy and economic tools, however, enter into national security considerations in several other ways. These include economic sanctions, export controls, economic incentives, expeditionary economics, and economic issues as a cause of conflict. They are briefly presented here because of their relevance to current security policy.\nEconomic incentives or disincentives can be both an adjunct to and substitute for hard power. The use of hard power or the threat of using it by the military often is buttressed by economic tools such as financial and economic sanctions, financial incentives to change the behavior of potential enemies before or during combat, or reestablishing a local economy after combat (expeditionary economics).\nEconomic and financial sanctions lie between diplomacy and open warfare. They are used either to punish countries for some action or to induce them to change their behavior without resorting to kinetic means (shooting them). The sanctions on Iran and North Korea imposed by the United Nations are two prominent examples of the use of this tool. Sanctions tend to be coercive but not lethal and less likely to trigger open warfare. The efficacy of economic and financial sanctions, such as a trade embargo, however, depends greatly on cooperation by countries near the target country. In the North Korean case, although the trade and financial sanctions are being implemented by nations, such as South Korea, Japan, and the United States, they cannot work well without the full cooperation of China.\nRelated to economic sanctions are export controls. Under the Export Administration Act ( P.L. 96-72 ) Congress delegates to the Executive Branch the authority to regulate foreign commerce by controlling exports of sensitive dual-use goods and technologies. These are exports that have both civilian and military applications and that may contribute to the proliferation of nuclear, biological, and chemical weaponry. Congress is considering reauthorizing and rewriting this act. In the policy debates, there are those who advocate that controls be liberalized in order to promote exports. Although exports of particular goods and technologies can adversely affect U.S. national security, some argue that current export controls are too strict and hinder U.S. businesses in competing for sales abroad. They claim that many products under export control are available from other exporting countries and that the resultant loss of market share and jobs can harm the U.S. economy. This, in turn, has a negative effect on U.S. national security. Others, however, argue that further liberalization of export controls may compromise national security goals by putting sensitive products into the hands of potential adversaries. Those in this camp tend to view security concerns as being paramount in the U.S. export control system and that such controls can be an effective method to thwart proliferators, terrorist states, and countries that can threaten U.S. national security interests.\nAs for the role of financial incentives as a weapon in open combat, armies have long been able to buy loyalties, pay potential enemies not to fight, finance local security forces consisting of unemployed potential insurgents, or offer rewards for the capture or killing of particular enemy leaders. This goes beyond, for example, carrying sacks of money into meetings with tribal sheiks. Such financial incentives can complement direct military campaigns by establishing a reward-based system in which members of the local citizenry view siding with the U.S. military preferable to aiding, or actually becoming, the adversary. For example, the U.S. Marine Corps Small Wars Manual stresses the importance of focusing on the social, economic, and political development of the people as well as on destruction. In Iraq, the use of financial incentives and the direct funding of armed Sunni militias as a key factor in the Awakening in Anbar province has been extensively debated.\nAn emerging field of economics addresses how to re-establish a viable economy during or after an invasion or counter-insurgency campaign. This is referred to as expeditionary economics. The chaos and destruction following hot battles present an economic condition ripe for corruption and extortion often with a security, economic, and governmental infrastructure that does not function. Yet during and in the aftermath of war, street markets often thrive, vendors can price gouge, and civilians have to go somewhere for food, water, and necessities. The questions of expeditionary economics include who should set up and govern such markets (particularly if the existing government has been toppled), how to allocate military resources between waging war and providing security for citizens, and eventually how to build a self-sustaining economy. This entails creating jobs, extending basic services to citizens, improving infrastructure, and making progress toward fiscal sustainability. These are particularly difficult if they must be done while a war or counter-insurgency campaign is being conducted—as is the case currently in Afghanistan.\nA further role of economics in national security centers on economic factors as a contributor to conflicts both among countries and within national borders. Access to resources, such as oil, diamonds, water, and territory, continues to create tensions and can be a casus belli that either may lead to overt hostilities between contesting countries or incite sectional and factional violence within nations. The list of territorial claims in dispute among nations is long, and history is replete with examples of conflicts over diamonds, oil, or other minerals. Even though the sharing of resources, such as river water by India and Pakistan, can necessitate cooperation between countries, it also holds the potential for conflict, although, so far, conflicts over water have been minimal.", "At the macroeconomic level, the recession of 2008-2009 in combination with the wars in Iraq and Afghanistan and rising costs for domestic social programs have pushed the U.S. budget deep into deficit. Alarm bells have been sounding from many quarters that the nation is on an unsustainable fiscal path. The issues for Congress include whether to slow the growth of the budget deficit and how to do so without compromising national security, how to achieve a balance between military and civilian expenditures, and whether a \"peace dividend\" is forthcoming as expenditures for the wars in Iraq and Afghanistan diminish.\nEconomic growth requires both sufficient demand on the macroeconomic level and increased productivity at the microeconomic level. Microeconomic policies combine with monetary and fiscal policies at the macroeconomic level to attempt to enlarge the overall size of the economy in order to provide the \"rising tide that lifts all ships.\"", "The macroeconomic debate centers on the federal government's budget and its components in general and military expenditures in particular. The expectation is that the current and projected growth in the national debt is not sustainable and, given the slow recovery from the financial crisis, the nation is facing a period of increased austerity that will compel deep cuts in the federal budget. The question is when those cuts should be made and to what extent the Pentagon is to be included or exempt from budget cuts. In August 2010, Admiral Mike Mullen, Chairman of the Joint Chiefs of Staff, stated that the national debt is the single biggest threat to national security.\nIn theory, the budget for the national security community, including the military and homeland security, should be sufficient to address foreign threats, defend the homeland, prevail in ongoing wars, and help define and advance U.S. interests abroad, including, to a certain extent, projecting U.S. democratic values and human rights. In practice, there is considerable disagreement on how best to address these tasks and the ways and means necessary to carry them out. Without concurrence on the tasks, one can hardly expect a public policy consensus on the optimal size of the military budget and whether the amount being spent is too great or too small. The line of reasoning in the public debate, therefore, tends to be that the military budget is either too large or too small relative to what the country can afford, to past expenditures, to the overall federal budget, to what is spent on other programs, or to what other nations spend. Another line of reasoning is that the military budget also is too large or too small relative to current war fighting needs, to rising threats from non-state actors (such as terrorists) or from states with nuclear weapon programs (such as North Korea and Iran), or for its participation in alleviating the effects of natural disasters (such as earthquakes, tsunamis, infectious diseases, or climate change).\nU.S. defense expenditures account for nearly $700 billion in annual budget outlays, including some $400 billion in contracts for goods and services. The impact on U.S. gross domestic product exceeds $1 trillion. U.S. defense expenditures are roughly equal to those of the next 14 countries combined, account for about 20% of the U.S. federal budget, and comprise an estimated 4.9% of U.S. gross domestic product.\nSince the debate over military spending is quite extensive, a detailed review of that debate lies beyond the purview of this report. Here we cite a statement from the Secretary of Defense plus two representative studies, one for increasing or maintaining defense expenditures and the other for considering cuts. We also present some relevant economic data.\nIn 2010, Defense Secretary Robert Gates called for significant cuts in defense spending. He has outlined some details of his plans to save $100 billion over the next five years. This includes new guidelines on how the Pentagon buys goods and services with more fixed price contracts, cutting overhead, gaining efficiency, and closing the Joint Forces Command in Norfolk, Virginia. (For further discussion, see the section below on \"Defense Acquisition and Contracting Process.) Secretary Gates, however, has warned against sharp reductions in military spending, arguing that such cuts would be \"catastrophic\" to national security.\nIn October 2010, the Heritage Foundation, American Enterprise Institute, and the Foreign Policy Initiative issued a report claiming that the arguments frequently made for Pentagon spending cuts are false and that the Pentagon is actually underfunded given the need for comprehensive military modernization and to prepare fully for the wars of the future. The argument rests primarily on the global reach and expanding responsibilities of the U.S. military, the need to update military hardware, and the fact that spending on entitlements, Social Security, Medicare, and Medicaid, has outstripped that of the Pentagon. The report noted that even if Pentagon spending of about $700 billion were eliminated entirely, it would only halve the fiscal deficit of around $1.3 trillion and hardly put a dent into the $13.6 trillion national debt. The report was followed by an op-ed piece by the heads of the three authoring organizations that argued that a strong military is necessary to keep the peace, and peace is required for global prosperity. Hence, military spending is not a net drain on the U.S. economy.\nA counter view of the debate has been put forward by the Sustainable Defense Task Force. On June 11, 2010, it issued a report that concluded that at a time of \"growing concern over federal deficits, it is essential that all elements of the federal budget be subjected to careful scrutiny. The Pentagon budget should be no exception.\" The report presents options that the Task Force argues could save up to $960 billion between 2011 and 2020. The options include recommendations that focus on cutting programs based on unreliable or unproven technologies, missions and capabilities with poor cost-benefit relationships, capabilities that mismatch or over-match current and emerging challenges, and management reforms. Based partly on this report, a group of 57 Members of Congress sent a letter to the Commission on Fiscal Responsibility calling on the Commission to subject military spending to the same rigorous scrutiny that non-military spending was to receive and to do it in a way that would not endanger national security.\nOn December 1, 2010, the Commission released its proposals to reduce the budget deficit. These proposals included $828 billion in deficit reduction between 2012 and 2015 through cuts in discretionary spending, tax reform, health care cost containment, mandatory savings, Social Security reform, and changes in the budget process. In particular, the Commission recommended that both security and non-security discretionary spending be cut by an equal percentage. Since security spending is twice as large as non-security discretionary spending, equal percentage cuts imply that the amount of cuts in security spending would be twice as large as that in non-security spending.\nAs shown in Figure 2 , since 1980, the share of national defense (excluding Veteran's Affairs) has been declining after a bulge in the late 1980s. From 22% in 1980 it is now around 20%. The figure also demonstrates the argument that defense alone will not solve the budget deficit problem. Human resources command a larger share of the budget (67% in 2010).\nFigure 3 shows federal government budget outlays and receipts in trillions of current dollars. This shows the dramatic impact of the global financial crisis on government revenues from 2008 and the gradual recovery expected through 2015. It also shows the steady increase across the budget that has occurred since 2000 and the futility of trying to cut outlays enough to reduce the budget deficit significantly without considering changes to entitlements (Health [mostly Medicaid], Medicare, Social Security, and Income Security) in addition to the Other category and National Defense. Data in Figure 3 are not adjusted for inflation to show how actual government outlays have changed relative to government receipts. While total receipts are projected to recover as the economy recovers, government outlays are projected to continue to rise. How much each will change depends greatly on actions by Congress.\nFigure 4 shows the amount of gross federal debt and that held by the public (including the Federal Reserve). The difference between the two amounts is that debt held in government accounts. The total debt is the accumulation of federal budget deficits and surpluses. In 2009, at $11.9 trillion, the gross debt amounted to 83% of U.S. annual gross domestic product. How much of a burden is this on the U.S. economy? Currently, the Treasury has few problems in issuing securities to fund the debt. Treasury securities are in such demand that in late October 2010, in some secondary markets, investors were willing to accept negative interest rates. It is true that China and Japan combined hold about $1.6 trillion in U.S. Treasury securities, and they are being pressured to reduce their trade surpluses and, in the case of China, reduce their buying of dollar assets in order to strengthen the dollar vis-à-vis the renminbi. In the short-term, therefore, the financing of the deficit does not appear to be a problem. Over the medium- to long-term, however, interest payments will take an increasingly larger share of the federal budget, and, as world economies recover, investors may seek higher returns elsewhere. This could cause interest rates to rise throughout the economy and reduce U.S. well-being as Americans are taxed to make interest payments to foreign holders of U.S. debt and as fewer investments are made in U.S. manufacturing and infrastructure because of higher interest costs. The national debt crises in Iceland, Greece, and Ireland, moreover, have raised the specter of countries nearing default on sovereign debts and requiring large rescue packages. Although the situation in the United States is different, at some point markets could become greatly concerned over the large U.S. debt and take actions adverse to U.S. interests. History has shown that when investors decide to dump a country's securities or currency, the drop in confidence is fast and the downward slope steep.", "The federal budget is currently on an unsustainable path over the next several decades. This is primarily due to the impending retirement of baby boomers, rising life expectancy, and the increasing cost of medical care. Under current policies, federal debt, as a consequence of long-term and persistent budget deficits, is projected to grow to levels that may threaten the government's ability to meet its security and non-security obligations. As part of the 2010 National Security Strategy , the President calls for achieving long-term fiscal sustainability. To accomplish this goal, he calls for creating a responsible federal budget that reduces the budget deficit by making the best use of taxpayer dollars and working with global partners and institutions.\nThe Administration initially proposed to work toward reducing the deficit using a multi-pronged approach. Components of this approach include placing a three-year freeze (in nominal dollar terms) on non-security discretionary spending, implementing a new fee on the largest financial services companies to recoup taxpayer losses for the Troubled Asset Relief Program (TARP), and eliminating \"tax loopholes and unnecessary subsidies.\" The Administration also created the above-mentioned bipartisan fiscal commission, which is tasked with providing recommendations to generate additional budgetary savings and further improve the budget outlook in the medium-term. Together, these proposals, also included in the President's FY2011 Budget, are aimed at cutting the deficit in half by the end of the President's current term.\nThe current economic climate poses challenges to achieving the deficit reduction goals of the NSS. Numerous actions taken by the federal government in FY2008 and FY2009 have had major effects on the budget deficit, including two major economic stimulus measures and a variety of programs in response to the financial turmoil. The impact of this legislation, along with health care reform and any additional legislation enacted, will affect deficit levels in FY2010 and beyond. The final costs of federal responses to the nation's economic turmoil will also depend on the pace of economic recovery, how well firms with federal credit guarantees weather future financial shocks, and government losses or gains on its asset purchases.\nMost budget analysts agree that deficit reduction is key over the long-term in order to stabilize the economy and establish sound fiscal policy. However, the question over the short- to medium-term is how to ensure the continuation of economic recovery, while, at the same time, providing indications that the Administration and Congress are committed to improving the long-term budget outlook. If a more sustainable fiscal path is not achieved, high budget deficits and the resulting high levels of federal debt could limit the government's flexibility in meeting its obligations or in responding to the emerging national needs. Ultimately, failing to take action to reduce the projected growth in the debt could potentially lead to future insolvency or government default.", "Microeconomics deals with individuals, households, businesses, and industrial sectors within the macroeconomy. In addition to providing resources for the defense community needed to provide physical security, the economy, itself, provides the means for Americans to attain economic security. Such economic security in the context of national security has received stronger emphasis in recent years.\nEconomic security is the condition of having stable income, employment, or entrepreneurial support to maintain what one considers to be an acceptable standard of living. As is the case with physical security, economic security can be an elusive concept. It is of most concern, perhaps, in its absence: during recessions, periods of high unemployment and bankruptcy, and when there is a gap between economic expectations and reality. When economic times are difficult, the tradeoff between physical and economic security comes into clearer focus. Economic security depends greatly upon (1) an economic growth rate sufficient to keep the rate of unemployment low and provide opportunities for entrepreneurs, (2) U.S. industries able to compete in international markets, and (3) U.S. leadership in science, technology, and innovation.\nHistorically, three microeconomic issues related to defense spending have generated considerable political debate. The first is the sufficiency of the dedicated defense industry or what is often called the defense industrial and technological base. This includes whether sufficient civilian industrial capacity and relevant technology exists to support military procurement (particularly if there is a surge in needs or a shift in security-related technology that necessitates new capabilities such as in cyber warfare). The second deals with the Pentagon's procurement and contracting process and how to ensure the integrity of the defense supply chain. The third deals with how defense dollars are spent in local communities and the level of spending that supports jobs in specific areas—even if the expenditures are for products or roles deemed unnecessary by the Pentagon (e.g. bases identified for closure or continued procurement of certain big-ticket military hardware items).\nIn the following section, these three microeconomic issues are addressed. This is followed by a section dealing with microeconomic factors that contribute to economic growth. The final section deals with soft power issues: the international economy and foreign economic assistance, their role in U.S. national security, and relevant policy issues. Each of these sections contain brief overviews and provide some context and analysis. They are intended to serve both as a guide to how the issues relate to national security and to the CRS analysts and CRS reports that deal with the issues in greater detail.", "General perceptions and presidential cautions notwithstanding, the \"military-industrial complex\" familiar to the casual reader of the Wall Street Journal is a relatively recent creation that took shape during the mid-20 th century.\nFor the first three quarters of the nation's history, its defense industry was wholly owned by the federal government, embodied in a number of federal arsenals operated by the War Department and government shipyards within the Navy Department. In the preindustrial United States, with small standing militaries and rare threats to the national defense, the output of this \"arsenal system,\" augmented when necessary by purchases from foreign suppliers and contracts with private gunsmiths and boat builders, proved adequate to meet the nation's defense needs.\nThe advent of industrialization and mass mobilization for war, presaged by the nation's experience in the Civil War, initiated a gradual change in how the United States approached the task of providing itself with weapons of war. Throughout the latter half of the 19 th century, neither the Army's Ordnance Department nor the Navy's Bureau of Construction and Repair could reasonably be considered leaders in the introduction of innovative military technologies. Outside reformers, such as the President or congressional committees, often had to push both the military departments and private industry to create a significant domestic war production capacity. Even so, the United States entered the 20 th century with industrialization efforts focused on a rapidly expanding commercial market. World-class military hardware, when deemed necessary, was procured abroad from arms makers in the United Kingdom, France, and Germany.\nThe American entry into World War I in 1917 saw unprecedented mobilization of the industry and manpower for the national defense. In many respects, though, the experience provided more lessons in how not to mobilize industry than how to do so well. The sudden upsurge of material needs in the Army and Navy overwhelmed the existing military procurement bureaucracies and the government's production facilities. Private industries pursuing suddenly lucrative production contracts flooded the nation's transportation system and led to a meltdown of the Army's distribution network. The popular image of the American doughboy using French and British weapons in the trenches and flying French, Italian, and British aircraft can be seen as much a result of the inadequacy of Army procurement and distribution practices than the technical superiority of European industries.\nThe lessons of the First World War were not lost on those who had to plan for a potential American involvement in World War II twenty-three years later. For the nation's industry, the impact of the Great War had been mixed. Though military contracts had proven profitable, procurement had been overestimated and uncoordinated, the level of technology incorporated in weapon designs had been low relative to European arms, and type of contracts used had left liability for early cancellation largely with the companies. The abrupt declaration of the Armistice in November 1918 had caught many unawares, led to the abrupt termination of many contracts, and precipitated thousands of court claims against the government.\nBetween the world wars, defense appropriations plummeted to relatively miniscule levels. Industry demobilized, turning again to satisfying civilian demand, and the needs of the Army and Navy could once again be satisfied largely by government arsenals and shipyards.\nParadoxically, the Great Depression helped to set the stage for the creation of a dedicated defense industry. Military appropriations fell further—to the point that Congress authorized new Navy construction one ship at a time—and the funds that were made available went to basic procurement, not innovative technology development. The rapid rearmament of Europe in the mid-1930s and the large-scale Japanese assault on China provoked little response from the U.S. government until the end of the decade, when Congress began increasing defense appropriations and the War Department undertook to place as many procurement contracts with as wide a supplier base as possible.\nEven with a rapidly expanding domestic war materials market and major armed conflict raging in Europe and Asia, private enterprise proved reluctant to invest in the war-specific productive capacity needed to meet the potential demand. Instead, manufacturers remembered the industrial dislocations of 1918 and 1919 and preferred to focus on a slowly recovering, but more reliable, civilian market. Nevertheless, with both the Administration and Congress preparing for a potential military conflict of unprecedented scale, industry had little choice but to negotiate plans for potential war mobilization. The methods upon which the government agencies and corporations eventually settled minimized corporate risk while retaining flexibility to meet unanticipated demands: emphasis on subcontracting, temporary conversion of existing civilian production capacity to war manufacturing, expansion of existing private plants, and construction of government-financed, government-owned facilities that would be staffed and operated by private corporations. While the war effort followed all four paths, the government-financed expansion of private factories and the government construction of contractor-operated facilities (the GOCOs) endured to form the core of the post-war military-industrial complex.\nWhen the storm broke at the end of 1941 and the United States entered the conflict, the vastly expanded production needs of the war again overwhelmed the production capacity of the government's arsenal system. This opened war material development and production to a number of new, primarily civilian, players. Prominent among them, the Office of Scientific Research and Development, independent of both War and Navy Departments, contracted for military research and production of innovative weapons such as the proximity fuse, airborne radar, and the bazooka. Congress encouraged industrial development by liberalizing private corporate financing through accelerated asset depreciation and allowed the government to guarantee corporate debt. The Defense Plant Corporation, a government corporation, purchased or built production facilities operated by contractors. The Office of Production Management—later the War Production Board—prioritized war material deliveries and controlled nonessential (nondefense) production.\nAs the war neared its conclusion, procurement wound down, contracts were terminated, temporary civilian agencies disbanded, and government controls on labor, finance, and industry were eased. At war's end, both armed services and industry demobilized. Defense appropriations plummeted, and privately owned manufacturing capacity shifted back to civilian production, straining to satisfy consumer demand held in check by a decade of depression and four years of war.\nBut the U.S. could not return to its prewar posture. The nation's position in world politics and economics had changed fundamentally by 1945, having assumed worldwide responsibilities in defense—as demonstrated by the Berlin Crisis, the rise of Communist governments in Europe and Asia, and in an unexpected war in Korea. The problem, as seen by both the Truman and the Eisenhower administrations, was to create a global defense at a price that would not cripple the domestic economy. The solution that both presidents pursued was technology as a substitute for high-cost manpower. U.S., indeed Western, defense would rely on a strategy of containing the influence of the enemy, the Soviet Union, within a defined geographic area.\nThe military component of this containment strategy would not take the form of large, expensive standing armies ringing the communist world. Rather, the threat of Soviet-inspired expansion would be met with the threat of immediate, devastating attack with atomic, later thermonuclear, weapons delivered by new aircraft, missiles, ships, and submarines.\nThe ensuing competition among the various military services to establish claims on this unprecedented approach to high-technology warfare encouraged the rapid rise of something not seen before, a peacetime civilian sector of industry dedicated to providing the Army, Navy, Air Force, and Marine Corps with high-quality, cutting edge military systems. The focus on a nuclear first line of defense combined with strategic alliances prompted a spirited competition among the military services as each laid claim to some portion of the nuclear mission. The late 1940s and 1950s saw the creation of the Air Force's Strategic Air Command and development of the intercontinental bombers—later missiles—able to carry nuclear bombs and warheads to any point in the Soviet Union. Likewise, the Navy doubled the threat to Soviet targets, buying nuclear-capable aircraft and missiles and the large ships and submarines able to carry them close to the Soviet border. Even the Army staked a claim, creating a doctrine for fighting a contaminated ground war that would employ smaller nuclear weapons. Referred to as the Pentomic Army, these atomic soldiers needed both weapons and specialized equipment to operate on the nuclear battlefield.\nThe desire to minimize manpower and cost and maximize the effectiveness of firepower helped to create an expectation that each new military system would perform significantly better than the one it succeeded. This expectation eventually came to be shared by the military that conceived of, managed, and used the systems, the legislators who paid for them, and the private corporations that actually built them. Two important factors reinforced that expectation—the enduring presence of the Soviet Union, a powerful, sophisticated peer adversary that could project its presence globally, and the continued strengthening and consolidation of budgeting and program control in the Office of the Secretary of Defense.\nFor the next half-century, each military department would have a well-defined protagonist against whom it could plan a war, and each would be competing within a centralized budgeting process for the wherewithal to fight it. As a result, the military departments demanded ever more capable and sophisticated weapons and supporting systems, and private industry strove to meet the needs of \"the customer.\"\nAs the Cold War continued, some companies, such as Lockheed, General Dynamics, Raytheon, and others, devoted significant portions of their activities to defense projects. A number of corporations came to specialize in serving particular defense niches. Grumman Aircraft Engineering Corporation (later Grumman Aerospace Corporation), for example, became known as the premier builder of fixed wing aircraft for the Navy. Thus, President Dwight D. Eisenhower could be moved to devote a significant portion of his 10-minute farewell address to the nation on January 17, 1961 to this new phenomenon.\nUntil the latest of our world conflicts, the United States had no armaments industry. American makers of plowshares could, with time and as required, make swords as well. But now we can no longer risk emergency improvisation of national defense; we have been compelled to create a permanent armaments industry of vast proportions. Added to this, three and a half million men and women are directly engaged in the defense establishment. We annually spend on military security more than the net income of all United States corporations.\nThis conjunction of an immense military establishment and a large arms industry is new in the American experience. The total influence—economic, political, even spiritual—is felt in every city, every state house, every office of the Federal government. We recognize the imperative need for this development. Yet we must not fail to comprehend its grave implications. Our toil, resources and livelihood are all involved; so is the very structure of our society.\nIn the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist.\nWe must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.", "As part of the 2010 National Security Strategy, the Obama Administration expressed concern over the perceived lack of management and oversight over Department of Defense procurement spending, an amount which \"accounts for approximately 70% of all Federal procurement spending\" and has stated its intention to reform \"Federal contracting and strengthen contracting practices and management oversight with a goal of saving Federal agencies $40 billion dollars a year.\"", "Facing two wars, a large defense budget, spiraling contracting costs, and a decline in the breadth and depth of the civilian, organic defense workforce, Secretary of Defense Robert M. Gates has made several announcements that are intended to fundamentally change DOD operations. In April 2009 the Secretary announced his intention to embark on a plan to rebalance the workforce by reducing the number of contractors and the percentage of contracted services, and, at the same time, increase the size of the organic defense workforce.\nOn August 9, 2010, Secretary Gates unveiled a direct and significant push to change the strategic direction of the Department and improve the Department's performance, oversight, and control of critical services. To accomplish this, he has proposed a reorganization and restructuring of the Department's business operations by taking the following actions: (1) shifting overhead costs to force structure and future modernization accounts, (2) inviting outside experts to suggest ways the Department can be more efficient, (3) conducting front end assessments to inform the FY2012 budget request, and (4) reducing excess and duplication across the defense enterprise.\nTo achieve his objectives, the Secretary has announced a series of targeted, budget-cutting initiatives designed to \"reduce duplication, overhead and excess, and instill a culture of savings and restraint across DOD.\" The impact of these initiatives could be significant and include (but are not limited to) the following reductions.\nReducing funding for service support contractors by 10% a year for each of the next three years, and no longer automatically replacing departing contractors with full-time personnel.\nFreezing the number of Office of the Secretary of Defense, Defense Agency and combatant command positions at the FY2010 levels for the next three years. Other than changes planned for FY2010, no more full-time positions in these organizations will be created after this fiscal year to replace contractors. Some exceptions can be made for critical areas such as the acquisition workforce.\nFreezing at FY2010 levels the number of senior positions—civilian senior executive and active General and Flag Officers. A senior task force is to assess the number and location of senior positions, as well as the overhead and accoutrements that go with them, with results due by November 1, 2010. Gates expected the task force to recommend cutting at least 50 General and Flag-officer positions and 150 senior civilian executive positions over the next two years.\nAuthorizing each of the military departments to consider consolidation or closure of excess bases and other facilities where appropriate.\nFreezing the overall number of DoD-required oversight reports. Immediately cutting the dollars allocated to advisory studies by 25%, and henceforth, publishing the actual cost of preparing each report and study prepared by DoD. Conducting a comprehensive review of all oversight reports, and using the results to reduce the volume generated internally.\nDirecting an immediate 10% reduction in funding for intelligence advisory and assistance contracts and freezing the number of senior executive positions in defense intelligence organizations. Conducting a zero-based review of the department's intelligence missions, organizations, relationships, and contracts.\nEliminating organizations that perform duplicative functions or have outlived their original purpose, including the Office of the Assistant Secretary of Defense for Networks and Information Integration, also known as NII, and organization within the Joint Staff's J6 Command, Control, Communications and Computer Systems, the Business Transformation Agency, and the Joint Forces Command.", "The NSS objective for procurement reform reflects the view that the federal government has to become more fiscally accountable to its citizens, and that the policies of past Administrations—through outsourcing, privatization, competitive sourcing, and managed competitions through Office of Management and Budget (OMB) Circular A-76—have largely resulted in an increased presence and use of private sector contractors. In spite of the increased use of contractors, the federal government has not to date produced a complete and detailed analysis of the costs and footprint of the contractor workforce or the range of services that contractors perform for the federal government. This NSS objective also reflects the Obama Administration's stated view that DOD, like the rest of the federal government, should carefully identify ways to reduce its overhead, eliminate wasteful and duplicative programs, and pursue ways to economize and increase the efficiency of its business operations.\nThe Secretary's planned budget reductions as described here represent a significant attempt to restructure and reduce DOD business operations. These reductions would affect every aspect of DOD operations and particularly highlight those contracted services that have been the subject of public scrutiny largely because the nature of the contracts make transparency difficult—such as the 25% reductions in funding for advisory studies, studies conducted by existing boards and commissions, and a 10% reduction in funding for intelligence advisory and assistance contractors.\nIt is difficult to fully evaluate the efficacy of the Secretary's plan given that the plan was not accompanied with specifics on how DOD arrived at these budgeting and programmatic decisions. The impact of such reductions on the efficiency and effectiveness of DOD business operations remains uncertain. Whether these reductions will achieve real budget savings or improve DOD business operations is a question that will be raised by both proponents and opponents.\nEliminating DOD agencies and components will, in all likelihood, result in a reduction of personnel as some positions and possibly functions will be eliminated. However, critical and inherently governmental functions will need to shift to other DOD agencies and components. The extent to which this happens will affect the size of the reductions in the defense budget. The 10% reduction for all service support contractors would reduce the size of the contractor workforce and might shed light on the breadth and scope of services actually rendered by the contractor workforce. Without a clear sense of the long-term costs of all DOD personnel—be they contractor, civilian, or uniformed military—as well as which personnel would be most affected by the proposed reductions—the question remains as to the impact of the Secretary's proposed reductions on the long-term personnel costs and on the future performance of the Department of Defense.\nGiven the challenges facing the Department, these proposed reductions could (and may likely) serve as a starting point to consider deeper cuts and perhaps help the Department to prepare itself for additional restructuring and reshaping. Many of the initiatives proposed will take months, if not years, to develop and will likely take longer to begin to harvest the benefits and savings.", "Even though the primary purpose of the U.S. defense establishment is to provide security from foreign threats, expenditures both for procurement and by service personnel, themselves, have a significant impact on many local communities. When bases are closed or procurement contracts or programs are cancelled, the employment and expenditure multiplier effects often can be large and usually generate considerable political pressures.\nIn September 2005, a Base Realignment and Closure (BRAC) Commission submitted its final report to the Administration and implementation is proceeding. Congress can override the recommendations by disapproving the list of closures as a whole, but the President can veto the action.\nThe issue with base closures and loss of defense contracts often has less to do with protecting the nation than with defending the economic security of those affected. What can be said is that the economic impact, in general, is proportional to the size of the facility or contract relative to the size and resources of the local economy, the types of workers involved (whether they have the skills to find jobs in other industries), and whether the loss is primarily of household expenditures by military personnel (groceries, gasoline, rents, etc.) or of contracts needed to maintain capital- and skill-intensive manufacturing facilities (e.g. shipbuilding or aircraft production).\nEconomic impact studies of such actions often rely on multiplier effects. These are defined either as the number of jobs in the community generated by each job paid for by the military or by how much economic activity is generated in the local community by a dollar spent by the military. For the employment multiplier, the concept is that each direct job created generates indirect employment by those industries that support that job holder. For the income multiplier, the concept is that a dollar spent in the local community is then re-spent as purchases are made through the relevant supply chain. The more of each dollar that is spent (not saved) at each round and the less that is spent on imports the higher the multiplier effect. These multipliers can range from less than 1 to as much as 2.5 or 3.0 depending on the nature of the military expenditure, and the economic conditions in the community. When considering a base closure or loss of large procurement program, the multiplier also depends on the resiliency of the workforce and the length of the period of adjustment. The more quickly the bases are converted to civilian use, the higher the value of underlying real estate, the lower the clean-up costs, and the more vibrant the local and national economy, the lower the impact of the base closure on the local communities.\nFor communities that are adversely affected by a base closure or loss of a large procurement contract or program, the adjustment period for securing new jobs can be difficult and is normally longer than four years, with some communities requiring up to 20 years. Base realignments or program cuts also have a fiscal effect on local governments as they deal with changes in their revenue base and issues such as a mismatch between existing infrastructure (particularly roads and schools) and the needs of the military. A Government Accountability Office study of 73 base closures over the 1988 to 2003 period found that the percent of jobs recovered by local communities ranged from 0% to more than 1,000%.\nThe Office of Economic Adjustment serves as the Defense Department's primary source for assisting communities that are adversely affected by changes in Defense programs. The Office offers technical and financial assistance and coordinates the involvement of other federal agencies.", "A microeconomic issue that equally falls into the macroeconomic realm is the rate of economic growth of the whole economy. The rate of economic growth stems from both demand and supply. On the demand side are macroeconomic policies that affect total household consumption, business investment, government spending, and the balance of trade. The above discussion of the federal budget and total military expenditures is part of the demand side of the economic debate. On the supply side are microeconomic policies that affect labor productivity, innovation, and the efficient use of labor and capital. The government policies that affect the supply side of the economy range from taxes to education, to research and development, and to immigration. In the following analysis, we exclude discussion of tax policy, an important component of U.S. industrial competitiveness and entrepreneurship but beyond the purview of this report. Instead, we focus on those items that have been addressed in the 2010 National Security Strategy of the United States and tend to be more directly related to U.S. national security.\nOn a global basis, the importance of economic growth to national security was demonstrated in the 2008-2009 global financial crisis. In February 2009, Director of National Intelligence Dennis C. Blair stated in a congressional hearing that instability in countries around the world caused by the current global economic crisis, rather than terrorism, was the primary near-term security threat to the United States. The slowdown in growth was causing instability in governments, and he feared that U.S. allies and friends would not be able to fully meet their defense and humanitarian obligations. He also saw the prospect of increased refugee flows and a questioning of American economic and financial leadership in the world. While this report focuses on the sources of U.S. economic growth, these factors operate to promote growth in other countries as well.", "Economic growth is highly dependent on increasing the productivity of workers. In this era of a knowledge-based economy, this increase in productivity depends as much on education and training as in traditional investments in hardware and equipment. Knowledge is not only a product that can be bought and sold, but it is a tool that can be used to produce economic and security benefits. It depends greatly on the ability of workers to generate and use knowledge in the production process, which, in turn, depends on the skill and education of workers.\nEducation also plays into national security concerns through the ability of Americans to understand foreign countries and cultures and to speak certain foreign languages, such as Arabic and Chinese. In addition, technical and engineering education provides the United States with workers who can provide direct security benefits, such as technological innovation that keeps the military at the forefront of technological capabilities and engineering skill that provides advanced weaponry as well as a secure infrastructure.", "The 2010 National Security Strategy proposes that the United States would benefit from improving education at all levels so that American children can succeed in a global economy. The NSS supports a comprehensive, developmental approach to education, which includes early childhood education, elementary and secondary education, postsecondary education, and job training. The NSS states that one major goal of improving education is to restore U.S. leadership in higher education by having the highest proportion of college graduates in the world by 2020.", "The federal government supports early childhood care and general education programs from birth through adulthood. Major congressional efforts to enact legislation and support education at all levels took place in the 1960s. To date, Congress has enacted legislation that supports early childhood education, elementary and secondary education, career and technical education, postsecondary education, and adult education and job training. The remainder of this section outlines the legislative context of support for education from early childhood education to adult education and job training programs.\nFederal support for early childhood programs comes in many forms, ranging from grant programs to tax provisions. Some programs serve as specifically dedicated funding sources for child care services or education programs. For other programs, child care is just one of many purposes for which funds may be used. Until recently, support for early childhood care and education programs have been separate from general education programs for older children, youth, and adults. For example, the largest source of federal funding for comprehensive early childhood education is the Head Start program, which is administered by Health and Human Services. A recent congressional hearing, however, indicated some interest in incorporating early childhood education programs into traditional elementary schools.\nThe primary legislation supporting elementary and secondary education is the Elementary and Secondary Education Act (ESEA), most recently amended by the No Child Left Behind Act of 2001 (NCLB; P.L. 107-110 ). Congress has employed a variety of strategies to support elementary and secondary education, including (1) compensatory education programs, in which federal funding is provided to support the education of disadvantaged students; (2) civil rights statutes, which prohibit discrimination among students according to criteria such as race, color, national origin, or sex, and which require that a free appropriate public education be made available to students with disabilities; (3) standards-based reforms, under which recipients of federal education funding are required to implement challenging educational standards and assessments; and (4) market-based reforms, which permit parents to signal their educational preferences by choosing their children's schools.\nThe Carl D. Perkins Vocational and Technical Education Act of 1998 (Perkins Act; P.L. 105-332 ) is the main source of specific federal funding for vocational education. Vocational education programs provide occupational preparation mostly at the high school level and at less-than-four-year postsecondary institutions, such as community colleges. At the high school level, vocational courses can be classified into three groups: (1) consumer and homemaking education, (2) general labor market preparation providing general skills that are not related to a particular occupational field, and (3) specific labor market preparation in occupational fields. At the postsecondary level, community colleges provide vocational courses that are more broad and can cover areas such as computer programming and engineering technology.\nThe largest federal postsecondary education programs are the federal student aid programs authorized under the Higher Education Act (HEA), federal tax benefits administered through the Internal Revenue Code (IRC), and veterans' education assistance programs. The federal government also supports postsecondary education through a number of targeted programs. For example, several HEA programs authorize the provision of direct assistance to institutions of higher education that serve large proportions of low-income individuals and individuals from minority populations. Other HEA programs support the provision of services and incentives to help disadvantaged students increase their secondary or postsecondary educational attainment. The HEA also provides some support for the education and training of workers in certain fields or occupations, such as teaching and science and engineering occupations.\nThe Workforce Investment Act (WIA; P.L. 105-220 ) is the primary federal workforce development legislation that aims to increase coordination among federal workforce development and related programs. The majority of WIA funding provides support for job training programs, which provide a combination of education and training services to prepare individuals for work and to help them improve their prospects in the labor market. WIA also provides funding for the Adult Education and Family Literacy Act (AEFLA), which supports an array of literacy programs targeted to help adults obtain literacy and complete secondary education.", "In the 2010 NSS President Obama proposes to ensure national security by providing a \"complete and competitive\" education for all Americans, from early childhood through adulthood. The NSS provides limited detail on the legislative means by which education would be supported; it is unclear whether the NSS proposes to support existing programs, design new programs, or work to align current education programs from early childhood through adulthood.\nThe primary, measureable education goal stated in this section of the NSS is \"to restore U.S. leadership in higher education by seeking the goal of leading the world in the proportion of college graduates by 2020.\" At face value, this measureable goal seems to focus on supporting early childhood education, elementary and secondary education, and postsecondary education. It is not directly linked to promoting or supporting career and technical education or adult education and job training programs. While some career and technical education programs lead to college degrees from less-than-four-year postsecondary institutions, it is unclear whether these degrees are included in the stated NSS goal. If the primary goal is to increase the proportion of college graduates by 2020, the Administration may seek to focus on college-readiness in elementary and secondary education and promoting access to postsecondary education.\nOne potential disadvantage of focusing on increasing the proportion of college graduates by 2020 is the possibility of losing focus on job training and worker retraining programs. With record unemployment rates and a changing economy, the workforce may require more job training and worker retraining programs in order to promote high-demand skills in emerging industries. The NSS recognizes that promoting job training programs and high-demand skills in emerging industries is an important factor in our national security; however, without a stated measureable objective, the extent to which these programs would be supported is unclear.", "The 2010 National Security Strategy includes several science, technology, engineering, and mathematics (STEM) education provisions. As a question of domestic policy, the STEM education provisions are relatively generic in nature, consistent with existing federal policy, and likely to reflect consensus opinion. Nevertheless, policymakers continue to debate how to assure a capable national scientific and technological workforce and the role of the U.S. STEM education system in that process. A number of CRS reports explore various aspects of these issues in greater detail.", "American innovations in science and technology played a central role in ensuring national prosperity and power over the last century. From the first mechanically propelled flight of the Wright brothers in 1903 to the development of Google in the 1990s, U.S. scientific and technological innovations have reshaped the global economy and provided economic mobility and security for generations of Americans.\nMany analysts believe a combination of internal weaknesses and external threats now call the nation's historic edge in science and technology into question. In an influential report, Rising A bove the Gathering Storm , the National Academies asserted that the United States is at risk of losing its comparative advantage in science and technology. In support of this claim, the Academies cited indications of weakness in the domestic STEM education system and of a growing threat from other nations in STEM education and achievement.\nA suite of data capturing trends in education outputs (e.g. graduation rates) and inputs (e.g. teacher training) drive concerns about the performance of the U.S. STEM education system. Among the data most frequently cited as worrisome are U.S. student achievement on science and mathematics tests and STEM degree attainment. On average, U.S. elementary and secondary students lag behind other nations on international STEM tests. The percentage of U.S. 24-year-olds with STEM degrees is lower than that of many other nations. Many analysts believe this data suggests challenges for the future scientific and technological workforce and the nation's capacity for innovation.\nAchievement gaps in mathematics and science between various demographic groups also raise concerns. For example, the average scores of white and Hispanic 17-year-olds on a 2008 nationwide mathematics test differed by 21 points. Many analysts believe that traditionally underrepresented groups must increase their STEM achievements in order to ensure a stable domestic supply of scientific and technological labor as the national demographic profile shifts over the next century.", "In the 2010 National Security Strategy President Obama proposes to ensure national security partly by investing in STEM education, improving the quality of mathematics and science teaching, and by expanding education and career opportunities for underrepresented groups. The President argues these provisions will strengthen human capital and contribute to national prosperity and security.\nAs a matter of national security policy, the inclusion of STEM education in the President's 2010 National Security Strategy represents a change from similar statements produced by the George W. Bush Administration. This change may be significant to national security analysts, whose opinions on the inclusion of domestic concerns in national security policy differ.\nConsidered through a domestic policy lens, the STEM education provisions of the President's 2010 National Security Strategy may have little practical effect on federal policy. Both the Obama and Bush Administrations have supported federal policies that seek to improve U.S. STEM education as a means to strengthen the economy. Congressional support for the 2007 America COMPETES Act ( P.L. 110-69 ), which in part sought to improve economic competitiveness through STEM education, reflects a similar position. In this sense, the STEM education provisions of the National Security Strategy are broadly consistent with existing federal policy.\nNevertheless, many issues in federal STEM education policy remain contentious. While the STEM education provisions of the President's 2010 National Security Strategy reflect consensus positions by and large, generally speaking, opinions vary on how to implement these objectives.\nFor example, observers disagree about whether the problem with the U.S. scientific and technological workforce is on the supply side or the demand side. The general consensus seems to be that the U.S. is not producing enough STEM graduates and scientifically literate citizens. As a result, policymakers have paid much attention to policies that seek to increase the supply of STEM-trained workers, such as reforms to improve STEM teaching or increase financial aid for STEM college students.\nOther analysts argue that the pursuit of supply side solutions fails to address demand side factors like the limited attractiveness of scientific careers and differential employment rates in certain STEM fields (for example, surpluses in the life sciences and shortages in engineering). These analysts argue that the U.S. STEM education system may actually produce too many scientists. They suggest more attention to policies addressing demand side factors, such as increasing the number of tenure-track jobs and providing grants for early-career scientists.\nBeyond the supply-demand debate are other questions about the relative value of STEM education data, the interpretation of that data, and implications for policymaking. Reformers sometimes argue that poor student performance on mathematics and science tests, among other things, indicates a need to overhaul the U.S. STEM education system. Other analysts dispute claims that poor performance on average should be interpreted as suggesting general reform of the U.S. STEM education system. The data, they argue, show that the U.S. is a top producer of the highest- and lowest-scoring students. This distinction, they claim, merits a subtler policy response targeting only low-performing students.\nOther issues in STEM education policy include debates about whether STEM education reform can or should be undertaken outside of general education reform. The scope and scale of federal STEM education programs is also an open question. Some studies have found a lack of coordination, or even of an accurate count of federal STEM education programs. STEM advocates have also advanced a variety of policy options—for example, hands-on learning, specialty schools, or teacher training—designed to address various perceived deficiencies. However, in some cases a dearth of definitive research establishing underlying assumptions adds a degree of uncertainty to these recommendations.", "According to the 2010 National Security Strategy , notwithstanding the \"pervasiveness of the English language and American cultural influence,\" the United States must increase its efforts to promote international education and exchange in order to succeed in the global economy. To this end, the Administration proposes to \"support programs that cultivate interest and scholarship in foreign languages and intercultural affairs, including international exchange programs … [and] welcome more foreign students to our shores.\" Policy recommendations beyond this general support for current programs are not specified in this section of the NSS.", "According to the Interagency Working Group (IAWG) of Government-Sponsored International Exchange and Training, the federal investment in this area was over $1.5 billion in FY2008. That year, 250 programs supporting international exchange and training were administered by 15 cabinet-level departments and 51 independent agencies and commissions. Over 2.4 million people participated in these programs worldwide in FY2008; roughly 55,000 were \"U.S. participants.\" The IAWG found that programs administered by the State Department accounted for 45% of all FY2008 U.S. participants.\nThe Bureau of Educational and Cultural Affairs Office administers the State Department's numerous exchange programs, most of which are authorized by the Mutual Education and Cultural Exchange Act of 1961 (also known as the Fulbright-Hayes Act). The two largest of these programs, the Citizen Exchange and Fulbright Programs, sent nearly 10,000 Americans abroad in FY2008. The number of Americans studying abroad through federally sponsored programs is dwarfed by the number that do so without federal support. During the 2007-2008 school year, a total of 262,416 U.S. students studied abroad. This is more than double the number studying abroad a decade earlier (113,959 in 1997-1998) and over five times the number (48,483) doing so during the 1985-1986 school year.\nThe major federal programs supporting foreign language and area studies at U.S. colleges and universities originated in the National Defense Education Act of 1958. These programs were consolidated into Title VI of the Higher Education Act of 1965 (HEA) by the Education Amendments of 1980 and are administered by the U.S. Education Department (ED). The impact of federal assistance to post-secondary institutions may be evident in the growth of foreign language bachelor's degrees awarded since enactment. The number of such degrees increased from 4,527 at the end of the 1959-1960 school year to 19,457 in 1969-1970. Foreign language degree output began to dwindle by the late 1970s, falling to 11,550 in 1985-1986, and has since steadily increased to 20,977 in 2007-2008. Meanwhile, bachelor's degrees awarded in area studies increased from 2,492 in 1970-1971 to 7,202 in 2007-2008.\nSince the Immigration Act of 1924, the United States has expressly permitted foreign students to study in U.S. institutions. To do so, such students must be issued visas from one of three non-immigrant categories: F visas for academic study, M visas for vocational study, and J visas for cultural exchange. The number of non-immigrants admitted have more than doubled over the past two decades. In FY1989, the total number of F, M, and J visas issued by the State Department was 322,385, in FY1999 the number was 480,131, and in FY2009, 654,835 such visas were issued to non-immigrants.", "The proposals in this section of the NSS reflect long-held priorities in federal policy that encourage international education and exchange in recognition of \"the benefits that can result from deeper ties with foreign publics and increased understanding of American society.\" However, the NSS does not provide specific policy recommendations beyond general support for, and perhaps expansion of, current federal programs for this purpose. In this sense, the current administration's strategy is not a major break with that of previous administrations, although some have claimed otherwise. Some concerns and questions that may be raised in response to the NSS are discussed below.\nThe large number of federally sponsored programs raises concerns about program coordination and possible duplication of effort. To address such concerns, Congress amended the Fulbright-Hayes Act in 1998 to establish the IAWG and require that it conduct a \"duplication assessment.\" The IAWG defines programmatic duplication as \"activities sponsored by different organizations that direct resources toward the same target audiences, using similar methodologies to achieve the same goals, and which result in duplicative—as opposed to complementary—outcomes.\" The analysis concluded that federal international exchange and training programs are typically specific in their theme, geographic focus, and target audience and therefore involve a low risk of duplication. Though not specifically charged with assessing coordination, the IAWG also concluded that interagency funding transfers tend to promote transparency and enhance coordination. Such transfers account for roughly 19% ($278 million) of all ($1.5 billion) federal spending in this area.\nAlthough the volume of U.S. students studying abroad has grown substantially in recent years, the regional distribution has remained steady. In 2007-2008, over half (56.3%) of all students studying abroad went to countries in Europe; Latin America was the second largest destination (15.3%), followed by Asia (11.1%). Study in Europe dropped about six percentage points since 1988-89 (62.7%) and was replaced almost entirely by a five percentage point increase in travel to Asia; which stood at 6.0% in 1988-89. Meanwhile study in the Middle East (where security is often a concern) dropped from 2.8% of all students in 1988-1989 to 1.3% in 2007-2008; slightly up from its low of 0.4% in 2002-2003. Given the emerging role of non-European nations in U.S. security concerns, some may question whether the federal government should do more to influence students' destination of study and encourage them to choose regions of greatest relevance to national security.\nSimilar concerns can be raised with regard to the languages U.S. students choose to learn. The number of foreign language degrees awarded at U.S. higher education institutions nearly doubled in the last two decades; however, two-thirds of this growth occurred in one language, Spanish. While degrees awarded in the two other major European languages (French and German) saw large declines during this period and non-European languages (e.g., Chinese and Arabic) achieved notable percentage gains, the absolute number of bachelor's degrees awarded in the three major European languages is many times greater than all other world languages combined; in 2007-2008, 12,895 and 2,210 respectively. Again, given that current security concerns are in regions largely composed of non-European language speakers, some may assert that more federal support should be directed at building the nation's capacity in languages other than those commonly spoken in Europe.\nRecent growth in the number of non-immigrant visas issued for academic/vocational study and cultural exchange indicates that the United States is welcoming more foreign students to the country following the downturn in numbers after the terrorist attacks on September 11, 2001. In 2008, the largest number of F-1 visas went to students from China (56,258), South Korea (50,078), and India (36,149). This suggests that students worldwide continue to see U.S. higher education institutions as attractive places to advance their education. Some feel that these institutions have a finite growth capacity and that foreign students prevent some Americans students from being accepted for entry. Moreover, there is a subsequent \"brain drain\" of talent as foreign students return to their home country after graduation (or perhaps a year or two of work in the United States). Others argue that K-12 schools have not been able to provide native-born talent to fill all slots in U.S. institutions, particularly in high-demand subjects, and that to maintain U.S. competitiveness, we must draw the best and brightest students the world has to offer.", "The 2010 NSS states: \"Our ability to innovate, our ties to the world, and our economic prosperity depend on our nation's capacity to welcome and assimilate immigrants and a visa system which welcomes skilled professionals from around the world.... Ultimately, our national security depends on striking a balance between security and openness. To advance this goal, we must pursue comprehensive immigration reform that effectively secures our borders, while repairing a broken system that fails to serve the needs of our nation.\"\nThere is a broad-based consensus that the U.S. immigration system is broken. This consensus erodes, however, as soon as the options to reform the U.S. immigration system are debated. Substantial efforts to reform immigration law have failed in the recent past, prompting some to characterize the issue as a \"zero-sum game\" or a \"third rail.\" The challenge inherent in reforming legal immigration is balancing the hopes of employers to increase the supply of legally present foreign workers, longings of the families to re-unite and live together, and a widely shared wish among the various stakeholders to improve the policies governing legal immigration into the country.", "Four major principles underlie current U.S. policy on permanent immigration: the reunification of families, the admission of immigrants with needed skills , the protection of refugees, and the diversity of admissions by country of origin. The Immigration and Nationality Act (INA) specifies a complex set of numerical limits and preference categories that gives priorities for permanent immigration reflecting these principles. Legal permanent residents (LPRs) refer to foreign nationals who live lawfully and permanently in the United States. During FY2009, a total of 1.1 million aliens became LPRs of the United States. Of this total, employment-based LPRs (including spouses and children) accounted for 12.7%. Most LPRs (66.1%) entered on the basis of family ties.\nCurrently, annual admission of employment-based preference immigrants is limited to 140,000 plus certain unused family preference numbers from the prior year. As Figure 4 displays, LPR admissions for the first (i.e., extraordinary persons), second (i.e., exceptional persons with advanced degrees) and third (i.e., professionals, skilled and shortage workers) employment-based preferences have exceeded the ceilings several times in recent years. Although there were almost the same number of first, second, and third preference employment-based LPRs in FY2007 and FY2008 (155,889 and 155,627, respectively), the number of employment-based LPRs in the extraordinary and exceptional categories rose in FY2008, particularly among those with advanced degrees. Despite the dip to 126,874 employment-based LPRs in FY2009, the first preference extraordinary category rose slightly. In FY2009, the number of skilled and unskilled LPRs was at its lowest level of admissions since FY1999.\nThe INA provides for the temporary admission of various categories of foreign nationals, who are known as nonimmigrants. Nonimmigrants are admitted for a temporary period of time and a specific purpose. They include a wide range of visitors, including tourists, students, and temporary workers. Among the temporary worker provisions are the H-1B visa for professional specialty workers, the H-2A visa for agricultural workers, and the H-2B visa for nonagricultural workers. Persons with extraordinary ability in the sciences, arts, education, business, or athletics are admitted on O visas, whereas internationally recognized athletes or members of an internationally recognized entertainment group come on P visas. Foreign nationals working in religious vocations enter on R visas. Foreign nationals also may be temporarily admitted to the United States for employment-related purposes under other categories, including the B-1 visa for business visitors, the E visa for treaty traders and investors, J and Q visas for cultural exchange, and the L visa for intracompany transfers.\nThe issuances of temporary employment-based visas rose steadily over the past decade, then dropped in FY2009 ( Figure 7 ). In FY2009, there were 1.1 million temporary employment-based visas issued, down from a high of 1.3 million in FY2007. The number of visas issued to H and NAFTA workers dropped by 33.4% from FY2007 to FY2009. The E and L visas fell by 18.7%, and the J and Q visas decreased by 8.1%. Only the numbers of O and P visas held steady, dipping only by 1.7%.", "The Congress is faced with strategic questions of whether to continue to build on incremental reforms of specific elements of immigration (among which is increasing skilled migration and reforming temporary worker visas) or whether to comprehensively reform the law.\nA variety of constituencies are advocating a significant reallocation from the family-based to the employment-based visa categories or a substantial increase in legal immigration to meet a growing demand from families and employers in the United States for visas. Against these competing priorities for increased immigration are those who offer options to scale back immigration levels, with options that would confine employment-based LPRs to exceptional, extraordinary, or outstanding individuals.\nSome business people express concern that a scarcity of labor in certain sectors may curtail the pace of economic growth at a time when encouraging economic growth is paramount. A leading legislative response to skills mismatches is to increase the supply of temporary foreign workers (rather than importing permanent workers). While the demand for more skilled and highly trained foreign workers garners much of the attention (e.g., lifting the ceiling on H-1B visas or set-asides of visas for foreign graduates of U.S. universities), pressure to increase unskilled temporary foreign workers, commonly referred to as guest workers, also remains. Those opposing increases in temporary workers assert that there is no compelling evidence of labor shortages and cite the growing rate of unemployment. Opponents argue that continuing temporary foreign workers programs during an economic recession has a deleterious effect on salaries, compensation, and working conditions of U.S. workers. More recently, some are suggesting that temporary foreign worker visas should be scaled back or placed in moratorium during periods of economic recession.\nAs the United States rises out of an economic recession, attention is again focused on recruitment of the \"best and the brightest\" people to the United States. Once a debate limited to the H-1B visas, the global competition for foreign workers with advanced degrees and high-level skills has broadened to encompass more sweeping revisions to the permanent employment-based preferences. Some promote amending the INA to create expedited pathways for foreign students earning degrees at U.S. universities in the fields of the sciences, technology, engineering, or math (STEM) to become LPRs without an assessment of labor markets needs. However, Michael Teitelbaum, vice president of the Alfred P. Sloan Foundation (which funds basic scientific, economic and civic research) has said over the past few years that there are \"substantially more scientists and engineers\" graduating from U.S. universities than can find attractive jobs. A fundamental question is whether the current labor market tests to hire foreign workers offer an efficacious response to these competing perspectives on the international race for talent.\nSome observers, which notably includes a panel of international experts assembled by the Transatlantic Council on Migration, advocate what they refer to as more \"flexible\" and \"forward-thinking\" approaches to bringing foreign workers into the labor market. These options are typically based upon the human capital needs of the national economy rather than the hiring preferences of individual employers. Other policy research groups, such as the Directorate for Science, Technology, and Industry of the International Organization for Economic Cooperation and Development (OECD), maintain that immigration laws and labor market protections are not the most decisive factors for talented migrants.\nVarious factors contribute to the flows of the highly skilled. In addition to economic incentives, such as opportunities for better pay and career advancement and access to better research funding, mobile talent also seeks higher quality research infrastructure, the opportunity to work with \"star\" scientists and more freedom to debate.\nThe United States arguably fares quite well on these factors. Labor markets tests that employers must pass in order to hire foreign workers are arguably aimed at curbing employer abuses rather than influencing the migration decisions of foreign workers.", "Even though a sufficient number of people might be educated and trained to meet the needs of the United States in the 21 st century, economic growth and progress depends on how those human resources actually are employed and whether the results contribute both to economic growth and to the defense industrial and technological base. In this section, we address policies related to investing in research, and expanding international science partnerships. We also examine two specific national security issues that rely on research, development, and innovation. These are energy independence and space capabilities.", "President Obama's National Security Strategy contends that research and development (R&D) is central to \"our broader national capacity,\" and that investments in research will secure \"substantial economic and national security advantage\" for the United States. The document links U.S. strength in basic and applied sciences to addressing national challenges such as the H1N1 influenza outbreak and the development of renewable energy technologies. The President asserts that he seeks to reverse \"the decades-long decline in federal funding for research,\" and claims credit for the single largest infusion to basic science research in American history. Additionally, the President asserts the importance of maintaining the historic strength of United States in transforming science and technology into engineering and products. Recognizing the limitations of government in this regard, the strategy is to support and create incentives to encourage private initiatives.", "It is widely believed among experts that U.S. industrial competitiveness, economic growth, and job creation depend heavily on the nation's scientific and technological prowess. There is general consensus among economists that advances in knowledge (largely, technological innovation) have been responsible for at least half of long-term economic growth among advanced economies, which in turn is responsible for employment growth and increases in standards of living. Recognizing this linkage, governments around the world have increased public funding for R&D and enacted policies to stimulate increased private sector R&D investment. Total R&D funding of Organization for Economic Cooperation and Development (OECD) member countries, largely advanced industrial nations, rose 79% between 1997 and 2007; among developing countries the growth has been markedly higher during the same period (e.g., roughly doubling in Argentina and Romania; tripling in Russia, Israel, Singapore, and Chinese Taipei (Taiwan); and rising more than sevenfold in China).\nThe United States leads the world in both total national R&D and in government R&D funding. The U.S. federal government accounts for approximately one-third of the world's government-funded R&D and substantially more than any other nation—more than four times as much as either of the next two largest funders, Japan and China. In 2007, U.S. government funding for R&D was $105.6 billion in current purchasing power parity. And while industry provides the vast majority of funding for development, the federal government leads in the funding of basic research (57%) and plays a substantial role in funding applied research (32%). Funding for basic and applied research provides a fundamental knowledge base that supports technological innovation and the development of new and improved product and services.\nThrough its investments, the federal government supports a broad range of scientific and engineering R&D. Its purposes include addressing specific concerns, such as national defense, health, safety, the environment, and energy security; advancing knowledge generally; developing the scientific and engineering workforce; and strengthening U.S. innovation and competitiveness in the global economy. Most of the R&D funded by the Federal government is performed in support of the unique missions of the funding agencies. Four mission agencies—the Department of Defense, National Institutes of Health, NASA, and Department of Energy—account for more than 90% of federal R&D funding.\nThere has been broad, long-standing support across party lines for a strong federal role in providing funding for basic and applied research and creating a policy environment that facilitates innovation. Vannevar Bush's report, Science: The Endless Frontier , to President Harry S Truman is widely viewed as establishing the framework for federal research investment after World War II. At the time, federal R&D was focused largely on national defense (81% in 1949). The report responded to a letter from President Franklin D. Roosevelt seeking recommendations on how research and the research infrastructure established to support America's war effort could be \"profitably employed in times of peace.\"\nIn his response, Vannevar Bush laid out a framework that reaffirmed the essential role of scientific progress in meeting the nation's economic, national security, and social needs; the propriety of the federal role in supporting research; and the need to preserve freedom of inquiry among academic researchers. Specifically, the report asserted \"The Federal Government should accept new responsibilities for promoting the creation of new scientific knowledge and the development of scientific talent in our youth.\" A key recommendation of the report led to the formation of the National Science Foundation in 1950 to undertake these responsibilities.\nWhile World War II drove the first major wave of federal R&D funding, subsequent national challenges—the Cold War, Space Race, environmental protection and stewardship, the energy crisis of the early 1970s, and improving health and defeating diseases—have driven increases in and changes to the composition of the federal R&D budget. In the late 1970s, U.S. industrial competitiveness and technological leadership rose to national prominence with the ascent of Japan as a formidable industrial competitor. More recently, concerns have risen over the rapid emergence of China and India, and their rising scientific and technological capabilities, as well as over competitive pressures from other industrialized nations, both those with broad capabilities and those with expertise in niche fields.", "\"Investing in research\" has been a long-standing federal policy that has enjoyed widespread support across the political spectrum, broadly speaking. A testament to this consensus is the growth in the federal R&D investment over the past 60 years: to wit, federal outlays for R&D were more than 20 times higher in 2009 than in 1949, in constant dollars.\nNevertheless, there have been and continue to be contentious issues related to the federal R&D investment. With respect to the appropriate size of the investment, many have argued for substantial increases to address national economic and societal needs. Emblematic of the consensus for increased investment, President Obama, President George W. Bush, and Congress have all sought to double funding over 7 to 10 years for selected agencies that conduct physical sciences and engineering research. In addition, President Obama has set a national goal for R&D investment of 3% of the nation's gross domestic product which would likely require substantial increases in both government and industrial funding. However, even among those who are generally supportive of a strong federal role in research, some have opposed this accelerated growth due to current economic conditions and budget pressures. Others have expressed concerns about the rapid pace of development in emerging areas of science and technology that offer the potential for revolutionary advances, such as nanotechnology and biotechnology, due to the potential for unintended societal effects, including unknown environmental, health, and safety hazards and risks. Some holding this perspective have called for slowing the pace of research until such concerns have been addressed; others have called for a moratorium.\nOther areas of divergent views include how to allocate funds among: basic research, applied research, and development; scientific and engineering disciplines and multidisciplinary research; \"Big Science\" projects requiring substantial and sustained investments and smaller, investigator-driven research projects; universities, companies, non-academic research organizations, and federal laboratories; low-risk, incremental advances in knowledge and high risk, high reward transformational research; mission-related research and general advancement of knowledge; and well-established universities and less well-established ones. Still other areas of disagreement relate to whether to seek to achieve greater geographical balance in federal R&D funding, whether to pursue research focused on addressing problems whose existence is in dispute (e.g., climate change), and whether to coordinate research activities with other nations and under what conditions.\nAn ongoing issue of great contention is the use of federal research funding to advance technology with commercial applications, especially with respect to the funding of for-profit companies. One set of arguments in opposition to such efforts, which generally characterize such activities as \"industrial policy,\" includes the inability and/or inefficiency of the government in making such decisions; the supplanting of the judgment of the market and dampening of market signals; and the role of politics in the selection of technologies, companies, and/or industries for favored treatment. A second thrust in opposition to this type of funding, generally referred to as the \"corporate welfare\" argument, is that such an approach forces individual taxpayers to subsidize companies (including sometimes highly profitable, large, multinational corporations) for the benefit of shareholders.\nPresident Obama's R&D funding record with respect to regular annual appropriations has been one of small increases (and perhaps cuts when adjusted for current dollars). The President's FY2010 R&D request was 0.4% above the estimated FY2009 appropriation; his FY2011 request for R&D was 0.2% greater than the estimated FY2010 appropriation. However, analysis of President Obama's R&D funding record is complicated by the American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ). ARRA provided billions of dollars of R&D funding to multiple agencies, some with the authority to spend it in FY2009 and beyond. Approximately $18.2 million of ARRA R&D funds were allocated for FY2009; the President's FY2011 budget provides no estimate of ARRA R&D funding for FY2010 or beyond. The President's National Security Strategy states that the Administration achieved \"the single largest infusion to basic science research in American history,\" but provides no further details. This statement may refer to the $13.3 billion in FY2009 ARRA funding that the Administration has characterized as research (both basic and applied).\nThe President's National Security Strategy also asserts the need to reverse \"the decades-long decline in federal funding for research.\" However, data from the National Science Foundation and the Office of Management and Budget does not support the existence of such a trend. Table 1 shows compound annual growth rates for federal outlays for R&D and for federal research expenditures for the 10-year, 20-year, and 30-year periods preceding the election of President Obama. The figures are calculated for both current dollars and constant 2000 dollars. In each period, for both R&D and research alone, the compound annual growth rates are positive.\nConcerns about flat or declining federal funding for physical science and engineering research led to calls from leaders in industry and academia to substantially bolster funding. In 2006, President Bush initiated, as part of his American Competitiveness Initiative, an effort to double research funding for the National Science Foundation, the Department of Energy's Office of Science, and the National Institute of Standards and Technology laboratories. These agencies were chosen, in part, because a substantial portion of their research portfolios is focused on the physical science and engineering disciplines. President Obama, in his A Strategy for American Innovation, adopted the same objective and target agencies, proposing agency funding levels in FY2010 and FY2011 toward completing the doubling effort in 2017. The actual FY2010 funding increase for these agencies was 4.3%, below the 7.2% rate required annually to achieve a 10-year doubling.\nThere are also issues related to how effective increases in federal research funding may be in stimulating U.S. economic growth and job creation. First, historically, the time required to conduct basic research and translate the knowledge into new products has been measured in decades. Thus, while these investments may be critical to long-term scientific, technological, and industrial leadership, investments in research are generally unlikely to produce near-term commercial results.\nSecond, the conditions that facilitated the United States' ability to reap the benefits of federal research have changed significantly over time. After World War II, the United States dominated global R&D. As late as 1960, the United States accounted for more than 69% of global R&D; federal funding alone accounted for 45% of global R&D. Accordingly, the R&D investments of the Federal government could drive global technology development pathways, and American companies—as well as the U.S. economy and workers—were generally the first to benefit. Today, the Federal government accounts for about 10% of global R&D, not because the federal investment has declined in absolute terms, but because other public and private investors around the world have grown at a faster pace. As new competitors emerged around the globe, many have been aggressive in accessing the results of the U.S. federal research investment which is largely performed in the open and available to all. Digitization of this research has expanded its accessibility and may have further eroded its unique value to U.S. companies.\nThird, U.S. firms have more options than ever as to where to conduct work and locate production. Thus, even U.S. companies that are successful in translating the knowledge generated by federal research investments into products may opt to conduct related activities—such as design, engineering, manufacturing, and support—in locations outside of the United States. In the post-WWII era, these activities would have been more likely to occur within U.S. borders, creating economic growth and jobs in the U.S. economy.\nWhile federal investment in research may be required for retaining U.S. scientific, technological, and industrial leadership and for generating economic growth and jobs, it may be insufficient in this regard in the absence of other policies affecting the relative attractiveness of the United States for the conduct of innovation, production and related work.", "The 2010 National Security Strategy characterizes a national reluctance to move away from fossil fuels as leading to energy dependence which is likely to undermine both our national security and economic prosperity. The NSS suggests that there is a \"window of opportunity\" available, which the United States could take to become the world leader in clean energy technologies and production. According to the Strategy , if the United States waits, and allows other nations to take the lead, the likely result is that the country will have to import these technologies and products later (possibly from China). The NSS sees multi-faceted benefits to be derived from the clean energy approach, including economic growth and job creation, cutting greenhouse gas emissions, reducing our vulnerability to energy supply disruptions and manipulation, as well as enhanced energy efficiency and other benefits. The NSS recognizes that this fundamental transformation of our energy portfolio will take time, and encourages the use of fuels considered to be \"transitional\" as investment in next-generation clean technologies proceeds.", "The economic infrastructure of the United States is currently structured to run on fossil fuels. Air and ground transportation depend largely on gasoline, diesel, and jet fuel, all derived from crude oil. Electricity generation is largely fueled by coal and natural gas. Home heating is largely dependent directly on natural gas and other fossil fuels, or indirectly through electricity. The industrial sector relies on fossil fuels as a raw material, and to fuel industrial processes. The infrastructure to produce, transport, and deliver these fuels to consumers represents a large capital investment.\nBecause of the linkages between U.S. economic activity and fossil fuel use, volatility in either fuel prices or availability can have consequences for macroeconomic activity, including employment, inflation, growth and the international trade balance. In addition, use of these fuels has been associated with a variety of external costs, such as climate change.\nCrude oil prices have been volatile over the period 2008-2010. The price of oil reached a peak of over $142 per barrel in July 2008, and declined to less than $40 per barrel by January 2009. These price variations represent a more than 70% change in price during a seven-month period. In 2010, oil prices have varied between a low of approximately $70 per barrel and a high of approximately $85 per barrel. In 2010, the United States consumed more than 19 million barrels per day of crude oil-based products with about 30% of the crude oil produced domestically and the remainder imported.\nAlthough the United States has not been subject to supply disruptions over the 2008-2010 period, economic growth in China, India, and other emerging nations has resulted in tight market conditions with little available world excess capacity that in the past has tended to stabilize the market. High oil prices, in conjunction with a large import requirement have contributed to the U.S. international trade deficit, and represent an economic cost to the nation, even though supply disruptions have not recently been costly to the economy.\nSince the 1970s, oil markets have been subject to potential supply disruption because of international political problems. For example, Nigerian rebels periodically disrupt Niger delta oil shipments. The issue of Iran's possible development of nuclear weapons threatens to disrupt oil supplies from the Persian Gulf should military conflict develop. The uncertain security conditions in Iraq have impeded that nation from developing its full oil export capabilities.\nCoal production is almost entirely domestically sourced in the United States. Prices have been variable, but do not exhibit the same degree of volatility as crude oil prices. Coal has become associated with the problem of controlling carbon dioxide gas emissions and the issue of climate change.\nNatural gas is viewed by many analysts as the key transition fuel in the NSS's vision of a renewable energy future. The economic conditions in the natural gas market are favorable for consumers, but they are uncertain for producers. New discoveries of shale containing natural gas, and other non-conventional supply sources, along with economically viable technologies for recovery, have increased domestic production and reserves. Producers of natural gas have faced weakening prices as supply has increased without large observed increases in demand. Historically, the natural gas market has generated cycles, with periods of low prices and ample supplies followed by much higher prices and reduced availability.", "Transition of the U.S. energy economy to a clean energy, renewable fuels portfolio is likely to be a large project with economic gains and losses, requiring capital investments, a long lead time, and a fundamental reassessment of many products and infrastructure elements. Even with the availability of government-financed research and technology development and the environmental factors envisaged in the NSS, the transition will ultimately be subject to a market test appraising the economic viability of new investments and energy sources as they compete against fossil fuel alternatives.\nA key factor in assessing the likelihood of an energy transition as proposed in the NSS is the substitutability of energy sources in a wide variety of final uses. For clean energy technologies to be adapted, it would be beneficial if the transition could be accomplished maximizing the use of existing infrastructure and final consumption goods. Within any given energy sector, the less substitutable and less able to use existing infrastructure a new energy source is, the more costly and time consuming the transition is likely to be.\nFor example, in the automobile and light truck transportation sector, which accounts for almost half of U.S. crude oil consumption, gasoline is the key fuel. A large infrastructure of refineries, pipelines, and service stations exist to supply product to the market. Recently, ethanol has been added to gasoline, requiring separate handling facilities, but still utilizing the same final consumer distribution system. Replacement of gasoline, either by a transition fuel, [natural gas based fuels are already being proposed to replace diesel fuel in trucks], would require a new, large-scale distribution system providing convenient access for consumers, and running parallel to the existing system. A later transition, to perhaps an electricity-based system, would make the existing oil-based infrastructure largely obsolete. On the consumer side, only limited possibilities for the conversion of the existing fleet of vehicles to alternative fuels exist. Due to the large automobile fleet and its relatively slow turn-over, it likely to take a number of years for the gasoline powered automobile/light truck fleet to be transformed to renewable energy based fuels.\nElectricity generation could use the existing infrastructure as long as energy transition implies simply burning different fuels at the existing centralized generating plants. The barriers in that case are largely a national policy choice: should the United States draw on its large coal reserves, or cut back on domestic mining with the attendant implications for employment in the that sector? A more decentralized electric generating system, perhaps based on solar energy, would, as in the case of the oil industry, make capital investments in generating facilities largely redundant.\nJobs will very likely be created in both the transition to, and the achievement of a clean, renewable energy future. However, it is also likely that jobs will be lost in the traditional energy industries. Whether these gains and losses will offset each other, or favor one side or the other is unknown. Also unknown is whether the new jobs created will be higher or lower paying jobs than the ones they supplant. In addition, the skill requirements and locations of the new and old energy industry jobs will likely differ, making it less likely that actual individuals who lose a job will be able to find a job in the clean energy industry.\nTo the extent that clean, renewable energy sources also implies domestic sourcing, key cost elements may decline. The cost of imported oil and petroleum products attained a yearly historic peak of over $400 billion in 2008, and is projected to reach approximately $181 billion in 2010. Reducing gasoline usage will decrease these totals. In addition, some analysts tie a share of the U.S. defense budget to securing oil supplies. To the extent that reducing, or doing away with, this responsibility scales back the required military force, the actual savings may exceed the reduced cost of oil imports.\nA key benefit from the transformation of the energy economy to cleaner fuels is likely to be the reduction in carbon emissions. Fossil fuels, to one degree or another, all necessarily emit carbon. The carbon can be captured, and other pollutants can be treated, but all at a cost. Using fuels that do not emit significant amounts of carbon while achieving similar levels of performance is a more direct way to confront climate change issues.\nPast experience with government leadership in energy transition has not resulted in the desired level of success. Subsidies for shale oil, solar energy, and other alternatives have so far generally not resulted in products that met the market test. Perhaps the consumer outlook concerning the broad scope of costs associated with petroleum use, beyond the high out-of-pocket costs will create an environment in which a transition might be more feasible.", "The 2010 NSS states that U.S. space capabilities underpin global commerce and scientific achievements and bolster our national security strengths and those of our allies and partners. These points were detailed earlier in the Obama Administration's National Space Policy (NSP), issued in June 2010. To maintain these benefits to global commerce and scientific achievement, the NSS calls for investments in space technology R&D, strengthening the space industrial base, and collaboration with universities to encourage students to pursue space-related careers.\nFor the first two of these goals related to space technology R&D and the space industrial base, the NSP directs federal departments and agencies to strengthen U.S. leadership in space-related science, technology, and industry by conducting basic and applied research, encouraging the commercial space sector, and ensuring the availability of space-related industrial capabilities. Specifically, it directs the Secretary of Defense, the Director of National Intelligence, and others to \"reinvigorate U.S. leadership by promoting technology development, improving industrial capacity, and maintaining a robust supplier base.\" The goals of investing in technology R&D and strengthening the industrial base are also consistent with proposals in the Administration's FY2010 budget for the National Aeronautics and Space Administration (NASA), such as increased NASA funding for space technology development rather than specific flight missions, and a new initiative to help industry develop commercial crew launch services.\nBecause significant national security capabilities are provided by commercial space assets, some national security analysts have expressed concern over the state of the U.S. space launch industry and other factors affecting access to space for commercial satellites. The NSS does not specifically mention commercial access to space, other than its general references to space capabilities and the space industrial base. Although the NSP mentions this issue, analysts have criticized that policy document for lacking an \"executable strategy\" to address the problem. This is not a new concern, however. The same analysts note that the NSP's commercial space guidelines are \"almost verbatim\" those of the previous Administration's policy.\nThe third space goal articulated by the NSS, encouraging students to pursue space-related careers, is less clearly aligned with the new NSP. The National Space Policy directs departments and agencies to \"develop and retain space professionals,\" but its discussion of this point focuses mostly on the current space workforce. Although it mentions public-private partnerships to foster education in science, technology, engineering, and mathematics (STEM), it makes no reference to universities. At present, congressional attention to space workforce policy is focused primarily on the end of the space shuttle program, the proposed termination of NASA's Constellation program, and the impact of these changes on the existing workforce. An Administration budget amendment in June 2010 proposed transferring $100 million from NASA to the Departments of Commerce and Labor \"to spur regional economic growth and job creation along the Florida Space Coast and other affected regions.\" In light of these concerns about the future of the existing space workforce, some analysts might question the focus in the NSS on encouraging additional university students to choose space-related careers.\nThe NSS additionally identifies U.S. space capabilities as critical to U.S. national security interests. In order to promote security and stability in space, the NSS also states that the United States will pursue activities consistent with the inherent right of self-defense, deepen cooperation with allies and friends, and work with all nations toward the responsible and peaceful uses of space. These objectives were largely in place from the George W. Bush and even earlier Bill Clinton era space policies, although most analysts argue that the tone of the Obama NSP stresses greater international cooperation on all these issues. The Obama Administration reaffirmed long-standing policy that the United States would employ a variety of measures to assure the use of space for all responsible parties and, consistent with the right of self-defense, continue to protect U.S. assets and interests in space as essential to U.S. national security interests.\nSome of the activities identified in the new NSP designed to strengthen stability in space include pursuing domestic and international measures to promote safe and responsible operations in space, improving information collection and sharing to avoid collisions with objects in space, seeking ways to enhance the protection of critical space and information systems, and strengthening measures to mitigate orbital debris. Many of these efforts are in place or underway throughout the U.S. national security space environment. In particular, the Administration is looking to lead continued development and adoption of international and industry standards designed to minimize orbital debris, such as through the UN Space Debris Mitigation Guidelines. Additionally, the NSP states the United States will continue its own efforts to conduct research, and develop technologies and techniques to deal with the challenges and threats to U.S. national security assets posed by orbital debris. Finally, the Administration is looking to enhance collaboration even further between the Department of Defense, the intelligence community, NASA and other U.S. agencies, as well as industry and foreign nations to improve global understanding of the threat to all in space posed by orbital debris and to seek ways to deal with that problem.\nAnother emphasis is the Obama Administration's stated interest in space-related arms control measures that it argues would be equitable, effectively verifiable, and enhance the national security of the United States and its allies. Arguably, this differs from the Bush Administration approach that stated the United States would not accept limitations on U.S. freedom of action in space. Beyond some potential arms control measures such as those mentioned above regarding orbital debris, there does not appear to be any broad or overarching arms control measure being seriously considered by the Administration. In fact, despite some stated Administration support for a proposed UN Prevention of an Arms Race in Space agreement, for example, the Obama Administration has refrained from voting for such resolutions when the opportunity has presented itself. Neither has the Administration indicated specifically whether it will support the space arms control treaty introduced by Russia and China at the 2008 Conference on Disarmament. Some have suggested instead that various 'codes of conduct' or 'rules of the road' type agreements might be worth pursuing and possible in the current environment.", "The U.S. economy and national security depends greatly on what happens in countries and economies in the world at large and on the financial impact of trillions of dollars that flow through international foreign exchange markets each day. The Global Financial Crisis demonstrated strongly how interconnected the economies of the world have become and how quickly conditions in one market can be transmitted across the U.S. economy and across the oceans to Europe, Asia, and Latin America. Imbalances in trade and capital flows, undervalued exchange rates, and government intervention into markets all can affect wealth accumulation, economic strength, and military power.\nU.S. national security also is affected by perceptions of the United States in other countries and by ideas and philosophies that drive policy in nations around the world. Some analysts have identified the clash of civilizations as a key source of conflict, while threats posed by non-state, militant Islam terrorists command more and more military, diplomatic, and law enforcement resources. U.S. security may be enhanced by targeting causes of unrest abroad, particularly poverty, human rights abuses, and dictatorial governments. Improving human rights, especially the status of women, has been shown to go hand-in-hand with the development of democracy. The nexus between democracy and peace, though frayed, still seems to exist, even though experience has shown that democracy cannot simply be parachuted into a country without supporting cultural and political institutions. In these respects, U.S. economic assistance and diplomatic outreach come into play.\nIn this section of this report, we address the international economic side of national security by focusing on six large issues. They are instability in the global economy, savings and exports, opening markets abroad, increasing domestic demand in China, building cooperative arrangements with international partners, deterring threats to the international financial system, and human rights and democracy.", "The global financial crisis of 2008-2009 left such a path of destruction that the leading nations of the world have vowed to take measures to preclude a repeat of the disaster. The financial crisis also demonstrated the close connections and interdependence among world financial markets, national economic activity, the well being of people, and the balance sheets of governments, businesses, and households. It also highlighted the systemic failures that can occur when regulations do not account for new financial instruments or practices and oversight becomes lax. It also exposed the dangers existent when financial firms package and trade risky assets and provide insurance against those risks without adequate capital reserves.\nThe costs of the financial crisis have been enormous. These include a synchronous global recession that spread from the United States to Europe and Asia, a global increase in unemployment of an estimated 34 million persons between 2007 and 2009 (including more than 7 million in the United States), a loss of nearly one-third of global wealth (with some recovery in securities markets since 2008), and widespread disruption caused by home foreclosures, bankruptcies, and budgets in deficit at both state and central government levels.\nIn 2009, Dennis Blair, the Director of U.S. National Intelligence, stated that the global financial crisis and its geopolitical implications pose, \"the primary near-term security concern of the United States.\" In addition, he said, \"The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests.\"\nThe United States and other leading countries of the world have taken many measures, and are considering additional ones, aimed at reforming their respective financial sectors and strengthening international financial institutions. Although the recession officially has ended, the industrialized economies still are faced with growth rates too low to generate a sufficient number of jobs to lower the rate of unemployment and must contend with severe constraints on their ability to pursue stimulative monetary and fiscal policies. The debt crisis in Greece in the spring of 2010 followed by a similar crisis in Ireland in the fall of 2010 again roiled financial markets. They exposed the fragility of the economic recovery in the northern industrialized countries and demonstrated how quickly instability can be transmitted from one country to another.\nThe contagion and simultaneous downturn in major economies of the world can be seen in Figure 7 . Even China experienced a slowdown in growth, although it did not fall into recession. This financial crisis was caused primarily by a bubble in housing prices, excess borrowing and leveraging by almost all sectors of the economy, and arguably insufficient regulation and oversight of new financial instruments and practices.\nThe process for coping with the crisis by countries across the globe has been manifest in four basic phases. The first has been intervention to contain the contagion and restore confidence in the system. The second has been coping with the secondary effects of the crisis, particularly the global recession and flight of capital from countries in emerging markets and elsewhere that have been affected by the crisis. The third phase has been to make changes in the financial system to reduce risk and prevent future crises. The fourth is dealing with political, social, and national security effects of the financial turmoil. For Europe, the fear is that the sovereign debt crises in Greece and Ireland may put those countries back into phase one.\nThe role for Congress in response to this financial crisis is multifaceted. While the initial focus was on combating the recession and on regulatory reform, the ultimate issue seems to be how to ensure the smooth and efficient functioning of financial markets to promote the general well-being of the country while protecting taxpayer interests and facilitating business operations without creating a moral hazard. In addition to preventing future crises through legislative, oversight, and domestic regulatory functions, Congress also provides funds and ground rules for economic stabilization and rescue packages and informs the public through hearings and other means. Congress also plays a role in measures to reform the international financial system, in recapitalizing international financial institutions, such as the International Monetary Fund, in replenishing funds for poverty reduction arms of the international development banks, and in providing economic and humanitarian assistance to countries in need.\nIn 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act and several other measures dealing with financial reform and amelioration of the impact of the recession. These measures sought to address issues such systemic risk; Federal Reserve emergency authority; resolution (bankruptcy) regime for failing firms; securitization and shadow banking (banking functions being done by non-banks); consolidation of bank supervision; consumer financial protection; derivatives; credit rating agencies; investor protection; hedge funds; executive compensation and corporate governance; insurance; extension of unemployment benefits; cash for clunkers (automobiles); mortgages; and international financial institutions.\nAt the international level, the G-20 (Group of Twenty) and the Financial Stability Board have been both coordinating reforms and providing an opportunity for heads of state to show their support for actions. The International Monetary Fund also has increased its focus on global systemic stability, while the World Bank has worked to alleviate poverty around the world, provide trade and microfinance, and reform its governance to increase representation for emerging market economies.\nSome of the issues to watch that are related to traditional national security include political turmoil as unemployment rates remain high and anti-incumbency sentiments intensify; attempts by countries to shift the burden of recession to trading partners by protecting domestic markets from imports or manipulating exchange rates to favor their exports; and severe fiscal restraints on central governments that cause them to reduce support for multinational counter-insurgency or peace keeping efforts.\nAn issue that increasingly is likely to impinge on U.S. national security is the enhanced presence of China in the global economy. China emerged from the financial crisis even stronger relative to countries in neighboring Asia, North America, and in Europe. With over $2 trillion in foreign exchange reserves, a growth rate of around 9%, a banking system relatively unharmed by the bursting of the mortgage bubble, virtually no national debt, a currency still tied primarily to the dollar, and confident that its hybrid, state-led model of development is superior to that of the West, China has become more self-assured in international affairs and more aggressive in its military activities.", "The 2010 NSS makes a direct connection between the rate of saving in the U.S. economy as a whole and the growth of exports as a key component in job creation and economic security. The NSS states that reducing the imbalance between U.S. consumers buying and borrowing and other countries exporting and accumulating U.S. claims means \"saving more and spending less, reforming our financial system, and reducing our long-term budget deficit.\" As a result of these changes, the NSS concludes that the nation will experience, \"a greater emphasis on exports that we can build, produce, and sell all over the world, with the goal of doubling U.S. exports by 2014.\" The goal of this renewed emphasis on exports, according to the NSS, is that of an employment strategy, \"because higher exports will support millions of well-paying American jobs….\"", "The financial crisis of 2008-2009 spurred most advanced economies to adopt fiscal stimulus measures to shore up their economies and prevent a sharp rise in the rate of unemployment. While these efforts averted an economic free-fall, the large increase in government debts has rattled international capital markets and sparked calls for a major rebalancing in saving and consumption among the major economies. Financial turmoil in Greece, Ireland, and in other European countries has placed increased pressure on national governments to adopt austerity measures to satisfy credit markets. At the same time, most advanced economies are navigating a fine line between fiscal austerity, on one hand, and maintaining public support to forestall a slip back into recession, on the other. Given this clash of policies, some governments are promoting exports to spur their economies instead of relying on fiscal stimulus measures to boost domestic consumption. It is impossible, however, for all governments to increase their exports in order to raise their rate of economic growth, since exports imply that some countries must import. Also, the determination to increase exports has increased pressure on exchange rates and raised concerns over the prospects that nations will engage in competitive devaluations of their currency to make their exports more price competitive in international markets.", "The relationship between exports, employment, and national savings is complicated. Trade and its impact on labor and wages in the economy generates much debate. On one hand, there are those who extol the benefits of free trade and argue in favor of a free and open trading system. On the other hand, some argue that foreign trade, principally imports, destroys jobs, undermines communities, and reduces the standard of living for many Americans.\nBasically, trade represents an exchange of goods or services between two or more willing parties. Economic theory holds that such trade allows nations to use their resources in the most efficient way possible in order to maximize the total amount of goods and services that are available to their citizens, a common definition of a nation's standard of living. As a result of this maximization process, it is thought that nations trade because it serves their national interests. In the same way that individuals gain by specializing in activities that use their strongest skills and then trade with others, nations specialize in the production of certain goods and then trade with other nations for the goods they do not produce. Essentially, nations export in order to import goods and services they do not produce, or cannot produce efficiently. Most economists maintain that trade increases total welfare by spurring changes in the productive processes of the economy that make production more efficient and it increases the amount and variety of goods and services that are available to consumers. Economic theory argues, however, that the total number of jobs in the economy and the level of wages are determined primarily by the macroeconomic environment and not through trade, although trade can add to the rewards for labor, if that is a nation's abundant factor of production. This means, though, that for an economy such as the United States, trade alone is not seen as determining the level of wages, the level of output, or the level of employment and, therefore, does not serve well as a jobs creation program.\nIn the current highly globalized economy, trade has come to represent a complex set of transactions. Nations not only trade goods and services, but they also trade a broad range of financial products. In addition, liberalized capital flows and floating exchange rates have greatly expanded the amount of capital that flows between countries. As a result of these financial transactions, nations that have a surplus of saving can lend that excess saving to nations with deficient saving, closely linking national economies. In the U.S. economy, foreign capital inflows play an important role by bridging the gap between domestic supplies of and demand for capital. Capital inflows help keep U.S. interest rates below the level they would reach without them, and they allow the nation to spend beyond its current output, including financing its trade deficit.\nAnother aspect of capital mobility and capital inflows is the impact such capital flows have on the international exchange value of the dollar. Demand for U.S. assets, such as financial securities, translates into demand for the dollar, since U.S. securities are denominated in dollars. As demand for the dollar rises or falls according to overall demand for dollar-denominated assets, the value of the dollar changes. These exchange rate changes, in turn, have secondary effects on the prices of U.S. and foreign goods, which tend to alter the U.S. trade balance. The prominent role of the dollar means that the exchange value of the dollar often reacts to economic and political news and events across national borders. While the global role of the dollar helps facilitate a broad range of international economic and financial activities, it also means that the dollar's exchange value can vary greatly on a daily or weekly basis as it is buffeted by international events. A triennial survey of the world's leading central banks conducted by the Bank for International Settlements in April 2010 indicates that the daily trading of foreign currencies through traditional foreign exchange markets totals $4.0 trillion, up from the $3.3 trillion a day reported in the previous survey conducted in 2007. In addition to the traditional foreign exchange market, the over-the-counter (OTC) foreign exchange derivatives market reported that daily turnover of interest rate and non-traditional foreign exchange derivatives contracts reached $2.5 trillion in April 2010. The combined amount of $6.5 trillion for daily foreign exchange trading in the traditional and OTC markets is nearly half the size of the annual U.S. gross domestic product (GDP) and more than three times the annual amount of U.S. exports of goods and services. The data also indicate that 85% of the global foreign exchange turnover is in U.S. dollars.\nIncreasing the rate of saving in the U.S. economy can be supported by any number of policy objectives, but it is not necessarily a path to a higher level of employment. By increasing the amount of domestic saving in the U.S. economy relative to the level of demand for those funds, the economy would be less reliant on foreign capital inflows. In turn, a lower level of demand for foreign capital would lower demand for the dollar, thereby reducing pressure on the international exchange value of the dollar. As the dollar would weaken in international markets, U.S. exports would become more price competitive, which would tend to shift production and employment in the economy towards the production of export goods. Such a shift in employment most likely would not add to the total number of jobs in the economy, but would represent a shifting of the existing jobs toward the export goods sectors. Increasing saving in the economy and reducing the inflow of foreign funds may also ease the concerns of those who argue that the exposure to foreign holdings of U.S. assets increases the overall risks to the economy should foreign investors decide to withdraw from the U.S. financial markets for political or economic reasons.", "The 2010 National Security Strategy states the need for greater domestic demand abroad, especially in some emerging and developing countries, in order to help achieve the goal of more balanced global economic growth and to generate new opportunities for U.S. producers of goods and services. Such rebalancing is also considered critical to preventing a repeat of the global economic crisis that was largely sparked by global imbalances in savings, investment, and trade flows. In particular, nations with high savings rates (which are especially concentrated in Asia) are seen as needing to lessen their reliance on exporting for GDP growth and instead rely more on domestic consumption.", "The largest key to generating greater domestic demand abroad lies in China. As the world's most populous nation, second largest economy, biggest holder of foreign exchange reserves, and largest merchandise exporter, China plays a central role in the goal of achieving more balanced economic growth and creating new sources of external demand for the U.S. economy and for U.S. goods and services. Chinese economic policies are viewed by many as a significant cause of the global imbalances.\nTo illustrate:\nGross savings are the total level of domestic savings, including private, corporate, and government. Savings represents income that is not consumed or spent by businesses. Over the past several years, the United States has maintained one of the world's lowest gross savings rates (i.e., total national savings as a percent of GDP), while China has maintained one of the world's highest national savings rates. From 1990 to 2009, U.S. gross national savings as a percent of GDP declined from 13.5% to 8.7%, while China's rose from 37.8% to 50.5%. The United States does not save enough to fund its investment needs and must borrow from abroad, while China has excess savings relative to its investment needs. In 2008, the ratio of U.S. gross domestic savings to gross investment was 66.9%, the lowest among the world's major economies. On the other hand, the ratio for China was 122.2%, one of highest among major economies. Nations that do not save enough to meet domestic investment run current account deficits and those that save more than they need for domestic investment run current account surpluses. In nominal dollar terms, the United States had the world's largest current account deficit at $706 billion in 2008, while China had the world's largest current account surplus at $426 billion. These balances were also significant as a share of GDP: 9.6% for China and -4.9% for the United States. Until very recently, domestic private consumption has been the dominant contributor to U.S. GDP growth. In 2008, private consumption as a percent of GDP was 70%, the highest among the major world economies. Private consumption as a percent of GDP for China was 35.3%, among the world's lowest. Analysis by the International Monetary Fund estimated that fixed investment related to tradable goods plus net exports together accounted for over 60% of China's GDP growth from 2001 to 2008, (up from 40% from 1990 to 2000). This was significantly higher than that in the G-7 countries (16%), the euro area (30%) and the rest of Asia (35%).\nMany economists contend that China's economic policies have favored sectors producing tradable goods at the expense of other domestic sectors, which led to over-investment in many industries and suppressed domestic consumption. For example, China's central bank heavily intervenes in foreign exchange markets to limit the appreciation of its currency, the renminbi (RMB) or yuan against the dollar and other major currencies. This policy makes Chinese exports cheaper, and foreign imports into China more expensive than they would be if market forces determined the exchange rate of the RMB. Such policies have led China to become the world's largest holder of foreign exchange reserves at $2.5 trillion through June 2010, a large share of which (some estimate around 70%) is in U.S. dollar assets. Rather than just hold onto dollars that earn no interest, China has invested a large share of these holdings in U.S. securities, especially U.S. Treasury securities which are used to fund U.S. budget deficits. China is the largest holder of U.S. Treasury securities, estimated at $844 billion as of June 2010. Many analysts contend that Chinese large-scale investment in the United States contributed to artificially low real U.S. interest rates that in turn led to the U.S. housing bubble and subsequent global financial crisis and economic slowdown.", "China's economy was hit hard by the global economic slowdown, especially its export sector where over 20 million people were estimated by the government to have been laid off. The Chinese government responded with a $586 billion economic stimulus program that was largely focused on infrastructure development as well as loose monetary policies to boost bank lending in order to boost domestic demand. These policies appear to have been successful in the short-run. While many of the world's largest economies fell into recession in 2009, China's was able to maintain fairly healthy economic growth, with real GDP growth at 9.1% in 2009 (although down from 13% in 2007) and an estimated 10.1% in 2010.\nChinese officials have stated that these measures represent a long-term commitment by the government to rely more on domestic consumption as a source of GDP growth and less on exporting. It has stated plans to further improve infrastructure, boost education spending, improve energy efficiency and reduce pollution, and develop a comprehensive social safety net, For example, in April 2009, the government pledged to implement a three-year, $124.4 billion, plan to begin the establishment of universal health care plan to be in place by 2020. However, some remain skeptical of China's willingness to eliminate its export-oriented economic policies. For example, in June 2010, the Chinese government announced it would allow its currency to gradually appreciate against the dollar and other currencies, a policy that was implemented from July 2005 to July 2008 (when the RMB was allowed to rise by 21% against the dollar) but was halted when the global economic slowdown began in mid-2008. Yet, the RMB has appreciated by only 0.6% from June though August 21, 2010. Some U.S. economists have charged that China's currency policy has forced other Asian economies to try to hold down the value of their currency against the dollar in order to compete against Chinese exports. This in turn, some contend, has diminished U.S. exports and has undermined global economic recovery. China, on the other hand, counters that its imports have risen faster than its exports during the first half of 2010 (year-on-year) and thus contends that Chinese demand is contributing to global economic economy.\nChinese officials insist that their current trade policy is not meant to favor exports over imports but, instead, to foster domestic economic stability. They have expressed concern that abandoning their current policies, especially their effort to keep their currency from appreciating too rapidly, could further weaken their export industries and cause wide-scale layoffs. Chinese officials view economic stability as critical to sustaining political stability.\nChina is currently the third largest U.S. export market. If China were to implement major economic reforms (such as to the banking system, its currency policy, and in terms of lowering trade barriers), it would likely stimulate domestic demand and produce healthy economic growth. Such growth would likely sharply increase Chinese domestic demand for goods and services related to consumption (as opposed to imports that are largely used by the export sector to make finished products), and thus would increase demand for foreign imports. Such policies could lead to significant improvements in Chinese living standards as well as those in the United States (because of increased exports).", "According to the 2010 National Security Strategy , the Obama Administration aims to open foreign markets for U.S. goods and services by negotiating and enforcing multilateral agreements, in the form of \"an ambitious and balanced Doha multilateral trade agreement,\" together with bilateral trade agreements that \"reflect our values and interests,\" and regional arrangements with countries in the Trans-Pacific area. At the same time, according to the statement, the Administration will maintain open U.S. markets to foreign goods and services because they \"force [U.S.] companies and workers to compete and innovate\" and \"at the same time, [have] offered market access crucial to the success of so many countries around the world.\" Open markets will be crucial to U.S. companies and workers, according to the NSS statement, as they strive to compete in an increasingly globalized world. While underscoring the benefits of open markets both abroad and in the United States, the Obama Administration's NSS acknowledges that some workers and firms confront adjustment costs in the face of increased foreign competition and that has undermined confidence in the benefits of trade agreements. In the NSS, the Administration argues that its domestic agenda to promote innovation, infrastructure development, healthcare reform, and education reform would assist workers and firms with the adjustments and help restore public confidence in open markets. The goal to \"open markets to U.S. products and services\" is closely related to the objectives \"to achieve balanced and sustainable growth,\" including the one to \"save more and export more,\" that are discussed elsewhere in this report.", "This NSS objective reflects mainstream economic theory—that open markets promote economic welfare—\"prosperity\"—through more efficient allocation of resources. It also acknowledges that the benefits from more open markets are not distributed evenly—some workers and firms may benefit while others \"lose.\" The objective re-affirms basic U.S. trade policy employed by both Democratic and Republican Administrations since the 1930s. Over the years, this policy has contributed to building a multilateral framework under the aegis of the World Trade Organization (WTO), to liberalize and establish rules to govern trade in manufactured and agricultural goods and in services as well as some trade-related activities, among 153 economies. The policy has also led to the United States forming 11 free trade agreements (FTAs) with 17 trading partner countries.\nAccording to academic research, parties to trade liberalizing blocs and FTAs are less prone to disputes than other states, and hostilities between members are less likely to occur as trade flows rise between them. One study found that heightened commerce is more likely to inhibit conflict between states that belong to the same preferential grouping than between states that do not. The George W. Bush 2006 National Security Strategy stated that free trade agreements encourage countries to enhance the rule of law, fight corruption, and further democratic accountability.\nThe Obama Administration's strategy in gaining market access for U.S. goods and services appears to be three-pronged: (1) to encourage/demand that trading partners fulfill commitments made under the WTO and FTAs to open their markets to U.S. exports; (2) to address outstanding concerns in agreements and negotiations pending from the Bush Administration and move them forward; and (3) to pursue new initiatives.", "During its first year, the Obama Administration's trade policy largely consisted of using U.S. trade laws to secure trading partners' adherence to commitments in multilateral trade agreements and in regional and bilateral trade agreements as a way to open foreign markets for U.S. goods and services and to protect U.S. firms and workers from foreign unfair trade practices. One of the most prominent examples concerned U.S. imports of tires from China. On September 11, 2009, President Obama made a determination under section 421 of the Trade Act of 1974, as amended, that passenger vehicle and truck tires from China were causing or threatening to cause market disruption for U.S. tire producers and ordered additional duties to be imposed on those imports for three years. It was the first time since the enactment of section 421 in 2002, as part of legislation to grant China permanent normal trade relations (PNTR) status, that a President has made such a determination.\nHowever, some U.S. trading partners have charged that the United States has not been fulfilling its WTO obligations because it has not complied with some adverse decisions in the WTO. These include WTO determinations that the U.S. practice of \"zeroing\" in calculating antidumping duties and U.S. subsidies on cotton violate WTO rules and agreements. The WTO has approved the right of trading partners to impose countermeasures, such as increased tariffs, in retaliation for U.S. noncompliance in those cases. Each countermeasure and retaliatory action further distorts international trade and adds to tensions that could spill over into political and security areas.", "The Bush Administration completed negotiations on three FTAs—with Colombia, Panama, and South Korea—which had not received congressional consideration before the end of the Bush Administration. Each of the three FTAs were completed under the terms of the Trade Promotion Authority (TPA) before it expired on June 30, 2007, and therefore would be eligible for expedited (fast-track) congressional consideration. Concerns of some Members about violence against labor union leaders in Colombia, about Panamanian laws that encourage use of that country as a tax haven, and about market access in South Korea for U.S.-made cars and U.S. beef, among other issues, have held up congressional action on these agreements; and, therefore, they remained pending as the Obama Administration began its term.\nDuring its first year, the Obama Administration kept consideration of the pending trade agreements largely on the backburner, as recovery from the effects of the global financial crisis and economic downturn, health care reform and other issues dominated its economic agenda. In an apparent shift in strategy, President Obama, during his January 27, 2010, State of the Union address, expressed the need for the United States to strengthen its trade ties in Asia \"with partners like South Korea\" and also called for doubling of U.S. exports within five years. On June 26, 2010, President Obama announced that he would direct the U.S. Trade Representative, Ambassador Robert Kirk, to work with the South Korean trade minister to resolve outstanding issues on the KORUS FTA by the time President Obama and South Korean President Lee met again in Seoul in November 2010 for the G-20 summit. The President said that he intends \"in the few months\" after the November meeting to present Congress with the implementing legislation for the agreement. The President made the announcement at a joint press conference following his meeting with President Lee prior to the G-20 summit in Toronto. It was the Administration's first public indication of a timeline for consideration of any of the pending FTAs. On December 4, 2010, President Obama announced that U.S. and South Korean negotiators had reached agreement on modifications to the KORUS FTA and that he looked forward to working with Congress and leaders in both parties to approve the pact. The Administration has also expressed intentions to move on the Colombia and Panama FTAs, as outstanding issues are resolved.", "The Trans-Pacific Partnership Agreement (TPP) is a free trade agreement that includes nations on both sides of the Pacific. It currently consists of Brunei, Chile, New Zealand, and Singapore, but the United States, Australia, Peru, and Vietnam have committed to joining and expanding this group. President Bush had formally notified the 110 th Congress towards the end of his second term of his intention to begin negotiations with current and potential TPP member countries. However, U.S. participation did not seriously begin until November 2009 when President Obama committed the United States to engage with the TPP countries in order to construct a comprehensive free trade framework as a model for the 21 st century. The Administration aims to use the TPP to build ties with the Asian-Pacific region but also to create a comprehensive FTA template that would service U.S. economic interests in the 21 st century.", "Views on the value of trade liberalization and trade agreements sharply diverge In general those views reflect the fact that the benefits of trade liberalization are generally diffused throughout the economy, while the costs are concentrated on specific segments of the economy. Some recent opinion surveys suggest ambivalence, and perhaps a growing skepticism, among the American public regarding the impact of trade liberalization on U.S. economic welfare especially as they deal with the effects of the economic downturn. According to these surveys, a shrinking plurality regards trade liberalization in general as good for U.S. economic interests, but a majority believe that trade agreements per se cost American jobs.\nViews on trade liberalization vary among the major U.S. stakeholders in trade policy. In general, the U.S. business community has supported trade agreements, although some import-sensitive industries, such as textiles and apparel, have largely opposed them. The agriculture community largely supports them. U.S. labor in general has been skeptical on trade and has opposed most free trade agreements. Some non-governmental organizations, particularly those that serve poor countries, have opposed trade liberalization, while others view trade liberalization as an avenue to economic growth and development.\nCongress appears to reflect the public's ambivalence on trade policy much of the time. Ambivalence on trade appears to be especially evident in the House of Representatives. Over the years, support in Congress for trade liberalization, by some measures, seems to have declined. Skepticism on trade, especially among Democratic House Members is reflected in H.R. 3012 , the Trade Reform, Accountability, Development, and Employment Act of 2009 (TRADE Act of 2009), introduced in the House on June 24, 2009 and has 147 co-sponsors. The bill calls for a major review of some current FTAs and a halt to future negotiations pending a review of U.S. trade policy.", "The 2010 National Security Strategy views cooperation with international partners as a key component of achieving balanced and sustainable growth. In particular, the NSS emphasizes two areas of cooperation. The first is U.S. support for increased representation of emerging-market countries in the international financial architecture. The second is using U.S. leadership to promote specific goals within the G-20. Generally, cooperation brings benefits but can also be difficult to achieve. Ad hoc planning, voluntary (i.e., non-binding) adoption of policies, and little enforcement and follow-up can pose challenges to cooperating with international partners.", "In recent decades, emerging-market countries have begun to play a larger role in the international economy. They have grown in size, developed rapidly, become active participants in international trade and finance, and increased their holdings of foreign exchange reserves. The international financial architecture, however, has been slow to reflect their increased importance and role in the global economy. Since the global financial crisis began in the fall of 2008, however, this has started to change. The NSS's commitment to increase the representation of emerging markets in the international financial architecture largely reiterates changes that are already underway or are being discussed in other forums.\nG-20: The NSS emphasizes U.S. support for the G-20 process, whose prominence has increased with the global financial crisis. Before the crisis, economic discussions at the leader level had been held by the G-7/G-8, a small group of advanced countries. When the global financial crisis hit, leaders decided that emerging-markets were too important to exclude from these discussions. The G-7/G-8 leaders convened, for the first time, leaders from a more diverse set of countries that included advanced and emerging-market countries (the G-20). It is reported that this decision was supported by the Bush Administration. The G-20 met in Washington, DC in November 2008, and since then the G-20 has held five summits with the fifth in Seoul, Korea in November 2010. In the third G-20 summit (September 2009 in Pittsburgh), which was hosted by President Obama, the participants decided that the G-20 would henceforth be the premier forum for international economic cooperation, effectively displacing the G-7/G-8's role as such.\nWhile many have applauded the expansion of the G-7/G-8 to the G-20, others have expressed reservations. Some argue that G-20 membership is arbitrary and does not include some important emerging-market countries (such as Poland, Thailand, Egypt, and Pakistan), under-represents sub-Saharan Africa, and has a disproportionate number of European members. Others have expressed concern that expanding economic discussions to such a heterogeneous group undermines efforts at international economic cooperation.\nReforms at the World Bank and the IMF: The NSS also supports efforts to increase the representation of emerging markets at the World Bank and the International Monetary Fund (IMF). This references commitments made by the G-20 leaders to shift voting power to emerging-market countries. The World Bank shareholders agreed to voting reform in April 2010. In this agreement, U.S. voting power is not expected to be affected and the United States will retain veto power over major decisions at the Bank.\nIMF quota reform is proving more controversial. Many experts argue that IMF quotas should broadly reflect a country's relative size in the world economy, and that some European countries are over-represented at the IMF, while some emerging-market countries, like China, are under-represented. However, no agreement has been reached on exactly which countries will see their quota share, and thus voting power, change, and if so, by how much. The United States is considered an underrepresented country at the IMF, because its IMF quota share is smaller than its share in the world economy. Over the decades, the United States has given up IMF quotas to lower its financial commitment to the institution and allow new members to join, while still retaining its veto power over major decisions at the IMF. The United States is not expected to lose substantial quota share in the IMF reform.\nThe G-20 leaders also pledged that the heads of international financial institutions should be appointed through an \"open, transparent, and merit-based selection process.\" This may affect the 60-year-old unwritten convention that the Managing Director of the IMF is selected by Western European countries and the President of the World Bank is selected by the United States. However, the wording in the G-20 declarations on this point is vague. To date there is no consensus on how this would be implemented in practice.", "The 2010 NSS states that U.S. leadership in the G-20 will be \"focused on securing sustainable and balanced growth, coordinating reform of financial sector regulation, fostering global economic development, and promoting energy security.\" These are the main issues that have been discussed in recent G-20 summits and were on the agenda for the Seoul Summit.\nSecuring sustainable and balanced growth: The G-20's \"Framework for Strong, Sustainable and Balanced Growth\" aims to correct the global imbalances that many believe contributed to the global financial crisis. Through this framework, the G-20 members agree on shared policy objectives, assess (with the IMF's assistance) the collective implications of national policy frameworks for the global economy, and consider and agree to actions that are necessary to meet common objectives. In this process, the G-20 and the IMF can only make policy recommendations; they cannot impose policies on members. The assessment process is underway, but some have raised questions about how effective it will be without rigorous enforcement mechanisms.\nCoordinating reform of financial sector regulation: Some argue that a major cause of the global financial crisis was the failure of policymakers to adequately regulate financial markets both domestically and globally. Consequently, proposals for regulatory reform have been central components of each of the G-20 summits. Within the G-20, the United States is generally viewed as a leader in regulatory reform, having passed a major regulatory reform bill in July 2010 ( P.L. 111-203 ). The Administration is now expected to focus on making sure that other countries adopt consistent and harmonized regulatory reforms to ensure a \"level playing field,\" and that capital does not flow out of the United States to countries with looser banking standards. Assessing the implementation and consistency of national level regulations is expected to be a major G-20 priority.\nFostering global economic development: For the Seoul Summit, Korean officials also proposed an ambitious set of new initiatives that focus on the needs of the emerging and developing world. These initiatives include (1) creating safety nets to help countries handle volatile capital flows; (2) refocusing the G-20's discussions on narrowing the development gap and reducing poverty; and (3) engaging the private sector in development initiatives.\nPromoting energy security: At the Pittsburgh summit, the G-20 leaders committed to eliminating fossil fuel subsidies over the medium-term. The Obama Administration supports the ban on fossil fuel subsidies and reportedly pushed for it at the G-20 summit in Pittsburgh. Eliminating fossil fuel subsidies may prove difficult. Governments in low-and middle-income countries, who spend $310 billion a year on fossil fuel subsidies compared to the $20 billion-$30 billion spent annually by developed countries, may be reluctant for political reasons to eliminate these subsidies. In 2008, cuts in subsidies in Egypt, India, and Indonesia resulted in street protests and political upheaval. Eliminating fossil fuel subsidies in rich countries may also face obstacles. In the United States, it would require congressional approval, and it is expected that the oil industry would strongly oppose such legislation.", "The 2010 NSS identifies as a national security priority the goal of denying illicit actors and their affiliated support networks access to the international financial system and targeting illicit resources stored within the international financial system. Abuse of the international financial system by illicit actors includes a variety of often transnational financial crimes. Such crimes include but are not limited to money laundering, international trade and customs fraud, financing for nuclear proliferation and terrorism, and the kleptocratic looting of government funds by public officials for self-aggrandizement. Illicit actors may seek to store criminal proceeds within the international financial system or use legitimately-sourced funding stored in the international financial system with the intent to use it for the financing of illicit activities. Although there are no reliable and precise estimates for either the amount of such dirty money, experts widely agree that the combined total volume circulating in the international financial system is likely vast.\nFor at least more than a decade, successive Administrations have identified threats to the international financial system—and emphasized efforts to deter and combat such threats—as a national security goal. Policies to combat financial crimes can be described as evolutionary, building and refining upon prior efforts as new financial threats emerge, while remaining roughly consistent with the goals of prior administrations. With such evolutionary progress, U.S. efforts to protect the international financial system from illicit threats appear to have also grown in terms of the scope and number of programs in place, as well as in the amount of resources and number of personnel involved. One of the most significant changes over time, however, is the strategic context in which financial threats are framed and identified.\nNSS documents under President Bill Clinton, for example, emphasized money laundering and other \"threats to the integrity and reliability of the international financial system\" as manifestations of post-Cold War, non-state transnational security problems, primarily drug trafficking, which was identified for the first time as a national security threat in 1986 (National Security Decision Directive 221) and remained a major U.S. policy concern throughout the 1990s. Other non-state transnational threats included terrorism and other international organized crimes such as arms trafficking and migrant smuggling. According to the Clinton Administration's 1999 NSS, for example, transnational threats were among the top five \"most serious threats to U.S. security.\" Key identified means to confront such threats in the Clinton Administration's NSS included standardizing laws and regulations governing financial institutions, improving international law enforcement cooperation in the financial sector, and extending the reach of financial sanctions to international terrorists support networks.\nPresident George W. Bush's 2002 and 2006 NSS documents were influenced by and responded primarily to the Al Qaeda terrorist attacks of September 11, 2001. As a result, threats to the international financial system became largely framed, particularly in the 2002 NSS, in the context of terrorist financing. Yet, the primary mechanism through which new counter-terrorist financing programs were established centered on modifications to existing anti-money laundering programs. Goals included identifying and blocking the sources of funding for terrorism, freezing the assets of terrorists and those who support them, denying terrorists access to the international financial system, protecting legitimate charities from being abused by terrorists, and preventing the movement of terrorists' assets through alternative financial networks. By 2006, however, the Bush Administration had expanded its emphasis on terrorist financing to include other threats to the international financial system, such as proliferation finance by WMD (weapons of mass destruction)-smuggling networks, money laundering by international criminals, and the illicit appropriation of government assets by corrupt political leaders. Unlike the Clinton Administration's NSS, discussion of threats to the international financial system were not limited to non-state actors, particularly with the additional emphasis in the 2006 NSS of illicit financial activity by corrupt foreign politicians and foreign countries seeking nuclear technologies through illicit smuggling networks.\nPresident Barack Obama's 2010 NSS not only builds upon prior NSS documents to identify combating threats to the international financial system as a national security priority, but also includes other U.S. government strategy documents that seek to target and block illicit international financial activity, several of which were issued during the Bush Administration. In reverse chronological order, these include the 2010 National Drug Control Strategy, the 2008 U.S. Law Enforcement Strategy to Combat International Organized Crime, the 2007 National Money Laundering Strategy, the 2006 U.S. Strategy to Internationalize Efforts Against Kleptocracy, and the 2006 National Strategy to Combat Terrorism.\nCommon policy threads across the Clinton, Bush, and Obama Administrations center around three key goals: (1) applying financial measures to freeze and block assets of specially designated criminal entities and their associates; (2) expanding financial regulatory and enforcement tools to monitor and combat money laundering, both domestically and through multilateral venues; and (3) encouraging international financial intelligence and law enforcement information sharing. Notable developments in U.S. policy to combat international financial crimes have included the:\nEnhanced financial regulatory authorities. For example, section 311 of the USA PATRIOT Act of 2001, which amended the Bank Secrecy Act of 1970, allows the Treasury Department to apply enhanced banking regulatory requirements, called \"special measures,\" against designated jurisdictions, financial institutions, and international transactions that are found to be involved in criminal or terrorist financing activities. Development of further financial regulatory standards internationally. This has included enhanced emphasis on developing international regulatory standards and procedures for mutual evaluation of financial regulatory practices through the Financial Action Task Force (FATF) and FATF-style regional bodies; Expansion of international law enforcement cooperation. Such initiatives have included: 1. creation of the Egmont Group, an international consortium of national Financial Intelligence Units (FIUs) through which financial intelligence data can be shared internationally through secure servers; 2. establishment of Trade Transparency Units (TTUs) in several countries in Latin America to facilitate bilateral law enforcement cooperation in trade and customs irregularities that could be indicative of trade-based money laundering; 3. establishment of a foreign political corruption task force to facilitate law enforcement cooperation on kleptocracy cases and support for the World Bank's Stolen Asset Recovery (StAR) Initiative to repatriate assets stolen by corrupt political leaders, and 4. enhancement of international cooperation on combating bulk cash smuggling, such as with Mexico to combat bulk cash movements of drug proceeds from the United States to Mexico; Application of targeted financial sanctions. For example, the Treasury Department's Office of Foreign Asset Control (OFAC) has gained increased authority to freeze assets and block transactions within U.S. jurisdiction of specially designated individuals involved in drug trafficking, terrorism and terrorist financing, WMD proliferation and other illicit activities. Provision of targeted foreign assistance to combat financial crimes. For example, such assistance has included U.S. support for the institutional development of foreign countries' financial legal framework, regulatory bodies, law enforcement capacity, and intelligence functions; and Introduction of foreign-deployed threat finance cells in Iraq and Afghanistan. Such threat finance cells are intended to track and target the financial flows and transactions associated with insurgent, terrorist, and other illicit actors that are of national security priority. Reorganization of offices and missions within the Department of Treasury. This has included a heightened emphasis on countering the financing of terrorism and other financial crimes through, in 2005, the creation of the Office of Terrorism and Financial Intelligence (TFI).\nWith the exception of the imposition of additional economic sanctions against North Korea and Iran related to WMD proliferation concerns, most of these policy initiatives had begun before the Obama Administration. There are no apparent public indications that the current Administration plans to update the 2005 money laundering threat assessment or revise the 2007 U.S. money laundering strategy. A question for policymakers is whether the absence of more recent strategic guidance to combat financial crimes is indicative of an inherent embrace of prior Administrations' strategic direction for combating financial crime and strengthening the international financial system. Some observers might question whether the current balance of priorities—among counterterrorism financing, anti-proliferation financing, and traditional anti-money laundering goals—remains the same as they had been under prior Administrations. Further, policymakers may also question how existing strategic guidance for combating financial crimes can respond to emerging threats and novel alternate financing and laundering methods for which an effective government response may not exist.\nAnother question for policymakers is how to coordinate U.S. government resources, programs, and data related to combating financial crime. More than a dozen federal agencies are involved in U.S. efforts to protect the international financial system from financial crime threats, including the Departments of Treasury, Justice, State, Defense, and Homeland Security, as well as the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. In recent years, the U.S. Government Accountability Office has issued several reports on U.S. efforts to combat international financial crimes, variously recommending improved interagency and international coordination, as well as improved efforts to align U.S. resources with strategic mission priorities.", "Many argue that a key long-term factor in ensuring U.S. national security is to help create a world in which citizens in all countries are afforded basic human rights and have a voice in their governments through democratic means. Realpolitik , however, often requires that the United States deal with certain dictatorial governments for the lack of better alternatives. U.S. economic assistance and cooperation in areas such as science and technology are intended to achieve a number of U.S. goals related to political and human conditions in foreign countries that affect U.S. national security.", "The 2010 National Security Strategy asserts that the United States must support democracy and human rights abroad because governments that respect these values are more just, peaceful, and legitimate, contributing to an atmosphere that supports America's national security interests. The report states that the first steps begin at home with policies that promote a strong U.S. economy and that living these values at home helps to promote them overseas. Furthermore, the NSS says that both the U.S. government and private sector have roles to play in advancing our democratic values. The report goes on to say that democracy, human rights, and development are mutually reinforcing values and coordinated support of all three creates a synergy that contributes to achieving greater progress toward America's national interests.\nThe NSS states that the U.S. must forge more effective partnerships with democracies and non-democracies, allies and \"key centers of influence,\" including China, India, and Russia. The report goes on to say that this Administration will pursue engagement with hostile nations and give them an opportunity to change course, and will reach out to individuals, as well as governments. Seven categories in which the Administration is advancing these universal values include:\nEnsuring that New and Fragile Democracies Deliver Tangible Improvements for Their Citizens . The report states that the Obama Administration is working on a bilateral and multilateral basis with countries at all levels, from individual citizens to local communities to political and civil society leaders in order to strengthen institutions that provide democratic accountability. Practicing Principled Engagement with Non-democratic Regimes . The Administration will work with non-democratic regimes to advance U.S. interests on counterterrorism, nonproliferation, economic issues, among many other things, but will simultaneously seek ways to advance individual rights and opportunities in those countries. The Administration's dual-track approach to reach out to governments, encouraging gains in human rights while also encouraging peaceful political opposition, is a model it hopes NGOs will follow. If governments react negatively to this approach, however, the United States must openly lead the international community to use diplomatic tools, incentives, and disincentives in an effort to reverse repressive behavior, according to the NSS. Recognizing the Legitimacy of All Peaceful Democratic Movements . The National Security Strategy says America believes all peaceful, law-abiding, and nonviolent voices around the world should be heard, even if it disagrees with them; the United States should not promote certain candidates or movements in other countries, but it will support legitimately-elected peaceful governments that treat its citizens with respect and provide their rights. If elected officials rule ruthlessly, they will forfeit U.S. support, the report says. Supporting the Rights of Women and Girls . The NSS states that women and girls bear a greater burden than males in crises or conflicts and that countries are more peaceful and prosperous when women enjoy equal rights and opportunities. Therefore, the Obama Administration is promoting democracy by working with regional and international organizations to prevent violence against women and girls; to promote equal access for justice and participation in the political process; to combat human trafficking especially with women and girls, and to support education, employment, and micro-finance for women around the world. Strengthening International Norms Against Corruption . The Administration is working with multilateral and bilateral organizations to promote the idea that pervasive corruption is a violation of basic human rights that impedes development and security worldwide. The Administration pledges to work with governments and civil society organizations to establish greater transparency and accountability in their budgets, expenditures, and assets of public officials. The Administration pledges to institutionalize transparency in international aid flows, international banking and tax policy, and private sector natural resources to strengthen citizen efforts to hold their governments accountable. Building a Broader Coalition of Actors to Advance Universal Values . The Administration is working with other governments, nongovernmental and multilateral organizations to build broad support for democracy, rule of law, and human rights. It seeks to strengthen existing institutions, such as the United Nations Human Rights Council, that are not working up to their potential, and strengthening human rights monitoring and enforcement mechanisms so that any violators of international human rights norms will be held accountable. Marshalling New Technologies and Promoting the Right to Access Information . The NSS identifies new opportunities to advance democracy and human rights through the emergence of new technologies such as the Internet, wireless networks, smart-phones, satellite and aerial imagery, and supports the use of new technologies to facilitate freedom of expression, expand access to information, increase government transparency and accountability, and counter restrictions on their use. The Administration will also use such technologies to effectively communicate American messages to the world.", "The Obama Administration appears to have distanced itself from the high profile and controversial democracy promotion activities of the Bush Administration (i.e., conflating democracy promotion with the Iraq War, cultivating close ties with autocratic regimes, and condoning abuses of the rule of law and human rights in its counterterrorism agenda) that some believe have tarnished the concept of democracy promotion. At the same time, however, President Obama has continued many country programs, many that were conducted by previous administrations. According to the State Department's Advancing Freedom and Democracy Report , May 2010, the Obama Administration is continuing to assist with: elections; development of institutions such as courts that will support a democracy; training media on independent reporting; promoting citizen participation in, and access to, government; gender equality; and government transparency. Specific country programs include financial and technical support for fair, free, and competitive elections for Georgia's municipal elections in 2010 and national elections in 2013, Lebanon's municipal elections in 2010, helping Uganda with a Web-based voter registry before its 2011 elections, and support for electoral reform and voter awareness for Jordan's expected 2010 parliamentary elections. Other activities include assisting with Kenya's Trafficking in Persons Task Force to develop a national action plan, as well as in-country training of police, prosecutors, and medical personnel to handle gender-based violence; providing media training in Somalia; and guest speaker programs that promote citizen participation in the political process in Malaysia.\nCritics of the muted Obama democracy promotion and human rights agenda have pointed out that his inaugural address is the first since former President Ronald Reagan's to not mention the word democracy. Some view the Obama approach as too subtle; others express disappointment that \"setting an example\" is not strong enough to influence authoritarian regimes. These critics contend that the Obama Administration has not made democracy promotion and human rights foreign policy priorities. Another concern is that the Obama Administration seems to support a philosophy of \"country-ownership\" where the \"partner\" governments can weigh in on what activities the United States conducts within their country. Critics say, this would give authoritarian governments the ability to influence how U.S. tax dollars are spent, and they wonder if effective democracy and human rights programs would ever be allowed to flourish by those governments. The foreign policy community is mixed on the benefits of a whole of government approach to democracy and human rights activities. Some believe that this approach could be confusing on the ground, having different agencies (Departments of Defense, State and USAID, for example) working at cross purposes, at times. Others believe that having multiple, coordinated voices would reinforce the image of democracy and signal the importance America places on democracy promotion activities.\nSupporters of the 2010 National Security Strategy on democracy and human rights believe that the Obama Administration is intentionally breaking from the pre-emptive and go-it-alone style of the previous Administration to repair any damage overseas that may have resulted. Obama takes a quieter, more humble stance on democracy promotion, mentioning it several times, but not highlighting it as the previous administration did in its National Security Strategy, 2002. For example, the NSS states that this Administration \"is promoting universal values abroad by living them at home and will not impose these values through force.\" Supporters believe Obama's is a more realistic approach that may be more likely to succeed than the aggressive style of the George W. Bush Administration.\nA concern expressed by both proponents and opponents is a lack of discussion about cost. The NSS does not mention the cost of democracy promotion and human rights programs or from where the money will come. As the 112 th Congress seeks to reduce the budget deficit, foreign affairs funding is being eyed by some as a place to cut expenditures.\nMeasuring democracy promotion and human rights progress can be done with specific projects that seek, for example, to create a voter data base, increase voter turnout, establish free media, or reduce political arrests. In the long-term, however, it is very difficult to measure overall progress and declare success in achieving democracy and respect for human rights because of its abstract nature and because backsliding is always a possibility.", "Development has been slow and uneven, according to the 2010 NSS. The Obama Administration is pursuing a range of specific and targeted initiatives, such as food security and global health that the President believes are essential to security and prosperity for all people worldwide. Like the Bush Administration before it, the Obama Administration supports the elevation of development alongside defense and diplomacy (sometimes called the 3 Ds) as key to achieving U.S. national security and promoting U.S. national interests abroad. The NSS presents a whole-of-government approach for applying the three D tools. For development that requires improved coordination to implement assistance programs, pursuit of a development that reflects U.S. policies and strategies, and certainty that U.S. policy tools are aligned to support development objectives. The report also suggests that development is a way to support existing partnerships and assist other countries in becoming capable, democratic future partners. To do that, the Administration is expanding civilian development capability, engaging with international financial institutions that leverage U.S. resources and advance U.S. objectives, working toward a development budget that reflects U.S. policies and strategies, and aligning foreign policy tools that support U.S. development objectives.\nThe Administration's sustainable development goals are to:\nIncrease Investments in Development by providing a deliberate and focused global development agenda across U.S. government agencies, increasing foreign assistance funding, expanding investments in effective multilateral development institutions, and leveraging the engagement of other countries to share the burden. Invest in the Foundations of Long-term Development by initiating long-term investments that reward other governments which demonstrate the willingness and capability to pursue sustainable development strategies, providing support by assisting other countries and communities to better manage challenges, and by investing in strong institutions that foster democratic accountability to help sustain development. This will help expand the number of countries, particularly in Africa, that are able to reap benefits of the global economy while contributing to global security and prosperity, according to the NSS. Exercise Leadership in the Provision of Global Public Goods by shaping and leading global partners on challenges (i.e., how to control epidemic disease, how to adapt to global warming, and how to make advances in agricultural output) that stifle development progress but cannot be resolved by the individual countries alone and are not being fully addressed with bilateral efforts. The Administration supports overseas partners with increased investments and technologies to assist them with low-carbon productivity, advances in food security, and resilience against impacts of climate change. The report specifically mentions pursuit of new vaccines, weather-resistant seed varieties, and green energy technologies that would significantly benefit sustainable development. The budget request seeks an increase in environment accounts and has put food security top priority.", "The Obama Administration has continued a number of Bush Administration foreign aid changes such as the President's Emergency Plan for AIDS Relief (PEPFAR) and the Millennium Challenge Corporation (MCC). It has also continued the Office of the Director of Foreign Assistance (referred to as the F Bureau) which President Bush created and placed in the Department of State to coordinate State/USAID budget information and activities. Some say creation of the F Bureau has weakened USAID. Whether the Obama Administration will continue this office or make some other organizational change that would strengthen USAID or expand the Department of State's development assistance responsibilities is currently unclear. The Administration's Quadrennial Diplomacy and Development Review (QDDR) released on December 15, 2010 states that this Administration will be focused on sustainable development outcomes with a premium placed on broad-based economic growth, democratic governance, game-changing innovations, and sustainable systems for meeting basic human needs. It does not address the issue of continuation of the F Bureau. Clearly identifying which agency will take the lead on development assistance budgets and program implementation, as well as how the Department of Defense aid activities will be integrated, is of critical interest. Some think that will signal how serious President Obama is in achieving long-term development goals versus using development tools to achieve short-term foreign policy and national security objectives.\nMany foreign aid experts applaud the Obama Administration's goal of doubling foreign aid funding (continuing the foreign aid increases of the Bush Administration) and promoting long-term sustainable development. Some in Congress, however, are working to cut foreign affairs spending in the FY2011 budget, arguing in favor of domestic spending and deficit reduction. While this works against the Administration's goal to double foreign aid spending, President Obama's National Security Strategy acknowledges that \"the United States must be strong at home in order to be strong abroad.\" To ensure the best use of tax dollars spent on foreign aid, transparency, monitoring, and measuring development program results are key. The Administration's NSS, as well as legislation introduced by both the House Foreign Affairs Committee and the Senate Foreign Relations Committee have included language in legislation to require increased transparency and monitoring of development programs.\nMeasuring success in development, particularly long-term, sustainable development is difficult. It may take years before sustainable development programs can be identified as successes or failures. Furthermore, whether development is sustainable may be influenced by government and regional instability, resources, trade potential, corruption in the country, and activities of other donor countries. In its report on the Millennium Development Goals, the Administration stated, \"Our commitment to sustainability and innovation will be underpinned by a relentless commitment to measuring results.\" To measure results, the Administration has stated it will\nlook at MCC's rigorous impact evaluation approach; collect baseline data and improve indicators, providing technical assistance to recipient countries to develop their own monitoring capacity; strengthen USAID's capacity to monitor and evaluate with the new Office of Learning, Evaluation, and Research; and promote strong monitoring and evaluation functions in multilateral organizations that we support.\nBeyond measuring progress toward sustainable development, is whether long-term development always results in countries becoming stronger partners with the United States. With numerous other influences in the world and other donor countries competing, whether that translates to greater U.S. national security and promoting America's interests seems unlikely in every case.\nReaction to President Obama's first NSS regarding sustainable development is mixed. Some praise its multilateral tone, compared with the unilateral tone in President Bush's first NSS of 2002. Foreign aid experts note favorably the concepts of working with former allies and new partners, strengthening international institutions, and integrating government agencies, as well as acknowledging challenges of an interconnected world. Criticism, however, includes how to lead abroad in solving trans-boundary problems such as climate change when there is no consensus at home, the lack of specifics on how to increase burden-sharing abroad during a worldwide recession, and where to find the willingness in Congress to invest in long-term development projects in these tight economic times. Adding the cost to adequately monitor progress toward sustainable development, some note, would either raise the cost of development or detract from the amount spent on actual development aid, critics say.", "The 2010 National Security Strategy calls for enhancing U.S. science, technology, and innovation:\n\"America's scientific leadership has always been widely admired around the world, and we must continue to expand cooperation and partnership in science and technology. We have launched a number of Science Envoys around the globe and are promoting stronger relationships between American scientists, universities, and researchers and their counter- parts abroad. We will establish a commitment to science and technology in our foreign assistance efforts and develop a strategy for international science and national security.\"\nIn his June 4, 2009 speech in Cairo Egypt, President Obama declared his intention to \"appoint new science envoys to collaborate on programs that develop new sources of energy, create green jobs, digitize records, clean water and grow new crops.\" Subsequently Secretary of State Clinton announced in a November 2009 speech in Marrakesh, Morocco the formation of the U.S. Science Envoy Program. Secretary Clinton stated that the U.S. government seeks to engage in meaningful partnerships on science and technology to serve as a global engine of progress and growth, and that engagement by highly respected American scientists has the potential to build bridges and help identify opportunities for sustained cooperation. To date, three such envoys have been named.", "Scientists, engineers, and health professionals frequently communicate and cooperate with one another without regard to national boundaries. Since the end of World War II and the emergence of many new countries, the United States government has served a role in providing research and scientific support for other countries that are in the early stages of development or at a major point of transition. Many policymakers view American leadership in science and technology (S&T) as a diplomatic tool to enhance other countries' growth and to improve understanding by other nations of U.S. values and ways of doing business. These efforts have focused on both providing S&T resources, as well as addressing developmental challenges where S&T could play a role.\nTitle V of the Foreign Relations Authorization Act, Fiscal Year 1979 ( P.L. 95-426 , 22 U.S.C. 2656a - 22 U.S.C. 2656d, as amended) provides the current legislative guidance for U.S. international S&T policy, and makes the Department of State the lead federal agency in developing S&T agreements. In that act, Congress found that the impact of modern S&T advances are of major significance in U.S. foreign policy and that its diplomatic workforce should have an appropriate level of knowledge of these topics. Further, it indicated that this workforce should conduct long-range planning to make effective use of S&T in international relations, and seek out and consult with public and private industrial, academic, and research institutions in the formulation, implementation, and evaluation of U.S. foreign policy.\nThe National Science and Technology Policy, Organization, and Priorities Act of 1976 ( P.L. 94-282 ) states that the White House's Office of Science and Technology Policy (OSTP) director is to advise the President on S&T considerations in foreign relations. Further, the OSTP director is to \"assess and advise [the President] on policies for international cooperation in S&T which will advance the national and international objectives of the United States.\" The OSTP, an office within the Executive Office of the President (EOP), does not fund domestic or international programs. Within OSTP, the National Science and Technology Council (NSTC) currently established by Executive Order 12881, coordinates S&T policy across the federal government.\nAlso, a number of federal agencies that sponsor research and use S&T in developing policy are involved in U.S. international S&T policy. These include the National Science Foundation (NSF), National Institutes of Health, Department of Energy, National Aeronautics and Space Administration, Department of Agriculture, Environmental Protection Agency, Department of Interior, and others. Federal R&D activities may be efforts focused on the agencies' mission, or may come as initiatives from proposals the science community submits in response to specific requests in an R&D field or from a more general solicitation for research in the field. In addition, the National Academies of Science (NAS) and the American Association for the Advancement of Science (AAAS) are nationwide scientific organizations that directly represent the U.S. scientific community; both are private, not-for-profit organizations.\nThe 111 th Congress examined both the nature of international science and technology cooperation as well as addressing the effectiveness of these international science and technology (S&T) policy activities. On April 21, 2009, Senator Richard Lugar introduced S. 838 , a bill to provide for the appointment of the United States Science Envoys. While pre-dating the President's speech in Cairo, it would have provided the same general guidelines that the Administration had proposed then and in the National Security Strategy report. This bill was read and reported out of the Senate Foreign Relations committee on May 7, 2009 and was put on the Senate Legislative Calendar. On March 26, 2009, Representative Brian Baird introduced H.R. 1736 , the International Science and Technology Cooperation Act of 2009. This bill would \"provide for the establishment of a committee to identify and coordinate international science and technology cooperation that can strengthen the domestic science and technology enterprise and support United States foreign policy goals.\" This effort would come from the Office of Science and Technology Policy and be coordinated by the National Science and Technology Council. H.R. 1736 was referred to the House Science and Technology Committee, where it was reported favorably out of committee and referred to the House floor. On June 8, 2009, it passed the House in a voice vote and was referred to the Senate Commerce, Science, and Transportation Committee. It was not taken up in the Senate.", "Interested observers may ask whether the Obama statement on expanding international science partnerships represents a new policy initiative or a continuation of existing federal programs and activities. Some may contend that the Obama Administration's Science Envoys are similar, if not identical, to existing diplomatic efforts in organizations such as the NAS, AAAS, NSF, the State Department and other federal agencies. Other may argue that creating Science Envoys brings a higher profile and attention to U.S. efforts to create scientific partnerships, a welcome elevation of the S&T policy profile.\nSignificant issues are at the core of any discussions regarding U.S. international science and technology partnerships. The Obama Administration has focused on \"green\" S&T as part of its overall national and international S&T policy. Does this approach provide the most targeted and effective use of U.S. S&T resources? Will other parts of the U.S. science research establishment be represented by global outreach and science partnerships—such as biomedical, nanoscience, computer science, or human capital, among others? How does the encouragement of international science partnerships affect U.S. national security goals—can policymakers assume that all science partnerships will protect U.S. interests? While it is clear that the United States has much to offer other countries and that science can be an important part of U.S. diplomacy, many of these and other questions are still unanswered.", "As is evident from the topics covered above, economics enters into national security considerations through a variety of ways. The economy plays a dual role of providing the resources to help ensure the physical security of Americans and of generating employment and income to help ensure the economic security of households. The economy also provides a model, culture, and other elements of soft power helpful in winning the hearts and minds of people around the world. There is scarcely an economic policy issue before the Congress that does not affect U.S. national security. Likewise, there is scarcely a national security policy issue that does not affect the economy." ], "depth": [ 0, 1, 2, 2, 1, 2, 2, 3, 3, 2, 3, 3, 4, 4, 3, 1, 2, 3, 4, 4, 3, 4, 4, 3, 4, 4, 3, 4, 4, 2, 3, 4, 4, 3, 4, 4, 3, 1, 2, 2, 3, 3, 2, 3, 3, 2, 3, 3, 3, 3, 3, 2, 3, 3, 2, 1, 2, 3, 2, 3, 2, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full h1_full", "", "h1_full", "h0_full h2_full h3_title", "", "", "", "", "h3_full", "", "", "", "", "", "h2_title h1_title", "h2_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_title h2_full", "", "h0_title", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h2_title", "h2_full", "", "", "", "h2_full", "", "", "h0_full" ] }

{ "question": [ "Why is the United States a strong nation?", "Why the issue of national security is a contentious subject?", "How has the Unites United states protected itself from national security threats?", "What allowed the US to be so dominant and strongly protected?", "What makes the American economy a focal point to consider when discussing the issue of national security?", "What specifically contributed to the American economy's important status in the national security debate?", "What does a country need to do to achieve long-term hard power?", "What does national security depend on?", "What stimulates economic growth?", "What contributes specifically to USA's economic growth?", "What are the benefits soft power to the US?", "Why is the economic state of a country important for national security?", "What does this report address?", "What is the purpose of this report?", "What does the analysis discussed point out?" ], "summary": [ "As the world begins the second decade of the twenty-first century, the United States holds what should be a winning hand of a preeminent military, large economy, strong alliances, and democratic values.", "Yet the debate over national security seems to be both intensifying and broadening. The problem appears not only in the difficulty of finding a winning strategy in the long war against acts of terrorism but having to face economic constraints that loom large in the public debate.", "The United States has long been accustomed to pursuing a \"rich man's\" approach to national security. The country could field an overwhelming fighting force and combine it with economic power and leadership in global affairs to bring to bear far greater resources than any other country against any threat to the nation's security.", "The economy has always been there both to provide the funds and materiel for defense and to provide economic security for most households.", "The world, however, has changed. Globalization, the rise of China, the prospect of an unsustainable debt burden, unprecedented federal budget deficits, the success of mixed economies with both state-owned and private businesses, huge imbalances in international trade and capital flows, and high unemployment have brought economics more into play in considerations of national security.", "Traditionally the economy has entered into the national security debate through its impact on the nation's hard power: the funding of defense, the efficacy of the defense industrial base, and the use of economic sanctions and other instruments as non-kinetic tools of warfare.", "The long-term efficacy of hard power, however, depends greatly on the ability of a country to provide for it through an ever growing and innovative economy.", "National security depends also on soft power, the ability of a country to generate and use its economic power and to project its national values.", "Economic growth depends on building human capital. It also depends on science, technology, and innovation.", "In addition, the increased integration of the U.S. economy into global markets means that U.S. security also depends on global economic stability, on a balanced international economy, the ability to coordinate key economic policies with other leading nations, and deterring threats to the international financial system.", "Soft power also enables the country to project American values through diplomacy, economic assistance, fostering democracy and human rights, and promoting sustainable development abroad.", "Security is achieved not only by military means but by the whole of the American economy. In national security, the economy is both the enabler and the constraint.", "This report briefly addresses each of the above issues and provides a context and some possible alternatives to current policy.", "The purpose of this report is not to provide an exhaustive analysis but to survey the landscape, show how each issue relates to national security, examine possible Congressional actions, and refer the reader to relevant CRS products and analysts.", "This analysis illustrates how disparate parts of the U.S. economy affect the security of the nation. Security is achieved not only by military means but by the whole of the American economy." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, -1, -1, -1, 1, -1, -1, -1, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Test Audits", "MSIS Audits", "NMAP Contractor Expenditures", "The Majority of the MIG’s NMAP Audits Were MSIS Audits, Which Were Less Effective than Other Audit Approaches", "MSIS Audits Were Less Effective than Test and Collaborative Audits", "MSIS Audits Were Not Well Coordinated with States and Diverted Resources from States’ Program Integrity Activities", "MIG’s Redesign of the NMAP Has Potential Advantages, but MIG Has Not Been Transparent about Key Details of the Program’s Redesign", "Collaborative Audits Enhance States’ Program Integrity Activities; MIG also Plans to Continue Using MSIS Data in Some Audits", "Changes to the Role of Review Contractors Too Early to Assess", "CMS Has Not Reported Key Details of Its NMAP Redesign to Congress", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "General Comments", "Comments on Our Recommendations", "Appendix I: Status of Medicaid Statistical Information System (MSIS) Audits", "Appendix II: Information on Medicaid Statistical Information System Audits that Identified Potential Overpayments", "Appendix III: Status of Collaborative Audits", "Appendix IV: Comments from the Department of Health and Human Services", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgements", "Related GAO Products" ], "paragraphs": [ "The MIG has taken three different approaches since establishing the NMAP—test audits, Medicaid Statistical Information System (MSIS) audits, and collaborative audits. In each approach, contractors conducted post payment audits, that is, they reviewed medical documentation and other information related to Medicaid claims that had already been paid. The key differences among the three NMAP approaches were (1) the data sources used to identify audit targets, and (2) the roles assigned to states and contractors. In June 2007, the MIG hired a contractor to conduct test audits, and it implemented MSIS audits beginning in December 2007 by hiring separate review and audit contractors for each of five geographic areas of the country. Collaborative audits were introduced in January 2010.", "In June 2007, the MIG hired a contractor to conduct test audits in five states. Working with the MIG and the states, the contractor audited 27 providers. States provided the initial audit targets based on their own analysis of Medicaid Management Information System (MMIS) data. MMIS are mechanized claims processing and information retrieval systems maintained by individual states, and generally reflect real-time payments and adjustments of detailed claims for each health care service provided. In some cases, states provided samples of their claims data with which to perform the audits, and in other cases states provided a universe of paid claims that the MIG’s contractor analyzed to derive the sample. Twenty-seven test audits were conducted on hospitals, physicians, dentists, home health agencies, medical transport vendors, and durable medical equipment providers.", "In December 2007, while test audits were still under way, the MIG began hiring review and audit contractors to implement MSIS audits.audits differed from the test audits in three ways.\nFirst, MSIS audit targets were selected based on the analysis of Medicaid Statistical Information System (MSIS) data. MSIS is a national data set collected and maintained by CMS consisting of extracts from each state’s MMIS, including eligibility files and paid claims files that were intended for health care research and evaluation activities but not necessarily for auditing. As a subset of states’ more detailed MMIS data files, MSIS data do not include elements that can assist in audits, such as the explanations of benefit codes and the names of providers and beneficiaries. In addition, MSIS data are not as timely because of late state submissions and the time it takes CMS’s contractor to review and validate the data. MIG officials told us that they chose MSIS data because the data were readily available for all states and the state-based MMIS data would require a significant amount of additional work to standardize across states. (See table 1 below.)\nSecond, MSIS audits were conducted over a wider geographic area; 44 states have had MSIS audits, compared with the small number of states selected for test audits.\nThird, MSIS audits use two types of contractors—review contractors to conduct data analysis and help identify audit leads, and audit contractors to conduct the audits. In the test audits, the states provided the initial audit leads.\nReview contractors. The MIG’s two review contractors analyze MSIS data to help identify potential audit targets in an analytic process known as data mining. The MIG issues monthly assignments to these contractors, and generally allows the contractors 60 days to complete them. For each assignment, the MIG specifies the state, type of Medicaid claims data, range of service dates, and algorithm (i.e., a specific set of logical rules or criteria used to analyze the data). The work of the review contractor is summarized in an algorithm findings report, which contains lists of providers ranked by the amount of their potential overpayment. The January through June 2010 algorithm reports reviewed by the HHS-OIG The identified 113,378 unique providers from about 1 million claims.MIG’s Division of Fraud Research & Detection oversees the technical work of the review contractors. A summary of the review contractor activities for MSIS audits is shown in figure 1.\nAudit contractors. The MIG’s audit contractors conduct postpayment audits of Medicaid providers. Audit leads are selected by the MIG’s Division of Field Operations, generally by looking at providers across one or more applicable algorithms to determine if they have been overpaid or demonstrated egregious billing patterns. From the hiring of audit contractors in December 2007 through February 2012, the division assigned 1,550 MSIS audits to its contractors. During an audit, the contractor may request and review copies of provider records, interview providers and office personnel, or visit provider facilities. If an overpayment is identified, the contractor drafts an audit report, which is shared with the provider and the state. Ultimately, the state is responsible for collecting any overpayments in accordance with state law and must report this information to CMS. A summary of the audit contractor activities is shown in figure 2.\nIn June 2011, CMS released its fiscal year 2010 report to Congress, which outlined a redesign of the NMAP with an approach that closely resembled the test audits. The report described the redesign as an effort to enhance the NMAP and assist states with their program integrity priorities. CMS refers to this new approach as collaborative audits. In these collaborative audits, MIG and its contractor primarily used MMIS data and leveraged state resources and expertise to identify audit targets. In contrast, MSIS audits used separate review contractors and MSIS data to generate lists of providers with potential overpayments, and the MIG selected the specific providers to be audited.", "From June 2007 through February 2012, payments to the contractors for On an annual test, MSIS, and collaborative audits totaled $102 million.basis, these contractor payments account for more than 40 percent of all of the MIG’s expenditures on Medicaid program integrity activities. Contractor payments rose from $1.3 million in fiscal year 2007 and reached $33.7 million in fiscal year 2011. (See fig. 3.) The total cost of the NMAP is likely greater than $102 million because that figure does not include expenditures on the salaries of MIG staff that support the operation of the program.", "The MSIS audits were less effective in identifying potential overpayments than test and collaborative audits. The main reason for the difference in audit results was the use of MSIS data. According to MIG officials, they chose MSIS data because the data were readily available for all states, they are collected and maintained by CMS, and are intended for health care research and evaluation activities. However, the MSIS audits were not well coordinated with states, and duplicated and diverted resources from states’ program integrity activities.", "Compared with test and collaborative audits, the return on MSIS audits was significantly lower. As of February 2012, a small fraction of the 1,550 MSIS audits identified $7.4 million in potential overpayments. In contrast, 26 test audits and 6 collaborative audits together identified $12.5 million in potential overpayments (see fig. 4.) Appendix II provides details on the characteristics of MSIS audits that successfully identified overpayments. While the newer collaborative audits have not yet identified more in overpayments than MSIS audits, only 6 of the 112 collaborative audits have final audit reports (see app. III), suggesting that the total overpayment amounts identified through collaborative audits will continue to grow. In addition, the MSIS audits identified potential overpayments for much smaller amounts. Half of the MSIS audits were for potential overpayments of $16,000 or less, compared to a median of about $140,000 for test audits and $600,000 for collaborative audits.\nThe use of MSIS data was the principal reason for the poor MSIS audit results, that is, the low amount of potential overpayments identified and the high proportion of unproductive audits. Over two-thirds (69 percent) of the 1,550 MSIS audits assigned to contractors through February 2012 were unproductive, that is, they were discontinued (625), had low or no findings (415), or were put on hold (37). (See fig. 5.) Our findings are consistent with an early assessment of the MIG’s audit contractors, which cited MSIS data issues as the top reason that MSIS audits identified a lower amount of potential overpayments.\nState program integrity officials, the HHS-OIG, and its audit contractors told the MIG that MSIS data would result in many false leads because the data do not contain critical audit elements, including provider identifiers; procedure, product, and service descriptions; billing information; and beneficiary and eligibility information. For example, the MIG assigned 81 MSIS audits in one state because providers appeared to be billing more than 24 hours of service in a single day. However, all of these audits were later discontinued because the underlying data were incomplete and thus misleading; the audited providers were actually large practices with multiple personnel, whose total billing in a single day legitimately exceeded 24 hours. One state official told us that when states met with the MIG staff during the roll out of the Medicaid Integrity Program, the state officials emphasized that (1) MSIS data could not be used for data mining or auditing because they were ‘stagnant,’ i.e., MSIS does not capture any adjustments that are subsequently made to a claim and (2) MMIS data were current and states would be willing to share their MMIS data with CMS. In their annual lessons-learned reports, the audit and review contractors told the MIG that the MSIS data were not timely or accurate, and recommended that the MIG help them obtain access to state MMIS data.based audits to its contractors; 78 percent of MSIS audits (1,208) were assigned after the August 2009 HHS-OIG report.\nNevertheless, the MIG continued to assign MSIS- MIG officials told us that they chose MSIS data because the data were readily available for all states, they are collected and maintained by CMS, and are intended for health care research and evaluation activities. However, when considering the use of MSIS data, officials said that they were aware that the MSIS data had limitations for auditing and could produce many false leads. MIG officials also told us that collecting states’ MMIS data would have been burdensome for states and would have resulted in additional work for the review contractors because they would need to do a significant amount of work to standardize the MMIS data to address discrepancies between the states’ data sets. However, officials in 13 of the 16 states we contacted volunteered that they were willing to provide the MIG with MMIS data if asked to do so. In addition, the review contractors have had to do some work to standardize the state files within the MSIS maintained by CMS.", "The MIG did not effectively coordinate MSIS audits with states and as a result, the MIG duplicated state program integrity activities. Officials from several states we interviewed noted that some of the algorithms used by the review contractor were identical to or less sophisticated than the algorithms they used to identify audit leads. An official in one state told us that even after informing the contractor that its work would be duplicative, the review contractor ran the algorithm anyway. Officials in another state told us that the MIG was unresponsive to state assertions that it had a unit dedicated to reviewing a specific category of claims and the MIG was still pursuing audits for this provider type. State officials also cited general coordination challenges, including difficulty communicating with contractors. MIG officials acknowledged that poor communications resulted in the pursuit of many false leads that had not been adequately vetted by the states. In addition, representatives of a review contractor we interviewed told us that states did not always respond to requests to validate overpayments in the algorithm samples provided and the MIG may not have been aware of the lack of a state response when making audit assignments.\nState officials we interviewed told us that the review contractors’ lack of understanding of state policy also contributed to the identification of false leads, even though (1) the MIG required its contractors to become familiar with each state’s Medicaid program, and (2) the MIG reviewed state policies as a quality assurance step prior to assigning leads to its audit contractors. Nonetheless, one state official described how the MIG and its review and audit contractors had mistakenly identified overpayments for federally qualified health centers because they assumed that centers should receive reduced payments for an established patient on subsequent visits. In fact, centers are paid on an encounter basis, which uses the same payment rate for the first and follow-up visits.\nOfficials in seven of the states we spoke with described the resources involved in assisting the MIG and its contractors. For example, states told us that they had assigned staff to: (1) review the algorithms used by review contractors to generate potential audit leads; (2) review lists of audit leads created by the MIG; and (3) provide information and training on state-level policies to audit contractors. One state official described how it had clinical staff rerun algorithms using the state’s data system to see if the audit targets chosen by the MIG had merit.state staff found that the MIG was pursuing a false lead, the state had to provide the MIG and its contractors with detailed explanations of why the suspect claims complied with state policies. While the state officials we spoke with did not estimate the cost of their involvement in MSIS audits, officials in some states said that participation in MSIS audits diverted staff from their regular duties. MIG officials told us they were sensitive to state burden and had attempted to minimize it.", "MIG’s redesigned NMAP focuses on collaborative audits, which may enhance state Medicaid program integrity activities, and it also intends to continue using MSIS data in some audits. As part of its NMAP redesign, the MIG has assigned new activities to its review contractors, but it is too early to assess their benefit. CMS has not reported to Congress key details about the changes it is making to the NMAP, including the rationale for the redesign of the program, but it plans to discuss these changes in its upcoming 2012 strategic plan.", "As part of its redesign, the MIG launched collaborative audits with a small number of states in early 2010 to enhance the MIG’s program and assist states with their own program integrity priorities. The MIG did not have a single approach for collaborative audits. For example, one state told us that the MIG’s audit contractor suggested that together they discuss conducting a collaborative audit with the MIG while in another state a collaborative audit was initiated by the MIG, with the audit contractor’s role limited to assistance during the audit (rather than leading it).\nGenerally, collaborative audits allow states to augment their own program integrity audit capacity by leveraging MIG’s and its contractors’ resources. For example, officials from six of the eight states we interviewed told us the services targeted for collaborative audits were those that the state did not have sufficient resources to effectively audit on its own. In some cases, the MIG’s contractor staff conducted additional audits. In others, contractors were used to assess the medical necessity of claims when the states’ programs needed additional clinical expertise to make a determination.\nOfficials from most of the states we interviewed agreed that the investment in collaborative audits was worthwhile but some told us that collaborative audits created some additional work for states. For example, two state programs reported that their staff was involved in training the MIG’s contractor staff. In one of these states, state program staff dedicated a full week to train the MIG’s audit contractor so that the contractor’s work would be in accordance with state policies. Another state program official reported that staff had to review all audits and overpayment recovery work, leading to a “bottleneck” in the state’s own program integrity activities. Officials in one state suggested that the collaborative audits could be improved if the MIG formalized a process for communicating and resolving disagreements related to audit reports, and minimized the changing of contractors in order to reduce the burden on states. Most states were in favor of expanding the number of collaborative audits. According to the MIG, the agency plans to expand its use of collaborative audits to as many states as are willing to participate. In fact, officials indicated that they are discussing collaborative audits with an additional 12 states.\nMIG officials noted that they do not foresee the collaborative audits completely replacing audits based on MSIS data. According to MIG officials, NMAP audits using MSIS data might be appropriate in certain situations, including audits of state-owned and operated facilities and states that are not willing to collaborate, as part of the MIG’s oversight responsibilities. The MIG recognizes that MSIS-based audits are hampered by deficiencies in the data, and noted that CMS has initiatives under way to address these deficiencies through the Medicaid and CHIP Business Information and Solutions Council (MACBIS). MACBIS is an internal CMS governance body responsible for data planning, ongoing projects, and information product development. According to MIG officials, MACBIS projects include efforts to reduce the time from state submission of MSIS data to the availability of these data; automation of program data; improvements in encounter data reporting; and automation, standardization, and other improvements in MSIS data submissions. One MACBIS project is known as Transformed MSIS (T-MSIS), which aims to add 1,000 additional variables to MSIS for monitoring program integrity and include more regular MMIS updates. MIG officials told us that CMS is currently engaged in a 10-state pilot to develop the data set for T-MSIS, and anticipates that T-MSIS will be operational in 2014.", "As part of its NMAP redesign, the MIG has assigned new activities to the review contractors. Because these activities are new, it is too early to assess their benefit. Although the review contractors were not involved in early collaborative audits, the MIG expects that they will be involved in future collaborative audits based on these new activities.\nIn redesigning the NMAP, the MIG tasked its review contractors in November 2011 with using MSIS data to compare state expenditures for a specific service to the national average expenditure for that service to identify states with abnormally high expenditures. Once a state (or states) with high expenditures is identified, then discussions are held with the states about their knowledge of these aberrations and recovery activities related to the identified expenditures. According to MIG officials, such cross-state analyses were recently initiated and thus have not yet identified any potential audit targets. The review contractor also indicated that it would continue to explore other analytic approaches to identify causes of aberrant state expenditures.\nAdditionally, as part of its redesign of the program’s audits, the MIG instructed its review contractors in November 2011 to reexamine successful algorithms from previously issued final algorithm reports. According to the MIG, the purpose of this effort is to identify the factors that could better predict promising audit targets and thereby improve audit target selection in the future. Although some MSIS audits identified potential overpayments, the value of developing a process using MSIS data to improve audit target selection in the future is questionable.According to the MIG, MSIS audits are continuing but on a more limited scale and with closer collaboration between states and the MIG’s contractors.", "In its 2010 annual report to Congress on the Medicaid Integrity Program, CMS announced that it was redesigning the NMAP in an effort to enhance MIG programs and assist states with their program integrity priorities, but it did not provide key details regarding the changes. For example, the report did not mention that the MSIS audits had a poor return on investment, the number of unproductive audits, or the reasons for the unproductive audits. Moreover, since issuing its 2010 annual report, CMS has assigned new tasks to its review contractors such as reexamining old final algorithm reports to improve provider target selection and new cross-state analyses using MSIS data. But CMS has not yet articulated for Congress how these activities complement the redesign or how such activities will be used to identify overpayments.\nThe MIG is preparing a new strategic plan—its Comprehensive Medicaid Integrity Plan covering Fiscal Years 2013 through 2017—which it plans to submit to Congress in the summer of 2012. According to MIG officials, the new strategic plan will generally describe shortcomings in the NMAP’s original design and how the redesign will address those shortcomings. However, MIG officials told us that they do not plan to discuss the effectiveness of the use of funds for MSIS audits, or explain how the MIG will monitor and evaluate the redesign. In its fiscal year 2013 HHS budget justification for CMS, the department indicated that in the future CMS would not report separately on the NMAP return on investment. HHS explained that it had become apparent that the ability to identify overpayments is not, and should not be, limited to the activities of the Medicaid integrity contractors. Rather, HHS said it is considering new measures that better reflect the resources invested through the Medicaid Integrity Program. Federal internal control standards provide that effective program plans are to clearly define needs, tie activities to organizational objectives and goals, and include a framework for evaluation and monitoring. Based on these standards, the poor performance of the MSIS audits should have triggered an evaluation of the program, particularly given the DRA requirement for CMS to report annually to Congress on the effectiveness of the use of funds appropriated for the Medicaid Integrity Program.", "In approximately 5 years of implementation, the MIG has spent at least $102 million on contractors for an audit program that has identified less than $20 million in potential overpayments. Moreover, almost two-thirds of these potential overpayments were identified in a small number of test and collaborative audits that used different data and took a different approach to identifying audit targets than the MSIS audits, which comprised the vast majority of the program’s audits. The poor performance of the MSIS audits can largely be traced to the MIG’s decision to use MSIS data to generate audit leads, although evidence showed that (1) these data were inappropriate for auditing, and (2) alternative data sources were both available and effective in identifying potential overpayments. Ineffective coordination with states and a limited understanding of state Medicaid policies on the part of the MIG’s contractors also contributed to the poor results of the MSIS audits.\nAlthough the MIG recognizes that the MSIS audits have performed far below expectations, it has not quantified how expenditures to date have compared with identified recoveries. Currently, the MIG is experimenting with a promising approach in which the states identify appropriate targets, provide the more complete MMIS data, and actively participate in the audits. This collaborative audit approach has identified $4.4 million in potential overpayments and is largely supported by the states we spoke with, even though they may have to invest their own resources in these audits. However, the MIG has not articulated how its redesign will address flaws in NMAP and it also plans to continue using MSIS data, despite their past experience with these data, for cross-state analysis and for states that are not willing to participate in collaborative audits. At this time, the MIG is preparing a new comprehensive plan for Congress that outlines the components of the NMAP redesign. The details provided in such a plan will be critical to evaluating the effectiveness of the redesign and the agency’s long-term plan to improve the data necessary to conduct successful audits. Transparent communications and a well- articulated strategy to monitor and continuously improve NMAP are essential components of any plan seeking to demonstrate that the MIG can effectively manage the program.", "To effectively redirect the NMAP toward more productive outcomes and to improve reporting under the DRA, the CMS Administrator should ensure that the MIG’s planned update of its comprehensive plan (1) quantifies the NMAP’s expenditures and audit outcomes; (2) addresses any program improvements; and (3) outlines plans for effectively monitoring the NMAP program, including how to validate and use any lessons learned or feedback from the states to continuously improve the audits; future annual reports to Congress clearly address the strengths and weaknesses of the audit program and its effectiveness; and use of NMAP contractors supports and expands states’ own program integrity audits, engages additional states that are willing to participate in collaborative audits, and explicitly considers state burden when conducting audit activities.", "We provided a draft of this report to HHS for comment. In its written comments, HHS stated that we had not appropriately recognized the progress CMS has made in evaluating and improving the Medicaid Integrity Program, which included the agency’s redesign of NMAP. Collaborative audits were the core of that redesign. HHS described CMS’s redesign approach as a phased one in which not all elements had been finalized when the agency announced the redesign in its June 2011 annual report to Congress (covering fiscal year 2010). HHS also commented that we did not fully describe the reasons for CMS’s use of MSIS data. HHS partially concurred with our first recommendation and fully concurred with the other two recommendations. HHS’s comments are reproduced in appendix IV.", "Although we characterized collaborative audits as a promising new approach, HHS commented that we (1) did not acknowledge that CMS had presented its rationale for the NMAP redesign in the agency’s June 2011 annual report to the Congress, and (2) inappropriately criticized CMS for not including other redesign details in its report, which HHS said had not yet been finalized. We continue to believe that a full articulation of the redesign should include transparent reporting of the results of the MSIS audits. However, we agree that the June 2011 report, which was released 18 months after the initiation of collaborative audits, described their advantages—use of better data, augmenting state resources, and providing analytic support for states lacking that capability. Regarding the use of MSIS data, HHS stated that we do not fully describe CMS’s reason for its use or acknowledge that CMS sought alternative data sources to supplement or replace MSIS data. We disagree because our report provides CMS’s reasons for using MSIS data, acknowledges CMS’s awareness of the MSIS data limitations, and discusses its Transformed MSIS project to improve the quality of MSIS data. In addition, we pointed out that officials in 13 of the 16 states we contacted volunteered that they were willing to provide CMS with their own more complete and timely MMIS data. We agree with HHS’s comment that not all of CMS’s plans for the redesign may have been complete at the time the June 2011 annual report to Congress was being finalized and therefore could not have been included in that report. We have revised this report to acknowledge that some of the elements of the redesign may not have been initiated until after the June 2011 report was finalized.", "HHS agreed with two of three elements related to our first recommendation regarding CMS’s planned update of its Comprehensive Medicaid Integrity Plan covering fiscal years 2013 to 2017. HHS agreed that the planned update should (1) address any NMAP improvements proposed by CMS, and (2) outline CMS’s plans for effectively monitoring the NMAP. HHS commented that CMS considers transparency of the program’s performance to be a top priority. However, HHS did not concur that the update should quantify NMAP’s expenditures and audit outcomes; CMS considers such information to be more appropriately presented in the annual reports to Congress, which already includes dollar figures on annual expenditures for NMAP and overpayments identified in each fiscal year. CMS’s annual reports to Congress have provided a snapshot of results that did not differentiate between the effectiveness of the various audit approaches used. For example, in its annual report covering fiscal year 2010, CMS reported that 947 audits were underway in 45 states and that its contractors had identified cumulative potential overpayments of about $10.7 million. Based on our analysis of CMS’s data, MSIS audits had only identified overpayments of $2.4 million as of September 30, 2010. The remaining $8.4 million in overpayments were identified during the test audit phase, in which states identified the audit targets and supplied their own MMIS data. We continue to believe that CMS should more fully report on NMAP expenditures and audit outcomes in its annual reports and provide an overall assessment of NMAP in its next comprehensive plan.\nHHS concurred with our recommendation that CMS should clearly address NMAPs strengths, weaknesses, and effectiveness in the agency’s annual reports to Congress. HHS noted that in CMS’s December 7, 2011 congressional testimony the agency had reported its awareness of the limitations of MSIS data and outlined steps to improve contractors’ access to better quality Medicaid data. HHS also concurred with our recommendation that CMS’s use of NMAP contractors should support and expand states’ own audit activities, engage other willing states, and explicitly consider state burden when conducting collaborative audits. HHS reported that since February 2012 CMS had increased the number of collaborative audits by 25—from 112 audits in 11 states to 137 in 15 states. Based on HHS comments, we made technical changes as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretary of Health and Human Services, the Acting Administrator of CMS, appropriate congressional committees, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-7114 or yocomc@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Major contributions to this report are listed in appendix V.", "Total (percent) 59 (4) 296 (19) 355 (23) 118 (8) 1,077 (69) 1,550 (100)", "The 59 MSIS audits that successfully identified potential overpayments were conducted in 16 states, and most of these audits involved hospitals (30 providers) and pharmacies (17 providers). These provider types also had the highest potential overpayments—over $6 million for hospitals and $600,000 for pharmacies. Arkansas and Florida accounted for over half of the audits that identified potential overpayments, but the most substantial overpayments were in Delaware ($4.6 million) and the District of Columbia ($1.7 million). (See tables 3 and 4.)", "Total (percent) 18 (16) 6 (5) 24 (21) 85 (76) 3 (3) 112 (100)", "", "", "Carolyn L. Yocom at (202) 512-7114 or yocomc@gao.gov.", "In addition to the contact named above, key contributors to this report were: Water Ochinko, Assistant Director; Sean DeBlieck; Leslie V. Gordon; Drew Long; and Jasleen Modi.", "National Medicaid Audit Program: CMS Should Improve Reporting and Focus on Audit Collaboration with States. GAO-12-814T. Washington, D.C.: June 14, 2012.\nProgram Integrity: Further Action Needed to Address Vulnerabilities in Medicaid and Medicare Programs. GAO-12-803T. Washington, D.C.: June 7, 2012.\nMedicaid: Federal Oversight of Payments and Program Integrity Needs Improvement. GAO-12-674T. Washington, D.C.: April 25, 2012.\nMedicaid Program Integrity: Expanded Federal Role Presents Challenges to and Opportunities for Assisting States. GAO-12-288T. Washington, D.C.: December 7, 2011.\nFraud Detection Systems: Additional Actions Needed to Support Program Integrity Efforts at Centers for Medicare and Medicaid Services. GAO-11-822T. Washington, D.C.: July 12, 2011.\nFraud Detection Systems: Centers for Medicare and Medicaid Services Needs to Ensure More Widespread Use. GAO-11-475. Washington, D.C.: June 30, 2011.\nImproper Payments: Recent Efforts to Address Improper Payments and Remaining Challenges. GAO-11-575T. Washington, D.C.: April 15, 2011.\nStatus of Fiscal Year 2010 Federal Improper Payments Reporting. GAO-11-443R. Washington, D.C.: March 25, 2011.\nMedicare and Medicaid Fraud, Waste, and Abuse: Effective Implementation of Recent Laws and Agency Actions Could Help Reduce Improper Payments. GAO-11-409T. Washington, D.C.: March 9, 2011.\nMedicare: Program Remains at High Risk Because of Continuing Management Challenges. GAO-11-430T. Washington, D.C.: March 2, 2011.\nOpportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue. GAO-11-318SP. Washington, D.C.: March 1, 2011.\nHigh-Risk Series: An Update. GAO-11-278. Washington, D.C.: February 2011.\nMedicare Recovery Audit Contracting: Weaknesses Remain in Addressing Vulnerabilities to Improper Payments, Although Improvements Made to Contractor Oversight. GAO-10-143. Washington, D.C.: March 31, 2010.\nMedicaid: Fraud and Abuse Related to Controlled Substances Identified in Selected States. GAO-09-1004T. Washington, D.C.: September 30, 2009.\nMedicaid: Fraud and Abuse Related to Controlled Substances Identified in Selected States. GAO-09-957. Washington, D.C.: September 9, 2009.\nImproper Payments: Progress Made but Challenges Remain in Estimating and Reducing Improper Payments. GAO-09-628T. Washington, D.C.: April 22, 2009.\nMedicaid: Thousands of Medicaid Providers Abuse the Federal Tax System. GAO-08-239T. Washington, D.C.: November 14, 2007.\nMedicaid: Thousands of Medicaid Providers Abuse the Federal Tax System. GAO-08-17. Washington, D.C.: November 14, 2007.\nMedicaid Financial Management: Steps Taken to Improve Federal Oversight but Other Actions Needed to Sustain Efforts. GAO-06-705. Washington, D.C.: June 22, 2006.\nMedicaid Integrity: Implementation of New Program Provides Opportunities for Federal Leadership to Combat Fraud, Waste, and Abuse. GAO-06-578T. Washington, D.C.: March 28, 2006." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 1, 1, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h0_full", "", "h0_full", "", "h0_title h2_title", "h0_full", "h2_full", "h2_full h1_full", "h1_full", "", "h2_full", "h1_full", "h3_full", "h3_title", "", "h3_full", "", "", "", "", "", "", "", "h2_full" ] }

{ "question": [ "why weren't Medicaid Integrity Group’s (MIG) audits as effective as the initial test audits ?", "What is MSIS?", "What is a big flaw of the MSIS?", "How did MSIS differ from collaborative audits for finding potential overpayments?", "What might be problematic with MIG's decision of redesigning NMAP?", "Why redesigning NMAP might be difficult to execute?", "What were the benefits of the collaborative approach?", "Why does Congress believe NMAP is important?", "How do Medicaid's payments compare to those of other federal programs?", "How was Medicate impacted by the Deficit Reduction Act of 2005?", "What is the main focus of this report?", "What steps were taken by the GAO to prepare that report?", "What were the GAO's recommendations regarding MIG?", "How did HHS respond to GAO's recommendation." ], "summary": [ "Compared to the initial test audits and the more recent collaborative audits, the majority of the Medicaid Integrity Group’s (MIG) audits conducted under the National Medicaid Audit Program (NMAP) were less effective because they used Medicaid Statistical Information System (MSIS) data.", "MSIS is an extract of states’ claims data and is missing key elements, such as provider names, that are necessary for auditing.", "Since fiscal year 2008, 4 percent of the 1,550 MSIS audits identified $7.4 million in potential overpayments, 69 percent did not identify overpayments, and the remaining 27 percent were ongoing. In contrast, 26 test audits and 6 collaborative audits—which used states’ more robust Medicaid Management Information System (MMIS) claims data and allowed states to select the audit targets—together identified more than $12 million in potential overpayments.", "Furthermore, the median amount of the potential overpayment for MSIS audits was relatively small compared to test and collaborative audits.", "The MIG reported that it is redesigning the NMAP, but has not provided Congress with key details about the changes it is making to the program, including the rationale for the change to collaborative audits, new analytical roles for its contractors, and its plans for addressing problems with the MSIS audits.", "However, the lack of a published plan detailing how the MIG will monitor and evaluate NMAP raises concerns about the MIG’s ability to effectively manage the program.", "Early results showed that this collaborative approach may enhance state program integrity activities by allowing states to leverage the MIG’s resources to augment their own program integrity capacity.", "Given that NMAP has accounted for more than 40 percent of MIG expenditures, transparent communications and a strategy to monitor and continuously improve NMAP are essential components of any plan seeking to demonstrate the MIG’s effective stewardship of the resources provided by Congress.", "Medicaid, the joint federal-state health care financing program for certain low-income individuals, has the second-highest estimated improper payments of any federal program.", "The Deficit Reduction Act of 2005 expanded the federal role in Medicaid program integrity, and the Centers for Medicare & Medicaid Services (CMS), the federal agency that oversees Medicaid, established the MIG, which designed the NMAP. Since the NMAP’s inception, the MIG has used three different audit approaches: test, MSIS, and collaborative.", "This report focuses on (1) the effectiveness of the MIG’s implementation of NMAP, and (2) the MIG’s efforts to redesign the NMAP.", "To do this work, GAO analyzed MIG data, reviewed its contractors’ reports, and interviewed MIG officials, contractor representatives, and state program integrity officials.", "GAO recommends that the CMS Administrator ensure that the MIG’s (1) update of its comprehensive plan provide key details about the NMAP, including its expenditures and audit outcomes, program improvements, and plans for effectively monitoring the program; (2) future annual reports to Congress clearly address the strengths and weaknesses of the audit program and its effectiveness; and (3) use of NMAP contractors supports and expands states’ own program integrity efforts through collaborative audits.", "HHS partially concurred with GAO’s first recommendation commenting that CMS’s annual report to Congress was a more appropriate vehicle for reporting NMAP results than its comprehensive plan. HHS concurred with the other two recommendations." ], "parent_pair_index": [ -1, -1, 1, 1, -1, 0, -1, -1, -1, -1, -1, 2, -1, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 0, 0, 0, 0, 3, 3 ] }

{ "title": [ "Challenges Associated with Operating in Afghanistan", "Key Oversight and Accountability Issues Regarding U.S. Efforts in Afghanistan", "Mitigating the Risk of Providing Direct Assistance to the Afghan Government", "Oversight and Accountability of U.S. Development Projects", "Estimating Future Costs of Sustaining ANSF", "Need for Contingency Planning as the U.S. Transitions to a Civilian-Led Presence in Afghanistan", "Lessons Learned from Iraq", "Status of Transition to a Civilian-Led Presence in Afghanistan", "Contacts and Acknowledgments" ], "paragraphs": [ "Our work has identified several challenges related to U.S. efforts in Afghanistan. Among those we highlighted in our 2013 key issues report are a dangerous security environment, the prevalence of corruption, and the limited capacity of the Afghan government to deliver services and sustain donor funded projects.\nDangerous security environment. Afghanistan’s security environment continues to challenge the efforts of the Afghan government and international community. This is a key issue that we noted in 2007 when we reported that deteriorating security was an obstacle to the U.S. government’s major areas of focus in Afghanistan.2009, the U.S. and coalition partners deployed additional troops to disrupt and defeat extremists in Afghanistan. While the security situation in Afghanistan has improved, as measured by enemy- In December initiated attacks on U.S. and coalition forces, Afghan security forces, and non-combatants, including Afghan civilians, the number of daily enemy-initiated attacks remains relatively high compared to the number of such attacks before 2009. In 2012, attacks on ANSF surpassed attacks on U.S. and coalition forces (see fig. 2).\nPrevalence of corruption in Afghanistan. Corruption in Afghanistan continues to undermine security and Afghan citizens’ belief in their government and has raised concerns about the effective and efficient use of U.S. funds. We noted in 2009 that according to the Afghan National Development Strategy pervasive corruption exacerbated the Afghan government’s capacity problems and that the sudden influx of donor money into a system already suffering from poor procurement practices had increased the risk of corruption and waste of resources. According to Transparency International’s 2013 Corruption Perception Index, Afghanistan is ranked at the bottom of countries worldwide. In February 2014, the Afghan President dissolved the Afghan Public Protection Force which was responsible for providing security intended to protect people, infrastructure, facilities, and construction projects. DOD had reported major corruption concerns within the Afghan Public Protection Force.\nLimited Afghan capacity. While we have reported that the Afghan government has increased its generation of revenue, it remains heavily reliant on the United States and other international donors to fund its public expenditures and continued reconstruction efforts. In 2011, we reported that Afghanistan’s domestic revenues funded only about 10 percent of its estimated total public expenditures. We have repeatedly raised concerns about Afghanistan’s inability to sustain and maintain donor funded projects and programs, putting U.S. investments over the last decade at risk. DOD reported in November 2013 that Afghanistan remains donor dependent.\nThese persistent challenges are likely to play an even larger role in U.S. efforts within Afghanistan as combat forces continue to withdraw through the end of 2014.", "The United States, along with the international community, has focused its efforts in areas such as building the capacity of Afghan ministries to govern and deliver services, developing Afghanistan’s infrastructure and economy, and developing and sustaining ANSF. In multiple reviews of these efforts, we have identified numerous shortcomings and have made recommendations to the agencies to take corrective actions related to (1) mitigating against the risk of providing direct assistance to the Afghan government, (2) oversight and accountability of U.S. development projects, and (3) estimating the future costs of ANSF.", "In 2010, the United States pledged to provide at least 50 percent of its development aid directly through the Afghan government budget within 2 years. This direct assistance was intended to help develop the capacity of Afghan government ministries to manage programs and funds. In the first year of the pledge, through bilateral agreements and multilateral trust funds, the United States more than tripled its direct assistance awards to Afghanistan, growing from over $470 million in fiscal year 2009 to over $1.4 billion in fiscal year 2010. For fiscal year 2013 USAID provided about $900 million of its Afghanistan mission funds in direct assistance. In 2011 and 2013, we reported that while USAID had established and generally complied with various financial and other controls in its direct assistance agreements, it had not always assessed the risks in providing direct assistance before awarding funds. Although USAID has taken some steps in response to our recommendations to help ensure the accountability of direct assistance funds provided to the Afghan government, we have subsequently learned from a Special Inspector General for Afghanistan Reconstruction (SIGAR) report that USAID may have approved direct assistance to some Afghan ministries without mitigating all identified risks.", "Since 2002, U.S. agencies have allocated over $23 billion dollars towards governance and development projects in Afghanistan through USAID, DOD, and State. The agencies have undertaken thousands of development activities in Afghanistan through multiple programs and funding accounts. We have previously reported on systemic weaknesses in the monitoring and evaluation of U.S. development projects as well as the need for a comprehensive shared database that would account for all U.S. development efforts in Afghanistan (see table 1).\nWith respect to monitoring and evaluation, although USAID collected progress reports from implementing partners for agriculture and water projects, our past work found that it did not always analyze and interpret project performance data to inform future decisions. USAID has undertaken some efforts in response to our recommendations to improve its monitoring and evaluation of the billions of dollars invested toward development projects in Afghanistan. We and other oversight agencies, however, have learned that USAID continued to apply performance management procedures inconsistently, fell short in maintaining institutional knowledge, and still needed to strengthen its oversight of contractors. For example, in February 2014, we reported that USAID identified improvements needed in its oversight and management of contractors in Afghanistan, including increasing the submission of contractor performance evaluations. We also found that USAID may have missed opportunities to leverage its institutional knowledge, and have recently recommended that USAID further assess its procedures and practices related to contingency contracting.\nGAO, Afghanistan Reconstruction: Progress Made in Constructing Roads, but Assessments for Determining Impact and a Sustainable Maintenance Program Are Needed, GAO-08-689 (Washington, D.C.: July 8, 2008). comprehensive database of U.S. development projects in Afghanistan in 2012, we suggested that Congress consider requiring U.S. agencies to report information in a shared comprehensive database.", "Since 2002, the United States, with assistance from coalition nations, has worked to build, train, and equip ANSF so that the Afghan government could lead the security effort in Afghanistan. U.S. agencies have allocated over $62 billion to support Afghanistan’s security, including efforts to build and sustain ANSF, from fiscal years 2002 through 2013. This has been the largest portion of U.S. assistance in Afghanistan. The United States and the international community have pledged to continue to assist in financing the sustainment of ANSF beyond 2014. In April 2012, we reported concerns regarding the need to be transparent in disclosing the long-term cost of sustaining ANSF beyond 2014. DOD initially objected to such disclosure noting that ANSF cost estimates depend on a constantly changing operational environment and that it provided annual cost information to Congress through briefings and testimonies. Our analysis of DOD data estimates that the cost of continuing to support ANSF from 2014 through 2017 will be over $18 billion, raising concerns about ANSF’s sustainability. Furthermore, we reported that on the basis of projections of U.S. and other donor support for ANSF, that there will be an estimated gap each year of $600 million from 2015 through 2017 between ANSF costs and donor pledges if additional contributions are not made. We previously noted in 2005 and 2008 that DOD should report to Congress about the estimated long-term cost to sustain ANSF.Congress mandated that DOD take such steps. In 2012, we once again In 2008, reported that DOD had not provided estimates of the long-term ANSF costs to Congress. Subsequently, in a November 2013 report to Congress on its efforts in Afghanistan, DOD included a section on the budget for ANSF and reported the expected size of ANSF to be 230,000 with an estimated annual budget of $4.1 billion.", "In February 2013, we reported that while the circumstances in Iraq differ from those in Afghanistan, potential lessons could be learned from the transition from a military to civilian-led presence to avoid possible missteps and better utilize resources. As we have reported, contingency planning is critical to a successful transition and to ensuring that there is sufficient oversight of the U.S. investment in Afghanistan.particularly vital given the uncertainties of the U.S.-Afghanistan Bilateral Security Agreement and post-2014 presence.", "While the circumstances, combat operations, and diplomatic efforts in Iraq differ from those in Afghanistan, potential lessons can be learned from the transition from a military to civilian-led presence in Iraq and applied to Afghanistan to avoid possible missteps and better utilize resources. In Iraq, State and DOD had to revise their plans for the U.S. presence from more than 16,000 personnel at 14 sites down to 11,500 personnel at 11 sites after the transition had begun—in part because the United States did not obtain the Government of Iraq’s commitment to the planned U.S. presence. Given these reductions, we found that State was projected to have an unobligated balance of between about $1.7 billion and about $2.3 billion in its Iraq operations budget at the end of fiscal year 2013, which we brought to the attention of Congressional appropriators. As a result, $1.1 billion was rescinded from State’s Diplomatic and Consular Programs account. According to DOD officials, U.S. Forces-Iraq planning assumed that a follow-on U.S. military force would be approved by both governments. The decision not to have a follow-on force led to a reassessment of State and DOD’s plans and presence.", "In April 2014, we reported that State planned for the U.S. footprint in Afghanistan to consist of the U.S. Embassy in Kabul, with additional representation at other locations as security and resources allow. In a review still under way, we are examining the status of U.S. civilian agencies’ plans for their presence in Afghanistan after the scheduled end of the U.S. combat mission on December 31, 2014, and how changes to the military presence will affect the post-2014 U.S. civilian presence. We have found that State plans to provide some critical support services to U.S. civilian personnel after the transition, but is planning to rely on DOD for certain other services. We plan to report in July 2014 on the anticipated size, locations, and cost of the post-2014 U.S. civilian presence, the planned division of critical support responsibilities between State and DOD, and how pending decisions regarding the post-2014 U.S. and coalition military presence will affect the U.S. civilian presence.\nIn closing, the President announced in May 2014 that the United States intends to maintain a military presence in Afghanistan through the end of 2016, stationing about 10,000 military personnel in Afghanistan with two narrow missions: to continue supporting ANSF training efforts and to continue supporting counterterrorism operations against the remnants of al Qaeda. Simultaneously, the President announced that the embassy would be reduced to a “normal” presence. At the same time, the United States has made commitments to continue providing billions of dollars to Afghanistan over the next 2 years. These recently announced plans underscore the bottom line of my message today: continued oversight of U.S. agencies is required to ensure the challenges they face are properly mitigated in Afghanistan and that there is oversight and accountability of U.S. taxpayer funds.\nChairman Ros-Lehtinen, Ranking Member Deutch, and Members of the Subcommittee, this concludes my prepared statement. I would be pleased to answer any questions that you may have at this time.", "For further information on this statement, please contact me at (202) 512- 7331 or johnsoncm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. GAO staff who made key contributions to this testimony include Hynek Kalkus (Assistant Director), David Dayton, Anne DeCecco, Mark Dowling, Brandon Hunt, Christopher J. Mulkins, Kendal Robinson, and Amie Steele.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h0_full", "h0_title h2_title", "", "h0_full h2_full", "", "h2_title h1_full", "h1_full", "h2_full", "" ] }

{ "question": [ "What has GAO found regarding U.S. efforts in Afghanistan?", "What challenges has the GAO identified?", "What level of funding was allocated for U.S. operations in Afghanistan?", "How do U.S. efforts in Afghanistan compare to those in Iraq?", "What factors may assist in a ensuring a smooth transition in Afghanistan?", "Why is contingency planning important for the war in Afghanistan?", "Why was the US engaged in Afghanistan?", "What was the approach that US took regarding the war in Afghanistan?", "Was this approach succesful?" ], "summary": [ "Since 2003, GAO has identified numerous challenges related to U.S. efforts in Afghanistan.", "Among the various challenges that GAO and others have identified, are the following: the dangerous security environment, the prevalence of corruption, and the limited capacity of the Afghan government to deliver services and sustain donor-funded projects.", "As illustrated in the figure below, between fiscal years 2002 and 2013, U.S. agencies allocated nearly $100 billion toward U.S. efforts in Afghanistan.", "In February 2013, GAO reported that while the circumstances, combat operations, and diplomatic efforts in Iraq differ from those in Afghanistan, potential lessons could be learned from the transition from a military- to a civilian-led presence to avoid possible missteps and better utilize resources.", "As GAO has reported, contingency planning is critical to a successful transition and to ensuring that there is sufficient oversight of the U.S. investment in Afghanistan.", "This is particularly vital given the uncertainties of the U.S.-Afghanistan Bilateral Security Agreement and the ultimate size of the post-2014 U.S. presence in Afghanistan.", "The U.S. government has engaged in multiple efforts in Afghanistan since declaring a global war on terrorism that targeted al Qaeda, its affiliates, and other violent extremists, including certain elements of the Taliban.", "These efforts have focused on a whole-of-government approach that calls for the use of all elements of U.S. national power to disrupt, dismantle, and defeat al Qaeda and its affiliates and prevent their return to Afghanistan.", "This approach, in addition to security assistance, provided billions toward governance and development, diplomatic operations, and humanitarian assistance." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 4, 4, 4, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Views on the Need for and Merits of the Guidance", "Supportive Perspectives on the Guidance", "Opposing Views on the Guidance", "A Preliminary Look at Potential Costs and Benefits from Implementing the Guidance", "Studies on the Guidance's Impact", "The Quality of Disclosures After the Guidance, from an Investor's Perspective", "Climate Change-Related Filings After the Guidance, from a Corporate Securities Law Firm's Perspective", "Changes in the Number of Climate Change-Related Disclosures After the Guidance, and Financial Professionals' Perceptions of Those Disclosures" ], "paragraphs": [ "", "On January 27, 2010, the Securities and Exchange Commission (SEC) voted to provide an interpretive guidance, the Commission Guidance Regarding Disclosure Related to Climate Change (the Guidance), which technically does not create new legal obligations, but clarifies how publicly traded corporations should apply existing SEC disclosure rules to certain mandatory financial filings with the SEC regarding the risk that climate change developments may have on their businesses. The Guidance's release was controversial and prompted legislation in the 112 th Congress to repeal it. To date, no bills have been introduced in the 113 th Congress that address the Guidance.\nThis report (1) briefly describes the Guidance; (2) provides opposing views on the Guidance, including past congressional legislation; (3) summarizes a study on potential corporate costs and benefits of implementing the Guidance; and (4) examines the impact of the Guidance from the perspectives of investors, corporations, and finance professionals.\nAt the opening of the SEC commissioners' vote on the Guidance, then-SEC Chairman Mary Schapiro explained that the Guidance provided \"interpretive guidance on existing [public company] disclosure requirements as they relate to business or legislative events on the issue of climate change.\" As such, the Guidance, which went into effect on February 8, 2010, attempts to give greater specificity to various existing disclosure rules that may require a public company to disclose the impact that business, legal, regulatory, or legislative developments related to climate change may have on its business. This information must meet the test of \"materiality\"—the notion that information should be disclosed if a reasonable investor would want it in order to make an informed investment decision.\nSpecifically, the Guidance states what companies could be required to disclose in relation to climate change under the corporate disclosure requirements that fall under the SEC's Regulation S-K, including Forms 10-K and 20-F filings. In accordance with the Sarbanes-Oxley Act of 2010 ( P.L. 107-204 ), the SEC must look at one filing from each public company at least once every three years.\nIn part, the Guidance attempts to clarify how certain climate change-related matters should be disclosed under the aforementioned SEC corporate disclosures through providing examples of developments that could trigger such disclosures. Key points expressed in the Guidance include the\nimpact of climate change legislation and regulation, impact of international accords on climate change, indirect consequences of regulation or business trends, and physical impacts of climate change.\nOn the day that the SEC voted to adopt the Guidance, then-SEC Chairman Mary Schapiro, who had voted for adoption, observed,\n[T]he Commission is not making any kind of statement regarding the facts as they relate to the topic of \"climate change\" or \"global warming.\" And, we are not opining on whether the world's climate is changing; at what pace it might be changing; or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics…. It is neither surprising nor especially remarkable for us to conclude that of course a company must consider whether potential legislation—whether that legislation concerns climate change or new licensing requirements—is likely to occur. If so, then under our traditional framework the company must then evaluate the impact it would have on the company's liquidity, capital resources, or results of operations, and disclose to shareholders when that potential impact will be material. Similarly, a company must disclose the significant risks that it faces, whether those risks are due to increased competition or severe weather. These principles of materiality form the bedrock of our disclosure framework. Today's guidance will help to ensure that our disclosure rules are consistently applied, regardless of the political sensitivity of the issue at hand, so that investors get reliable information.", "The vote by the SEC commissioners in favor of the Guidance split 3-2, a vote that reflected two rival perspectives on the merits of the Guidance. Below are examples of views both in support of and in opposition to the Guidance.", "A Supportive SEC Commissioner. Articulating a view commonly found among many of the Guidance's advocates, Luis A. Aguilar, a Democratic commissioner who voted for it, argued for the Guidance's importance. His stance significantly derived from his view that a clear consensus had been established on the reality of climate change. At the time, his view was also informed by the belief that, given the salience of climate change and the various related legislative and regulatory responses to it, the Guidance would help foster a better understanding of how the SEC's existing disclosure requirements applied to climate change. Climate change, he argued, had become increasingly material to corporate affairs as well as to corporate investors, the disclosures' ultimate beneficiaries:\nOver two years ago, the Intergovernmental Panel on Climate Change concluded that it is \"unequivocal\" that the Earth's climate is warming. In October of last year, 13 federal agencies and departments published a coordinated annual report to Congress that reached the same conclusion. It is expected that climate change, if unchecked, will result in severe harm to ecosystems and people around the world. So it is no surprise that regulation of greenhouse gases has the attention of state governments, Capitol Hill, and the Environmental Protection Agency, as well as the attention of investors and companies. Against this backdrop of a changing climate and changing legislative and regulatory landscapes, it is only natural that there are questions about what companies should be disclosing to investors. Today's release is an important step toward answering these questions. By explaining what our existing rules currently require with respect to climate change disclosure, today's release should help companies comply.... Climate change and related governmental action can create risks and opportunities for companies. It is clear that disclosure of this material information will inform and aid investors in their decision making.... This release clarifies that effects resulting from climate change that are keeping management up at night should be disclosed to investors. Additionally, today's interpretive release should facilitate disclosure to investors regarding regulatory restrictions on greenhouse gas emissions that would materially change a company's business and future prospects.\nA Supportive Group of Institutional Investors. In March 2010, soon after the release of the Guidance, a group called the Investor Network for Climate Risk, a coalition of public pension fund and corporate treasurers, comptrollers, controllers, institutional investors, and asset managers, wrote to then-SEC Chairman Schapiro to lend their support to the guidance. Echoing the views expressed by Commissioner Aguilar, the network stressed that the Guidance would add significant value to corporate disclosures:\nClimate change already poses significant risks to economies and investments. Many of us have concluded that corporate assessments of the regulatory, physical and litigation risks from climate change are critical in understanding the value of our investments. In response to our efforts to engage companies, more businesses have started to account for the impacts of climate change on their financial performance, while others have pursued opportunities to develop energy-efficient and low-carbon products and services in order to gain market share and improve competitiveness. However, few companies disclose sufficient information about these issues in SEC filings to allow us to make more informed investment decisions. The SEC's new interpretive guidance provides registrants valuable information about how to apply longstanding disclosure requirements to the evolving challenges posed by climate change.\nTwo Supportive Members of Congress D uring the 111 th Congress. In January 2010, during the 111 th Congress, Senator Christopher Dodd, then-chair of the Senate Committee on Banking, Housing, and Urban Affairs, lent his support to the Guidance.\nInvestors have a right to know if their investment may be helped or hurt by severe weather, rising sea levels, or new greenhouse gases regulation or legislation. These new guidelines will help ensure that investors have the guidance they need to make well-informed decisions.\nAt the same time, Senator Jack Reed, then-chair of the Senate Banking Subcommittee on Securities, Insurance, and Investment, expressed similar support:\nI am pleased the SEC has taken the important step of issuing guidelines regarding climate change disclosure that will increase informational transparency. Climate change is creating new opportunities and risks in the economy. Major environmental risks and liabilities can significantly impact companies' future earnings and, if undisclosed, could impair investors' ability to make sound investment decisions.", "A Critical SEC Commissioner . At the time, then-SEC Commissioner Katherine Casey cast one of the two dissenting votes against adopting the Guidance. Ms. Casey argued that her opposition largely stemmed from her view that (1) the state of the science and the law underlying the idea of global change lacked certainty; (2) existing SEC disclosure rules were adequate with respect to corporate reporting on environmental change; and (3) while certain interest groups had advocated for such climate change disclosure guidance, the usefulness of the information to most investors from the Guidance was questionable:\nI believe that the release is premised on the false notion that registrants may not recognize that disclosure related to \"climate change\" issues may be required. In truth, our disclosure regime related to environmental issues including climate change is highly developed and robust, and registrants are well aware of, and have decades of experience complying with, these disclosure requirements.... There is undoubtedly a constituency that is interested in, and has long pressed the Commission to require, more extensive disclosures on environmental issues in order to drive particular environmental policy objectives. The issuance of this release, however, at a time when the state of the science, law and policy relating to climate change appear to be increasingly in flux, makes little sense.... I do not believe that this release will result in greater availability of material, decision-useful information geared toward the needs of the broad majority of investors.\nCriticism from an Electrical Utility Industry Trade Group. In the private sector, major criticism of the Guidance came from the Edison Electrical Institute, an electrical utility trade group, which reports that its members are responsible for 60% of the total electricity supplied in the United States. In a July 2010 letter to then-SEC Chairman Schapiro, the group voiced concerns that the SEC Guidance (1) required too much speculation by corporate registrants in areas such as predicting weather patterns, the likelihood of enacting climate-change-related legislation, and potential corporate reputational damage related to climate change; (2) could discourage voluntary disclosures by registrants fearful of liability under securities laws for the contents of such disclosures, which would reduce the total amount of general climate change information provided to investors; and (3) might be interpreted as requiring that corporate management conduct a comprehensive review of climate change-related matters, which could be both unnecessary and excessively burdensome.\nCritical Responses in Congress . To date, in the 113 th Congress, no legislation involving the climate change guidance has been introduced.\nHowever, in both the 111 th and 112 th Congresses, various Members have expressed displeasure with the SEC's Guidance by introducing legislation and through correspondence with the SEC.\nIn the 112 th Congress, Senator John Barrasso and Representative Bill Posey introduced identical bills ( S. 1393 and H.R. 2603 , respectively) that would prohibit the enforcement of the SEC's climate change disclosure guidance. In a joint news release accompanying the introduction of the bills, the Members explained the purpose behind the legislation:\nIn this economy, the SEC's main responsibility should be to protect American investors and maintain fair markets. Instead, it's actually using time and resources on regulating climate change. This is yet another startling example of how the Administration is making it worse for job creators across our country. Our bill blocks the SEC from forcing American employers to conduct burdensome and expensive climate analysis.\nIn March 2010, during the 111 th Congress, Representative Posey was joined by 20 of his House colleagues in writing a letter to Chairman Schapiro to express their opposition to the climate change disclosure guidance. Among the signatories were former Representative Ron Paul and Representative Scott Garrett, currently chair of the Subcommittee on Capital Markets and Government-Sponsored Enterprises of the House Financial Services Committee. Earlier in the 111 th Congress, similar concerns were expressed in a February 2, 2010, letter to Chair Schapiro from Representative Spencer Bachus, then-ranking Member of the House Committee on Financial Services. In his letter, Representative Bachus reportedly observed,\nWith legislative progress on climate change having stalled, this guidance suggests an attempt by the SEC to promote a political agenda through regulation. The guidance reaches beyond the SEC's expertise and will impose potentially significant compliance costs on issuers with little apparent benefit to investors.", "The Guidance did not address the issue of the added costs or burdens of its implementation. Soon after the Guidance's release, however, a law review article was published that examined the Guidance's potential costs and benefits for corporations. Among other things, the article, An Inconvenient Risk: Climate Change Disclosure and the Burden on Corporations , concluded that (1) in the context of the fairly limited data that exist on climate change risks previously placed in 10-K filings and in existing voluntary disclosure protocols, the Guidance would require expanded disclosure of \"all relevant information\"; (2) there are legitimate concerns that the added burdens of identifying and measuring climate change-related risk would exacerbate the challenges of determining what disclosures are material; and (3) in the context of potential corporate \"maximum liability\" for risks related to climate change, the added cost of comprehensively assessing climate change risks as dictated by the Guidance would appear to be justified.", "The Guidance has been in effect since early February 2010. Several studies examined its impact for the initial year. This section examines three such studies, which reflected, respectively, investor, corporate, and finance perspectives.", "One impact study after the Guidance's first year was done by Ceres, a nonprofit coalition of institutional investors, environmental organizations, and other public interest groups. Ceres works with companies to address what it calls sustainability challenges, such as global climate change and water scarcity. Ceres was also one of several entities that petitioned the SEC in 2007 to \"issue an interpretive release clarifying that material climate-related information must be included in corporate disclosures under existing law.\" Other entities included the California Public Employees' Retirement System, California state controller, Friends of the Earth, New York City comptroller, New York state attorney general, Rhode Island general treasurer, Vermont state treasurer, North Carolina state treasurer, and Maine state treasurer. The SEC Guidance essentially reflects many of the recommendations from the 2007 petition.\nCeres has also been responsible for several reports that examined public company disclosures after the Guidance went into effect. Three such efforts are described below.\nA 2011 report by Ceres, Disclosing Climate Risks & Opportunities in SEC Filings: A Guide for Corporate Executives, Attorneys & Directors , examined various public company disclosures after the Guidance went into effect, with a focus on the quality of climate change risk disclosures from an investor perspective. The study's central conclusion was that most corporate filers needed more experience at communicating the risks associated with climate change. Overall, it found that large public companies have improved their climate change risk disclosures in recent years, but recommended that more work be done.\nIn assessing the quality of companies' disclosures, Ceres rated such disclosures as either\ngood —detailed disclosure of the financial impacts of existing and proposed regulatory requirements on the company; fair —disclosure of regulatory risk discusses legislation and its possible effects on the company, but makes no attempt at quantifying or assigning a value to the risks, or fails to place such values in a meaningful context; or poor —disclosure of regulatory risks does not mention existing or proposed regulations, or mentions them without analyzing possible effects on the company.\nThe study concluded that good climate change risk disclosures were rare and that the vast majority of climate change risk disclosures were either fair, poor, or involved no such disclosure. Summarizing its findings, Ceres observed,\nAlthough public companies' climate reporting has improved somewhat in recent years, it remains true that disclosures very often fail to satisfy investors' legitimate expectations. Ensuring adequate disclosure will require commitment from management, as well as continued attention from regulators - and it will require that investors continue to make their needs heard. Greater attention to risks and opportunities will help companies themselves, and improved disclosure will help investors and the broader public.\nReleased on June 18, 2012, the Ceres report, Clearing the Waters: A Review of Corporate Water Risk Disclosure in SEC Filings , examined corporate disclosure with respect to water risks in an attempt to ascertain how such disclosures have evolved between 2009 and 2011, a year after the Guidance was issued. For example, the report looked at changes in water risk disclosures of 82 companies in the beverage, chemicals, electric power, food, homebuilding, mining, oil and gas, and semiconductors sectors. Among other things, the report found that there had been a large increase in the number of analyzed companies that disclosed their exposure to water risk in 2011 over those that did so in 2009. It reported that a significant focus of the corporate disclosures involved reporting of water-related physical risks. Eighty-seven percent of the companies it analyzed in 2011 reported that they disclosed such risks, up from the 76% that did so in 2009 before the release of the Guidance. Within this, the percentage of companies in the oil and gas and chemicals sectors reporting water-related physical risks grew from 31% in 2009 to 45% in the 2011 disclosures.\nThe report also observed that while overall disclosure improved between 2009 and 2011, there was still a dearth of disclosed data on water use and the financial implications of water-related risks. Arguing for the importance of such disclosures, it observed that it helped \"investors understand the exposure of their portfolio companies to current and future water stress, as well as potential regulatory developments.\"\nThe report recommended that companies boost their use of quantitative data (e.g., water use data, the proportion of operations affected by new regulations, the extent of financial losses from drought, or cost reductions through innovations or advances in efficiencies) as well as qualitative disclosures. It also recommended that companies bolster their use of performance targets, and risk management disclosures to better explain the nature of their responses to water-related risks.\nAnother Ceres publication, Sustainable Extraction? An Analysis of SEC Disclosure by Major Oil & Gas Companies on Climate Risk and Deepwater Drilling Risk , was released in August 2012. The report examined the quality of material climate risk and deepwater drilling risks in the 2010 annual financial filings as disclosed in 2011 among 10 of the world's largest publicly held oil and gas companies, Apache, BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Marathon, Shell, Suncor, and Total.\nAmong other things, in the area of climate risk disclosure, it found that\nnone of the corporate disclosure warranted an excellent rating because no company provided reporting of that quality; while the companies are broadly involved in undertaking extensive capital investments related to climate change and deepwater drilling, which carry material financial risks, they are generally deficient in properly disclosing them in ways that are consistent with SEC rules and investor needs; of a total of 60 climate disclosure ratings (described above) given by Ceres, only 5 were rated good and 34 (more than half) merited a poor rating or were simply not disclosed; while all the companies reported some disclosures on regulatory risks and indirect risks, they exhibited significant range in terms of specificity, comprehensiveness, and the quality of analysis; and 6 of the 10 companies provided no disclosures and 3 provided poor disclosures.\nWith respect to deepwater drilling risk disclosures, the report found that\nout of 50 deepwater drilling risk disclosure ratings given, 4 merited a good rating, and 29 were rated either poor or involved no disclosure; after the Gulf of Mexico oil drilling disaster, disclosure on drilling and safety generally remained weak, including disclosures related to drilling risk management and spill response strategy; 8 out of 10 of the companies disclosed minimal or no information on safety or environmental statistics; and 8 out of 10 of the companies disclosed minimal or no information regarding their investments in safety-related research and development.\nOverall, for both climate risk and deepwater drilling disclosures, the report concluded that its \"findings are concerning, and demonstrate the need for oil and gas companies to better align their climate risk and deepwater drilling risk disclosure with SEC rules and investor expectations.\"", "Another study on the impact of the Guidance was published by Davis Polk & Wardwell, a law firm with a significant corporate securities practice. The study, Environmental Disclosure in SEC Filings, 2011 Update , examined a large number of 2010 corporate disclosure filings after the Guidance's first year. Some of its findings were as follows:\nDespite concerns of some critics that the Guidance would lead to extraneous and unimportant disclosure that might distract investors from focusing on significant disclosures, the Guidance did not appear to have had as significant an impact on disclosure as various critics had feared. Disclosures appeared to feature more generic weather risk factors. New disclosures emerged on potential changes in demand for products and services and on increases in fuel prices. There was relatively little disclosure of actual or potential reputational harm that may result from climate change. Companies in greenhouse gas intensive industries, especially energy companies, have expanded their disclosure. For example, they have added longer factual updates of legislative, regulatory, and litigation developments. Left unclear, however, was whether the increase in energy company climate change-based disclosure was largely due to the Guidance, earlier electric utility settlements with the office of the New York attorney general, or the historical growth in climate change regulation in general.", "Davis Polk & Wardwell took a granular approach in its study of post-guidance filings by focusing on the nature of individual filings. By contrast, an article in an American Bar Association (ABA) newsletter looked at (1) changes in the number of climate change-related disclosures during the Guidance's first year; and (2) the views of corporations and finance professionals on those disclosures.\nAmong other things, Davis Polk found that prior to the Guidance in 2009, of the 75,000 Form 10-Ks filed with the SEC, about 800, or 1.8%, included some reference to climate change or greenhouse gas. Immediately after the Guidance in the first quarter of 2010, the article in the ABA newsletter observed a significant increase in the percentage of such filings to 2.8%. However, by the third quarter of the year, it found that the percentage of climate change or greenhouse gas referenced in 10-K filings had fallen below the 2009 level to 1.6%.\nIn addition, in its survey of how various corporations and finance professionals thought about the disclosures, the article also reported the following:\nMany companies saw little upside and even less downside in climate change disclosures. Many companies saw no meaningful business opportunities coming from climate change disclosures, but felt that they carried a potential for creating risks. Often disclosing uncertain climate change-related information was frequently seen as a speculative process that was driven by guidelines that lacked any recognized standards or had not resulted in any standardized practices. Investor relations professionals reportedly observed a general lack of interest in climate change from the financial community or other constituencies. Financial analysts had generally shown a small amount of interest in climate change-related issues. About half of the asset managers surveyed indicated that they did not analyze climate risks because no investor clients requested that they do so. Many companies appeared to believe that there were few, if any, penalties from the SEC for nondisclosure of climate change matters, a perception that was reinforced by observations that also characterized the SEC's level of enforcement in this area as negligible." ], "depth": [ 0, 1, 1, 2, 2, 1, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "", "", "", "", "h2_title h1_title", "h1_full", "", "h2_full" ] }

{ "question": [ "What are public companies required to do?", "What does the Commission Guidance Regarding Disclosure Related to Climate Change require from public comapnies?", "How was this guidance recieved?", "What is the impact of the Guidance?", "According to Ceres's report what were the benefits of the climate-change related guidance?", "What is the believed downside of climate change disclosure?", "How did SEC reportedly fail in enforcing the climate change guidance?", "What did observations found about SEC?" ], "summary": [ "Publicly traded companies are required to transparently disclose material business risks to investors through regular filings with the Securities and Exchange Commission (SEC).", "On January 27, 2010, the SEC voted to publish Commission Guidance Regarding Disclosure Related to Climate Change (the Guidance), which clarifies how publicly traded corporations should apply existing SEC disclosure rules to certain mandatory financial filings with the SEC regarding the risk that climate change developments may have on their businesses.", "The Guidance has been controversial and prompted legislation in the 112th Congress to repeal it.", "Since the Guidance went into effect on February 8, 2010, there have been several attempts to gauge its impact. For example, a 2011 report from Ceres, a nonprofit coalition of institutional investors, environmental organizations, and other public interest groups, concluded that most corporate filers needed more experience at communicating the risks associated with climate change.", "Although it found that large public companies had improved their climate-change risk disclosures in recent years, the report concluded that there was more work to be done in this area.", "A study published for the American Bar Association found that many companies reported seeing little upside and even less downside in climate change disclosures. It also found that many companies reported few meaningful business opportunities resulting from climate change disclosures, which instead carried a potential for creating risks.", "In addition, many companies indicated that disclosing frequently uncertain climate change-related information was often a very speculative process and that there were few, if any, penalties from the SEC for nondisclosure of climate change matters.", "This perception was underscored by other observations that characterized the SEC's level of enforcement in this area as negligible." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 3, 3, 5, 5, 5 ] }

{ "title": [ "", "Overview", "Politics and Governance", "Historical Background", "Government of National Unity", "Mugabe's Presidency", "ZANU-PF: Party Divisions and Succession Rivalries", "Opposition Dynamics", "#ThisFlag", "Opposition Among Veterans", "Rule of Law and Human Rights Conditions", "Corruption", "Economy and Related Issues42", "Food Security Crisis", "Foreign Investment and Indigenization", "China", "Investment and Fiscal Pressures", "Zimbabwe's Arrears Clearance Effort", "Natural Resource Nationalization", "Land", "Diamonds", "Wildlife Protection", "U.S. Policy and Aid", "Targeted Sanctions and Restrictions on Aid and Trade", "U.S. Assistance", "Possible Issues and Options for Congress", "IFI Arrears", "Effects and Dynamics of U.S. Restrictions", "Level and Focus of Engagement", "Policy Oversight", "Outlook" ], "paragraphs": [ "", "U.S. relations with Zimbabwe, a mineral-rich southern African country, remain strained. Tensions in bilateral relations emerged in the late 1990s, when increasing indications of human rights violations, undemocratic governance, and economic decline, accompanied by radical government economic policies and land seizures, spurred concern among Members of Congress and other U.S. policymakers. Bilateral relations since that time have been—and remain—dominated by U.S. policy, diplomatic, and targeted assistance efforts intended to prevent and counter such outcomes, mitigate their effects, and push for policy and governance reforms in Zimbabwe, as well as alleviate socioeconomic hardships among the country's people. Legislation enacted by Congress is a key component of these policy efforts.\nZimbabwe attained independence in 1980 under a negotiated political settlement that ended white minority rule, following a long armed struggle. Its politics have since been dominated by the Zimbabwe National Union-Patriotic Front (ZANU-PF) political party, which has its origins in the struggle for majority rule, and President Robert Mugabe ( moo-G AH -beh ), Zimbabwe's sole post-independence president. Opposition parties have pushed for governance reforms and greater pluralism, notably during a period of often uneasy power sharing between ZANU-PF and the opposition under a Government of National Unity (GNU) between 2009 and 2013. The GNU had been formed under a regionally mediated accord intended to overcome a political impasse between ZANU-PF and the opposition following violent, procedurally disputed elections in 2008.\nElections were last held in July 2013, but their legitimacy was disputed by the opposition and criticized by the Obama Administration, among others. The elections gave ZANU-PF a strong majority in parliament, extended Mugabe's presidential tenure, and ended power-sharing under the GNU. Since then, economic conditions have steadily deteriorated. Public dissatisfaction with the economy and with the Mugabe administration and its intolerance of opposition activity have recently sparked a growing number of large public demonstrations and repressive responses by the government. Protest organizers have included political parties, aggrieved workers, and new citizen-led movements, notably a social media-organized movement known as #ThisFlag. Such demonstrations have added to ongoing political turmoil and maneuvering by parties over governance and economic policy, prospects in the upcoming 2018 elections, and rivalry over the prospective succession of Mugabe, who turned 92 years old in early 2016. The succession question has led to internal ZANU-PF factionalization, notably including an emergent split between Mugabe and veterans of the pre-independence armed struggle, who have long been one of ZANU-PF's most vocal core constituencies. The government has responded to growing domestic criticism and protests by seeking to restrict public gatherings and harshly lashing out at its critics, both in public statements and through law enforcement actions.\nSuch patterns of conduct—and a host of more serious reported human rights abuses—have long concerned domestic and international human rights advocacy groups and Western policymakers. For over two decades, successive U.S. administrations have sought to counter abusive and undemocratic actions by the ZANU-PF government by imposing targeted economic and travel sanctions on individuals and firms identified as having committed or abetted abuses. The targeted sanctions regime is authorized under a series of executive orders. Executive branch officials have periodically stated a willingness to consider changes to the U.S. sanctions regime in response to demonstrable improvements in governance, but to date they have deemed progress to have been insufficient to warrant major changes in U.S. policy. For many years, U.S. sanctions were complemented by similarly extensive sanctions by other Western governments. Surrounding the 2013 elections, however, most of these other foreign actors, most notably the European Union, removed or relaxed their sanctions regimes, in contrast to the United States.\nSanctions were originally called for by Congress in a \"sense of Congress\" provision of the Zimbabwe Democracy and Economic Recovery Act of 2001 (ZDERA, P.L. 107-99 ). Expressing congressional concern over negative governance, human rights, and rule of law trends in Zimbabwe, ZDERA also prohibits U.S. support for international financial institution (IFI) loans or grants to Zimbabwe's central government, unless and until the Zimbabwean government fulfills a range of governance reform conditions. In the years since ZDERA's passage, Congress has reiterated the ban on U.S. support for IFI credit assistance to Zimbabwe in annual appropriations legislation. Such legislation has also restricted bilateral aid for Zimbabwe, with exceptions for aid programs designed to foster the kinds of humanitarian, education, health, poverty reduction, human rights, and good governance outcomes sought by U.S. policymakers.\nZimbabwe is also ineligible for IFI loans under U.S. laws other than ZDERA due to its failure to make payments on its debt to these institutions. Recently, the possibility that Zimbabwe might again become eligible for IFI loans has emerged as an issue for policymakers. In October 2015, the Zimbabwean government issued a plan to repay its IFI arrears as a prerequisite to applying for new IFI credit (see \" Zimbabwe's Arrears Clearance Effort \"). If it does so, Members of Congress may reexamine the conditions imposed by ZDERA and other legislation, and may seek to influence whether, and under what circumstances, the Mugabe government might be able to receive financial support. Such conditions may be likely to include concrete, demonstrable efforts to pursue market-led economic growth, improved economic management and fiscal transparency, more transparent and accountable governance, and free and fair elections.\nThe question of who may succeed President Mugabe arguably presents the most immediate and pressing challenge for Zimbabwe's political system, and for foreign governments engaged with the country. The stakes are high. Succession outcomes are likely to shape future developments in all major policy arenas, and the succession process could generate political and economic instability, possibly violent, in the wider southern Africa region. Succession is subject to the interplay of diverse, primarily domestic factors, however, making it an unpredictable and fluid process, and one not readily influenced by U.S. or other foreign policy interventions. Enduring support and admiration for Mugabe in southern African political circles—including within South Africa—may also limit the impact of U.S. actions.", "", "Zimbabwe gained independence in 1980, after a lengthy armed struggle by black Zimbabweans for universal suffrage and against white minority rule. It achieved independence under the Lancaster House Agreement, an accord negotiated between the British government, the armed black independence Patriotic Front movement, and the so-called Zimbabwe-Rhodesia government. The Patriotic Front was an alliance between the Zimbabwe African National Union (ZANU), led by Mugabe, and the Zimbabwe African Peoples Union (ZAPU), another liberation movement led by the late Joshua Nkomo. The Lancaster House accord provided for elections just prior to independence, in which ZANU won a majority. ZAPU and a party that essentially represented the former white-dominated government won almost all of the remaining seats. After independence, ZANU suppressed alleged anti-government activity by members of ZAPU, its armed wing, and elements of its ethnic Ndebele political base, including through a series of mass detentions and killings led by the Fifth Brigade of the ZANU-dominated army, known as Operation Gukurahundi. Following these actions, in 1987 ZAPU and ZANU signed a unity accord, under which ZAPU was merged into ZANU, which was renamed ZANU-PF.\nThe armed struggle and the enduring effects of post-independence land allocations—which continued to favor whites until the commencement of large-scale land seizures in the 2000s (see \" Natural Resource Nationalization \")—have profoundly shaped post-independence politics and ZANU-PF's often radical policies. This history has also led to frequent anti-Western and anti-imperialist rhetoric by ZANU-PF which, along with its general intolerance of and periodic violent action against its political opponents, has long caused friction with donor governments.\nZimbabwe has held a series of highly contested elections since 2000, when ZANU-PF nearly lost its parliamentary majority to the then-newly formed opposition Movement for Democratic Change (MDC). The vote took place after Zimbabweans rejected a set of ZANU-PF-supported constitutional amendments in a public referendum. Despite this outcome, later in the same year ZANU-PF used its slim majority in parliament to amend the constitution to allow for the compulsory acquisition of land \"unjustifiably dispossessed\" by the United Kingdom (UK)—that is, provided to white settlers during British colonial rule—and to hold the UK liable for any compensation. The government then supported a campaign of often violent seizures of large, mostly white-owned commercial farms, without compensation, for redistribution to black farmers. The policy was later regulated under a program known as the Fast Track Land Reform Program (FTLRP). Such seizures, along with alleged election irregularities, human rights abuses, and various violations of the rule of law, spurred Congress to pass ZDERA in 2001.\nIn succeeding years, a decline in agricultural production linked to land seizures, a variety of state-centric economic policies, and persistent political turmoil led to a severe, multi-year economic contraction. In elections in 2008, amid reports of widespread irregularities, ZANU-PF lost its parliamentary majority and Mugabe received fewer votes than his main opponent, Morgan Tsvangirai ( CHAHN -geh-rai ), the presidential candidate of the MDC-Tsvangirai (MDC-T, the main opposition party, so-named to distinguish it from a smaller breakaway faction). Despite Tsvangirai's claim to have won the election outright, official results gave him 47.9% of votes, below the 50% threshold needed to avoid a second round. A violent presidential election run-off followed, which Tsvangirai boycotted, allowing Mugabe to win with over 90% of votes. The international community rejected the result as illegitimate, as did the MDC-T.", "A post-election political impasse led to regionally mediated talks, which resulted in the September 2008 Global Political Agreement (GPA). A Government of National Unity (GNU) was formed in early 2009 under the terms of the GPA, with Mugabe as president and Tsvangirai as prime minister. Under the GNU, executive power was shared between ZANU-PF, the MDC-T, and a smaller MDC faction—the parties that had won parliamentary seats in 2008. The GPA also set out agreements on a range of contentious issues and governance reforms, the drafting of a new constitution, and the conduct of a constitutional referendum, prospectively leading to elections.\nThe GPA decreased political violence and helped create a working but often tense relationship between the main GNU parties. It also enabled the MDC-T-controlled Finance Ministry to pursue critical economic reforms that spurred robust economic recovery after years of severe contraction under ZANU-PF stewardship. At the start of the GNU, Zimbabwe faced hyperinflation of 500 million percent or more, widespread poverty, unemployment at 80%-plus, collapsed social services, and a dearth of hard currency. To address these challenges, the GNU adopted the U.S. dollar as the effective national currency, ended price controls, and established a cash budgeting policy, among other liberalization policies. This led to a rapid expansion of the agriculture, mining, and services sectors. Economic expansion under the GNU began in 2009 and lasted until 2013, the last year of the GNU, when growth stalled.\nWhile some GPA governance reforms were implemented, many were not, and there were reports of violations of GPA-guaranteed rights and freedoms, notably press freedom and political assembly. There were also periodic acts of political harassment and violence. Constitutional and other reform processes were slow and contentious, leading to renewed Southern African Development Community (SADC) mediation, a 2011 \"election roadmap,\" and a schedule for implementing unfulfilled GPA goals. Contested implementation of the roadmap then became a key focus of GNU politics for the next two years. The roadmap's effects were ultimately limited, but one of its main goals, the completion of a new draft constitution, was achieved in early 2013. Voters adopted the new charter by an overwhelming margin in a referendum in March 2013. A highly disputed electoral process followed, resulting in a ZANU-PF victory and an end to power sharing under the GNU.", "President Mugabe has led Zimbabwe since independence, initially as prime minister, and has long presided over ZANU-PF. His party leadership has been driven by both ideological and tactical considerations, and he has played a central executive and mediational role within ZANU-PF's hierarchy and policymaking processes, which have long shaped patterns of state governance. Under his tenure, the party has controlled state power through a mixture of nationalistic economic policies and rhetoric, command of the public sector, social regulation, political cooptation, often corrupt patronage, and periodic repression of and violence against ZANU-PF opponents and critics. His eventual exit from the presidency will mark a major watershed and could conceivably lead to political and policy transformation. Such a transition is not a given, however, especially if ZANU-PF retains control and continues to pursue its current policy agenda under the strong influence of an aging, conservative cadre of security sector officials. In the meantime, Mugabe shows no interest in retiring, despite his advanced age, periodic signs of debility, and reported health problems. In 2014, he accepted ZANU-PF's nomination to be its presidential candidate in 2018, when he would be 94, a decision reaffirmed by a party Congress in late 2015. In 2015, he chaired both SADC and the African Union, reflecting his continuing influence among fellow African leaders. Mugabe has no designated successor, which has generated succession rivalries. In July 2016, he stated that he would hold office as long as the party continues to back him.", "Fluid divisions and alliances have long characterized the ruling party. Public information about these dynamics, however, tends to be opaque and expediently driven by party insiders, most notably Mugabe. He continues to actively shape the party leadership by orchestrating promotions and countervailing appointments and dismissals. Debate and political jockeying over Mugabe's succession and alternatives to his leadership have occurred for years. Although often discussed in the press, these issues were considered sensitive and were not often publicly addressed by the party. Those perceived as challenging or implying an end to Mugabe's tenure historically faced penalties, such as demotions or party suspensions. In recent years, however, the succession issue has increasingly come to be discussed in public, including by Mugabe.\nUntil late 2014, the main reported ZANU-PF rivals to succeed Mugabe—as both head of state and of ZANU-PF—were two long-time top officials, Emmerson Mnangagwa ( mm-nahn- GAHG -wa h ) and Joice Mujuru. Both were die-hard ZANU-PF members closely linked to Mugabe. Mnangagwa, however, a former intelligence chief and GNU Defense Minister, maintained a reputation as an uncompromising hardliner. In contrast, Mujuru, a former liberation war combatant who had served as national and party Vice President since 2004, was viewed as both a strong party loyalist and a potential pragmatist open to possible reforms in various areas.\nIn late 2014, Mugabe led a purge of top ZANU-PF elements linked to Mujuru and dismissed her as party and national Vice President. He then elevated Mnangagwa, alongside a less prominent official, Phelekezela Mphoko, to the dual national and ZANU-PF vice presidencies (there are two deputy posts in both the state and party). His action also appeared intended to facilitate the entr y into politics of his 50-year-old wife, Grace Mugabe, who had actively encouraged Mujuru's removal while raising her own political profile. Mujuru's fate was sealed when Mugabe railed against her during the ZANU-PF party congress, accusing her of plotting with U.S. embassy officials to oust him (an allegation linked to the Wikileaks scandal and later denied by the State Department). Further purges of Mujuru-allied officials and the naming of a new cabinet followed. In early 2015, ZANU-PF formally expelled Mujuru, citing her putative anti-Mugabe plot. To date, however, she has not been criminally indicted.\nShould Mugabe vacate the presidency, either by choice or due to natural causes, Mnangagwa, who also serves as Justice and Legal Affairs Minister, would likely succeed him temporarily. He might then formally accede to the post, but such an outcome is not assured. Mugabe's successor must be chosen by the party, and Mnangagwa's rivals could engineer an alternative successor. Another possible successor, Grace Mugabe, has often led party outreach events and distributed patronage goods since Mujuru's ouster. These activities appear intended to strengthen her national profile as a credible successor to her husband and, at a minimum, to protect her family's assets and influence by ensuring she plays a high-level post-Mugabe political role.\nHer lack of independence war credentials and relative youth, however, could be liabilities, given Zimbabwe's often gerontocratic political culture and the traditional dominance of veterans within ZANU-PF and among security establishment leaders. They have long maintained that liberation war experience is a prerequisite for any national president, and are likely to strongly influence any succession process. Nevertheless, generational change in politics is on the horizon, as signaled by the emergence of an informal ZANU-PF faction, the Generation 40 (G40), a term alluding to a younger cohort that came of political age after independence. They reportedly support a leading role for Grace Mugabe—potentially through her replacement of Mnangagwa as vice president, making her Mugabe's likely successor, or through an alliance between her and one of Mnangagwa's ZANU-PF old guard rivals. The G40-Mnangagwa rivalry may also be leading veterans, long a key ZANU-PF base of support, to break with Mugabe. Also factoring into party and succession dynamics are clan alliances and rivalries, both within the majority Shona ethnic group, to which Mugabe and many top ZANU-PF leaders belong, and between the Shona and the Manyika—a smaller, but still key ZANU-PF ethnic base.", "Opposition supporters are also divided. Intra-party recrimination over the MDC-T's performance during the 2013 elections divided the party, which is the largest opposition group. Continuing dissension eventually prompted the Tsvangirai-led faction to expel 21 rival sitting MDC-T members of parliament (MPs) and some indirectly-elected senators, thus making them ineligible to remain MPs. This led to June 2015 National Assembly by-elections for 16 seats, most of which had been vacated by the MDC-T. ZANU-PF won all of them after the various MDC factions boycotted the vote over claims of a flawed election process and demands for related reforms. In July 2016, Tsvangirai, who has colon cancer, prompted renewed internal party dissention after he unilaterally appointed two new party vice presidents.\nWhile the MDC-T enjoys strong representation in many municipal governments, its parliamentary delegation lacks sufficient seats to advance legislation, and it acts primarily as a critic of the government. Its limited electoral power is also under threat, as the minister of local government has ousted and replaced the MDC-T mayors of Harare and the smaller city of Gweru. The government is also sponsoring an opposition-contested bill that would create a substantially ministry-controlled tribunal with the power to suspend and replace municipal officers. The MDC-T, like other opposition parties, has also faced attempts by the government to regulate and restrict its public political gatherings. In some cases, such restrictions have been overturned in the courts, however, reflecting a significant degree of Zimbabwean judicial independence. In April 2016, after police denied the MDC-T a public demonstration permit, a court ruled in favor of an MDC-T suit to have the denial overturned. The MDC-T then held one of the largest anti-Mugabe protests in recent years. Other mass rallies, both by opposition parties and a wide range of other stakeholders—in some cases permitted by courts against government wishes—have since followed.\nThe future influence of the MDC-T and of opposition parties more broadly is likely to depend on their success during the next national elections in 2018, which, in turn, may depend on coalition-building. Prospects for an opposition victory, however, are mixed. In May 2016, five small parties formed the Coalition of Democrats (CODE), under which they are expected to jointly back consensus positions and candidates. While former finance minister Tendai Biti reportedly supports the coalition, his PDP party—and, more significantly, the MDC-T and Joice Mujuru's new Zimbabwe People First (ZPF), established in February 2016—declined to join it. Eighteen opposition political parties are also collaborating and jointly pushing for shared electoral system changes and Zimbabwe Electoral Commission neutrality ahead of the 2018 elections under the National Election Reform Agenda (NERA) coalition. While aimed at electoral reform, NERA members are involved in organizing mass protests bringing together opponents of continued ZANU-PF political dominance.", "In addition to opposition parties, the government has recently faced criticism from a fast-growing, nonpartisan, citizen-based campaign focusing on demands for accountable governance. The movement, organized on social media under the hashtag #ThisFlag , emerged after Evan Mawarire, a pastor, posted online an impromptu video reflection on economic malaise, corruption, and a need for patriotic civic activism. The April 2016 video elicited a massive spontaneous positive response and went viral, leading Mawarire to call for a month of citizen activism centered on countering poverty, injustice, and corruption. Opposition parties sought to capitalize on the campaign, and ZANU-PF to counter it with its own #OurFlag social media campaign. In May 2016, two MDC-T MPs wearing flags around their necks in a tribute to #ThisFlag were ejected from parliament.\nOn July 6, 2016, Mawarire and #ThisFlag activists, joined by the Tajamuka-Sesijikile (roughly \"fed up and opposing\") Campaign, a recently formed youth alliance critical of the government, organized a \"Zimbabwe Shutdown\" action. It was intended to temporarily interrupt private and public sector business and signal dissatisfaction with the country's ongoing economic malaise, unpaid civil servant wages, and state corruption. The boycott, which was widely heeded, coincided with labor strikes by doctors and teachers. It was generally peaceful, but featured some youth-led civil unrest in poor urban areas. It came on the heels of a July 4 protest by taxi drivers against high police traffic fines that turned violent, as well as late June protests in the southern border town of Beitbridge against new import restrictions. These events resulted in multiple arrests, and prompted authorities to temporarily shut down social media forums being used to organize the protests.\nIn mid-July, Mawarire was arrested and charged with attempting to subvert the government, but a magistrate's court dismissed the charges and released him. He later sought refuge in South Africa. President Mugabe and ZANU-PF militants have threated Mawarire; meanwhile, security forces are reportedly on high alert and are prepared to forcefully halt further demonstrations.", "Relations between ZANU-PF leaders and independence war veterans appear to be deteriorating after decades of strong interdependence. In recent months, Grace Mugabe and various politicians associated with the G40 faction have made public comments belittling the political roles and influence of independence war veterans, long a politically sacrosanct base of activist support for ZANU-PF. In early 2016, police fired water cannons at an anti-G40 veterans' march on ZANU-PF headquarters, and in March, Mugabe replaced his veterans' minister, the chair of the traditionally influential Zimbabwe National Liberation War Veterans Association (ZNLWVA), reportedly in relation to the official's opposition to the G40. In a possible sign of continuing deference to veterans, however, Mugabe also publicly acknowledged a demand by some veterans that he step down from power.\nRelations between Mugabe and veteran leaders deteriorated further after ZNLWVA issued a scathing statement on ZANU-PF and Mugabe in late July 2016. It harshly condemned the government and implied that Mugabe should exit power. The veterans' statement is significant because the armed struggle was crucial in bringing majority rule to Zimbabwe, and their contributions toward that end have long helped legitimize ZANU-PF's hegemonic rule. Veterans have formed a core ZANU-PF constituency since independence, and some have acted as a proxy force for the party, politically and at times physically attacking alleged government critics. The government reacted strongly to the statement—which was not attributed to any specific individuals—calling it \"traitorous\" and \"treasonable.\" Some ZNLWVA leaders later faced arrest. To prevent further anti-regime action by the current ZNLWVA leadership, the government may be attempting to create a rival pro-G40 faction within ZNLWVA. The Mugabe-ZNLWVA split may lead to further internal ZANU-PF fissures, as many top ZANU-PF officials are likely to continue to view veterans as a vital constituency. This is particularly true of the Mnangagwa camp, known as \"Team Lacoste\" (a play on Mnangagwa's nickname, \"The Crocodile\"). Mugabe's split with the veterans has been interpreted by some observers as a rejection of Mnangagwa's faction in favor of the G40.", "Human rights advocates have for years raised concern with documented government violations of the rule of law and respect for human rights, particularly during election periods and with regard to its treatment of political opponents and human rights and democracy advocacy groups. Frequent reported perpetrators of political violence in recent years have included the state security forces, ZANU-PF youth militants, members of ZNLWVA, and, to a lesser extent, MDC militants. In July 2016, Amnesty International (AI) reported that \"recently, human rights defenders and activists in Zimbabwe have been receiving threats and [are] subjected to arbitrary arrests, ill–treatment and attempted abductions.\" ZANU-PF supporters were implicated in harassment and intimidation in the lead-up to the by-elections in mid-2015, in addition to prior violence linked to the purge of Mujuru supporters, while opposition activists engaged in violent skirmishes in connection with intra-MDC competition. There have also been reports of state- and party-mediated allocations of food, fertilizer, and other commodities, as well as coercion, to secure votes or political support for ZANU-PF. The reported March 2015 daytime abduction of a Zimbabwean journalist and human rights activist, Itai Dzamara, allegedly by state security officials, has also drawn widespread local and international attention. Dzamara has not been found, and U.S. officials have called for a full and open investigation of his case. Similar allegations of state involvement in other abduction cases have periodically been reported since the early 2000s.\nPolice regularly halt public political and economic demonstrations and arrest political and labor union protesters. In its 2016 World Report , Human Rights Watch (HRW) asserted that in 2015, \"those who criticized Mugabe or his government, including human rights defenders, civil society activists, political opponents, and outspoken street vendors, were harassed, threatened, or arbitrarily arrested by police and state security agents.\" Zimbabwe Lawyers for Human Rights (ZLHR), a nongovernment advocacy group, has contended that authorities intentionally \"misinterpret and selectively misapply laws.\" Annual State Department human rights reports have reflected similar findings. Recently, however, and against the government's wishes, some judges have allowed bond for detainees facing protest-related charges, reduced or tossed out such charges, and permitted several protests for which the police have denied permits.\nHRW, ZLHR, and others also assert that the government has not pursued many of the legal reforms that they contend are needed to bring the national legal code and system into compliance with the 2013 constitution, including the repeal or reform of laws constraining freedoms of expression, association, and movement. These groups also call for progress toward an impartial state media and apolitical security services.\nCollectively, these laws have often been used to harass political and civil society activists. ZLHR, among other human rights groups, views several of them as contrary to the 2013 constitution, and in the absence of their full repeal or replacement sees an urgent need to bring them into line with the constitution. The government is also seeking passage of the Computer Crime and Cyber Crime Bill, which would reportedly give authorities additional authorities to intercept electronic communications and seize digital devices in a wide variety of circumstances. The new measure may reportedly be used by police to restrict expression via social media, which critics have often used to organize protests.\nZLHR also urges that a range of constitutionally required commissions (e.g., on national peace and reconciliation, gender, and land) be given adequate resources to pursue their mandates, and that legal reforms be enacted to devolve authority and resources to the provinces. ZLHR and HRW contend, in particular, that the official Zimbabwe Human Rights Commission lacks adequate resources, and HRW has noted that its mandate—limited to acts committed since early 2009, when the GNU was established—leaves it unable to investigate or help secure justice for victims of prior human rights abuses and political violence.\nPolice harassment and criminal prosecutions of journalists and social media writers, often based on allegations of slander against Mugabe and other state officials, have been common, although in early 2016, the Supreme Constitutional Court found Zimbabwe's criminal defamation laws to be unconstitutional. Law enforcement officials also regularly crack down on micro-businesses such as street vendors in the widespread informal sector.\nThe state and ZANU-PF also have a history of sponsoring various \"operations,\" a term drawn from military and law enforcement parlance, which refers to party or security agency campaigns that generally seek to support ZANU-PF-backed policies, aid the party's support base or, conversely, targeting putative ZANU-PF opponents, real and perceived. The targets of these campaigns have varied; examples include irregular housing settlements, illegal artisanal mining, and unregistered satellite TV receivers, as well as extra-governmental efforts to control inflation, meet housing demands, boost agricultural production, or undertake land reform. Others have involved systematic campaigns of political violence.\nThe Zimbabwean state also has a history of forcibly displacing selective groups of citizens and seizing their property, often for political ends. In 2014, HRW documented the eviction and resettlement without adequate compensation of 20,000 flood-displaced persons, who suffered security force abuses when they protested. The government has reportedly since acknowledged some fault in the case and pledged to address the victims' situation. Periodic uncompensated seizures of farmland, often orchestrated by top ZANU-PF or security service figures and targeting the few remaining white commercial farmers and others not favored by the government, have also continued. ZANU-PF-linked beneficiaries of land grabs continue seek to gain legal ownership of such properties. \"Indigenization,\" the mandatory partial nationalization of foreign firms, is another current form of state property expropriation.\nAnother key human rights challenge is trafficking in persons (TIP). Under the Trafficking Victims Protection Act of 2000 (TVPA, P.L. 106-386 , as amended), the State Department has classified Zimbabwe as a Tier 3 country since 2009, meaning that its government does not fully comply with minimum U.S. TVPA standards and is not making significant efforts to do so. Zimbabwe's ranking has made it ineligible for \"non-trade related, nonhumanitarian assistance to the government except for certain economic assistance for various specific purposes with specific limitations.\" In every year since 2010, the Obama Administration has issued a partial waiver of these restrictions to allow certain types of assistance deemed to be \"in the national interest.\"\nOne positive development praised by human rights campaigners was an early 2016 decision by Zimbabwe's Constitutional Court to outlaw the marriage of anyone under 18 years of age. Child advocates see it as a key step in reducing Zimbabwe's reportedly high rate of child marriage, which particularly affects minor brides.", "Public corruption has been a persistent problem, as acknowledged by top ZANU-PF leaders, who periodically inveigh against it and included anti-corruption efforts as a key goal in ZANU-PF's 2013 election platform. While Zimbabwe does not rank as poorly as some other African countries, according to a late 2015 survey of corruption in 36 African countries, 80% of Zimbabweans polled rated the government's efforts to fight corruption as \"very\" or \"fairly\" bad. The problem afflicts common public service delivery, but a particular feature of corruption in Zimbabwe has been elite appropriation of public resources. \"Salarygate,\" a series of media reports in 2013 and 2014 revealing the self-award of large salaries and other perks by leaders of multiple state-owned enterprises and public agencies during a period of public austerity and service cuts, drew intense public ire. While ZANU-PF took steps to address the issue by capping such salaries, in other cases, it has failed to rein in publicly reported acts of self-enrichment by top ZANU-PF or state officials.\nA number of analysts view selective ZANU-PF tolerance of the use of public resources for private gain as a structural feature of a political patronage system that has enabled ZANU-PF elites to access and control both wealth and political power . Zimbabwe's Central Bank has identified illicit financial flows worth hundreds of millions of dollars annually—in the form of illicit or suspicious cross-border bank transfers, trade mispricing, bulk cash exports, and related activities—as a key economic challenge. Such flows have reportedly contributed to a shortage of U.S. dollar paper currency. How vigorously the government is prepared to counter such flows, however, is unclear. For instance, despite Mugabe's complaint in 2016 that as much as $15 billion in diamond revenue had been diverted in recent years by ZANU-PF and military-linked firms, he reportedly refused to take action against Jinan, a Chinese firm accused by the Reserve Bank of Zimbabwe (RBZ) of illegally exporting nearly half a billion dollars. Responding to an inquiry about the Jinan case, RBZ Governor stated that they had \"allowed bygones to be bygones.\"", "After the 2013 elections, many observers viewed economic policy as a make-or-break challenge facing the newly elected ZANU-PF government given the severe crisis, hyperinflation, and massive economic contraction (-66.8%) that occurred from 2000 to 2009 under ZANU-PF stewardship. Since the advent of the ZANU-PF majority government in August 2013 and the departure of GNU finance minister Tendai Biti, economic growth has slowed considerably, and many Zimbabweans face increasingly dire economic prospects. The IMF estimates that GDP growth has declined from 4.5% in 2013 to 3.3% in 2014 and 1.4% in 2015.\nWeak economic growth is attributable to a drop in exports, a lack of credit for the private sector, in part due to high government borrowing, low demand linked to poverty and illiquidity, poor financial sector performance, and low foreign investment levels. Other contributing factors, according to some analysts, have been problematic economic policy decisions and regulatory actions, notably relating to indigenization and, more recently, currency and trade controls. A severe regional El Niño-related drought in 2015-2016, meanwhile, has buffeted the agricultural economy, decreasing export crop production and creating widespread food insecurity.\nLow world prices for several key Zimbabwean minerals, together with new mining royalty payment requirements, have dampened mineral production and exports. Imports have also fallen significantly, in part due to shortages of hard currency necessary for foreign transactions, but remain about double the value of exports. Low import demand is also driven by low formal sector domestic production. Import demand has been driven by low formal sector domestic production, which has also been hampered by low demand, generating a 2.5% deflation rate and lack of access to credit and hard currency. Many businesses have reportedly closed or downsized in recent years, and 65% of manufacturing capacity was reportedly idle in 2015. Regular, lengthy electricity cuts have exacerbated this situation. Formal sector unemployment is widely reported to be extremely high, although accurate employment data is lacking, and much of the labor force works in the informal sector. All of these factors have both helped spur and been affected by widespread poverty and contributed to weak market demand.\nZimbabwe's reliance on the U.S. dollar—the main local transactional currency since 2009—has also inhibited growth, due to a worsening dollar shortage and associated economic uncertainty. Rising local demand for the U.S. dollar has been driven by the international strength of the dollar; high import demand, including for food, production of which has dropped due to the drought; and a preference for hard currency in Zimbabwe's cash-dominated economy. The RBZ, which has few monetary policy options because it does not control its own currency, is attempting to address the shortage by limiting hard currency withdrawals (e.g., at ATMs) and import transactions. The bank, through which foreign exchange import transactions must flow by law, is distributing export earnings in multiple foreign currencies, rather than the dollar alone, to reduce reliance on the dollar and increase cash flows. It is also prioritizing certain imports over others, interfering in market mediation of demand and supply for goods, requiring multi-currency pricing of goods and the use of point of sale machines that can handle multiple currencies and payment types, and limiting external financial transfers.\nThe RBZ has also announced very controversial plans to issue $200 million worth of local bond notes intended to serve as proxies for and be valued at par with U.S. dollars. The bank's intention is to bring cash liquidity to the domestic economy and increase the volume of money circulating. The bond plan, however, has spurred fears of a return to the hyperinflation associated with the defunct Zimbabwean dollar and predictions that bonds will trade at a depreciated value relative to the dollar, depriving bond holders of the full value of their holdings. In August 2016, police used tear gas and water cannons to disperse a reportedly peaceful protest against the bonds. RBZ external transfer controls have also reportedly drawn the ire of politically connected elites and businesses.", "A severe El Niño-related drought that affected the entire southern Africa region during the late 2015-2016 rainy season has disrupted the agricultural economy and, critically, resulted in a sharp decrease in the production of maize, the staple food crop. There are increasing reports of hunger in rural areas and a rising need for food aid. The government expects to import up to 700,000 metric tons of maize in 2016, about seven times the 2015 level, but has not budgeted for this cost, and already faces public revenue shortfalls. In February 2016, the government declared a state of disaster in some areas and called for $1.6 billion in foreign food aid. In March, the World Food Program (WFP) launched a $220 million food aid appeal for Zimbabwe covering programs through March 2017. As of early May 2016, U.S. FY2016 food security contributions for Zimbabwe totaled $34.7 million, adding to $42.6 million provided in FY2015 and $34.8 million in FY2014. The U.S. Agency for International Development (USAID), which administers some U.S. food aid, reports that in 2016-2017 the period prior to planting, when food stocks from the prior harvest run low, will \"start earlier than usual in September and end later than usual, in April, due to the El Niño-related impacts.\" Citing a 2016 Zimbabwean government assessment, USAID also reported that at the peak of the lean season, from January to March 2017, an estimated 4 million Zimbabweans \"will be food insecure.\" USAID had earlier reported that about 2.8 million of 9.4 million rural dwellers were food insecure as of early May 2016.\nThe drought is also expected to dampen production in 2016 of tobacco, a key cash crop that, along with gold, had been one of the few economic bright spots. The tobacco sector grew steadily after hitting a production low in 2008. Strong tobacco prices led to strong export earnings in 2014 and 2015, notably from exports to China, but production and projected exports are plummeting. Gold has done well despite problems in the rest of the mining sector and a relative price decline after peaks in 2011 and 2012.", "Foreign direct investment (FDI), which would likely increase inflows of hard currency, has remained flat or increased moderately in recent years. A key deterrent is indigenization, a state policy under which foreign-owned businesses are required to share ownership of their operations with Zimbabwean citizens. The process is intended to increase local black ownership of major economic assets, and primarily affects large foreign-owned firms. Application of the indigenization law, despite an early 2015 reform, is viewed by many observers as politicized, opaque, and subjective, making it a key investor concern. The government has periodically amended some requirements, both to achieve indigenization policy goals more effectively and clarify the law for foreign investors.\nWhile some investors appear able to negotiate agreements that are reliable enough to allow them to remain in the country, frequent changes have generated the perception that indigenization is subject to political whims and other unpredictable shifts. Mugabe himself, contending that \"confusion\" over the indigenization law had undermined FDI, issued a \"clarification\" on the law in April 2016, further to other reform measures enacted in late 2015. The latter measures allow investors to use unspecified \"empowerment credits or quotas,\" negotiated between the government and individual investors, to meet indigenization requirements. Despite these efforts to make legal compliance easier, the government periodically threatens to seize or halt businesses that it alleges are not complying with the law. In early 2016, the government launched an indigenization compliance audit of foreign-owned firms. It has even required politically favored Chinese state-owned firms to turn over mining concession rights in some cases.", "Zimbabwe has made concerted efforts to form strong relations with China for over a decade, in part to diversify its foreign trading partners and replace Western investment and capital that fled in the early 2000s. China has become a key source of foreign investment and credit. Much of this activity has involved bilateral state economic cooperation in addition to private sector activity, including some development grants or loans, and investment funded by Chinese state-backed loans from the China Development Bank and Export and Import Bank (Exim) Bank, or backed by finance insurance from the China Export and Credit Insurance Corporation. Typically, deals have been between large Chinese state-owned corporations or other Chinese enterprises with state connections and their Zimbabwean counterparts. The focus of these transactions has varied. Key examples include Chinese exports of aircraft, buses, rail vehicles, engineering services, and agricultural and construction equipment, and Chinese purchases of Zimbabwean minerals, tobacco, and cotton. Chinese firms have also invested in Zimbabwean mining, infrastructure construction, agricultural, telecommunications, mineral processing, and power generation projects. Many deals involve joint ventures, and some—as elsewhere in Africa—have involved exchanges of services for mineral rights or commodities. Transparency advocates have criticized some of these deals as exploitative.\nDuring a 2015 state visit to Zimbabwe by Chinese President Xi Jinping, the two countries signed 12 agreements, including a $1.2 billion China Exim loan under which China's Sinohydro Corp. will add 600 megawatts of capacity to the national utility's largest thermal power plant. China also cancelled $40 million in loan interest on part of a reported $1 billion in Chinese concessional loans to Zimbabwe over the past five years. In return, Zimbabwe announced that it would increase use of the Chinese yuan, and hold it as a reserve currency. The Chinese government further agreed to provide a $65 million grant to support construction of a new parliament building and a pharmaceutical warehouse. A double taxation accord was also signed, as was a cooperation agreement, under which China donated to Zimbabwe $2.3 million worth of vehicles and equipment for wildlife protection.", "While Zimbabwe's economy is healthier than it was before 2009, its potential remains largely unrealized. According to the World Bank, \"with a relatively well-educated workforce, abundant natural resources and developed infrastructure (albeit aging), the fundamentals for growth and poverty reduction are strong, provided the country can tackle its political fragilities, and build a consensus around inclusive and competitive investment policies.\" Progress has been stymied, in part, by political uncertainty and insufficient access to investment capital, notably in the mining sector and public infrastructure. Especially problematic, given their broad economic and social welfare impacts, are poorly performing water supply and electricity systems—which have been further weakened by the drought. While state and donor-financed upgrades in these areas are underway, state revenue receipts are constrained by low growth and a large informal business sector that pays few taxes. Wage payments often take priority over long-term public capital investments. IMF data suggest that Zimbabwe spends about 70% of state revenues on salaries, although other estimates are higher, and there is political resistance to reductions in public worker payments, which are key to maintaining support for ZANU-PF. The government is increasingly struggling on this front, however; revenue shortfalls resulted in late military and civil service salary payments in June and July 2016—a major political challenge for the government.\nPublic funding shortfalls have long spurred a chronic failure to pay external national debts. This, in turn, has constrained access to foreign credit. In 2015, Zimbabwe owed an estimated $7.1 billion in long-term external public debt, nearly 79% of which was in arrears. This prompted the IFIs to halt lending years ago. Domestic business is also constrained by credit scarcity and high interest rates due, in part, to a banking system in which nonperforming loans have been common.\nTo help address these challenges, the government receives support from the World Bank under the Zimbabwe Reconstruction Fund (ZIMREF), a five-year multi-donor trust fund launched in 2014, to which the United States does not contribute. ZIMREF supports parts of Zim Asset (see below), Zimbabwe's national economic plan. ZIMREF projects support for business environment reforms, public expenditure governance and effectiveness, poverty program monitoring, and public sector analysis and advice.\nAlthough Zimbabwe is not eligible for IFI loans, in early March 2016, the government completed an IMF staff-monitored program (SMP). Under the SMP—technical cooperation that did not involve new IMF credit—the IMF monitored Zimbabwe's implementation of jointly agreed economic reform actions.", "A key goal for Zimbabwe in undertaking the SMP was to improve the economy and relations with the IFIs and donors as a precursor to negotiating the planned repayment of roughly $1.8 billion in IFI credit arrears, prospectively leading to renewed IFI credit flows and expanded technical cooperation. In October 2015, Finance Minister Patrick Chinamasa presented a national arrears clearance plan during the annual meetings of the IMF and the World Bank in Washington, DC, While IMF officials initially gave the plan a positive reception, it reportedly faced internal ZANU-PF opposition.\nOne impediment to an IFI arrears deal and possible future new IFI loans is likely to be a longstanding congressional requirement, first set out in ZDERA and most recently reaffirmed in the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), that the United States vote against any new IFI loans or grants to Zimbabwe's government, \"except to meet basic human needs or to promote democracy.\" Absent robust economic and governance reforms by the government, some in Congress continue to oppose the prospect of new IFI loans by some in Congress, notably Senate Foreign Relations Committee Chairman Bob Corker, and by some in the broader U.S. policy community.\nWhile the United States does not hold veto power over IFI loans, its views are influential on IFI Boards. According to U.S. Treasury officials, U.S. officials have expressed support for Zimbabwean arrears clearance efforts, but have contended that Zimbabwe must pay arrears with its own resources, and have noted that they are bound by U.S. law to vote against most new IFI credit. Press reporting on an AfDB meeting in late May 2016 suggested that Zimbabwe's plan was progressing well, but U.S. Treasury officials consulted by CRS indicated that controversy over Zimbabwe's bond note plan has given pause to IFI and bilateral creditors. In July 2016, an IMF official stated that \"there's no financing program under discussion with Zimbabwe at this point.\" The next big IFI forum on Zimbabwean arrears efforts is likely to occur in the fall of 2016. Treasury officials also stated that, like the United States, most major foreign donor governments are likely to tie any eventual multilateral and bilateral debt clearance deal to governance and human rights reforms. More robust, demonstrable economic policy change and greater financial transparency may also be required.\nObservers are split over whether the Zimbabwean government's stated support for economic reform is genuine and fully backed by top ZANU-PF leaders—many of whom have long periodically expressed hostility toward the IFIs—or is driven primarily by a desperate search for credit and liquidity for the economy. According to the Economist Intelligence Unit, an economic analysis firm,\nthere is little sign thus far of a genuine change in the administration's prioritisation of its political agenda over economic management. […] Policy confusion is likely to persist as (relative) moderates and hardliners fight for influence within the ruling party, and in this environment Zimbabwe is unlikely to make rapid progress on formulating a prudent economic policy.", "", "A key ZANU-PF policy since the late 1990s has been an often violent and chaotic program of land expropriations from large, primarily white commercial farmers. The invasions, generally by landless people, ex-war veterans, and ZANU-PF youth militants, reflected pent-up demand for land and resentment over racially unequal distribution of land inherited from the pre-independence system, with whites owning large tracts of the fertile central highlands. The invasions followed a long period of slow land reform generally premised on a \"willing seller-willing buyer\" model. After the defeat in 2000 of ZANU-PF-proposed constitutional amendments allowing for land seizures, the government informally blessed the invasions and then slowly regulated and systematized them under the Fast Track Land Reform Program (FTLRP).\nThe FTLRP facilitated the expropriation of millions of hectares of land that was then redistributed, under often partisan processes, to a mix of poor and landless persons (so-called \"A1\" recipients), and large commercial farm (\"A2\") recipients, who were often politically connected. FTLRP spurred an exit from farming (or from Zimbabwe altogether) of thousands of white farmers who had produced much of the country's food stocks. This led to a sharp drop in farm output, food supplies, and export earnings in the 2000s, and to internal displacements and job losses for hundreds of thousands of black farm workers. Some positive effects have also been reported, such as welfare gains for poor resettled farmers. However, many redistributed large farms reportedly remain idle, large commercial production has never recovered, and many studies show many problems across the post-FTLRP agricultural sector.\nThe government has often urged that land should be fully used, and in 2015 it initiated a donor-aided national land audit, a key unfulfilled goal of the 2008 GPA. The exercise reportedly faced resistance from politically connected persons whose property claims the audit might affect. In general, security of land tenure for new land occupants is not assured, and their land cannot be used to access credit, a key challenge. Redistributed land recipients generally must comply with \"offer letters\" requiring that the land be in active use, but the government reportedly sometimes rescinds these letters, allegedly for political reasons. A2 offer letter holders may also apply for 99-year leases, which can ostensibly be used as collateral for bank loans. All land, however, is state property under the constitution, and most farmland (as opposed to deeded urban property) cannot be freely bought and sold. As a result, banks reportedly are generally unwilling to provide lease-collateralized credit.\nAn abiding issue with implications for whether reengagement with the IFIs will be successful is if and how Zimbabwe may compensate white farmers whose land was seized. While the government has pledged to pay full compensation for land seized from foreign investors under bilateral investment treaties, authorities assert that compensation for land seized from nationals will be limited to the cost of property improvements, reimbursement for movable property that was taken, and related legal fees. It has paid off some dispossessed white farmers on this basis, but legal disputes over the valuation and compensability of assets have often slowed this process.\nIn March 2016, the government notified parliament that it had established a Lands Compensation Fund to address the issue and proposed to capitalize it with state revenues from A1, A2, and other land rental fees and leases, as well as possible future foreign aid or state appropriations. The state, however, reportedly lacks adequate funding for what one MP has estimated might cost as much as $11.4 billion. Some A1 recipients, many of whom are poor and need access to credit and inputs themselves, have reportedly protested the plan. Several years ago, the government had reportedly discussed a scheme with the World Bank under which the government would issue public bonds backed by IFI credit guarantees as a means of generating compensation funds for dispossessed farmers, but whether it pursues such an approach remains unclear.", "Diamonds have been a source of controversy since a 2006 mining rush in the Marange in eastern Zimbabwe. Between 2006 and 2008 production was mostly undertaken by artisanal miners tapping alluvial reserves (stones deposited on the surface by water and other geological factors). These miners were removed from the area through a brutal police and military campaign before the zone was parceled out to large commercial concessionaires. In the late 2000s, these abuses and alleged exports outside of the Kimberly Process (KP), an international rough diamond trade regulation regime, generated multiple human rights probes, unsuccessful calls for Zimbabwe's suspension from the KP, and KP monitoring of Zimbabwe's diamond exports. The diamond sector has also drawn international scrutiny because financial flows within the sector have been opaque and subject to limited and politically influenced state oversight. During the GNU, large sums of diamond earnings were allegedly systematically funneled to ZANU-PF and politically connected military, intelligence, and ZANU-PF figures involved in the handful of firms that control diamond mining in Marange. Some of these include joint ventures with opaquely managed Chinese state-backed firms.\nFor several years under the GNU, the industry made very limited public tax and royalty payments relative to the hundreds of millions of dollars-worth of diamonds that it exported, a fact publicly noted and criticized by the then-MDC Finance Minister. While little was done during the GNU to exert control over the diamond sector, recently President Mugabe, justifying an ongoing nationalization of the sector (see below), stated that the industry had engaged in \"a lot of swindling and smuggling,\" and that diamond sector firms had \"robbed us of our wealth.\" He claimed that the state had realized only $2 billion of $15 billion in diamond sector earnings. The basis for that unusually high estimate is unclear—officially, the country exported a total of $2.29 billion in diamonds from 2009 through 2015—as is the government's willingness to account for past alleged diamond sector diversions.\nIn early 2015, the government announced that the small number of partially state-owned diamond firms that had controlled the sector would be required to form a single diamond consortium, the Zimbabwe Consolidated Diamond Corporation (ZCDC), in a 51%-49% partnership in favor of the state. The move is ostensibly aimed at boosting sector transparency and accountability and curbing illicit exports. It comes as reserves of alluvial diamonds are declining and as firms move toward tapping kimberlites (deep diamond deposits). The ZCDC is intended to facilitate such extraction, which requires expensive equipment, by pooling investments and attaining economies of scale, while increasing state control over the sector and indigenization of ownership. Some affected firms have sued to halt the mandatory merger, which the state enforced by seizing control of the entire Marange mining area in early 2016. After the suits, at least one of which favored the plaintiffs, President Mugabe declared that that the state would take control of all diamond operations; what this means for the future of ZCDC is not clear. Centralization and indigenization within the diamond processing sector is also underway.", "While hunting is a significant source of conservation income nationally, generating $45 million in 2014 according to the Zimbabwe Parks and Wildlife Management Authority , it is controversial. In July 2015, a protected, rare black-maned lion dubbed Cecil, which was reportedly lured out of Zimbabwe's Hwange game reserve, was killed by a U.S. trophy hunter. The hunt was reportedly licensed but the killing allegedly occurred under the negligent supervision of a paid professional guide, faced criminal charges in Zimbabwe. The U.S. hunter was investigated by U.S. authorities but not charged. The killing drew global attention, condemnation, and calls for an end to lion hunting in Africa, and prompted several airlines to stop transport of animal trophies.\nThe killing of Zimbabwe's elephants for their ivory tusks has also drawn global attention, as has a spate of poaching-related, cyanide-based poisonings that reportedly primarily targeted elephant and rhinoceros and affected multiple species. An estimated 400 or more elephants have reportedly been killed in this manner since 2008, including about 70 in 2015 in Hwange and other parks in Zimbabwe, as have several hundred rhinos in recent years. Rhino horns are valued by Asian traditional medicine buyers, and are a key target of traffickers. In separate cases, in 2015, authorities arrested a group of game wardens and a group of villagers near Hwange in relation to cyanide poisonings, and recently killed an elephant poacher and arrested his alleged accomplices. To counter such activities, in late 2015, the Environment, Water and Climate Minister announced that the government would deploy the national army to supplement game warden and police poaching patrol and interdiction activities in several large game parks using helicopters, drones, and other methods.\nOther government efforts to manage wildlife populations have proven controversial. In July 2015, some conservationists criticized Zimbabwe after wildlife officials corralled a number of allegedly juvenile elephants and exported about 20 of them to China—reportedly as part of a cull in Hwange to reduce an elephant population that is ecologically unsustainable, as well as to earn foreign currency. Critics allege that such captures disrupt herd life and that the animals have been mistreated in China. Zimbabwe had previously come under criticism for similar actions involving exports to countries including China, the United Arab Emirates, and France, but is continuing such exports. In June 2016, the government drew criticism after requesting sale offers from private game reserves to buy wildlife residing in public game reserves. The stated objective was to reduce populations, thereby easing pressure on natural food stocks, and to raise funds to provide food and water to distressed animals.\nU.S. efforts to combat poaching and illicit trade in wildlife are pursued under the Obama Administration's National Strategy for Combating Wildlife Trafficking, in which the U.S. Fish and Wildlife Service (FWS) plays a leading role. In an effort to foster elephant conservation in Zimbabwe, the FWS issued a temporary ban—imposed under the authority of the Endangered Species Act (ESA), which lists the African elephant as threatened—on the import of sport-hunted elephant trophies from Zimbabwe for most of 2014. In 2015, FWS extended the ban indefinitely, pending possible creation of a demonstrably robust elephant conservation system, a goal that U.S. Interior Department officials are working with the government to achieve. The ban was initially justified by a FWS finding that Zimbabwean conservation plans did not adequately specify goals and progress towards conserving elephant populations, and that the government had insufficient data with which to assess the status of its elephant populations and lacked adequate capacities to effectively implement and enforce elephant-related laws. FWS therefore asserted that it could not determine if limited elephant hunting there would enhance the survival of the species.\nIn late 2015, after a review of scientific and commercial information, FWS also listed a subspecies of lion found in eastern and southern Africa, Panthera leo melanochaita [ P. l. melanochaita ], as threatened under ESA. FWS also issued a concurrent rule, which took effect in early 2016, that creates a comprehensive permitting process for all U.S. P. l. melanochaita imports (e.g., live animals, scientific specimens, and sport-hunted trophies). It is intended to ensure that such imports are legally sourced, ESA-compliant, and originate only from countries with well-managed, scientifically based lion species conservation programs.\nIn press accounts, Zimbabwean officials have portrayed the lion and elephant bans as devastating to the country's hunting industry. Hunting bans may have unpredictable effects. Reducing hunting could protect some animals, but properly regulated hunting theoretically targets relatively few animals, and the imposition of bans could change conservation-related economic incentives. Given high fees generated by commercial hunts, bans could potentially reduce community conservation funding and make poaching more economically attractive, potentially placing many species at greater risk. Critics of trophy hunting, however, assert that hunting is often not sufficiently regulated and that the link between conservation and income from hunting is not as strong as proponents may claim.", "Executive branch-issued sanctions on individuals whom the United States has identified as having undermined democratic institutions and processes in Zimbabwe have reinforced U.S. condemnation of ZANU-PF-led human rights violations, breaches of the rule of law, and undemocratic practices since 2000. Such persons are also subject to U.S. visa restrictions. Congress had called for the imposition of such sanctions when it passed ZDERA ( P.L. 107-99 ) in 2001. As earlier noted, ZDERA also set out a range of restrictions requiring U.S. representatives on the boards of IFIs to vote against loans or debt cancellations benefitting the Zimbabwean government, pending fulfillment of a range of conditions. These relate to the effective rule of law (e.g., guarantees of property rights, freedom of speech and association, and an end to the state-backed violence and intimidation); a freely held presidential election or the fulfilment of other conditions conducive to free and fair elections; an equitable, legal, and transparent process of land reform; and subordination of the security services to elected civilian leaders. At the time of ZDERA's passage, Zimbabwe was already ineligible for most multilateral loans as it was in arrears on past loans.\nRecent annual foreign aid appropriations laws have also prohibited U.S. support for international financial institution loans or grants to the Zimbabwean government, with some exceptions, pending fulfillment of a range of conditions. In an early 2016 letter to Treasury Secretary Jacob Lew, SFRC Chairman Bob Corker voiced support for such conditions, as well as others, writing that any new lending to Zimbabwe's government, including lending related to help Zimbabwe clear its IFI arrears, should \"be preceded by meaningful progress toward\"\nclear benchmarks for the restoration of the rule of law, including respect for private property, free press, freedom of speech, and freedom of assembly; a credible process of accountability for missing revenues from diamonds and a monitored plan for capturing future revenues; and official acknowledgement of past gross human rights abuses and a demonstration that the Government of Zimbabwe is prepared to make an earnest effort to remedy those abuses.", "In addition to restrictions on lending, Zimbabwe's default on U.S. loans makes it subject to appropriation prohibitions on government-to-government bilateral aid, with some exceptions (for education, agriculture, anti-corruption, family planning, reproductive health, agriculture, food security, and macroeconomic growth), in some cases subject to executive branch waivers. Zimbabwe's government is also generally ineligible for non-trade-related, nonhumanitarian U.S. aid due to its poor anti-trafficking-in-persons ranking under the TVPA ( P.L. 106-386 , as amended). Successive Administrations have determined Zimbabwe to be ineligible for trade benefits under the African Growth and Opportunity Act (AGOA, P.L. 106-200 , Title I, as amended). There is also a U.S. International Traffic in Arms Regulations (ITAR) ban on the export of defense articles and services to Zimbabwe, with exceptions for hunting rifles for personal use.\nThe Treasury Department's Office of Foreign Assets Control (OFAC) administers targeted financial sanctions imposed by executive order that currently affect roughly 200 Zimbabwean individuals and entities called Specially Designated Nationals. Violators have been convicted in U.S. courts, and in February 2016, Barclays Bank Plc. paid a $2.49 million settlement to OFAC in relation to 159 prohibited transactions by its Zimbabwean subsidiary. In advance of the 2013 elections, the Treasury Department licensed transactions with two sanctioned entities: the Agricultural Development Bank of Zimbabwe and the state-owned Infrastructure Development Bank. State Department Senate testimony in mid-2013 indicated that the action was meant to demonstrate U.S. intent to work toward normalizing relations if further democratic progress was made after the 2013 constitutional referendum. In February 2016, the two entities were removed from the OFAC sanctions list.\nStarting in 2002, the EU introduced various broadly similar sanctions, as did other governments at various times, but gradually eased them beginning in 2012 in response to putative progress made toward democratic reforms under the GNU. Currently, President Robert Mugabe, his wife, and Zimbabwe's defense industries remain subject to an EU asset freeze and travel ban, which also applies, on a suspended basis, to five top-ranking Zimbabwean military or security officials. An EU arms embargo also remains in place.\nIn the past, U.S officials have occasionally raised the possibility that positive rapprochement in bilateral relations might be possible and described the kinds of changes that might warrant a possible relaxation of U.S. aid restrictions and sanctions. This was particularly true toward the end of the GNU, as progress was made toward a reformed constitution. The flawed nature of the 2013 elections, however, together with subsequent ZANU-PF unwillingness to work constructively with the opposition, a return to problematic ZANU-PF policymaking, a failure to more robustly implement reforms necessary to implement the constitution, and an ongoing pattern of using state security forces to repress government critics appear to have foreclosed the near-term possibility of warming relations.", "Despite legal restrictions and sanctions, the United States supports a relatively robust and diverse U.S. aid program implemented by nongovernment actors. The primary goal of U.S. aid programs in Zimbabwe, according to the FY2017 State Department Congressional Budget Justification, is to \"provide support for the democratic, legal, and economic reforms needed for the country's transition to a democracy that is able to meet its citizens' needs.\" To do so, the Obama Administration plans to continue to support efforts by \"key stakeholders and activists to continue to advocate for transparent and accountable governance, to enhance political participation, and to create a more active and robust civil society that promotes respect for human rights, equitable economic growth, political and electoral reform, as well as improved delivery of essential social services.\" Other key development programs seek to \"improve access to vital health services, increase food security and resilience to shocks, and promote more transparent, accountable, and effective economic governance.\" Zimbabwe, like most African countries, participates in the Obama Administration's Young African Leaders Initiative (YALI).\nBilateral aid totaled an estimated $172 million in FY2015 and $152 million in FY2016, and $160 million was requested for FY2017. Zimbabwe also periodically benefits from USAID regional programs. Programs under the FY2017 request—which build on past year programs and are aligned with the USAID 2013-2015 Transition Country Development Cooperation Strategy [CDCS]—are slated to focus primarily on selected governance, food security and agriculture, and health goals. A new CDCS has been approved but not yet published. FY2017 governance programs are slated to provide support for citizen-government engagement, civil society policy analysis, monitoring, and advocacy of constitution implementation and legislative reforms, especially relating to fiscal management, transparency, and debt management. They are also to support the protection of human rights, especially through support for local organizations supporting human rights defenders and other vulnerable democratic activists. USAID programming also provides targeted technical assistance to selected parliamentary committees to enhance lawmaking skills, support legislative actions needed to achieve full and effective implementation of the new constitution, increase fiscal transparency oversight, and promote engagement with various civic constituencies. Ongoing support for electoral reform advocacy, voter education, and election monitoring in advance of the 2018 elections is also planned.\nHealth programs, the largest area of assistance, focus on prevention, care, and treatment to counter HIV/AIDS under the President's Emergency Plan for AIDS Relief (PEPFAR), as well as tuberculosis (TB). Aid under the President's Malaria Initiative (PMI) is slated to scale up malaria prevention and treatment efforts. Food security, agricultural, and resilience-building activities under the Feed the Future global hunger and food security initiative and other programs center on helping smallholder farmers to adopt improved agricultural practices, increase productivity and output, boost their access to credit and earnings, and develop trade capacity and linkages to markets. Nutritional aid to targeted populations and hygiene behavior change are other focus areas, among other food security and economic resilience programs. The United States also supports the removal of landmines in eastern Zimbabwe that remain from the independence war, and provides aid to landmine victims and help to build landmine removal capacity.", "In light of issues discussed in this report and congressional concerns outlined in current and past legislation, policy communications, and hearings, current U.S. policy issues and options for congressional consideration may include", "Zimbabwe's ongoing effort to pay its IFI arrears poses a potential challenge to congressional efforts to oppose any new Zimbabwean access to IFI credit assistance, and also provides a possible point of leverage to achieve U.S.-supported policy outcomes. If Zimbabwe were to pay its IFI arrears and apply for new IFI loans or other support, the United States might not be able to prevent IFI assistance if a majority of other IFI-contributing governments were to support it. U.S. influence within IFI forums is strong, however, and in such a scenario the United States could press for strong conditionality on any IFI support provided to Zimbabwe. Examples might include robust financial reform goals, linkages between IFI assistance and improved governance and human rights protections, and strong Zimbabwean compliance with any performance criteria linked to IFI credit or cooperation.", "Some U.S. policymakers may view U.S. aid restrictions and targeted sanctions as a means of depriving the ZANU-PF-led government and party leaders of resources and support, in the absence of Zimbabwean compliance with a robust set of U.S. conditions. If this outcome—or a message that undesirable behavior will be met with punitive U.S. action—has been the goal of U.S. policy, such measures may have been successful. On such a basis, some U.S. policymakers may support an extension of current U.S. policy, and efforts to broaden or strengthen sanctions against persons who continue to engage in currently sanctioned acts, or set out new criteria defining Zimbabwean government eligibility for U.S. assistance.\nIf the goal has been to change ZANU-PF behavior, however, success has arguably been more limited, as illustrated by Administration decisions to maintain the same sanctions regime that has prevailed for years because U.S.-opposed Zimbabwean behavior has not improved. While ZANU-PF leaders have long regularly railed against U.S. sanctions and aid restrictions, there have been few fundamental shifts in ZANU-PF policy or governance practices. Whether this has anything to do with U.S. policy is difficult to ascertain. The sweeping nature of the conditions associated with U.S. aid restrictions (e.g., that \"the rule of law\" be \"restored\"), however, could be seen as making compliance too much of an \"all or nothing\" proposition for Zimbabwean policymakers. They may perceive as low the likelihood that their decisions will in fact result in U.S. policy changes from which they may benefit, and view as high the risk that such decisions might threaten their own perceived political or pecuniary interests. The relatively restrictive nature of U.S. aid policy and the difficulty of making changes to the sanctions regime may potentially also have reduced the ability of U.S. policy implementers to flexibly use aid or the prospect of sanctions changes in selected cases to incentivize or support incremental change in discrete policy areas (e.g., land ownership) or by individual reformers.\nSome U.S. decision-makers may consider whether balancing the perceived punitive effect of blanket aid restrictions and sanctions with \"carrots\" targeting positive actions in particular instances might help to achieve U.S.-supported outcomes and spur reform. Under an \"action for action\" model, policy implementers could potentially be given the authority, for instance, to seek to selectively relax or amend restrictive measures in response to discrete individual Zimbabwean government actions that fulfill U.S. objectives, or to provide limited and highly targeted support to selected Zimbabwean state agencies that carry out U.S.-supported reform. Such authority could be made subject to close congressional supervision (e.g., be bound by pre-decisional reporting to and authorization from Congress). A more dynamic approach to applying U.S. policy restrictions could potentially enable the United States to exploit and adapt more quickly to emergent trends, developments, and opportunities and foster Zimbabwean government policy actions viewed by U.S. policymakers as positive. Changes in restrictions governing U.S. aid, for instance, might enable the provision of technical assistance to\nfoster Zimbabwean government efforts to implement selected aspects of its economic policy agenda, such as goals agreed with the IMF or other donors under World Bank-mediated Zimbabwe Reconstruction Fund programs, which U.S. policymakers may view as constructive, or support property rights reforms; strengthen implementation of human and civil rights guarantees and other elements of the 2013 constitution, possibly including through efforts to bolster the independence and technical capacity of central government oversight commissions with mandates relating to constitutional rights, freedoms, and other aspects of the rule of law, as well as selected parliamentary committees; and provide or expand leadership training for civil society groups, notably those involved in public policy advocacy and performance monitoring, protection of constitutional rights, and market-led growth.", "As a complement to any possible changes to aid and sanctions policy, Congress could consider the following:\nExpanding use of cultural, educational, and citizen exchanges—such as the Young African Leaders Initiative (YALI), in which Zimbabwe participates—to increase exposure to U.S. values and build long-term U.S.-Zimbabwean leadership linkages. Pursuing greater engagement with opposition actors, pragmatic elements of the Zimbabwean government, and foreign donor governments regarding steps to address key congressional concerns relating to such issues as the rule of law, respect for ownership and title to property, and civil freedoms. Such engagement might include direct congressional dialogue with Zimbabwean interlocutors or collaboration with regional governments aimed at urging inclusive political dialogue and reform, in particular in order to ensure a free and fair electoral process in 2018. How and if the United States could seek to engage with the military and security services with an eye toward encouraging the many powerful actors in the security sector to support a peaceful and rule of law-based transition, and potentially establish the basis for future security sector reform.\nSome policymakers may view pragmatic, realpolitik-oriented engagement as constructive, despite reservations about engaging with elements ZANU-PF or the security sector. Others may prefer an opposite approach, and seek to further restrict diplomacy and engagement with the government with a view toward further isolating it, potentially as a complement to placing additional conditions on aid or strengthening the U.S. sanctions regime. In the view of some observers, however, such an approach may be unlikely to spur reform-oriented change, and instead foster stasis, both with regard to bilateral relations and to the possibility of transformation in Zimbabwe's political system.", "Finally, Members of Congress could review aid and policy goals set out in U.S. strategy toward Zimbabwe, with respect both to current policy goals and programs and to executive branch contingency planning focusing on post-Mugabe transition scenarios. In particular, Members could focus on\nways in which the United States can best help foster a peaceful and constitutionally prescribed transition, and work with other governments to prevent a destabilizing succession process; and ways to leverage the anticipated post-Mugabe transition to achieve key U.S. policy outcomes, such as increased Zimbabwean government accountability and transparency, strengthened democratic processes and institutions, protection of constitutional rights and freedoms and the rule of law generally, and pursuit of market-led economic development policies.", "The outlook for Zimbabwe is highly uncertain. Many Zimbabwean political actors are increasingly focused on their own prospects in the upcoming 2018 elections and the forthcoming succession of Mugabe. This is particularly the case within ZANU-PF, whose upper hierarchy appears to be divided by factional dynamics and rivalries. Meanwhile, weak economic performance has persisted, generating increasing popular resentment and protest. While some top Zimbabwean policymakers are focused on fostering economic reform—including reforms agreed with the IMF—it is unclear how much cross-government support there is for such efforts, as opposed to simply meeting a set of criteria that might allow the country to eventually access IFI credit, while keeping in place the kinds of nationalist, state-centered economic policies long advocated by ZANU-PF.\nMugabe's prospective succession, which has been a focus of Zimbabwean politics and debate for years, is likely to present a watershed moment for the country. It could spur a transition toward a new governing regime with a new leadership ethos—potentially one more accepting of a pluralistic political system and market-led economy. On the other hand, succession could generate significant political acrimony, instability, and violence, possibly with regional humanitarian and security implications. It could also lead to a managed transition characterized by little political and policy change and continued ZANU-PF domination under a new leader.\nAll of these outcomes have implications for U.S. policy toward, and future relations with, Zimbabwe. What influence the United States may have on these outcomes, however, is likely to be limited by the fact that developments in Zimbabwe are dominated primarily by domestic factors—as well as conflicting policy goals among powerful states bordering Zimbabwe, such as South Africa and Angola. The scope and flexibility of actions available to U.S. policy implementers, and thus the potential for U.S. influence in Zimbabwe, may also be limited by relatively static and inflexible U.S. sanctions and aid restriction policies. While some U.S. policymakers may view any relaxation of U.S. aid restrictions and sanctions policy as an accommodation to what they see as a bad government, others may seek to examine changes in policy that might allow greater U.S. freedom of action to engage with reformers and other pragmatic Zimbabwean leadership elements but simultaneously not reward the most problematic actors within the government." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 2, 2, 1, 2, 1, 2, 2, 3, 2, 2, 2, 3, 3, 1, 1, 2, 2, 2, 3, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h1_full", "h0_title", "h0_full", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h3_full", "h3_full h2_title", "", "h2_full", "h3_full h2_full", "", "", "", "", "" ] }

{ "question": [ "what led to the political change in Zimbabwe?", "What were the economic ramifications of the political change in Zimbabwe?", "How did Zimbabwe deal with the political and economic turmoil in the country?", "What caused Zimbabwe economy to decline once again?", "How was Congress planning on helping Zimbabwe's government?", "What problems do US officials believe exist in Zimbabwe ?", "What has the US done to address these problems?", "How does the US assist Zimbabwe without directly funding its corrupt government?", "What is the purpose of the US monetary aid to Zimbabwe?", "How did the US choose to allocate its aid to Zimbabwe?", "What has Congress done to increase aid to Zimbabwe?", "Why is finding a successor to President Mugabe is a big challenge?", "Why do policymakers believe economic reform is needed in Zimbabwe?", "What concerns do US officials have regarding wildlife protection in Zimbabwe?", "What has the US done to address these concerns?" ], "summary": [ "Zimbabwe, a southern African country of about 14 million people, gained independence from the United Kingdom in 1980 after a lengthy armed struggle against white minority rule. The armed struggle, and the enduring effects of land allocations that favored whites, have profoundly shaped post-independence politics, as have the nationalist economic policies of the ruling Zimbabwe National Union-Patriotic Front (ZANU-PF), led by long-time president Robert Mugabe.", "Land seizures, state-centric economic policies, and persistent political turmoil under Mugabe led to a severe economic contraction between 2000 and 2009, which contributed to ZANU-PF's first-ever loss of its parliamentary majority in elections in 2008.", "A subsequent political impasse over the contested election results led to dialogue and the creation in 2009 of a Government of National Unity (GNU) joining ZANU-PF and key opposition parties. A politically tense period of GNU governance led to an economic recovery, some political reforms, and the enactment of a new constitution.", "Elections in 2013, which featured reported irregularities, gave ZANU-PF a strong parliamentary majority, extended Mugabe's tenure, and ended the GNU. Economic growth has since markedly decreased and intra-ZANU-PF splits and opposition to ZANU-PF's economic policy and governance practices is growing, as indicated by a wave of protests in 2016.", "Congress, citing governance and human rights concerns, has enacted legal prohibitions on aid to Zimbabwe's central government and on U.S. support for multilateral loans to Zimbabwe's government, under the Zimbabwe Democracy and Economic Recovery Act of 2001 (ZDERA, P.L. 107-99) and foreign aid appropriations measures.", "Successive U.S. Administrations have condemned human rights violations, breaches of the rule of law, and undemocratic actions by Mugabe and top ZANU-PF officials.", "U.S. officials have imposed targeted economic and travel sanctions on individuals and firms identified as committing or abetting such actions.", "Despite such restrictions, the United States funds a relatively diverse set of assistance programs in Zimbabwe that are implemented by nongovernment actors.", "According to the FY2017 State Department foreign aid budget request, this aid seeks to support a \"transition to a democracy\" and \"human rights, equitable economic growth, political and electoral reform,\" leading to \"transparent, accountable, and effective\" political and economic governance.", "Bilateral aid allocations totaled $172 million in FY2015 and an estimated $152 million in FY2016; $160 million was requested for FY2017. Health programs are the largest area of aid, and focus on HIV/AIDS, tuberculosis, and malaria.", "Relevant bills in the 114th Congress include H.R. 5912 and S. 3117, the House and Senate appropriations bills for the Department of State, foreign operations, and related programs.", "The question of who may succeed President Mugabe, who turned 92 years old in early 2016, presents an immediate and pressing challenge for Zimbabwe's political system and people, as well as for U.S. policymakers. Potential succession challenges could generate political and economic instability, with possible regional humanitarian and migration implications.", "Additional issues of long-standing concern to U.S. policymakers include what most see as a need for economic reforms to enable private sector growth, improved macroeconomic governance, and reform of land tenure and property rights.", "Also of interest to some U.S. officials are wildlife protection efforts in Zimbabwe, which came under intense international criticism after a U.S. trophy hunter killed a rare black-maned lion named Cecil near a game reserve in 2015.", "The United States has taken steps to promote wildlife conservation in Zimbabwe, including by placing temporary bans on the import of sport-hunted elephant trophies and imposing permit requirements on lion imports." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 1, -1, -1, 1, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Overview of Patent Law", "Requirements for Obtaining a Patent", "Rights of Patent Holders", "Major Patent Legislation", "Administrative Proceedings Before the PTO", "Proceedings Before the Federal Courts", "Patent Cases of the Supreme Court's October 2016 Term", "Cases Involving Procedural Issues", "TC Heartland v. Kraft Foods Group Brands", "SCA Hygiene Products Aktiebolag v. First Quality Baby Products", "Cases Involving Multicomponent Products", "Life Technologies v. Promega", "Samsung Electronics v. Apple", "Cases with Implications for the Health Care Industry", "The Legal Landscape for Health Care Innovators", "Impression Products v. Lexmark", "Sandoz v. Amgen", "Emerging Issues in Patent Law", "Viability of Inter Partes Review Proceedings", "Legislative and Executive Patent Law Activity" ], "paragraphs": [ "", "In an increase over prior terms, the Supreme Court of the United States issued six opinions involving patent law during its October 2016 Term. These decisions addressed issues ranging from patent exhaustion, multicomponent products, and biosimilar patents to procedural issues like venue and the statute of limitations for infringement claims. The increase in patent cases heard by the High Court coincides with an apparent increase in patent litigation generally. As observed by Judge Kathleen O'Malley of the U.S. Court of Appeals for the Federal Circuit (Federal Circuit), the court that has exclusive jurisdiction over most appeals involving patents: \"While federal filings in complex civil cases in regional circuits have been down in recent years, the patent litigation business is booming. Indeed, patent filings in district courts have almost doubled from 2010—when there were 3,301 patent actions filed—to 2013, when ... there were 6,497 such cases instituted.\"\nThe increase in patent litigation may reflect a broader interest in patents generally. As Judge Timothy Dyk, also of the Federal Circuit, has written: \"[P]atent law has ... moved further into the mainstream. And the importance of intellectual property to the broader American economy has continued to grow, with an estimated 84% of the S&P 500 Market Value attributable to intangible assets in 2015.\" Another commentator has noted that \"patent law is indisputably more visible to lawyers and to the general public today than it was a decade or two ago. Stories about patent law, patent litigation, and even the Federal Circuit itself are regular fixtures of leading newspapers....\" Accordingly, an understanding of patent law and the cases issued during the Supreme Court's recently concluded October 2016 Term will likely be of interest to Congress.\nTo this end, this report begins with an overview of patent law. It then discusses the Supreme Court's role in the development of patent law generally before examining the Court's recent decisions in detail. Finally, the report closes with a preview of developments in patent law that are on the horizon, such as the continued viability of certain administrative proceedings related to the validity of patents, which is the subject of two cases scheduled to be heard during the Court's upcoming term, as well as patent reform activity in the legislative and executive arenas.", "The patent law regime in the United States is grounded in the U.S. Constitution itself; article I, section 8, clause 8 of the Constitution provides: \"The Congress Shall Have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their respective ... Discoveries.\" Nonetheless, the rights associated with patents do not arise automatically. Rather, to obtain patent protection, the Patent Act of 1952 requires inventors to file a patent application with the PTO.", "A patent may be obtained by \"[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof,\" subject to the requirements of the Patent Act. A valid patent bestows upon its holder a time-limited \"franchise granting the right to exclude everyone from making, using or selling the patented invention without the permission of the patentee.\" This right to exclude is enforceable under the Patent Act, which states that anyone who \"makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent ... infringes the patent\" unless authority to do so is secured from the patent holder.\nThe administrative process of applying for and acquiring a patent before the PTO is called \"patent prosecution.\" Once an inventor files a patent application, a patent examiner at the PTO will evaluate whether the application meets the requirements of the Patent Act and thus merits the award of a patent. Under the Act, the application must include a written \"specification.\" The specification must include:\na written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art [ ] to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.\nIn other words, the Patent Act requires that a specification meet: (1) the written description requirement , which is met when a specification \"'reasonably conveys to those skilled in the art that the inventor had possession of the claimed subject matter as of the filing date'\" of the patent; (2) the enablement requirement , under which \"the specification ... must teach those skilled in the art how to make and use the full scope of the claimed invention without 'undue experimentation'\"; and (3) the best mode requirement , which requires that the specification demonstrates that \"the inventor possessed a best mode of practicing the claimed invention at the time of filing the patent application.\"\nThe Patent Act further requires that the specification \"conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the inventor or a joint inventor regards as the invention.\" Patent claims define the parameters of what an inventor considers his or her invention. As the Federal Circuit has noted:\nThe function of claims is (a) to point out what the invention is in such a way as to distinguish it from what was previously known ... and (b) to define the scope of protection afforded by the patent. In both of those aspects, claims are not technical descriptions of the disclosed inventions but are legal documents like the descriptions of lands by metes and bounds in a deed which define the area conveyed but do not describe the land .\nIn addition to examining a patent application for compliance with the statute's specification requirements, the patent examiner also determines whether a patent application meets several substantive standards of the Patent Act. Namely, to be patentable, an invention must be (1) a \"process, machine, manufacture, or composition of matter\" that is (2) novel, (3) useful, and (4) nonobvious. A corollary to the first requirement that \"specifies four independent categories of inventions or discoveries that are eligible for protection\" is that there is certain subject matter that is ineligible for patent protection; three specific examples of unpatentable subject matter that the Supreme Court has articulated are \"laws of nature, physical phenomena, and abstract ideas.\" As to novelty, the Act provides that a patent cannot be issued if \"the claimed invention was patented, described in a printed publication, or in public use, on sale, or otherwise available to the public before the effective filing date of the claimed invention.\" That is, the invention must be something new and different as compared to the so-called \"prior art,\" which are the existing references that disclose the state of the art, such as publications and other patents. As to usefulness or utility, the patent application must demonstrate that the \"claimed invention has a significant and presently available benefit to the public ... which is not so vague as to be meaningless.\" Finally, as to nonobviousness, the Act provides that \"[a] patent for a claimed invention may not be obtained ... if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious before the effective filing date of the claimed invention to a person having ordinary skill in the art to which the claimed invention pertains.\" In other words, \"a patent may be found invalid as obvious if 'there are a finite number of identified, predictable solutions, [and] a person of ordinary skill has good reason to pursue the known options within his or her technical grasp.'\"", "With some exceptions, a patent is generally granted \"for a term beginning on the date on which the patent issues and ending 20 years from the date on which the application for the patent was filed.\" Notably, once this period expires, others may use the invention without regard to the expired patent. During the term of a patent, however, anyone who \"makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent ... infringes the patent\" unless authority to do so is secured from the patent holder. Patent rights, however, are not self-enforcing; rather, patent holders must initiate enforcement measures themselves, most commonly through litigation in federal court.\nAlthough issued patents are entitled to a presumption of validity, accused infringers may defend against infringement actions on several grounds, including: (1) noninfringement or the \"absence of liability for infringement\" in light of a valid license or that the patent claims, when properly construed, do not cover the allegedly infringing acts; (2) patent invalidity , that is, that a patent is invalid for failure to meet any of the statutory requirements discussed above; or (3) unenforceability , or that a patent is unenforceable due to, for example, inequitable conduct in obtaining the patent.\nThere are several remedies available to the patent holder in light of a finding of infringement, and the Supreme Court has taken an active role in defining these remedies over the past decade. First, infringers can be enjoined from further infringement. Until 2006, the Federal Circuit followed a \"'general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.'\" In eBay Inc. v. MercExchange, L.L.C. , however, the Supreme Court clarified that courts must follow the four-factor test used in other areas of law before issuing a permanent injunction, thus heightening the requirement for injunctions in patent cases.\nSecond, the Patent Act provides for damages \"adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer.\" The Act further gives courts the discretion to \"increase the damages up to three times the amount found or assessed.\" In 2016, the Supreme Court clarified in Halo Electronics, Inc. v. Pulse Electronics, Inc. , that the award of such enhanced damages is \"designed as a 'punitive' or 'vindictive' sanction for egregious infringement behavior,\" such as \"willful infringement.\" Finally, attorney fees may be awarded to the prevailing party in \"exceptional cases.\" In 2014, the Supreme Court clarified in Octane Fitness, LLC v. Icon Health & Fitness Inc. , that an \"exceptional case\" is \"one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated\" based on the \"totality of the circumstances.\"", "As discussed below, patent reform appears to be of perennial interest to Congress, particularly over the last few decades. While a comprehensive history of legislative activity in the patent area is beyond the scope of this report, there are several key pieces of legislation enacted since the passage of the Patent Act of 1952 that merit mention.\nIn 1984, Congress passed the Drug Price Competition and Patent Term Restoration Act, commonly known as the Hatch-Waxman Act, which amended both patent law as well as food and drug law. The Hatch-Waxman Act included provisions intended to facilitate the marketing of generic pharmaceuticals, while incentivizing brand-name firms to innovate. For example, abrogating then-prevailing case law, the Act allowed potential generic drug manufacturers to obtain marketing approval from the Food and Drug Administration (FDA) on a patented drug by relying on the safety and efficacy data of an approved drug, while the patent holder, in turn, receives a period of regulatory exclusivity. In other words, the Act allowed generic manufacturers to commence work on a generic version of an approved drug during the life of the patent if the work complies with FDA regulations. In 2009, Congress enacted a related statute called the Biologics Price Competition and Innovation Act of 2009, which established procedures for \"biologics\"—a category of medical preparations derived from a living organism—that are found to be \"biosimilar\" or interchangeable with an FDA-approved biologic. Both of these laws are discussed in more detail below.\nThe most recent patent reform legislation, and perhaps the one that has made the most significant changes to patent law in the modern era, is the Leahy-Smith America Invent Act (AIA), signed into law in September 2011. Among the significant changes the AIA made to the patent system is the so-called \"first to file rule,\" under which the first inventor to file a patent application prevails when two or more persons independently develop the identical or similar invention at approximately the same time. This change brought the United States into conformity with all other patent-issuing countries, thereby arguably facilitating better cross-border cooperation in the patent arena. In addition, the AIA established assignee filing, which allows an inventor's employer or other entity to which patent rights are assigned to file patent applications, in contrast to the previous rule that the natural person or persons who developed an invention must file the patent application, even where the invention was developed in the inventor's capacity as an employee.\nPerhaps most significantly, as explained in more detailed in the following section, the AIA established or modified various administrative challenges to the validity of an issued patent before the PTO, including (1) post-grant review , which allows petitioners to challenge patent validity for failure to meet any of the Patent Act's patentability requirements for a patent, such as ineligible subject matter or lack of enablement; (2) inter partes review , which replaced the former inter partes reexamination system; (3) supplemental examination , which allows patent holders to request an examination to \"consider, reconsider, or correct information believed to be relevant to the patent\"; and (4) a transitional program for covered business method patents , which is a temporary program for a subset of patents involving certain \"covered business methods\" that operate similarly to post-grant reviews, but will only be available through September 2020 under a sunset provision in the AIA.\nWhile there have not been substantial changes made to patent law through legislation since the enactment of the AIA, as discussed below, there remains the possibility of future changes. As well, certain cases before the federal courts have the potential to invalidate some provisions of the AIA, such as those providing for inter partes review proceedings.", "As is evident, in addition to patent prosecution, the PTO conducts other administrative review proceedings, including those provided for in the AIA. Most of these proceedings involve challenges to the validity of issued patents and may result in the revocation of a previously issued patent. Such proceedings play a central role in the country's patent system as a popular, \"less expensive and quicker alternative to litigation.\"\nA post-grant review, made available under the AIA, allows petitioners to challenge a patent's validity based on any ground of patentability, but must be filed within nine months of the date the patent was granted. After a petition for a post-grant review is filed, the patent holder has the opportunity to file a response arguing that the post-grant review should not be initiated. If such a review is initiated, however, the PTO's Patent Trial and Appeal Board (PTAB) will conduct a trial and issue a final written decision, which can be appealed to the federal courts.\nAlso created by the AIA, an inter partes review allows any person (other than the patent holder) to challenge a patent based on previously issued patents or printed publications (i.e., the prior art) on the basis of novelty and/or nonobviousness. Such petitions may be filed at least nine months after a patent issues or a post-grant review concludes, whichever is later. As a result, a patent may be challenged administratively on any basis of patentability within nine months of the date it was granted through a post-grant review, after which it can be challenged on novelty and nonobviousness grounds through an inter partes review for the remainder of the patent's term. Both types of proceedings involve a trial-like procedure before a three-member panel, and include the use of witnesses, limited discovery, and a hearing prior to a decision on the merits.\nFinally, reexamination proceedings, which predate the enactment of AIA, allow any person, including the patent holder or the PTO Director, to cite prior art to challenge an issued patent on novelty or nonobviousness grounds. Unlike post-grant review and inter partes review proceedings, however, reexaminations effectively reopen prosecution of an issued patent and proceed on an ex parte basis (i.e., between the patent applicant and the PTO without participation by third parties). In addition, reexamination proceedings result in either (1) a certificate confirming the patentability of the patent, (2) the reissue of the patent with narrowed claims, or (3) a declaration of patent invalidity.", "The Federal Circuit has exclusive, nationwide jurisdiction over the majority of patent appeals, while the Supreme Court has discretionary authority to review cases decided by the Federal Circuit. The Federal Circuit also has jurisdiction over appeals involving veterans' claims, government contracts, federal taxation, claims under the Vaccines Act, grievance claims from federal employees, appeals involving international trade matters, among others. Notably, the Federal Circuit has \"no criminal jurisdiction, hear[s] few constitutional issues, and almost no cases involve state-law issues.\" This unique jurisdictional purview may be responsible for what one commentator has described as a view of the Federal Circuit, on the part of Supreme Court and the other circuit courts, \"as inhabiting a world apart.\" Some even view the Federal Circuit as a \"rogue\" court that is frequently reversed by the Supreme Court. However, although over the last decade the reversal rate for the Federal Circuit has been above the median of the circuit courts, it has been lower than five of its twelve sister circuits. Nonetheless, \"a perceived tension between the Supreme Court and [the Federal Circuit] by the bar and by the academy\" appears to exist, with some commentators questioning whether \"the Supreme Court understands patent law well enough to make the governing rules,\" and others criticizing the Federal Circuit as \"having a parochial attitude or a we know best attitude toward patent law.\"\nWith respect to its patent docket, the Federal Circuit's appeals originate from three main sources: the federal district courts, the PTO, and the U.S. International Trade Commission. Since the enactment of the AIA in 2011, however, there has been \"substantial growth\" in appeals coming from PTO proceedings: \"In 2000, cases from the [PTO] made up only 4% of [the Federal Circuit's] docket while in 2016 they were 33%. \" This trend demonstrates the significance of the PTO's administrative proceedings to the country's patent system.\nAs noted, the Supreme Court has taken an increasing number of cases involving patent law and other areas of intellectual property over the last decade, perhaps indicating the Court's heightened interest in patent law or recognition of its increased prominence in society as a whole. Ten years ago, Judge Dyk predicted that the Supreme Court would continue its trend of hearing more cases from the Federal Circuit involving substantive patent law, a prediction that is proving to hold true. Indeed, based on annual statistics on the Supreme Court published by the Harvard Law Review , from the October 2006 Term through the October 2015 Term \"the Supreme Court has taken an average of four [Federal Circuit] cases each term, representing 5.4% of the Court's merits cases. A large proportion of those cases have involved substantive patent law or related procedural issues.\" Because of this increase, one commentator has stated: \"No longer is the Federal Circuit 'the de facto Supreme Court of patents.'\"\nWhile the High Court is playing a larger role in the development of patent law by issuing an increased number of patent law opinions, the nature and extent of the Court's influence on patent law is the subject of some debate. Indeed, while Judge Dyk has asserted that \"[t]he Supreme Court's decisions have had a major impact on patent law [and] ... have involved important and foundational questions with enormous impacts on patent litigation,\" others contend that \"the sheer quantity of patent cases decided by the Supreme Court in recent years might make it seem as if the Court is serving as a percolating force in patent law by disrupting ossified doctrine and engaging in independent analyses of what the law should be.... But the key doctrines governing novelty, nonobviousness, and disclosure have remained relatively static.\" Nonetheless, the increased number of Supreme Court opinions involving patent law has evinced several trends.\nOne trend involves cases wherein the Court addresses a legal issue that is present in federal litigation generally, but appears to have been treated differently in the patent law context. Examples include eBay Inc. v. MercExchange, L.L.C. , addressing the test for issuing injunctions; MedImmune, Inc. v. Genentech, Inc. and Medtronic, Inc. v. Mirowski Family Ventures, LLC , addressing declaratory judgments; and Gunn v. Minton , addressing subject matter jurisdiction. A second trend involves an apparent effort on the part of the Court to harmonize patent law with other areas of federal law, such as copyright. Examples include Global-Tech Appliances, Inc. v. SEB S.A. , where the Court relied on the doctrine of willful blindness from criminal law to articulate the mental state requirement for induced patent infringement; Octane Fitness, LLC v. ICON Health & Fitness, Inc. , wherein the Court relied on case law interpreting the fee-shifting provision of the Copyright Act to determine the appropriate standard for awarding attorney fees under the Patent Act; and Commil USA, LLC v. Cisco Sys., Inc. , which drew upon knowledge requirements for civil and criminal liability to determine if liability for induced infringement is possible in the absence of actual knowledge. As shall be seen, further examples of the trends are evident in some of the Court's opinions issued during its October 2016 Term, as discussed below.", "", "The Supreme Court issued two opinions involving procedural issues during its October 2016 Term that will affect when and where patent cases will be filed. Notably, in TC Heartland LLC v. Kraft Foods Group Brands LLC , the Court overruled long-standing Federal Circuit precedent with regard to venue rules in patent cases, holding \"that a domestic corporation 'resides' only in its State of incorporation for purposes of the patent venue statute.\" And in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC , the Court ruled that the equitable doctrine of laches, which protects against unreasonable, prejudicial delay in commencing suit, is not available in a patent infringement action filed within the Patent Act's statute of limitations.", "TC Heartland centered on the meaning of the patent venue statute, 28 U.S.C. § 1400(b), which provides that \"[a]ny civil action for patent infringement may be brought in the judicial district where the defendant resides, or where the defendant has committed acts of infringement and has a regular and established place of business.\" Congress has amended the general venue statute twice, but has not amended the patent-specific statute, since the Court issued its 1957 opinion in Fourco Glass Co. v. Transmirra Products Corp. , which held that the patent-specific venue statute \"is the sole and exclusive provision controlling venue in patent infringement actions, and ... is not to be supplemented by ... [the general venue statute, 28 U.S.C.] § 1391(c).\" Nevertheless, after Congress amended the general venue statute in 1988 (but not the patent-specific statute), the Federal Circuit held in 1990 that this change also altered the patent-specific statute by reference.\nSpecifically, under the 1988 amendments, the general venue statute provided that, \"[f]or purposes of venue under this chapter , a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.\" In VE Holding Corp. v. Johnson Gas Appliance Co. , the Federal Circuit held that through this amendment of the general venue statute, Congress also changed the meaning of \"resides\" in the patent-specific venue statute. Accordingly, in the time since VE Holding was issued, the Federal Circuit has followed the rule that venue in patent cases is proper anywhere a defendant is subject to personal jurisdiction.\nIn 2011, Congress enacted the current version of the general venue statute, again leaving the patent-specific statute unaltered. Similar to the 1988 version, the present general venue statute provides: \"Except as otherwise provided by law\" and \"[ f ] or all venue purposes ,\" a corporation \"shall be deemed to reside, if a defendant, in any judicial district in which such defendant is subject to the court's personal jurisdiction with respect to the civil action in question.\" The Federal Circuit considered this amendment in its opinion in TC Heartland , and reaffirmed its holding in VE Holding , \"reasoning that the 2011 amendments provided no basis to reconsider its prior decision.\"\nIn 2014, Kraft Foods, a corporation organized under Delaware law with its principal place of business in Illinois, sued TC Heartland, a company organized under Indiana law and headquartered in Indiana, for patent infringement in the federal district court for the District of Delaware. Although TC Heartland was not registered to conduct business in Delaware, and had no meaningful presence there, it had shipped a small amount of the allegedly infringing products into Delaware. Relying on VE Holding Corp. , the district court in Delaware dismissed TC Heartland's motion to dismiss the case or transfer venue to the district court for the Southern District of Indiana, and the Federal Circuit subsequently denied TC Heartland's petition for a writ of mandamus on the same grounds.\nIn a unanimous opinion for the Court, Justice Clarence Thomas reversed the Federal Circuit based on Fourco . In reversing, the Supreme Court stated: \"In Fourco, this Court definitively and unambiguously held that the word 'reside[nce]' in § 1400(b) has a particular meaning as applied to domestic corporations: It refers only to the State of incorporation. Congress has not amended § 1400(b) since Fourco, and neither party asks us to reconsider our holding in that case.\" Thus, the Court \"conclude[d] that the amendments to § 1391 [(i.e., the general venue statute)] did not modify the meaning of § 1400(b) [(i.e., the patent-specific venue statute)] as interpreted by Fourco . [The Court] therefore h[e]ld that a domestic corporation 'resides' only in its State of incorporation for purposes of the patent venue statute.\"\nThe practical effects of the Federal Circuit's ruling in VE Holdings were dramatic. In fact, although there are ninety-four federal district courts in the United States, a single district court, that of the Eastern District of Texas, received almost half (44%) of all patent cases filed in 2015. By way of comparison, the District of Delaware had the second largest number of patent cases at 9%, followed by the Central and North Districts of California with 5% and 4%, respectively. In addition, one judge in the Eastern District of Texas handled two-thirds of the district's patent cases, meaning a single judge was assigned to nearly one-third of all the country's patent cases. Commentators have suggested that the popularity of the Eastern District of Texas as a venue for patent cases post- VE Holdings cannot be attributed to \"geographical clustering of patent-intensive industries, as major technology hubs are located elsewhere,\" but is instead explained by \"the patentee-friendly reputation of the district, attracting litigation through favorable procedural and administrative practices in patent cases.\" Perhaps unsurprisingly, calls for venue reform in patent cases came from many corners, particularly in light of the attention the issue received in national media reporting, such as stories describing \"the empty Texas offices rented by patentees and the skating rink sponsored by Samsung just outside the courthouse to curry favor with local juries.\" The issue has also been the subject of legislative proposals, as recently as last year. The Supreme Court's decision in TC Heartland , however, arguably dissipates many of these concerns.\nAs to the immediate impact of the TC Heartland decision, since it was issued on May 22, 2017, patent complaints filed in July 2017 in the Eastern District of Texas decreased 43% compared to June 2017, which is a decrease of 83% compared to July 2016. And, conversely, the District Court for Delaware received the greatest number of patent complaints for two months in a row after the opinion was issued, twice as many when compared to the same time year ago. Similarly, patent filings in the District Court for Central California increased by more than a third after the opinion was issued. The long-term effects of TC Heartland , however, remain to be seen.\nOf note to Congress, in addition to a potential long-term geographic redistribution of patent cases among the federal district courts, commentators have also suggested that TC Heartland may curb cases filed by non-practicing entities, better known as \"patent trolls.\" Non-practicing entities are \"patent owners who do not actually practice the invention that is the subject of the patent.... Trolls are generally considered entities that purchase patents for the purpose of generating capital by enforcing them.\" Of the cases filed in the Eastern District of Texas in 2015 (which as noted constituted 44% of the country's patent filings), 95% were filed by non-practicing entities. Thus, the unavailability of that venue for the many patent cases that are filed against corporations that are not incorporated in that forum may disincentivize the filing of patent cases by non-practicing entities.", "Another opinion involving a procedural issue, but arguably with potentially fewer ramifications, is the Court's opinion in SCA Hygiene Prod uct s Aktiebolag v. First Quality Baby Prod uct s , wherein the Court addressed \"the relationship between the equitable defense of laches and claims for damages that are brought within the time allowed by a statute of limitations.\" This was the subject of the Court's opinion three years earlier, in the context of the Copyright Act, in Petrella v. Metro-Goldwyn- Mayer, Inc. , wherein the Court concluded \"in face of a statute of limitations enacted by Congress, laches cannot be invoked to bar legal relief.\" In SCA Hygiene , the Court held that \" Petrella 's reasoning applies to a similar [statute of limitations] provision of the Patent Act,\" 35 U.S.C. § 286, and therefore \"[l]aches cannot be interposed as a defense against damages where the infringement occurred within the period prescribed by § 286.\" Thus, this opinion can be viewed as an example of one in which the Court harmonizes patent law with other areas of federal law, as discussed above.\nThe underlying suit began in October 2003 when SCA, a manufacturer of adult incontinence products, sent a letter to First Quality alleging that the company was making and selling infringing products. In response, First Quality informed SCA that one of First Quality's patents actually antedated SCA's patent, and therefore SCA's own patent was invalid. No further communication between the companies occurred until August 2010, when SCA filed a patent infringement action again First Quality. In the intervening period, SCA had initiated a reexamination proceeding before the PTO, and obtained a certificate confirming the validity of SCA's patent in light of First Quality's patent. First Quality moved to dismiss SCA's infringement action based on laches and equitable estoppel. In an en banc opinion, the Federal Circuit held that laches can defeat an infringement claim for damages even if it was filed within the Patent Act's six-year statute of limitations. The Supreme Court reversed based on its opinion in P e trella .\nOf possible interest to Congress, the Court in SCA Hygiene emphasized that:\nPetrella 's holding rested on ... separation-of-powers principles.... When Congress enacts a statute of limitations, it speaks directly to the issue of timeliness and provides a rule for determining whether a claim is timely enough to permit relief. The enactment of a statute of limitations necessarily reflects a congressional decision that the timeliness of covered claims is better judged on the basis of a generally hard and fast rule rather than the sort of case-specific judicial determination that occurs when a laches defense is asserted. Therefore, applying laches within a limitations period specified by Congress would give judges a \"legislation-overriding\" role that is beyond the Judiciary's power. As we stressed in Petrella , \"courts are not at liberty to jettison Congress' judgment on the timeliness of suit.\"\nAccordingly, in SCA Hygiene the High Court demonstrated that its prohibition on the use of laches as an equitable defense in cases claiming damages extends beyond the copyright context of Petrella , and may extend to arguably all statute of limitations enacted by Congress. Thus, the unavailability of laches is a consideration when such statutes are drafted.\nOne potential practical consequence of the Court's SCA Hygiene opinion, as described in Justice Stephen Breyer's dissenting opinion and by at least one commentator, is that patent holders may now wait until close to the expiration of the six-year limitations period to file infringement cases so that damages will have the maximum amount of time to accrue. As Justice Breyer observed, in the wake of SCA Hygiene , \"a patentee has considerable incentive to delay suit until the costs of switching—and accordingly the settlement value of a claim—are high. The practical consequences of such delay can be significant, as the facts of this case illustrate: First Quality invested hundreds of millions of dollars in its allegedly infringing technologies during the years that SCA waited to bring its suit.\" And, unlike the Patent Act, Justice Breyer points out that the Copyright Act \"has express provisions that mitigate the unfairness of a copyright holder waiting for decades to bring his lawsuit.\" This, according to Justice Breyer, is a difference between the patent and copyright regimes that should have prevented the majority from applying Petrella in the patent law arena. The extent to which this tactic will be used in future patent litigation of course remains to be seen.", "In another pair of cases heard during the Supreme Court's October 2016 Term, the Supreme Court dealt with issues related to patents on multicomponent inventions—one in the context of determining infringement and another in the context of calculating damages.", "Section 271(f)(1) of the Patent Act provides that anyone who supplies \"in or from the United States all or a substantial portion of the components of a patented invention, where such components are uncombined in whole or in part, in such manner as to actively induce the combination of such components outside of the United States in a manner that would infringe the patent if such combination occurred within the United States, shall be liable as an infringer.\" In Life Technologies v. Promega , the Supreme Court addressed \"whether the supply of a single component of a multicomponent invention is an infringing act under [this provision].\" The Court held that it does not, stating \"a single component does not constitute a substantial portion of the components that can give rise to liability under § 271(f)(1).\"\nLife Technologies involved a license for a patent on a toolkit for genetic testing. The toolkit covered by the patent contained five components, one of which was the enzyme Taq polymerase. Promega was the exclusive licensee of the patent and sublicensed it to Life Technologies, a manufacturer of genetic testing kits. Life Technologies manufactured all components of its toolkits in the United Kingdom, except for the Taq polymerase, which it made in the United States. The company then shipped the Taq polymerase to its United Kingdom facility, where it was combined with the other four components of the kit. Four years into this agreement, Promega sued Life Technologies on the grounds that it infringed the patent by selling the toolkits outside of the allowable fields of use in the license, which was limited to clinical and research markets. Because Life Technologies supplied the Taq polymerase from the United States to its United Kingdom manufacturing facilities, Promega alleged liability under § 271(f)(1).\nOn appeal to the Federal Circuit, the court held that \"there are circumstances in which a party may be liable under § 271(f)(1) for supplying or causing to be supplied a single component for combination outside the United States.\" Based on the facts of this case, the court concluded \"that substantial evidence supports the jury's verdict that LifeTech is liable for infringement under § 271(f)(1) for shipping the Taq polymerase component of its accused genetic testing kits to its United Kingdom facility.\" The Supreme Court disagreed.\nThe High Court started with what it considered a \"threshold determination\" as to \"whether § 271(f)(2)'s requirement of 'a substantial portion' of the components of a patented invention refers to a quantitative or qualitative measurement.\" Based on the text of the statute, the Court concluded that \"[t]he context in which 'substantial' appears in the statute ... points to a quantitative meaning here.\" Next, the Court addressed \"whether, as a matter of law, a single component can ever constitute a 'substantial portion' so as to trigger liability under § 271(f)(1),\" and concluded \"[t]he answer is no.\" Therefore, the Court held \"that § 271(f)(1) does not cover the supply of a single component of a multicomponent invention.\"\nThis case may appear to be limited to its facts, but arguably has consequences in a marketplace characterized by global supply chains, as well as for the presumption against extraterritoriality, under which this country's patent laws are said to only have force on U.S. soil. While the opinion does not discuss the presumption, it begins with the assertion that \"[t]his case concerns the intersection of international supply chains and federal patent law.\" One observer has noted that, despite not providing guidance on the presumption against extraterritoriality, to some extent the opinion delineates aspects of \"the risk that some parts of the [global supply] chain could be exposed to patent infringement liability.\" As another commentator put it, the Court's holding \"that a single component never qualifies as a substantial portion of the components—tends to curb the extraterritorial effects of Section 271(f), and that result is sensible given that the baseline rule of U.S. patent law is still a principle of territoriality.\" Thus, this case is of particular interest to those who manufacture multicomponent products, such as smartphones—the subject of the Court's other case involving multicomponent products this term—outside of the United States.", "In a second case involving multicomponent products—this time Apple's iPhone—the Supreme Court was again called upon to interpret the Patent Act, this time to determine:\nwhether, in the case of a multicomponent product, the relevant \"article of manufacture\" must always be the end product sold to the consumer or whether it can also be a component of that product. Under the former interpretation, a patent holder will always be entitled to the infringer's total profit from the end product. Under the latter interpretation, a patent holder will sometimes be entitled to the infringer's total profit from a component of the end product.\nUnder § 289 of the Patent Act, anyone who manufactures or sells \"any article of manufacture to which [a patented] design or colorable imitation has been applied shall be liable to the owner to the extent of his total profit.\" In Samsung Electronics v. Apple , the Federal Circuit identified Samsung's entire smartphone as the \"article of manufacture\" for purposes of calculating damages under § 289 because \"[t]he innards of Samsung's smartphones were not sold separately from their shells as distinct articles of manufacture to ordinary purchasers.\" The Supreme Court disagreed.\nThe underlying infringement case involved three Apple design patents for its iPhone: \"the D618,677 patent, covering a black rectangular front face with rounded corners, the D593,087 patent, covering a rectangular front face with rounded corners and a raised rim, and the D604,305 patent, covering a grid of 16 colorful icons on a black screen.\" After Apple released the first generation of its iPhone in 2007, Samsung released a series of smartphones that resembled Apple's iPhone. A jury found Samsung's smartphones infringed the design patents and awarded Apple $399 million in damages, Samsung's entire profit from sales of the infringing smartphones, which the Federal Circuit upheld.\nIn reversing, the Supreme Court grounded its decision on its interpretation of the statutory term \"article of manufacture,\" which it found to be \"broad enough to encompass both a product sold to a consumer as well as a component of that product. A component of a product, no less than the product itself, is a thing made by hand or machine.\" In doing so, the Court found the Federal Circuit's reading of \"'article of manufacture' in § 289 to cover only an end product sold to a consumer gives too narrow a meaning to the phrase,\" but the Court remanded to the Federal Circuit to determine the relevant article of manufacture for the each of the design patents found to be infringed in this case. Resolution of that issue is ongoing.\nWhile this case was limited to the issue of damages in the context of Apple's design patents, it is but one of many patent cases between Apple and Samsung related to their smartphones. In fact, on June 26, 2017, the Supreme Court invited the Solicitor General to file a brief \"expressing the views of the United States\" on Samsung's petition for certiorari to review the Federal Circuit's decision in another Samsung Electronics v. Apple case. That case involves three Apple patents: one patent covering the iPhone's autocorrect function, one covering the iPhone's \"slide-to-unlock\" feature, and one covering the iPhone's \"quick links\" feature, which initiates certain actions when users click on certain data (e.g., starting an email message when a user clicks on an email address). In an en banc opinion, the Federal Circuit upheld a jury verdict that found Samsung infringed all three patents, thereby overturning a Federal Circuit panel decision that found the autocorrect and slide-to-unlock patents were invalid as obvious and the quick links patent was not infringed. Should the Court grant certiorari in this case, it could have implications for substantive patent law, in particular the patentability requirement of nonobviousness.", "A final pair of patent cases decided by the Supreme Court during its October 2016 Term may have major implications for the pharmaceutical industry. According to the U.S. Department of Commerce, in 2015, pharmaceutical sales in the United States grossed $333 billion, comprising 1.9% of gross domestic product. While the U.S. pharmaceutical industry stands as one of the largest sectors of the economy, it is also among the most research and development (R&D) intensive—the \"industry generally allocates 15–20 percent of revenues to R&D activities and invests over $50 billion on R&D annually.\" Furthermore, with only about a 10% chance of succeeding, moving an investigative drug through the costly and time-consuming Food and Drug Administration (FDA) approval process means the stakes for research-based pharmaceutical companies are high, necessitating a legal regime that encourages such companies to make the necessary investments to create new drug products. At the same time, the high costs of R&D have, in turn, led to correspondingly high costs to consumers for pharmaceutical products, requiring laws that encourage competition among drug manufacturers to drive down drug costs. These conflicting interests—the interest in innovation and the interest in competition—lie at the heart of the law regulating pharmaceuticals.", "It is in this context that the Supreme Court issued two opinions this term at the intersection of patent and food and drug law, both of which raise issues of interest to Congress, as the Court gauges the proper balance Congress sought between innovation and competition in federal drug law. This section of the report will begin with a brief background on the legal landscape for health innovators, particularly, the patent regime and regulatory framework for medical products in the United States. Next, this section will cover the Supreme Court's decision in Impression Products v. Lexmark , a case centered on the patent exhaustion doctrine with implications across industries, particularly the pharmaceutical and medical device industries. Last, this section will cover the Supreme Court's decision in Sandoz v. Amgen , a case in which the Court interpreted certain statutory provisions in the Biologics Price Competition and Innovation Act (BPCIA), with the potential to affect the speed at which competition emerges for biologic products.\nAs noted, the U.S. patent law regime working in tandem with other statutorily prescribed protections—in particular, those provided for under food and drug law—has established a legal environment that aims to be hospitable to health innovation. Of note, the Hatch-Waxman Act, which was signed into law in 1984 with the congressional intent of striking a balance between fostering innovation and advancing consumer interests, encourages the manufacture of generic drug products by establishing the abbreviated regulatory scheme for approving generic drugs and providing a framework for resolving consequent patent disputes. Under federal law, in order for a new (i.e., \"pioneer\" or \"brand name\") drug to be marketed, a manufacturer must first obtain FDA approval of a new drug application (NDA). As a prerequisite to submitting an NDA, the manufacturer must conduct, or arrange to conduct, clinical studies designed to show that the drug is safe and effective for its intended use in accordance with section 505(d) of the Food, Drug, and Cosmetic Act (FD&C Act). Conversely, Hatch-Waxman's abbreviated pathway to approval for generic drugs created a new type of marketing application, the abbreviated new drug application (ANDA), which does not require clinical testing, but instead requires a third party or generic manufacturer to show that its drug formulation is a therapeutically equivalent copy of the brand name drug being marketed.\nSignificantly, Hatch-Waxman also amends the FD&C Act to provide for periods of time in which a new drug is the exclusive drug on the market. These periods of market exclusivity provided for under food and drug law are sometimes referred to as a type of \"regulatory exclusivity,\" which are in addition to and distinct from patent term exclusivity. That is to say, market exclusivity under food and drug law may still be in effect even if the drug is not under patent protection. More specifically, the Hatch-Waxman Act provides a five-year period of market exclusivity for new molecular entities and three years of market exclusivity for a new use or new formulation of previously approved drug products. To encourage the production of generic drugs, the Hatch-Waxman Act also created a 180-day exclusivity period for the first approved generic version of a brand-name drug product. Congress also provided additional market exclusivity under the Patent Act. In response to criticisms that the lengthy FDA approval process eroded the benefit of patent term market exclusivity, the Hatch-Waxman Act provided for \"patent term restoration,\" allotting additional time to the patent term of a pioneer drug in order to compensate the patent holder for the time lost during clinical trials and the FDA review process.\nMore recently, in 2010, as part of the Patient Protection and Affordable Care Act, Congress enacted the BPCIA for the stated purpose of \"balancing innovation and consumer interests.\" While there are important differences between the two statutes, like Hatch-Waxman, the BPCIA sought to achieve this goal through changes to food and drug as well as patent law. With respect to food and drug law, the BPCIA establishes an abbreviated pathway for regulatory approval of \"follow-on biologics\" or \"biosimilars\"—lower-cost versions of biologics. A \"biological product\" or \"biologic\" is a medical product made from natural resources (human, animal, microorganism) used in the prevention, treatment, or cure of disease. The traditional route for FDA approval of a biological product for commercial marketing is through a biologics license. In order to obtain a license to market a biologic, a sponsor must complete a biologics licensing application (BLA), wherein the sponsor provides clinical data—the results of a costly multi-phase clinical trial process—demonstrating that the product is \"safe, pure, and potent.\" Under the BPCIA's abbreviated pathway, a biosimilar applicant filing an abbreviated biologics license application (aBLA) must, in order to receive approval, submit information sufficient to show that a product is \"biosimilar\" to or \"interchangeable\" with a previously approved biologic (i.e., \"reference product\") and rely upon \"publicly-available information regarding [FDA's] previous determination that the reference product is 'safe, pure, and potent.'\" In balancing innovation with competition, the BPCIA also provides for a 4-year and 12-year exclusivity period for a reference product wherein (1) an aBLA may not be submitted prior to the date that is 4 years after the date on which the reference product was first licensed and (2) approval of an aBLA may not be made effective until the date that is 12 years after the date on which the reference product was first licensed. With respect to patent law, the BPCIA creates a process, discussed in greater detail below, that endeavors to speed the litigation of patents, while protecting the innovator's patent rights.", "On May 30, 2017, in a nearly unanimous decision, the Supreme Court reversed the Federal Circuit in a case respecting the doctrines of domestic and international patent exhaustion, holding in Impression Products v. Lexmark International that \"a patentee's decision to sell a product exhausts all of its patent rights in that item, regardless of any restrictions the patentee purports to impose or the location of the sale.\" Although the case arose out of a dispute over printer cartridges, the question at the heart of the dispute—whether restrictions placed on the sale of a patented product are enforceable under patent law—has significant implications across a number of industries, particularly the pharmaceutical and medical device industries.\nTo understand the Impression Products ruling, it is important to note several broad principles of patent law. In addition to providing a private right of action against anyone who, without authority from the patent holder, \"makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent,\" Section 1498 of Title 28 provides an express statutory means by which a patent holder can recover compensation for infringement of a patent by the federal government. Specifically, the statute provides that whenever a patent \"is used or manufactured by or for the United States without license of the owner,\" the patent holder may bring an action in United States Court of Federal Claims to recover \"his reasonable and entire compensation for such use and manufacture.\" Patent holders also have certain ancillary rights, such as the right to license their patented products and the right to sell or license their patented products with restrictions, including via so-called \"Single Use\" provisions, through contractual agreements.\nThere is, however, a key limitation on the rights of patent holders called the doctrine of patent exhaustion. The common law \"exhaustion doctrine\" (also known as the \"first sale doctrine\") stands for the principle that once an authorized sale of a patented article occurs, the patent holder's exclusive rights to control the use and sale of that article under patent law are said to be \"exhausted,\" freeing the purchaser to use or resell the article without restraint. The basis for this principle, as articulated by the Supreme Court, is that \"[t]he purpose of the patent law is fulfilled with respect to any particular article when the patentee has received his reward ... by the sale of the article\"; once that \"purpose is realized the patent law affords no basis for restraining the use and enjoyment of the thing sold.\" It is important to note, however, that the patent exhaustion doctrine applies only to the particular item sold and does not otherwise free a buyer to replicate or reproduce the patented item into a new product. Prior to the Supreme Court's ruling in Impression Products , the Federal Circuit's prevailing precedent allowed patent holders to place post-sale use and resale restrictions on domestic sales without implicating the doctrine of patent exhaustion and exempted sales abroad from the first sale doctrine entirely. In other words, patent holders maintained the ability to (1) sue for infringement if restrictions placed on domestic sales were not observed and (2) recoup more than a single reward for the sale of a patented item if the first sale was made abroad. Impression Products explicitly overturned the Federal Circuit's precedent with respect to both issues, changing the legal landscape for patent holders.\nThe controversy at issue in Impression Products stems from certain practices of companies known as \"remanufacturers\" that violated restrictions Lexmark had placed on the sales of its patented printer cartridges. Consumers had two options when purchasing toner cartridges from Lexmark—they could either buy the cartridge at full price with no restrictions, or they could buy the cartridge at a discount through Lexmark's \"Return Program.\" In order to receive the discounted price through the Return Program, however, customers had to sign a contract agreeing to use the cartridge only once and then return it to Lexmark. Despite these restrictions, remanufacturers would acquire the Lexmark cartridges, including those initially sold through the Return Program, refill them with toner, and sell them at a discounted rate. Remanufacturers also acquired Lexmark cartridges sold overseas, reimported them into the United States, and refilled and sold them along with the Return Program cartridges.\nLexmark sued a number of these remanufacturers, including Impression Products, for patent infringement with respect to two groups of cartridges: (1) those cartridges sold as part of the Return Program within the United States on the theory that the prohibited reuse and resale of these products infringed Lexmark's patents; and (2) all cartridges sold abroad that Impression Products imported into the United States on the theory that, because Lexmark never authorized the import of its cartridges, Impression Products infringed its patents by doing so. Impression Products moved to dismiss on the grounds that Lexmark's sales, both in the United States and abroad, exhausted all patent rights and freed Impression Products to refurbish, resell, and import products acquired overseas. The district court granted the motion with respect to the domestic Return Program sales, but denied the motion as to the cartridges sold abroad based on Federal Circuit precedent. On appeal, the Federal Circuit ruled in favor of Lexmark with respect to both groups of cartridges.\nThe Supreme Court's decision to reverse the Federal Circuit with respect to both domestic and international patent exhaustion appears to rest on the underlying principle that, \"when an item passes into commerce, it should not be shaded by a legal cloud on title as it moves through the marketplace.\" Referring to its 2013 ruling in Kirtsaeng v. John Wiley & Sons , a case involving copyright law, the Court noted that \"we have explained in the context of copyright law that exhaustion has an 'impeccable historic pedigree,' tracing its lineage back to the 'common law's refusal to permit restraints on the alienation of chattels.'\" In this manner, I mpression Pr oducts can be viewed as an example of one in which the Court harmonizes an aspect of patent law with other areas of federal law, as discussed above.\nThe Supreme Court reasoned that the Federal Circuit reached a different result because it \"got off on the wrong foot.\" The Court described the Federal Circuit's view that \"exhaustion must be understood as an interpretation of the patent infringement statute.\" The Federal Circuit, according to the Court, viewed exhaustion as not requiring a patentee to hand over the \"full bundle of rights\" every time it makes a sale, but rather allows a patentee to \"withhold a stick from the bundle, perhaps by restricting the purchaser's resale rights.\" The Court countered:\nThe misstep in [the Federal Circuit's] logic is that that the exhaustion doctrine is not a presumption about the authority that comes along with a sale; it is instead a limit on \"the scope of the patentee's rights.\" The right to use, sell, or import an item exists independently of the Patent Act. What a patent adds—and grants exclusively to the patentee—is a limited right to prevent others from engaging in those practices. Exhaustion extinguishes that exclusionary power. As a result, the sale transfers the right to use, sell, or import because those are rights that come along with ownership, and the buyer is free and clear of an infringement lawsuit because there is no exclusionary right left to enforce.\nWith respect to international patent exhaustion, commentators had, prior to this ruling, questioned Kirtsaeng 's application to international patent exhaustion, noting distinctions between copyright and patent law. Namely, unlike the first-sale doctrine in copyright law, commentators noted that patent exhaustion has not been codified, and patent rights have a territorial requirement restricting their reach to the United States. Likewise, in refusing to extend patent exhaustion extraterritorially, the Federal Circuit also emphasized distinctions between copyright and patent law, in particular the difference in breadth of scope. Specifically, while patent law affords the right to exclude others from use, copyright law does not. The Supreme Court, however, took another position. Noting that \"patent exhaustion, too, has its roots in the antipathy toward restraints on alienation,\" the Court stated that \"applying patent exhaustion to foreign sales is just as straightforward\" as applying the first sale doctrine to foreign sales of copyrighted works. To this end, the Court emphasized that \"nothing in the text or history of the Patent Act shows that Congress intended to confine that borderless common law principle to domestic sales. In fact, Congress has not altered patent exhaustion at all; it remains an unwritten limit on the scope of the patentee's monopoly.\"\nWhile the Supreme Court's decision in Impression Products suggests that patent law may not be used as a mechanism for enforcing restrictions on the sale of patented items, the Court clarified that such restrictions may remain enforceable under contract law:\nIf there were any lingering doubt that patent exhaustion applies even when a sale is subject to an express, otherwise lawful restriction, our recent decision in Quanta Computer, Inc. v. LG Electronics, Inc. , settled the matter ... without so much as mentioning the lawfulness of the contract, we held that the patentee could not bring an infringement suit because the \"authorized sale ... took its products outside the scope of the patent monopoly.\" Turning to the case at hand ... whatever rights Lexmark retained are a matter of the contracts with its purchasers, not the patent law.\nMoreover, in a passage that may be of particular importance for patentees that often license others to make and sell their patented products under certain conditions, the Court explained how a license of a patented product may implicate the exhaustion doctrine. The Court noted:\nA patentee can impose restrictions on licensees because a license does not implicate the same concerns about restraints on alienation of sale ... a license is not about passing title to product, it is about changing the contours of the patentee's monopoly: The patentee agrees not to exclude a licensee from making or selling the patented invention, expanding the club of authorized producers and sellers. Because the patentee is exchanging rights, not goods, it is free to relinquish only a portion of its bundle of patent protections.\nAt the same time, the Court emphasized that the ability to place restrictions on licenses did not provide a mechanism for circumventing patent exhaustion. The Court explained that \"so long as a licensee complies with the license when selling an item, the patentee has, in effect, authorized the sale,\" thereby exhausting the patent. The Court also reiterated that, in the event the purchaser did not comply with the restrictions, \"the only recourse for the licensee is through contract law, just as if the patentee itself sold the item with a restriction.\"\nContract law, however, offers significantly less protection for patent holders, as it reaches only as far as the parties in privity with the original contract. That is to say, once the patented item moves beyond the initial transaction, any restrictions made under the original contract will likely not be enforceable against new purchasers downstream. Contract law also provides less protection compared to patent law in terms of damages. As noted, the Patent Act provides for damages \"adequate to compensate for the infringement,\" and courts are granted the discretion to grant enhanced (i.e., treble) damages. By contrast, under contract law damages are more limited—the injured party may recover damages to cover losses incurred by the breach, but treble damages are unavailable. With patent infringement no longer an available mechanism for enforcing post-sale restrictions, it is likely that many existing contracts will need to be renegotiated and that patent holders will be increasingly scrupulous in entering into future contracts, particularly with foreign parties.\nPrior to the Supreme Court's decision in Impression Products , Federal Circuit precedent regarding patent exhaustion provided significant protections for patent holders by allowing them to enforce post-sale restrictions through patent infringement actions and rejecting international patent exhaustion. This legal climate, along with an increasingly global market for medical products, provided fertile ground for what is now, as commentators have noted, an entrenched business practice—the heavy use of restrictions on the domestic and international sales of patented products—within the pharmaceutical and medical device industries. Thus, as reflected in the amici briefs filed prior to the Supreme Court's Impression Products ruling, the Court's conclusion that \"patent exhaustion is uniform and automatic\" may have significant implications for pharmaceutical and medical device companies.\nPharmaceutical companies have argued that changes to the legal landscape that limit patent rights would stifle innovation, ultimately hurting the public health. More particularly, the industry has long argued that patent and other regulatory exclusivities, like those provided for under the FD&C Act, are a means of recouping investments in research and development. The Supreme Court's ruling with respect to international patent exhaustion, in particular, has potentially significant implications for this industry. It is no secret that drugs are sold at different prices in different countries for a number of reasons—including that drug prices in some markets are set not by the free market, but by the foreign government; patent rights are weaker under some foreign regimes, driving down prices; and, given disparities in global wealth, some foreign markets cannot support drugs at a revenue-generating cost. As such, there is concern among industry representatives that Impression Products ' extension of patent exhaustion to foreign sales could expand grey market sales—that is, products bought and sold outside the manufacturer's authorized trading channels—of medicines originally sold in foreign markets at lower prices. According to this view, an expansion of grey market sales may, in turn, upset the balance between innovation and patient access that Congress intended to strike through statutory and regulatory mechanisms. As examples of these mechanisms, U.S. patent law provides for U.S. market exclusivity and protection from infringement, while additional regulatory exclusivities for various categories of innovative medical products are provided for under laws implemented by FDA. In addition, FDA is authorized to enforce restrictions on the importation of medical products. In the views of at least one amicus brief, the expansion of grey market sales could result in limiting patient access to medications by limiting the incentive for innovation.\nThat said, given current regulatory restrictions on the importation of medical products, the law provides pharmaceutical companies with more protection than most other manufacturers with respect to the reimportation of goods sold abroad. Specifically, FD&C Act section 801(d)(1) prohibits anyone other than the manufacturer from reimporting drugs manufactured in the United States and sold abroad. Relying on this provision, one consumer advocacy group has argued that the statute \"effectively prevents large-scale parallel importation of drugs originating in the United States and thus renders the impacts predicted by [industry] unlikely.\"\nEconomic consequences may not be the only issues raised by the Supreme Court's decision scaling back a patentee's ability to enforce post-sale restrictions through patent infringement actions. In addition to economic concerns, the medical device industry argues that compromising the enforcement of restrictions on single-use devices (SUDs), which range in sophistication from compression sleeves to cardiac catheters, may pose public health risks. SUDs, which emerged in response to heightened awareness about the transmission of infectious diseases, are manufactured with the expectation that they will be discarded after one single use in one single patient. Because SUDs are not designed or constructed to be cleaned for subsequent use, some are made of materials that are unable to withstand necessary resterilization procedures.\nAs background, medical devices that are more complex and higher risk are typically required to obtain FDA approval prior to marketing through an application for premarket approval (PMA), which similar to an NDA, requires clinical testing to show a \"reasonable assurance of safety and effectiveness\" to market a device. Some less complex and lower-risk devices are eligible to instead obtain clearance for marketing through a 510(k) submission if the product is shown to be \"substantially equivalent\" to a predicate product (i.e., a device already on the market). FDA regulates the common cost-saving mechanism of reprocessing—the collection of discarded medical devices for cleaning, repair, and resterilization in preparation for resale—by requiring that manufacturers of reusable devices test and supply instructions for safe reprocessing and that reprocessors of SUDs demonstrate \"substantial equivalence\" in terms of safety and efficacy to the original manufactured product. Given that reprocessing is regulated by FDA, one may question whether post-sale restrictions are necessary to ensure safety with regard to SUDs. However, FDA itself has stated that \"[r]educing the risk of exposure to improperly reprocessed medical devices is a shared responsibility among various stakeholders ... [including] manufacturers.... \" Because SUDs are intended for use only once and may not—at least in some instances—be safely refurbished, manufacturers of SUDs, unlike manufacturers of reusable medical devices, are not, however, required to provide reprocessing instructions. Thus, the Medical Device Association argued in its amicus brief in Impression Products that \"if all post-sale restrictions are ineffective, medical device manufacturers will be unable to ensure compliance with the guidelines for safely reprocessing reusable devices.\" On the other hand, it seems unlikely that all single-use restrictions would be rendered entirely ineffective by the Supreme Court's decision on patent exhaustion, as FDA still requires reprocessors to demonstrate the safety and efficacy of a refurbished SUD. Furthermore, other laws, such as state tort law or consumer protection laws, could (subject to federal preemption limits) serve as a disincentive for a reprocessor's failure to heed a manufacturer's single-use restriction where reuse risks public safety.\nFinally, while Impression Products held that post-sale restrictions are not enforceable under patent law, it also clarified that contract law remains an appropriate vehicle for remedying such violations. As previously discussed, contract remedies extend only to parties in privity with the agreement, and with respect to concerns raised by the pharmaceutical industry, contract law cannot reach downstream sales where grey market transactions are likely to occur. Likewise, because many reprocessors are independent of the hospitals and health care facilities to which the devices were originally sold, there could be situations in which patent owners are without the requisite privity to base a breach of contract claim for violating post-sale restrictions on SUDs. While it remains to be seen how significant the Supreme Court's reversal of the Federal Circuit's position on patent exhaustion will be on the pharmaceutical and medical device industries, the myriad questions raised by the Impression Products decision implicate the recurrent theme of balancing innovation and competition and thus may be of interest to Congress and the subject of future legislative debate.", "Another Supreme Court opinion issued this term with significant implications for consumers and pharmaceutical companies is Sandoz v. Amgen , issued on June 12, 2017. This case will potentially affect the speed at which competition emerges for many pharmaceutical products. Specifically, the Supreme Court considered opposing views on how to interpret key provisions in the BPCIA.\nAs noted above, in 2010, as part of the Patient Protection and Affordable Care Act, Congress enacted the BPCIA for the stated purpose of \"balancing innovation and consumer interests\" with the establishment of an abbreviated pathway for regulatory approval of biological products that are \"highly similar\" to or \"interchangeable\" with a previously approved FDA-licensed reference product (\"reference product\"). As part of this new abbreviated regulatory pathway for so-called \"biosimilars\" and particularly relevant to Sandoz , the BPCIA sets forth a complex patent-dispute resolution regime wherein the reference product owner can protect against potential infringements of any patents of products that are the subject of an aBLA. Thus, rather than waiting until commercial marketing to resolve disputes, the BPCIA facilitates litigation during the period preceding FDA approval. In doing so, the BPCIA \"enables the parties to bring infringement actions at certain points in the application process, even if the applicant has not yet committed an act that would traditionally constitute patent infringement ... [the BPCIA] provides that the mere submission of a biosimilar application constitutes an act of infringement.\" The Supreme Court has referred to this type of \"preapproval infringement\" as \"artificial infringement.\"\nMore specifically, by amending section 262 of the Public Health Service Act, the BPCIA establishes an elaborate process for patent dispute resolution, sometimes referred to as the \"patent dance.\" The \"dance\" generally involves an applicant and reference product sponsor (i.e., \"the sponsor\") participating in a series of informational exchanges regarding potential disputes over patent validity and infringement prior to marketing of the biosimilar.\nThe Disclosure Requirement : Of particular relevance to Sandoz , the initial requirement under the BPCIA's disclosure and negotiation procedures is that the applicant \"shall\" grant the reference product sponsor confidential access to its aBLA application and the manufacturing information regarding the biosimilar product no later than 20 days after FDA accepts the application for review. From this disclosure, the exchange continues: pursuant to section 262( l )(3), within 60 days of disclosure, the sponsor \"shall provide\" to the applicant \"a list of patents\" for which it believes it could assert an infringement claim if a person without a license made, used, offered to sell, sold, or imported \"the biological product that is the subject of the [biosimilar] application.\" At this time the sponsor also identifies any patents on the list that it would be willing to license. In turn, within 60 days of receiving the sponsor's list, the applicant may provide the sponsor with a list of patents that it believes are relevant, but were omitted from the sponsor's list. Next, the applicant \"shall provide\" to the sponsor the reasons why it could not be held liable for infringing those patents, for example because the patents are invalid, unenforceable, or not infringed. The applicant must also, if applicable, respond to the sponsor's offer to license particular patents. The sponsor then \"shall provide\" within 60 days responses to the applicant's arguments concerning infringement, enforcement, and validity, as to each relevant patent.\nThe Notice Requirement : In another relevant provision of the BPCIA, the law provides that the applicant \"shall\" give notice of commercial marketing to the reference product sponsor at least 180 days prior to commercial marketing. This notice provides the reference product sponsor a period of time to seek a preliminary injunction to enjoin infringing acts. Furthermore, either party may sue for declaratory relief, but the parties are barred from doing so prior to the applicant's notice of commercial marketing.\nTwo-Phased Litigation : The Supreme Court's decision in Sandoz v. Amgen describes these mechanics as \"channel[ing] the parties into two phases of patent litigation\": (1) upon disclosure of the application and manufacturing information, the parties collaborate to identify patents for immediate litigation; and (2) upon notice of commercial marketing, the parties may litigate patents that were included on the section 262( l )(3) lists, but not litigated in the first phase. Thus, if the parties comply with the \"patent dance,\" they will have the opportunity to litigate any relevant patents prior to commercial marketing.\nRemedial Provisions : In order to encourage the parties to comply, the BPCIA also includes consequences for failing to do so. Two of these remedial provisions were of particular relevance in Sandoz . First, if the applicant fails to comply with the disclosure requirement, which effectively commences the two-phase litigation process, then the sponsor, but not the applicant, may immediately bring a declaratory action for infringement. Similarly, if the applicant fulfills the disclosure requirement, but fails to comply with the subsequent steps in the information exchange process, the applicant, but not the sponsor, may bring a declaratory judgment action with respect to any patent included on the sponsor's section 262( l )(3) list. In both instances, the BPCIA facilitates these actions by making it an artificial act of infringement to submit a biosimilar application with respect to any patent that could have been included on the section 262( l )(3) list.\nThe impetus behind the Sandoz litigation was Sandoz's first FDA approval under the BPCIA's new regulatory pathway for its product \"Zarxio,\" a biosimilar for the FDA-approved anti-infective biologic filgrastim, and the first biosimilar approved under the BPCIA. Amgen, the company that has produced and marketed filgrastim under the brand name \"Neupogen\" since 1991, filed suit in the Northern District of California for patent infringement under 42 U.S.C. § 262( l )(9)(c). Amgen also sought an injunction in an effort to forestall market entry of Zarxio with claims grounded in two alleged violations of the BPCIA—Amgen claimed that Sandoz's failure to comply with the disclosure and negotiation procedures established by the BPCIA and its interpretation of a 180-day notice requirement both comprised actionable unlawful business practices under California law.\nWith regard to participation in the BPCIA's disclosure and negotiation procedures, both the district court and the Federal Circuit held that those procedures—despite the use of the word \"shall\" in the statute—were not a mandate on the applicant. Rather, the lower courts viewed the disclosure and negotiation procedures as an option that confers certain benefits, largely in the form of reduced patent infringement litigation risks, in exchange for expediency in getting the product to market. Furthermore, the Federal Circuit held that an injunction was unavailable as a remedy under federal law because \"42 U.S.C. section 262( l )(9)(C) and 35 U.S.C. 271(e) expressly provide the only remedies\" for violating the disclosure requirement, with neither authorizing a court to compel compliance.\nWhile the district court held that the 180-day notice provision should be interpreted to allow the applicant to give notice to the reference product sponsor prior to FDA approval of the aBLA, the Federal Circuit vacated that holding in a split decision, maintaining that in order for notice to be effective, it must be given after the biosimilar is licensed by FDA. The Federal Circuit's interpretation of the notice requirement would have functionally provided the reference product sponsor with an additional six months of market exclusivity because the applicant could only begin to sell the biosimilar product 180 days after the FDA ended the sponsor's exclusive right to sell the biologic. Notably, the Federal Circuit seemed to suggest that the 180-day notice requirement is mandatory only if the applicant chooses to forgo the patent dance, stating that \"where, as here, a[n] ... applicant completely fails to provide its aBLA and the required manufacturing information to the [reference product sponsor] by the statutory deadline, the [notice] requirement ... is mandatory.\" In other words, the Federal Circuit's interpretation of the \"shall\" language with regard to the 180-day notice provision seemed to transform a requirement into something more optional.\nThe Supreme Court addressed two questions arising from the dispute: (1) whether the requirement that an applicant provide its application and manufacturing information to the manufacturer of the biologic is enforceable by injunction and (2) whether the applicant must give notice to the manufacturer after, rather than before, obtaining a license from the FDA for its biosimilar.\nWith respect to the first question, the Supreme Court explained that Sandoz's failure to disclose its application and manufacturing information did not amount to an act of \"artificial infringement\" remediable by injunctive relief under the BPCIA. The Court explained that the Federal Circuit erred in its apparent conclusion that noncompliance with section 262( l )(2)(A) (i.e., the disclosure requirement) is an \"element of the artificial act of infringement.\" Specifically, the Court noted that the Federal Circuit based its interpretation on the language in section 271(e)(2)(C)(ii), which states that \"[i]t shall be an act of infringement to submit[,] if the applicant for the application fails to provide the application and information [to the reference product sponsor].\" Rather, the Court held that such language \"merely assists in identifying which patents will be the subject of an artificial infringement suit. It does not define the act of artificial infringement itself.\" The Court reached this conclusion based on the structure of 271(e), which defines artificial infringement in two separate clauses—once within the context of the list exchange process and once when an applicant fails to disclose its manufacturing information. The Court concluded that in both instances it is the act of submitting the application, rather than a failure to disclose information, that constituted the act of artificial infringement for which a remedy is provided under section 271(e)(4). Instead, the Court held that a separate provision under section 262 of the BPCIA provides a remedy for an applicant's failure to turn over its application and manufacturing information—\"§262( l )(9)(C) authorizes the sponsor, but not the applicant, to bring an immediate declaratory judgement action\" for artificial infringement as defined in section 271(e)(2)(C)(ii). The Court also noted, \"§262( l )(9)(C) excludes all other federal remedies, including injunctive relief. Where, as here, 'a statute expressly provides a remedy, courts must be especially reluctant to provide additional remedies.'\" While concluding that an injunction was unavailable under federal law as a means of enforcing the disclosure requirement, the Court remanded the decision to the Federal Circuit to determine whether an injunction is available under California law.\nWith respect to the second question presented, the Court reasoned that the plain language of the statute, which requires a biosimilar applicant to provide notice to the reference product sponsor \"not later than 180 days before\" the date of first commercial marketing of the biosimilar product, does not require the notice to occur after FDA licenses the product. The Court explained:\nThe applicant must give \"notice\" at least 180 days \"before the date of commercial marketing.\" \"[C]ommercial marketing,\" in turn, must be \"of the biological product licensed under subsection (k).\" Because this latter phrase modifies \"commercial marketing\" rather than \"notice,\" \"commercial marketing\" is the point in time by which the biosimilar must be \"licensed.\" The statute's use of the word \"licensed\" merely reflects the fact that, on the \"date of first commercial marketing,\" the product must be \"licensed.\" Accordingly, the applicant may provide notice either before or after receiving FDA approval.\nIn support of this interpretation, the Court cited statutory context. Dismissing the lower court's position, the Court explained that, while section 262( l )(8)(A) contains a single timing requirement—an applicant must provide notice 180 days prior to marketing—\"[t]he Federal Circuit ... interpreted the provision to impose two timing requirements: The applicant must provide notice after the FDA licenses the biosimilar and at least 180 days before the applicant markets the biosimilar.\" The Supreme Court went on to explain that \"'[h]ad Congress intended to' impose two timing requirements in §262( l )(8)(A),\" it \"presumably\" would have structured those requirements parallel to the two timing requirements in the subparagraph that immediately follows.\nThe Supreme Court's decision in Sandoz has the potential to hasten the pace at which a biosimilar can reach the market by effectively making the \"patent dance\" optional. In other words, under Sandoz an applicant can choose not to engage in the disclosure and negotiation process with the reference product sponsor prior to marketing in exchange for assuming increased litigation risks. By refusing to adopt the Federal Circuit's interpretation of the BCPIA, the Supreme Court rejected an interpretation of the Act that would have effectively added 180 days of exclusivity for the sponsor. Legal and industry experts have been vocal in their reactions to the Court's decision—some have questioned the meaningfulness of notice provided prior to approval, while others have suggested that the rejection of the availability of injunctive relief for enforcing a violation of the BPCIA effectively guts the protections Congress presumably sought to provide. There is also concern that by loosening the requirements of the BPCIA, the Court's decision may create more uncertainty for innovator companies, biosimilar companies, and ultimately the general public alike. For those who may question the outcome, Justice Breyer's concurrence offers an alternative—in line with his comments during oral argument, he stated that \"if [FDA], after greater experience administering this statute, determines that a different interpretation would better serve the statute's objectives, it may well have authority to depart from, or to modify, today's interpretation.\" Whether or not FDA acts to address the implications of the Court's decision, Congress could, should it feel the Supreme Court's interpretation is not reflective of the policy decisions intended, amend the BPCIA to clarify its provisions.", "In addition to the effects of the patent decisions issued by the Supreme Court during its October 2016 Term, there are a number of patent-related issues on the horizon. Such issues stem from future Supreme Court cases to be heard during its next term; legislative proposals in Congress; and executive initiatives in the intellectual property area.", "As noted, the PTO's inter partes review proceedings are one of the major patent reforms made by the AIA, but their continued availability is contingent on the judgment of the Supreme Court. Specifically, on June 12, 2017, the Supreme Court granted certiorari in Oil States Energy Services v. Greene's Energy Group on the sole question as to \"[w]hether inter partes review—an adversarial process used by the [PTO] to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.\" While the Federal Circuit summarily dismissed the Oil States case (i.e., without a written opinion), it previously rejected a constitutional challenge to inter partes review proceedings in a written decision.\nSpecifically, in MCM Portfolio v. Hewlett-Packard , the Federal Circuit addressed whether inter partes review proceedings violate (1) Article III of the Constitution, by delegating issues to the PTO that must be adjudicated by a federal court, and (2) the Constitution's Seventh Amendment because there is no jury in PTO proceedings. Article III establishes the federal court system, providing that the \"judicial Power shall extend to all Cases, in Law and Equity, arising under ... the Laws of the United States,\" while the Seventh Amendment provides: \"In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved....\" In rejecting the constitutional challenge, the Federal Circuit reasoned that:\nThe patent right derives from an extensive federal regulatory scheme, and is created by federal law. Congress created the PTO, an executive agency with specific authority and expertise in the patent law, and saw powerful reasons to utilize the expertise of the PTO for an important public purpose—to correct the agency's own errors in issuing patents in the first place.... There is notably no suggestion that Congress lacked authority to delegate to the PTO the power to issue patents in the first instance. It would be odd indeed if Congress could not authorize the PTO to reconsider its own decisions.\nThe Supreme Court denied certiorari in MCM Portfolio , while granting it in Oil States .\nIn its brief on the merits, filed on August 24, 2017, Oil States raises two main arguments. First, the company asserts that \"[i]nter partes review impermissibly transfers the responsibility for deciding common-law suits from Article III judges to administrative agency employees who are beholden to Executive Branch officials—precisely the evil the Framers sought to avoid.\" Second, Oil States contends that \"[i]nter partes review impermissibly supplants juries as well as judges,\" in violation of the Seventh Amendment. Greene's Energy Group's brief on the merits is currently due on October 23, 2017, while Oil States' reply is due November 20, 2017.\nThere appears to be much anticipation as to the outcome of this case. One commentator has stated that \"[t]he Supreme Court's decision holds the potential to be one of the most significant patent decisions in decades.\" In deciding this case, the Supreme Court must determine whether a patent is a private property right , like real property, and therefore revocable only in an Article III tribunal, as opposed to a pub l ic right created by an administrative agency empowered to revoke that right. Notably, the Patent Act itself contains a provision stating \"patents shall have the attributes of personal property.\" If the Court were to find that patents are private property rights and hold that inter partes review proceedings are unconstitutional, there would be a cascade of consequences for the U.S. patent regime.\nAmong the possible consequences experts are currently discussing is the question of what will happen to patents that were invalidated in inter partes review proceedings. Since the proceedings began in 2012, the PTO has received approximately 7,000 petitions and, of the more than 1,500 final decisions it has issued, roughly 1,300 have invalidated at least some patent claims. One commentator has framed the question this way: \"'What happens to all those patents? Do they suddenly spring back to life?'\"\nRelatedly, as discussed above, is the fact that the PTO invalidates patents through other administrative proceedings, including reexamination proceedings, which have been available since the 1980s. In addition to the question of the fate of patents invalidated during inter partes review proceedings is that of those invalidated during reexamination. Further, if the Supreme Court rules that inter partes review proceedings are unconstitutional, this will call into question the constitutionality of the PTO's other revocation proceedings, including reexamination and post-grant reviews.\nFinally, should the Court hold that inter partes review proceedings are unconstitutional, the question of the impact on the caseload of the federal courts looms large. As noted, about 7,000 petitions for inter partes review proceedings have been filed in the last five years. While it is unlikely that all such petitions would amount to infringement complaints lodged in the federal courts, it seems likely that the elimination of PTO revocation proceedings will have a tangible effect on the dockets of the federal courts.\nNotably, as of the date of this report, the only other patent case scheduled to be heard during the Court's October 2017 Term also involves inter partes review proceedings. In SAS Institute v. Matal , the Court granted certiorari to answer the following question:\nDoes 35 U.S.C. § 318(a), which provides that the [PTAB] in an inter partes review \"shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner,\" require that Board to issue a final written decision as to every claim challenged by the petitioner, or does it allow that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the Federal Circuit held?\nUnder current PTO practice, a petitioner may challenge a patent \"on all or some of the challenged claims,\" and the PTO may institute a proceeding on a subset of the petition's challenged claims. Obviously, the challenge as to whether the PTO must address all patent claims challenged by a petitioner will become moot if the Court strikes down inter partes review proceedings as unconstitutional in Oil States . Standing alone, however, SAS Institute also has implications for the PTO because it has the potential to eliminate a practice of the agency that allows it to manage its workload by limiting the number of challenged claims it must analyze.", "As noted, patent reform appears to be of perennial concern to Congress. For instance, prior to the enactment of the AIA in 2011, there were several years of legislative activity in this area. With regard to patent reform, issues that have received attention include, but are not limited to: (1) remedies for patent infringement, including the availability of damages, injunctive relief, and attorney fees; (2) administrative proceedings before the PTO, such as those enacted in the AIA; (3) the issue of non-practicing entities (i.e., patent trolls); and (4) the high costs and burdens of patent litigation for U.S. businesses, and the costs that are passed on to consumers, particularly in the drug context.\nMost recently, in the 115 th Congress, the Support Technology and Research for Our Nation's Growth and Economic Resilience Patents Act (STRONGER Patents Act) of 2017 was introduced. The bill's stated purpose is \"to strengthen the position of the United States as the world's leading innovator by amending title 35 ... to protect the property rights of the inventors that grow the country's economy.\" The bill contains many provisions of the Support Technology and Research for Our Nation's Growth Patents Act of 2015 (STRONG Patents Act) of the 114 th Congress, as well as provisions from the Targeting Rogue and Opaque Letters Act of 2015 (TROL Act).\nAt center, the STRONGER Patent Act addresses the PTO's post-grant proceedings, with much of its provisions devoted to reforms of the inter partes review and post-grant review proceedings. For example, the bill would align the PTO's patent claim construction standard with that of the federal courts. The bill would also require that findings of patent invalidity by the PTO be proved by \"clear and convincing\" evidence, as they are in district court litigation. With regard to standing in PTO proceedings, the bill would limit potential petitioners to only those individuals and enterprises who have a demonstrated adverse relationship to the challenged patent to the exclusion of nonpracticing entities (i.e., patent trolls). In addition to provisions amending PTO administrative proceedings, Title II of the bill empowers the Federal Trade Commission to take certain enforcement actions against nonpracticing entities that send misleading patent-related demand letters.\nWhile addressing some of the concerns raised in the Oil States litigation with regard to inter partes review, as one observer has noted, the bill may modify or overturn the holdings of at least five intellectual property-related Supreme Court cases from the past decade, including eBay Inc. v. MercExchange , Microsoft Corp. v. AT&T Corp. , Global-Tech Appliances v. SEB SA , Akamai Techs. v. Limelight Networks , and Cuozzo Speed Techs . v. Lee . The future of the Bill remains to be seen, but it should be noted that similar patent reform legislation introduced in prior Congresses, such as the STRONG Patents Act of 2015, did not lead to enactment.\nFinally, on the executive front, the central policy pronouncement related to patents and intellectual property issued since President Donald Trump took office was the initiation of an investigation into China's intellectual property practices, including patent protection. On August 14, 2017, President Trump issued a presidential memorandum directing the United States Trade Representative (USTR) to \"determine ... whether to investigate any of China's laws, policies, practices, or actions that may be unreasonable or discriminatory and that may be harming American intellectual property rights, innovation, or technology development\" pursuant to section 301 of the Trade Act of 1974. The USTR initiated such an investigation on August 18, 2017, and is scheduled to convene a public hearing on October 10, 2017. While the investigation is in its early stages, it could result in remedial trade actions in response to a finding of unfair intellectual property practices, such as the suspension of trade agreement concessions or the imposition of duties or import quotas, among others." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 1, 2, 3, 3, 2, 3, 3, 2, 3, 3, 3, 1, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "", "h0_title h1_title", "h0_full", "", "", "h0_full", "h0_full h1_full", "h1_title", "h1_full", "", "", "h1_full", "", "", "h1_full", "", "", "", "h2_full", "", "h2_full" ] }

{ "question": [ "What are the qualifications to receive a patent?", "What does a patent bestow upon its holder?", "How is the PTO involved in the patent system?", "How can final PTO decisions be appealed?", "How has the Court played a larger role in the development of patent law recently?", "How was this demonstrated during the Court's October 2016 term?", "What impact might these cases have?", "What patent-related concerns are anticipated for the future?", "What concerns regarding constitutionality have been raised?", "How might Congress act to impact patent law?" ], "summary": [ "A patent may be obtained by \"[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter,\" subject to the requirements of the Patent Act.", "A valid patent bestows upon its holder the right to take action against anyone who \"makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent,\" unless authority to do so is secured from the patent holder.", "In addition to examining patent applications, the PTO conducts other proceedings to determine the validity of issued patents, which can result in the revocation of previously issued patents. These proceedings play a central role in the country's patent system.", "Final decisions from the PTO are appealable to the U.S. Court of Appeals for the Federal Circuit, which has exclusive, nationwide jurisdiction over most patent appeals.", "With the Supreme Court hearing an increasing number of cases involving patent law and other areas of intellectual property over the last decade, the Court is playing a larger role in the development of patent law.", "During its October 2016 Term, the Court issued two patent law opinions involving procedural issues that will affect when and where patent cases may be filed. In another pair of cases heard during the October 2016 Term, the High Court dealt with issues related to patents on multicomponent products—one in the context of determining infringement and another in the context of calculating damages.", "A final pair of patent cases decided during the Term may have major implications for the pharmaceutical industry—one addresses whether post-sale restrictions, commonly used in the pharmaceutical industry, are enforceable under patent law, and the other will likely affect the speed at which biosimilars come to market.", "In addition to the effects of the Supreme Court's patent decisions issued during its October 2016 Term on patent law, there are a number of patent-related issues on the horizon.", "The constitutionality of one of the PTO's post-grant review proceedings has been called into question in a case that will be heard during the Court's upcoming October 2017 Term.", "In addition, with patent reform being of perennial concern to Congress, certain legislative proposals have the potential to alter various areas of patent law." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "Background", "Mental Illness", "Mental Health Care System", "Federal Mental Health Care Programs", "Agency Coordination and Program Evaluation", "Eight Agencies Reported over 100 Programs That Can Support Individuals with Serious Mental Illness, but It Is Unlikely All Programs Were Identified", "Agencies Identified 112 Programs That Can Support Individuals with Serious Mental Illness, 30 of Which Specifically Target This Population", "It Is Unlikely That Agencies Identified All Programs for Individuals with Serious Mental Illness", "Interagency Coordination of Programs Supporting People with Serious Mental Illness Is Lacking", "Committees Have Been Established for Interagency Coordination, but They Did Not Focus on, and Took Little Action Specific to, Serious Mental Illness", "Staff of Most Programs Specifically Targeting Individuals with Serious Mental Illness Reported Some Coordination", "Agencies Have Evaluated Less than One-Third of the 30 Programs Targeted for People with Serious Mental Illness", "Conclusions", "Recommendations", "Agency Comments", "Appendix I: Scope and Methodology", "Identification of Federal Agencies", "Identification of Programs", "Developing and Administering the Web- Based Questionnaire", "Determining the Extent of Coordination", "Assessing Evaluations", "Appendix II: List of Programs That Can Support Individuals with Serious Mental Illness Identified by Eight Federal Agencies", "Appendix III: List of Programs Specifically Targeting Individuals with Serious Mental Illness Identified by Eight Federal Agencies", "Program name", "Baseline Psychological Testing for Recruits", "Agency", "Agency", "Program name", "Homeless with Schizophrenia Presumptive Disability", "Agency", "Agency", "Appendix IV: Questionnaire Responses on Coordination for Programs Targeting Individuals with Serious Mental Illness", "Appendix V: Status of Evaluations of Federal Programs Targeting Individuals with Serious Mental Illness, as of September 2014", "Program name", "Program name", "Appendix VI: Comments from Social Security Administration", "Appendix VII: Comments from the Department of Defense", "Appendix VIII: Comments from the Department of Veterans Affairs", "Appendix IX: Comments from the Department of Health and Human Services", "Appendix X: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Mental illness is generally defined as a health condition that changes a person’s thinking, feelings, or behavior and causes the person distress and difficulty in functioning. The symptoms associated with a given type of mental illness can vary in frequency and severity across individuals and for each individual over time. Mental illnesses with particularly severe symptoms can have a dramatic impact on an individual’s ability to function in everyday life. The fatigue experienced by an individual with major depressive disorder can be so severe that it is difficult to summon the energy to work every day. The delusions associated with paranoid schizophrenia can make it impossible to maintain stable personal relationships with spouses, co-workers, or friends. Certain other mental illnesses are known for the unpredictable and episodic nature of their symptoms and the harmful effect this has on the ability to function consistently over time. For example, individuals with bipolar disorder can alternate between periods of mania, relative normalcy, and profound depression.", "The services provided by the public mental health care system to individuals with serious mental illness have changed over time. Historically, state-run public mental health hospitals were the principal treatment option available to them. By the 1960s, the reliance on inpatient care was viewed as ineffective and inadequate because of patient overcrowding, staff shortages, and other factors. At the same time, improved medications and other interventions were reducing some of the symptoms of mental illness and increasing the potential for more of these individuals to live successfully in the community. A recovery-oriented, community-based approach to mental health treatment has since emerged. Under this approach, individuals are to receive services and supports uniquely designed to help them manage their mental illness and to maximize their potential to live independently in the community. These services and supports are multidimensional—intended to address not only mental illness but also employment, housing, and other issues. When feasible, these multidimensional services are provided in what is referred to as a “wrap-around” manner—that is, they are uniquely targeted to the nature and extent of each individual’s needs. When services are provided by multiple agencies, those agencies are to coordinate their activities and funding so that the individual experiences the services and supports seamlessly—as if from one system, not many.", "The federal government provides a range of programs to support the needs of individuals with serious mental illness, such as funding block grants to community mental health organizations and providing supportive housing programs for individuals with mental illness. The responsibility for the administration and evaluation of these programs falls upon multiple agencies, including Department of Defense (DOD), Department of Education (Education), HHS, Department of Housing and Urban Development (HUD), Department of Justice (DOJ), Department of Labor (DOL), Department of Veterans Affairs (VA), and Social Security Administration (SSA). Programs supporting individuals with serious mental illness may or may not be specifically targeting that population. For example, a program providing housing for homeless veterans may provide support to individuals with serious mental illness because these individuals make up a portion of the population of homeless veterans, but the program is targeting homeless veterans rather than individuals with serious mental illness.\nSAMHSA, an agency within HHS, leads the federal government’s public health efforts related to behavioral health, which includes mental health. Specifically, SAMHSA administers behavioral health programs, disseminates policies, information and data, and awards contracts and grants to states, tribes, local governments, and other organizations, including those that support individuals with serious mental illness.", "Our prior work has noted the importance of coordinating and evaluating programs. This is particularly important in the case of federal efforts to support serious mental illness, given the size of the population affected and the complexity of treatment. We have also reported on the importance of coordination between federal agencies on issues of national significance as a way to avoid fragmentation. Many of the meaningful results that the federal government seeks to achieve require the coordinated efforts of more than one federal agency and often more than one sector and level of government. Our past work has identified a range of mechanisms that the federal government uses to lead and implement interagency coordination, including interagency groups sometimes referred to as task forces, working groups, councils, or committees.\nIn addition, for many years, we have reported that more frequent evaluations of performance and results were needed for multiple federal programs and activities. systematic study to assess how well a program or programs are working.\nGAO, Government Efficiency and Effectiveness: Opportunities to Reduce Fragmentation, Overlap, and Duplication through Enhanced Performance Management and Oversight, GAO-13-590T (Washington, D.C.: May 22, 2013).\nEvaluations answer specific questions about program performance and may focus on assessing program operations or results. Evaluation can play a key role in agency strategic planning and in program management, providing important feedback on both program design and execution. Program evaluation is closely related to performance measurement and reporting. Performance measurement is the systematic ongoing monitoring and reporting of program accomplishments, particularly progress toward established goals or standards. The Government Performance and Results Act of 1993 (GPRA), as expanded by the GPRA Modernization Act of 2010, encourages federal agencies to conduct evaluations by requiring them to include a schedule of future program evaluations in their strategic plans and summarize their evaluation findings when reporting on their performance goals, among other things.", "", "Agencies identified 112 federal programs in fiscal year 2013—across eight federal agencies—that can support individuals with serious mental illness. These 112 programs conducted activities that can generally support individuals with serious mental illness. For example, HUD’s Continuum of Care program provided funding to nonprofit providers and state and local governments to quickly find housing for homeless individuals and families, among other services. See appendix II for a list of the 112 federal programs identified as supporting individuals with serious mental illness in fiscal year 2013.\nThe number and purpose of programs identified by agencies through our questionnaire varied widely. DOD reported the largest number, a total of 34 programs, and HHS identified 33. Together, the agencies accounted for more than half of the 112 programs. DOJ and VA also each reported over 10 programs. Overall, many of the programs focused on the provision of support services and a few programs focused on research or surveillance. Programs that provided support services included those that provided case management services such as SAMHSA’s Criminal and Juvenile Justice Programs. These programs sought to divert individuals with serious mental illness from the criminal justice system by providing support services that connect the individual to behavioral health, housing, and job placement services. DOD was the only agency that reported prevention programs (13 programs) through the questionnaire, and three agencies—DOD, HHS, and VA—reported treatment programs (16 programs). About a quarter of the programs—27 programs—were identified as serving other purposes. For example, the Department of Education included its Personnel Development program that awarded grants to assist in ensuring adequate numbers of highly qualified special education teachers and fully certified personnel to serve children with disabilities, including children with serious emotional disturbance who may have a serious mental illness. Table 1 provides the number of these programs, by primary program purpose, within the eight federal agencies.\nIn addition to serving a variety of purposes the 112 programs that support individuals with serious mental illness, served a variety of subpopulations, ranging from children to homeless veterans. For example, DOJ administered a program—the Second Chance Act Reentry Program—that focused on adults and youth with co-occurring substance abuse and mental health disorders during their confinement or court supervision. In addition, DOL administered the Homeless Veterans Reintegration program, which worked to meet the needs of homeless veterans by reintegrating them into the workforce.\nA subset of the 112 programs—30 programs, or 27 percent—were identified by agencies as specifically targeting individuals with serious mental illness. These targeted programs were administered by five agencies: DOD, DOJ, HHS, SSA, and VA. The primary purpose of the 30 targeted programs varied. Half of the targeted programs (15 programs) provided support services, such as case management, to individuals with serious mental illness. Ten of those programs were within HHS. Seven of the targeted programs provided treatment services, with 6 of those programs—administered by VA—providing treatment services to veterans with serious mental illness. All targeted programs reported by HHS were within SAMHSA, and focused on providing support services and technical Table 2 provides the number of these programs, by primary assistance.program purpose, within the five federal agencies that identified programs specifically targeted towards individuals with serious mental illness.\nIn addition to serving a variety of purposes, the 30 programs that specifically target individuals with serious mental illness, served a variety of subpopulations, ranging from children and families to homeless veterans. Over half of the targeted programs (16 programs) were administered by three agencies—DOD, DOJ, and VA—and served specific subpopulations; servicemembers, incarcerated or previously incarcerated individuals, and veterans, respectively. Three of the targeted programs (all within HHS) served children and/or families. The remaining programs served adults.\nBased on agency-reported information from the questionnaire, about $5.7 billion was obligated for the 30 targeted programs in fiscal year 2013.and VA for treatment and support services (among other things) for The majority of these funds—84 percent—was obligated by DOD servicemembers, veterans and their families. HHS’s SAMHSA obligations represented about 13 percent of total obligations for the 30 targeted programs. HHS officials noted that Medicaid is the largest payer for services for individuals with serious mental illness and that Medicare is also a significant payer for services for that population. The See appendix remaining funds were obligated for programs within DOJ.III for more information on the 30 targeted programs.", "Agencies had difficulty identifying all programs supporting individuals with serious mental illness because they did not always track whether or not such individuals were among the population served by the program. During follow-up interviews, officials from several agencies indicated that they were unsure how many individuals with serious mental illness were served by various programs. Specifically, some agencies noted that they administered broad federal programs focusing on individuals with disabilities that could serve individuals with serious mental illness. For example, Education officials indicated that individuals with serious mental illness could have been among individuals eligible to receive services under their Centers for Independent Living program that provided financial assistance to community-based centers for independent living.\nHowever, Education officials were unsure the extent to which the program served individuals with serious mental illness because that was not the focus of the program and because individuals self-identify their disability, which may include a serious mental illness. Similarly, the Disability Employment Initiative administered by DOL served all people with disabilities, including individuals with serious mental illness, but it was unclear how many individuals with serious mental illness were served by this program. Officials from agencies within HHS also noted that it is possible that all of their programs could support individuals with serious mental illness.\nThe inability of agencies to identify a comprehensive list or inventory of programs for individuals with serious mental illness is problematic. The GPRA Modernization Act of 2010 requires OMB to compile a comprehensive list of all federal programs identified by agencies, and to include the purposes of each program, how it contributes to the agency’s mission, and recent funding information. However, as we reported earlier this year, our initial review of these lists identified concerns about the usefulness of the information being developed and the extent to which it might be able to assist executive branch and congressional efforts to identify and address fragmentation, overlap, and duplication. The lack of such a list makes it more difficult for executive branch agencies and Congress to determine whether proposed or existing programs are duplicative.\nIn addition to difficulties in identifying a comprehensive inventory of programs for individuals with serious mental illness, some agencies also had difficulty identifying how much funding was obligated for programs supporting individuals with serious mental illness. For example, HHS’s National Institutes of Health identified all of its activities, including its mental health activities as one program, Scientific Research. Officials said they were able to identify funding amounts for individual research studies related to certain illnesses that may be considered serious mental illnesses, such as depression or schizophrenia. They noted that they were currently developing a method to categorize all research grants that were related to serious mental illness. Similarly, DOJ’s Bureau of Prisons identified three programs targeting individuals with serious mental illness but could not provide the obligated funding amounts for the programs, providing instead an amount that included all psychology services programs, which included all of the Bureau of Prisons’ substance abuse and mental health programs.\nIn addition, the number and scope of programs agencies identified is likely incomplete and difficult to compare across agencies for a variety of other reasons. Agencies varied widely in how they counted their programs, resulting in inconsistencies among agencies, thus limiting the potential comparability across programs. Some agencies identified broad programs that included many activities; other agencies counted each of these underlying activities as a separate program. For example, within DOD, the Army included one program, the Behavioral Health System of Care, which included a broad array of mental health and substance abuse activities for servicemembers and their families. In contrast, the Navy chose to list each comparable behavioral health activity as a separate program. Furthermore, NIH identified only one program, its Scientific Research program, which encompassed all of its internal and external research project grants on topics ranging from cardiovascular health to those grants related to mental illness.\nAgencies also varied in how they defined their programs and in which programs they chose to include. For example, DOD officials identified all of their suicide prevention programs as those that support individuals with serious mental illness, but SAMHSA officials did not initially include any of their suicide prevention programs. They explained that these services were not limited only to individuals with serious mental illness and served a broader population. Subsequently, after further discussion with us, SAMHSA included their suicide prevention programs among those that can support individuals with serious mental illness. In another instance, HUD and VA jointly administered the HUD-VA Supportive Housing program, a specialized program aimed at providing housing and other services to disabled veterans. VA officials indicated that this program was targeting individuals with serious mental illness while HUD maintained that the program was not targeting this population. Similar to these challenges in identifying programs supporting individuals with serious mental illness, our prior work has also found that agencies took various approaches to defining their programs. This variation in definitions across agencies can limit comparability among similar programs.", "Agency-level committees that officials said allowed them to coordinate efforts regarding mental health did not focus on, and took little action specific to, serious mental illness. However, program staff for the majority of the programs targeting serious mental illness reported taking steps to coordinate with other program-level staff.", "Interagency coordination for programs for individuals with serious mental illness is lacking because agency-level committees do not focus specifically on, and have taken little action regarding, serious mental illness. While DOD, DOJ, HHS, SSA, and VA officials reported establishing committees that they said allow them to coordinate efforts regarding mental health across agencies, none of these committees were focused specifically on serious mental illness.New Freedom Commission on Mental Health produced a report on the In 2003, the President’s fragmentation among programs for individuals with serious mental illness and made recommendations to the federal government to better coordinate services. In response, the Federal Executive Steering Committee for Mental Health—led by HHS—was formed with high-level representatives from DOD, DOJ, DOL, Education, HUD, SSA, VA, the Department of Agriculture, and the Department of Transportation. In 2008, we reported that the committee had taken steps to coordinate federal efforts by promoting access to employment services for young adults with serious mental illness. However, the steering committee has not met since 2009. HHS officials told us that the Behavioral Health Coordinating Council (BHCC) performs some functions previously carried out by the steering committee. The Secretary of HHS established the BHCC in 2010 to bring together members from agencies within HHS to focus on behavioral health issues, but the council did not include officials from other federal agencies. Moreover, the BHCC has focused mainly on substance use issues, rather than mental health.\nThere are several other interagency committees according to agency officials, but these committees were generally broader in scope and did not specifically focus on individuals with serious mental illness. (See table 3 for several examples of such committees that are currently operational.) For example, DOD, HHS, and VA lead the Interagency Task Force on Military and Veterans Mental Health to provide support to veterans, servicemembers, and their families. Agency officials told us the Interagency Task Force has undertaken efforts that were broadly related to mental health such as expanding capacity for mental health treatment, but have taken few actions specifically targeting serious mental illness. Similarly, HHS officials reported that the U.S. Interagency Council on Homelessness—formed to coordinate the federal response to homelessness—has worked to improve access to behavioral health services in an effort to address chronic and veteran homelessness. Accordingly, the work of this committee might affect individuals with serious mental illness, but the committee did not specifically focus on the unique needs of this population. Only one of the identified committees— HHS’s BHCC—had plans to establish a subcommittee devoted to addressing serious mental illness. It is also important to note that the formation of this subcommittee was only recently announced during the course of our work. SAMHSA officials said that the new subcommittee under the BHCC will have an explicit focus on addressing serious mental illness, and that they expected this group to have an initial meeting in early 2015 to establish a direction for its forthcoming efforts. However, consistent with the BHCC, the subcommittee is only expected to coordinate within HHS, not across federal agencies.\nAgency officials cited few specific actions taken by the coordination committees to address the needs of individuals with serious mental illness. For example, according to agency officials, the Psychological Health and Traumatic Brain Injury committee, co-chaired by DOD and VA, worked to implement the Integrated Mental Health Strategy, which the agencies jointly developed to address the mental health needs of servicemembers and veterans. However, VA officials said that none of the elements of this strategy or actions the committee has taken were specific to serious mental illness.\nAlthough SAMHSA is charged with promoting coordination across the federal government regarding mental illness, its efforts to lead coordination—specifically on serious mental illness—across agencies have been lacking. According to SAMHSA’s enabling legislation, as amended, it is required to promote coordination of programs relating to mental illness throughout the federal government. In addition, SAMHSA’s 2011-2014 strategic plan acknowledges the need for coordination, noting that no single program, either within HHS or anywhere else in the federal government, can solve the problems of homelessness, joblessness, educational challenges, and community cohesion for people with mental illness, including those with serious mental illness. Despite SAMHSA’s recognition of the need to coordinate, such coordination related to serious mental illness has been largely absent across the federal government. Further, our previous work has demonstrated the value of interagency coordination when it is supported by agency leadership. Without such coordination and support, agencies do not have the necessary information to assess the reach and effectiveness of their programs or to determine whether or where there may be gaps or overlap in services for individuals with serious mental illness.", "Although coordination specific to serious mental illness was lacking among interagency committees, staff who completed questionnaires regarding individual programs reported that they coordinate with their counterparts in other programs both within and across agencies. Specifically, staff from 90 percent of the programs targeting serious mental illness (27 of 30 programs) reported coordinating with their counterparts in other programs.\nProgram staff reported via the questionnaire and in follow-up responses that they coordinated with other programs in the same agency. For example, according to SAMHSA officials, program staff from the mental health homelessness programs in SAMHSA’s Center for Mental Health Services coordinated with staff in SAMHSA’s Center for Substance Abuse Treatment in order to conduct a national evaluation of SAMHSA’s homeless programs. This evaluation is a coordinated effort within SAMSHA to compare effectiveness of programs and models of service delivery such as those used by the Projects for Assistance in Transition from Homelessness program, which funded services in both community mental health and co-occurring alcohol and drug treatment. In another example, program staff from SAMHSA’s Primary and Behavioral Health Care Integration program—a program that addresses the primary care needs of individuals with serious mental illness in an integrated community mental health center setting—reported collaborating with HHS’s Health Resources and Services Administration to jointly fund a training and technical assistance center. According to staff for this program, the cooperative agreement targeted both the Primary and Behavioral Health Care Integration program grantees and the Health Resources and Services Administration’s community health centers and has supported trainings, curricula development, and webinars.\nIn addition, program staff reported via the questionnaire and in follow-up responses that they have coordinated with programs in other agencies. Program staff from SAMHSA’s Criminal and Juvenile Justice programs, for example, told us that they met quarterly with program staff for DOJ’s Bureau of Justice Assistance Justice and Mental Health Collaboration program. They said that they strategized the use of resources at these meetings. While coordination at the program level is important to ensure that program staff are aware of the efforts of staff for other programs, it does not take the place of, or achieve the level of leadership, that we have noted in past work is key to successful coordination. Where programs to address an issue are spread across multiple agencies—as we have found they are in the case of serious mental illness—interagency coordination at the agency level can minimize the potential for duplication and overlap that could reduce the efficiency of federal programs. See appendix IV for more information on the coordination mechanisms and activities reported by program staff.", "Agencies completed few evaluations of the 30 programs that specifically targeted individuals with serious mental illness. Specifically, as of September 2014, 9 programs had a completed program evaluation, 4 programs had an evaluation underway, and 17 programs had no evaluation. (See fig. 1.)\nOf the 9 completed program evaluations, 7 were completed by SAMHSA and 2 were completed by DOD. DOJ, SSA, and VA had not completed any evaluations for their targeted programs. Evaluations for both targeted DOD programs and two of the targeted SAMHSA programs were completed in 2013. Of the remaining 5, all of which are HHS’s SAMHSA programs, 1 was completed in 2010, 2 were completed in 2011, and 2 were completed in 2014.\nWe found that these completed evaluations gave an overall assessment of the program, examined its strengths and weaknesses, and provided recommendations for improvement. For example, SAMHSA contracted with the Human Services Research Institute—a consulting and research firm—to conduct an evaluation of the Protection and Advocacy for Individuals with Mental Illness (PAIMI) program. Human Services Research Institute’s 2011 evaluation report found that the program was successful in giving those with psychiatric disabilities a voice in the exercise of their rights, among other things. However, the report also found deficiencies in the program, such as insufficient training for federal program and contract officials regarding PAIMI requirements and frequent difficulties gaining access to at-risk individuals in residential settings. SAMHSA provided us with information about how the agency has addressed the deficiencies outlined in the PAIMI evaluation.\nIn addition, the Army Deputy Chief of Staff conducted an evaluation of the Army National Guard Psychological Health program in 2013. The evaluation recommended that the program demonstrate that the services delivered were responding to a specific need of its target population— Army National Guard and Army Reservists—and noted that it is unclear whether the program is reaching Reservists. The evaluation also found that the program adhered to its quality standards and effectively solicited customer feedback.\nFour of the 30 programs targeting individuals with serious mental illness reported having evaluations underway that were scheduled for completion after September 2014. The SSA Homeless with Schizophrenia Presumptive Disability program is scheduled for completion in December 2014, the SAMHSA Projects for Assistance with the Transition from Homelessness program and Mental Health Homelessness Prevention programs are scheduled for completion in 2016, and the DOD Air Force Air National Guard Psychological Health program is scheduled for completion in 2017.\nThe remaining 17 programs targeting individuals with serious mental illness had not completed a program evaluation. This included all 3 DOJ programs, all 8 VA programs, 2 DOD programs, and 4 HHS programs. (See table 4.) Our prior work has shown that program evaluations address specific questions about program performance and may focus on assessing program operations or results. These evaluations can play a key role in agency strategic planning and in program management, providing important feedback on both program design and execution. Although our past work has found that some program evaluations can be expensive, the relatively few evaluations completed among programs targeted for individuals with mental illness is a concern because without meaningful and timely evaluations, agencies may lose opportunities to identify improvements in federal government efficiency and effectiveness, and because comprehensive evaluations can be key to coordinating and streamlining federal programs.30 programs and their evaluation status.", "Individuals with serious mental illness can face significant challenges getting the services they need. Agencies identified a wide range of federal programs—across multiple agencies—that can support individuals with serious mental illness. Although staff in programs targeting serious mental illness reported taking steps to coordinate their individual programs, coordination efforts among agency leadership to address serious mental illness are lacking. The absence of this high-level coordination hinders the federal government’s ability to develop an overarching perspective of its programs supporting and targeting individuals with serious mental illness. Although SAMHSA—the agency within HHS that is required to promote coordination of programs relating to mental illness throughout the federal government—has made some effort to coordinate on mental health broadly, it has shown little leadership in coordinating federal efforts on behalf of those with serious mental illness. Without stronger leadership from HHS to coordinate an integrated, interagency approach, it is difficult to attain the type of high-level perspective needed to determine whether there are gaps in services. For example, federal agencies reported difficulty even identifying which programs can support this vulnerable population. Stronger HHS leadership can also help ensure that agencies have the necessary information to assess the reach and effectiveness of their programs for individuals with serious mental illness. The new subcommittee within HHS’s BHCC may provide a useful starting point to facilitate this coordination around serious mental illness; however, the subcommittee is new and the BHCC is limited to HHS and is not an interagency committee.\nWe have also reported many times on the importance of conducting formal program evaluations to inform program managers on the overall design and operation of the program and ensure that the program’s objectives are being met. Although about $5.7 billion was obligated by 4 agencies—DOD, HHS, DOJ, and VA—to support federal programs specifically targeting individuals with serious mental illnesses, less than one-third had a completed program evaluation. The public health, social, and economic impact of serious mental illness, coupled with the constrained fiscal environment of recent years, highlights the need to ensure that federal programs efficiently and effectively use their resources to support the complex needs of individuals with serious mental illness.", "To understand the full breadth of federal programs and the scope of federal resources expended on programs supporting those with serious mental illness, we recommend that the Secretary of HHS establish a mechanism to facilitate intra- and interagency coordination, including actions that would assist with identifying the programs, resources, and potential gaps in federal efforts to support individuals with serious mental illness.\nTo help determine if programs are effective at supporting those individuals with serious mental illness, we recommend that the Secretaries of Defense, Health and Human Services, Veterans Affairs, and the Attorney General—which oversee programs targeting individuals with serious mental illness—document which of their programs targeted for individuals with serious mental illness should be evaluated and how often such evaluations should be completed.", "We provided a draft of this report to DOD, DOJ, DOL, Education, HHS, HUD, SSA, and VA for review and comment. DOD, HHS, SSA, and VA provided written comments, which are reprinted in appendixes VI, VII, VIII, and IX. DOJ, Education, HHS, and HUD provided technical comments on this report that we incorporated as appropriate. Although our report does not include recommendations directed to SSA, it said it agreed with our report. DOL had no comments on the report.\nOur first recommendation was directed to HHS exclusively. HHS did not concur with this recommendation, which calls for the agency to establish a mechanism to facilitate intra- and interagency coordination. HHS noted that funding for SAMHSA is largely allocated to specific programs by Congress and thus improving coordination should include coordination at the Congressional level. HHS also stated that the recommendation was not supported because coordination was already occurring at the program level and there was not a specific need identified by agencies, stakeholders, or individuals with serious mental illness that more coordination was necessary.\nThe report acknowledges that coordination at a program level is important but notes that it cannot take the place of coordination at higher levels that would provide the perspective needed to assess the reach and effectiveness of all of the federal government’s programs targeting individuals with serious mental illness. In addition, as we note in the report, SAMHSA’s own enabling legislation, as amended, includes a requirement to promote coordination of programs relating to mental illness throughout the federal government, and its own strategic plan recognizes the need for coordination as well. In addition, our past work has highlighted the importance of interagency coordination supported by agency leadership. In light of these other sources demonstrating the importance of interagency coordination beyond the program staff level to the agency level, we believe our recommendation is appropriate and well- supported.\nIn addition, HHS expressed concern that we excluded Medicare and Medicaid from our scope, stating that this omission was unexplained and that it created inconsistencies in our findings because we included treatment and support services funded by DOD and VA. However, as we stated explicitly throughout the report, we excluded health benefit programs including Medicare, Medicaid, and TRICARE. The purpose of this report was to provide information on programs supporting individuals with serious mental illness beyond those of reimbursement. As a result, we do not believe it creates the inconsistencies stated by HHS. However, the draft included an estimate of spending on mental health services by Medicaid and Medicare to help address HHS’s concern.\nOur second recommendation on conducting program evaluations was directed to DOD, DOJ, HHS, and VA. HHS did not concur with this recommendation, while DOD, DOJ, and VA agreed. While HHS said that performance measurement is important, it stated that program evaluation is only one method of measurement and suggested that the report places undue importance on program evaluations in particular. In the report we acknowledge that there are other efforts to monitor performance and program effectiveness, including the performance and outcomes targets in SAMHSA’s strategic plan, but as the report states, this type of ongoing monitoring cannot take the place of a program evaluation. In addition, HHS expressed concern that the report focused on completed evaluations, noting that some program evaluations provide interim results while still underway. In the report we acknowledge 2 HHS programs that have program evaluations underway. Therefore, we believe we have appropriately characterized the current status of the agency’s program evaluations.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretary of Health and Human Services, the Secretary of the Department of Defense, the Secretary of the Department of Education, the Secretary of the Department of Housing and Urban Development, the Attorney General of the United States, the Secretary of the Department of Labor, the Commissioner of Social Security, the Secretary of the Department of Veterans Affairs, and to other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114, or kohnl@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of our report. Key contributors to this report are listed in appendix X.", "This appendix describes the methodology for developing, administering, and analyzing a web questionnaire for eight federal departments, agencies, and other entities to gather information on programs supporting individuals with serious mental illness or serious emotional disturbance, including any evaluation and coordination efforts undertaken related to those programs.", "To identify federal agencies that may have programs supporting individuals with serious mental illness or serious emotional disturbance, we reviewed the programs and agencies highlighted in the President’s New Freedom Commission on Mental Health “Major Federal Programs Supporting and Financing Mental Health Care,” reviewed our prior reports, other documents, such as reports from the Bazelon Center for Mental Health Law, and interviewed advocacy groups and agency Based on this review and our interviews, there were eight officials.agencies that were cited frequently as having programs supporting individuals with serious mental illness, and we included those agencies in our review:\nDepartment of Defense (DOD)\nDepartment of Education (Education)\nDepartment of Health and Human Services (HHS)\nDepartment of Housing and Urban Development (HUD)\nDepartment of Justice (DOJ)\nDepartment of Labor (DOL)\nDepartment of Veterans Affairs (VA), and\nSocial Security Administration (SSA).", "To identify federal programs that support individuals with serious mental illness or serious emotional disturbance, we developed definitions to provide some clarity on the programs that should be included in our review. To develop these definitions, we examined applicable federal requirements, our prior work, and interviewed advocacy groups and federal officials. We defined the key terms as follows:\nProgram: A federal program, activity, or initiative may include, but is not limited to, (1) grants to state, local, tribal, nonprofit, or research entities, (2) contracts with service providers, or (3) services directly provided to beneficiaries by the federal agency itself. This does not include health benefit programs—such as Medicaid, Medicare, or TRICARE—that reimburse providers for various mental health services.\nSerious mental illness: Adults who currently have, or at any time in the past year had, a diagnosable mental, behavioral, or emotional disorder (excluding developmental and substance use disorders) of sufficient duration to meet certain diagnostic criteria, as specified within the Diagnostic and Statistical Manual (DSM), that resulted in serious functional impairment, substantially interfering with or limiting one or more major life activities. Serious mental illness may also include individuals with a specific diagnosis, for example, individuals diagnosed with schizophrenia, schizoaffective disorder, bipolar disorder, or major depression.\nSerious emotional disturbance: Children and adolescents from birth up to age 18 who currently or at any time during the past year had, a diagnosable mental, behavioral, or emotional disorder of sufficient duration to meet diagnostic criteria specified within the DSM that resulted in functional impairment, which substantially interferes with or limits the child’s role or functioning in family, school, or community activities. Serious emotional disturbance may also be a condition exhibiting one or more characteristics—such as a general pervasive mood of unhappiness or depression—over a long period of time and to a marked degree that adversely affects a child’s educational performance as defined in the Individuals with Disabilities Education Act implementing regulations.\nWe adopted these definitions to focus our review on programs that either directly administer or fund programs for the seriously mentally ill, as well as programs that may support a broader population likely to include those with serious mental illness. Given the wide range of programs included in this review, we relied on the federal agencies to identify the programs that met the criteria above. When necessary, we discussed these criteria with the agencies. For example, SAMHSA officials did not initially include any of their suicide prevention programs, submitting instead only those programs that were specifically targeted for individuals with serious mental illness. After several discussions, SAMHSA officials provided the names of 12 additional programs, including their suicide prevention programs that can provide general support to individuals with serious mental illness. However, SAMHSA officials did not identify the primary purpose or provide additional information on these more broadly focused programs.\nWe received requests from several agencies to eliminate some of their programs from our review for various reasons. For example, Navy and Marine Corps program staff included their substance abuse programs in their responses to the questionnaire. After discussions with DOD, we determined that since these programs focus on substance abuse rather than mental health they should be removed. We ultimately determined that it was appropriate to remove 13 programs from our review. In total, 112 programs were included in our final analysis.", "We developed a web-based questionnaire to collect detailed information on federal programs that support individuals with serious mental illness or serious emotional disturbance for fiscal year 2013. It included questions on program goals, target groups served, evaluations conducted, and coordination activities with other federal agencies. In addition, the questionnaire asked agencies to identify which of these programs were specifically targeted for individuals with serious mental illness. We then verified this information through follow-ups with the agencies. Finally, the questionnaire also collected data on program obligations—defined as definite commitments that create a legal liability of the government for the payment of goods and services ordered or received—for fiscal year 2013. In some cases, we could not obtain data on funds obligated for these programs because agency officials told us that they did not report budgetary data at this level, among other reasons.\nTo minimize errors arising from differences in how questions may be interpreted, we conducted pretests with HHS and Education in February 2014. We made appropriate revisions and our final questionnaire was sent to several knowledgeable agency officials within each of the eight agencies. These officials were responsible for coordinating with the appropriate program staff to ensure we received completed questionnaires for these programs. Within the eight agencies, we received responses from program staff that were operating programs relevant to our purposes. The questionnaire was available from March 2014 to June 2014. In total, we received 44 completed questionnaires from program staff within the eight agencies. All eight agencies responded, for a 100 percent response rate. We also made telephone calls to officials and sent them follow-up e-mail messages, as necessary, to clarify their responses or obtain additional information.\nWe used standard descriptive statistics to analyze responses to the questionnaire. Because this was not a sample survey, there were no sampling errors. To minimize other types of errors, commonly referred to as nonsampling errors, and to enhance data quality, we employed survey design practices in the development of the questionnaire and in the collection, processing, and analysis of the questionnaire data.\nTo reduce nonresponse, another source of nonsampling error, we sent out e-mail reminder messages and phone calls to encourage officials to complete the questionnaire. In reviewing the questionnaire data, we performed checks to identify inappropriate answers. We further reviewed the data for missing or ambiguous responses and followed up with agency officials when necessary to clarify their responses. As a result, we determined that the data used in this report were sufficiently reliable for our purposes.", "To assess coordination efforts among the higher levels of agency leadership, we reviewed information gathered through the questionnaire and interviewed agency officials from the agencies represented among the 30 programs—that is, those identified as targeting individuals with serious mental illness—regarding interagency committees established to facilitate coordination and collaboration. To determine the organizational structure, mission, and the actions taken by these committees, we also reviewed relevant interagency committee documents such as membership rosters, meeting agendas, and meeting minutes.\nTo assess coordination efforts at the program level, we used information gathered through the questionnaire to identify which of the 112 programs at the eight agencies included in our review had coordinated with other programs in an official capacity. Finally, we interviewed agency officials and reviewed relevant documentation related to the reported program- level coordination.", "We used information gathered through the questionnaire to determine whether the eight agencies included in our review had begun or completed evaluations for any of their 112 programs. For the 30 programs that the agencies identified as targeting those with serious mental illness, we asked the agencies for copies of the most recent completed program evaluations. We reviewed the information provided to us to determine whether it met our definition of a program evaluation and, for each completed program evaluation, we reviewed its objectives and scope. Furthermore, we interviewed agency officials about factors affecting the lack of program evaluation. We also reviewed agency documents and interviewed agency officials to identify whether the agencies took other steps to help ensure that their programs are effective, such as whether the agencies used other methods—such as collecting outcome measures—to monitor their programs.", "Homeless with Schizophrenia Presumptive Disability Work Incentives Planning and Assistance General Outpatient Mental Health Services Intensive Community Mental Health Recovery Mental Health Residential Rehabilitation Treatment Primary Care Mental Health Integration Psychosocial Rehabilitation and Recovery Center Re-Engaging Veterans with Serious Mental Illness Specialized Homeless Services Specialized Post-Traumatic Stress Disorder Therapeutic and Supported Employment Services the Department of Education to the Administration for Community Living at the Department of Health and Human Services, envisioning an orderly transition period to effectuate the transferred authorities. Pub. L. No. 113-128, tit. IV, §§ 491, 503(e), 506(d), 128 Stat. 1425, 1695, 1701-1705 (July 22, 2014).", "", "", "A screening program completed during basic military training at Joint Base San Antonio to identify mental health and behavioral problems.\nSelected Air Force medical treatment facilities are outfitted with interactive virtual reality systems for use in enhanced exposure therapy between behavioral health providers and patients suffering from conditions such as post-traumatic stress disorder (PTSD), mild traumatic brain injury, addictions, phobias, and anger management issues.\nAir National Guard Psychological Health Program Provides assessment services, ensures continuity and engagement in treatment, and prevents servicemembers from falling through the cracks. This program does not provide direct treatment services.\nPsychological Health Program Provides assessment services, ensures continuity and engagement in treatment, and prevents servicemembers from falling through the cracks. This program does not provide direct treatment services.\nThis is a 10-week comprehensive residential treatment program for Active Duty members with combat related stress disorders, including PTSD. Includes evidence-based treatment such as cognitive processing therapy, along with psychopharmacological interventions and complementary alternative treatments.\nDistributes funding to eligible states and territories for a variety of mental health prevention and treatment services; planning; administration; and educational activities under the state plan for comprehensive community-based mental health services for children with serious emotional disturbance and adults with serious mental illness.\nChildren and youth (birth to age 17), adults (age 18-64)\nProvides support for technical assistance to facilitate the restructuring of the mental health system by promoting consumer directed approaches for adults with serious mental illness.\nCriminal and Juvenile Justice Diverts individuals with serious mental illness from the criminal justice system by providing support services that connect the individual to behavioral health, housing, and job placement services.\nProvides comprehensive services focusing on outreach, engagement, intensive case management, mental health services, substance abuse treatment, benefits support, and linkage to permanent housing.\nSupports state and local governments creation or capacity expansion of evidence-based practices addressing the prevention of mental illness; trauma-informed care; screening, treatment and support services for military personnel; and housing and employment support.\nExpands behavioral health services to individuals who are at risk for or have serious mental illness and/or co-occurring substance use disorder and are at risk or living with HIV/AIDS. Supports programs that develop or expand behavioral health and primary care networks in order to reduce the impact of behavioral health problems, HIV risk and HIV-related health disparities.", "Program description Funds the coordination and integration of primary care services into publicly-funded community behavioral health settings. The program encourages grantees to engage in necessary partnerships, expand infrastructure and increase the availability of primary health care and wellness services to individuals with mental illness.\nPopulation served Adults, elderly (age 65 or older)\nSupports services and resources to people with serious mental illness, including those with co-occurring substance use disorder, who are experiencing homelessness or at risk for homelessness. Provides funds for community-based outreach, case management, screening and diagnostic treatment, alcohol or drug treatment, and a limited set of housing services.\nProvides grant awards to support protection and advocacy systems designated by the governor of each state or mayor of the District of Columbia. These systems monitor compliance with the Constitution and federal and state laws within public and private residential care, treatment facilities, and non-medical community-based facilities for individuals with serious mental illness, children, and youth.\nSupports the creation of developmentally appropriate local systems of care to improve outcomes of youth and young adults with serious mental health conditions. The grants fund integration of local systems with state, tribal, or territorial levels in areas such as education, employment, housing, mental health and co-occurring disorders, and decrease contacts with the juvenile and criminal system.\nYoung adults (ages 16-25)", "Fiscal year 2013 obligations 2,093,606 driven organizations to enhance statewide service system capacity. Promotes skill development, business management, and partnership building as part of the recovery process for mental health consumers.\nProvides information, referrals, and support at the state and local level to families who have a child with a serious emotional disturbance.\nSupports broad-scale operation, expansion and integration of systems of care to improve behavioral outcomes of children and youth with serious emotional disturbances and their families.\nAn intensive residential substance abuse treatment program providing services for inmates with co- occurring substance use disorders and serious mental illnesses. The program is 9-months, unit-based, and offers cognitive-behavioral interventions in a modified therapeutic community setting.\nMental Health Step Down Unit Offers an intermediate level of care for inmates with serious mental illness who do not require inpatient treatment, but lack the skills to function independently in a general population prison. Programs operate as modified therapeutic communities and utilize cognitive behavioral treatments, cognitive rehabilitation, and skills training.\nA unit-based residential psychology treatment program that focuses on inmates with serious mental illness and a primary diagnosis of Borderline Personality Disorder. Uses evidence-based treatments to increase time between disruptive behaviors and increase pro-social skills, and aims to prepare inmates for transition to less secure prison settings or promote successful reentry to society.", "", "Aims to remove barriers to supplemental security income for individuals who have been diagnosed with schizophrenia or schizoaffective disorder who are known to be homeless by helping them through the application process and providing presumptive disability payments.\nProvides veterans with serious mental illness intensive recovery- oriented mental health services in their home and community that enable them to live in the community of their choosing. Connects veterans with a team that may include peer specialists, social workers, psychologists and physicians.\nProvides residential rehabilitation and treatment services for veterans with mental health and substance use disorders, medical conditions and psychosocial needs, such as homelessness and unemployment. The program addresses the goals of rehabilitation, recovery, and community integration. It provides specific treatment for mental health, substance use disorders and medical conditions.\nSupports recovery and integration into the community for veterans with serious mental illness and severe functional impairment. Includes individual assessment and curriculum planning, skills training classes, family education programs, psychiatric services, compensated work therapy, and case management services.", "Program description Identifies veterans with schizophrenia or bipolar disorder who have received care but have been lost to follow-up (no outpatient visits and no inpatient visits of more than 2 days) for at least 1 year. Contact information of identified veterans are sent to a social worker or psychologist at VA medical centers and community outpatient clinics who make efforts to locate, contact, assess the needs, and invite the veterans to return to care.\nProvides a range of inpatient and outpatient treatments for veterans diagnosed with military-based PTSD. These services use psychotherapies and psychopharmacology. Examples of specialty PTSD inpatient treatment are: Domiciliary PTSD, Women’s Trauma Recovery Program. Specialty PTSD outpatient treatment includes Substance Use PTSD and Women’s Stress Disorder Treatment Team.\nA continuum of recovery-oriented vocational rehabilitation programs that help veterans with mental health disabilities (including individuals with co-occurring physical disabilities) and a history of occupational dysfunction overcome barriers to employment and return to the workforce.\nA continuum of care designed to assist eligible homeless veterans and veterans at risk for homelessness. Services include homelessness prevention and rapid re-housing; assistance to veterans involved with the justice system; community case management; and employment assistance.", "Program description Provides services to veterans with acute and severe emotional and/or behavioral symptoms that may cause a safety risk to the self or others, and/or may result in severely compromised functional status, including veterans with serious mental illness. Programs provide a range of intensive clinical services (e.g., close safety monitoring, close medication management) and frequent group therapy and psychoeducation.", "Program staff in the 30 programs targeting individuals with serious mental illness reported using a variety of coordination mechanisms and activities when working with other programs both within and across agencies. As reported by program staff, the most frequent program-level coordinating mechanisms used were participating in an intra- or interagency committee or taskforce (11 programs) or developing or sharing tools that facilitate collaboration—for example, shared databases (10 programs). (See fig. 2.)\nReferral of patients or clients was the most frequently cited coordination activity for programs targeting individuals with serious mental illness (see fig. 3). For example, program staff for the Department of Justice’s Bureau of Prisons’ Dual Diagnosis Residential Drug Abuse Program received referrals after inmates have been pre-screened by Bureau of Prisons’ Designations and Sentence Computations Center. Involving other agencies in strategic planning was the second most commonly reported coordination activity by program staff (12 programs).", "", "(Y/N)", "(Y/N)", "", "", "", "", "", "", "In addition to the contact above, Tom Conahan, Assistant Director; Carolyn Fitzgerald; Cathy Hamann; Jacquelyn Hamilton; Mollie Hertel; Hannah Marston Minter; Vikki Porter; Michael Rose; and Joanna Wu made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 1, 1, 2, 2, 2, 2, 2, 2, 2, 2, 1, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "", "h0_full", "h0_full", "h0_full", "h1_full", "h0_full h3_full h1_full", "h3_full", "h3_full", "h2_full h1_title", "", "", "h2_full", "h2_full", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What agencies are responsible for programs supporting mental health?", "How does this differ from past distribution of responsibility?", "What issues did GAO find with other interagency committees?", "What steps have agencies taken to amend these issues?", "What issue did AGO find with this approach?", "What did GAO find regarding the completion of program evaluations for agencies targeting individuals with mental illness?", "How did agencies justify this lack of evaluations?", "What issues did GAO find with this lack of evaluations?", "What was GAO asked to do?", "What does this report discuss?", "How did GAO collect data for this report?", "What does GAO recommend DOD, HHS, DOJ, and VA do?", "How did HHS respond to these recommendations?", "How did DOD, DOJ, and VA respond to these recommendations?", "How did GAO respond to the agencies' disagreement?" ], "summary": [ "HHS is charged with leading the federal government's public health efforts related to mental health, and the Substance Abuse and Mental Health Services Administration is required to promote coordination of programs relating to mental illness throughout the federal government.", "In the past, HHS led the Federal Executive Steering Committee for Mental Health, with members from across the federal government. However, the steering committee has not met since 2009. HHS officials told us that the Behavioral Health Coordinating Council (BHCC) performs some functions previously carried out by the steering committee. The BHCC, however, is limited to HHS and is not an interagency committee.", "Other interagency committees were broad in scope and did not target individuals with serious mental illness.", "Staff for the majority of the programs targeting serious mental illness reported taking steps to coordinate with staff in other agencies.", "While coordination at the program level is important, it does not take the place of, or achieve the level of, leadership that GAO has previously found to be key to successful coordination and that is essential to identifying whether there are gaps in services and if agencies have the necessary information to assess the reach and effectiveness of their programs.", "Agencies completed few evaluations of the programs specifically targeting individuals with serious mental illness. Of the 30 programs specifically targeting individuals with serious mental illness, 9 programs had a completed program evaluation, 4 programs had an evaluation underway, and 17 programs had no evaluation completed and none planned.", "However, agency officials said they engaged in other efforts—such as drawing on evidence in published literature—to ensure their programs were effective.", "GAO's prior work has shown the significance of both performance monitoring activities and program evaluations and noted the importance of formal program evaluations to inform program managers about the overall design and operation of the program.", "GAO was asked to provide information on federal programs that support individuals with serious mental illness.", "This report identifies (1) the federal programs that support individuals with serious mental illness; (2) the extent to which federal agencies coordinate these programs; and (3) the extent to which federal agencies evaluate such programs.", "GAO developed and administered a web-based questionnaire to eight federal agencies regarding program goals, target populations, services offered, evaluations, and coordination. GAO also interviewed agency officials.", "GAO recommends that HHS establish a mechanism to facilitate interagency coordination across programs that support individuals with serious mental illness. GAO also recommends that DOD, HHS, DOJ, and VA document which programs targeting individuals with serious mental illness should be evaluated and how often such evaluations should be completed.", "HHS disagreed with both recommendations.", "DOD, DOJ, and VA agreed with the second recommendation.", "GAO continues to believe the recommendations are valid as discussed in the report." ], "parent_pair_index": [ -1, 0, -1, 2, 3, -1, 0, 0, -1, -1, 1, -1, 0, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 4, 4, 4, 1, 1, 1, 5, 5, 5, 5 ] }

{ "title": [ "Background", "Component Officials Identified Billions in Non-Major Acquisitions, but Most Could Not Confidently Identify the Full Scope", "Components Reported That They Plan to Spend More Than $6 Billion on Their Non-Major Acquisitions", "Component Officials Could Not Identify All Non-Major Acquisitions, and Data Are Unreliable", "Most Components Could Not Identify All of Their Non-Major Acquisitions", "Most Components Provided Data with Reliability Issues", "As Authorized, Components Use a Variety of Processes to Manage Non-Major Acquisitions, but Few Consistently Track against Baselines", "DHS Headquarters Has Recently Increased Focus on Non-Major Acquisitions, and New Policy May Help Ensure More Effective Management", "PARM Plans to Use Annual Reviews to Ensure Components Are Managing Non-Major Acquisitions Appropriately", "Components Have Started Entering Non-Major Acquisition Data into INVEST and Headquarters Is Taking Steps to Improve Data Reliability", "DHS Headquarters Has Taken Additional Actions to Help Improve Components’ Management of Non-Major Acquisitions", "Conclusions", "Recommendation for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "DHS’s acquisition management policy, commonly referred to as MD-102, as implemented by the DHS Instruction Manual, establishes two overarching categories of acquisitions: acquisitions of capital assets— such as information technology (IT) systems or aircraft—and acquisitions of services—such as those provided by security guards and emergency responders. For each acquisition type, acquisitions are further categorized as major or non-major based on expected cost. An acquisition’s major or non-major status determines who acts as the Acquisition Decision Authority (ADA), the individual responsible for management and oversight of the acquisition. DHS policy established the DHS Chief Acquisition Officer as the ADA for major acquisitions and the Component Acquisition Executive (CAE)—the senior acquisition official within the component—as the ADA for all non-major acquisitions. CAEs have overarching responsibility for the acquisition cost, schedule, risk, and system performance of the component’s acquisition portfolio and are responsible for ensuring that appropriate acquisition planning takes place. According to the DHS Instruction Manual, the CAEs are required to establish component-specific non-major acquisition policies and guidance that support the “spirit and intent” of department acquisition policies. CAEs establish unique processes for managing their components’ non- major acquisitions. Components that do not have CAE-approved policies for non-major acquisition management are required to follow MD-102 and the Instruction until those policies are developed. Figure 1 illustrates the decision authority and thresholds for major and non-major acquisitions.\nDHS acquisition policy establishes an acquisition lifecycle framework that includes a series of five acquisition decision events. These acquisition decision events provide the ADA an opportunity to assess whether an acquisition meets certain requirements and is ready to proceed through the lifecycle phases. Figure 2 depicts the five acquisition decision events and the four phases of the acquisition lifecycle.\nAs part of an acquisition decision event for a major acquisition, the ADA reviews and approves key acquisition documents, such as an acquisition program baseline. An acquisition program baseline establishes an acquisition’s critical cost, schedule, and performance parameters. Baselines are useful management tools that can help leadership (1) understand of the scope of an acquisition, (2) assess how well the acquisition is being executed, and (3) secure adequate funding. For non- major acquisitions, each CAE has flexibility in deciding how his or her component will apply the acquisition lifecycle framework and the types of documentation that will be required at each acquisition decision event. The Instruction grants the components flexibility when managing non- major acquisitions.\nWithin DHS headquarters, PARM is the lead office responsible for overseeing the department’s acquisition processes. PARM has a direct management role with major acquisitions and less oversight of non-major acquisitions. For non-major acquisitions, PARM’s role is to ensure CAEs are overseeing their components’ acquisitions appropriately, and facilitate component efforts to report acquisition information using DHS’s INVEST system, among other things. The INVEST system is a central repository for data on DHS acquisitions and investments, such as budget, schedule, and performance information. INVEST data are used to oversee both major and non-major acquisitions and to satisfy internal and external reporting requirements.", "DHS’s component agencies lack the information needed to effectively oversee their non-major acquisitions because they cannot confidently identify all of them. They identified over $6 billion in non-major acquisitions; however, we found 8 of the 11 components could not identify all of their non-major acquisitions and we found that the data that 9 components provided for these acquisitions were unreliable. Several officials indicated that their focus had been on major acquisitions historically, and they had not turned their attention to non-major acquisitions until more recently. Many component officials said they were still in the process of identifying all of their non-major acquisitions, but it was unclear when they would complete these efforts. DHS headquarters had not established time frames for components to do so, which may have resulted in components losing traction in their efforts. Federal internal controls standards establish that management should obtain relevant data from reliable sources in a timely manner. Another key challenge involves the use of baselines, which establish a program’s critical cost, schedule, and performance parameters. Component officials identified 38 non-major acquisitions that were active at the start of fiscal year 2017 (as opposed to acquisitions that have been delivered to end users and are considered to be non-active). We found that most of the active non-major acquisitions (23 of 38) did not have approved baselines, and that the value of the acquisitions without baselines constituted nearly half of the total value of the active acquisitions. At the beginning of fiscal year 2017, some components did not require approved baselines. However, in response to our preliminary findings, in February 2017, DHS required component leadership approve baselines for non-major acquisitions, which should help components oversee them more effectively.", "Component officials identified 38 non-major acquisitions, valued at greater than $6 billion, that were active as of the start of fiscal year 2017. We define acquisitions to be active when they have entered the obtain phase of the acquisition lifecycle and have not yet achieved FOC. Of the reported 38 active acquisitions, 36 were capital asset acquisitions with a total value exceeding $6 billion. The remaining two active acquisitions were services acquisitions with combined annual expenditures of $19 million in 2016. Across DHS, components identified a total of 255 non- major acquisitions in all phases of the acquisition lifecycle.\nDHS’s non-major acquisitions encompass diverse systems and capabilities that address critical mission needs including immigration services, law enforcement, and disaster response. For example, non- major acquisitions include USCG response boats that perform law enforcement and search and rescue missions; CBP’s Mobile Video Surveillance System, which identifies and detects illegal incursions into areas that have gaps in coverage from other surveillance systems; and DNDO’s Human Portable Tripwire, a small, wearable system that can detect radiological threats. Figure 3 depicts these three acquisitions.\nAcquisition management efforts have the greatest impact on active acquisitions. When an acquisition is considered active, managers develop, test, and evaluate the extent to which the acquired capability can meet DHS mission needs, and adhere to critical cost, schedule, and performance parameters. By comparison, acquisition management activities have less impact on acquisitions that have reached FOC because these acquisitions have passed key decision events in the acquisition lifecycle. Meanwhile, we define acquisitions that are very early in the acquisition life cycle, i.e. in the need or analyze/select phases, to be pre-active. Pre-active acquisitions do not yet have critical cost, schedule, and performance parameters because component officials have not yet agreed on what they want, when they want it, or how much they want to spend. Figure 4 depicts the number of non-major acquisitions component officials identified by acquisition lifecycle phase.\nAbout 74 percent of the non-major acquisitions that component officials identified (189 of 255) had reached FOC at the start of fiscal year 2017, and components were operating and maintaining them until disposal. Although officials indicated these acquisitions were no longer active and had already passed all of their major acquisition decision events, it is still important for DHS to understand the scope of these acquisitions because up to 70 percent of an acquisition’s total life cycle costs can occur after FOC.\nAbout 11 percent of the non-major acquisitions that component officials identified (28 of 255) are in the pre-active phases of the acquisition lifecycle. During these phases, program managers identify a mission need that justifies investment in a new acquisition and evaluate alternative options to meet that need.", "DHS component officials identified 255 non-major acquisitions across DHS, but officials from most of the components (8 of 11) also reported to us that they were not confident that they had accounted for all of their non-major acquisitions. However, these officials also told us they were working to improve their ability to identify their non-major acquisitions going forward. In the view of some officials, the problems lie primarily in tracking the non-active acquisitions, rather than those that are still active. Even when component officials could identify these acquisitions, we found that the data they provided were often unreliable. The data reliability issues often involved the type of information included in acquisition baselines, specifically cost, schedule, and capability information.", "We spoke with officials from 11 components to get their perspective on whether they were able to accurately identify the full scope of their non- major acquisitions. Officials from 8 of the 11 DHS components told us they could not identify all of their non-major acquisitions. These officials were able to provide data on some acquisitions, but they were not confident that they had identified all of them. Officials from 3 of the 8 components stated that they were more confident in their ability to identify all active acquisitions but were less sure that the full scope of post-FOC acquisitions were identified. Component officials offered two reasons for the lack of confidence in the data: 1. Historically, managing non-major acquisitions has been a relatively low priority when compared to managing major acquisitions or other component activities. 2. The components lack effective procedures for identifying those acquisitions.\nOfficials from all of the components we reviewed indicated that they are working to improve their management of non-major acquisitions for a variety of reasons, including to improve their ability to monitor acquisition cost growth and other acquisition performance metrics.\nCompeting priorities: Officials from 6 components indicated that managing non-major acquisitions has historically been a lower priority than managing major acquisitions or other component activities. For example, CBP officials reported that since 2011, CBP’s CAE staff has focused on bringing major acquisitions into compliance with DHS acquisition policy. It took CBP until 2016 to baseline all of its Level 1 acquisitions. In 2014, CBP officials turned their attention to non-major acquisitions. They began to identify their non-major acquisitions, and worked to understand their purpose, status, and the CBP offices they support. According to CBP officials, these efforts are ongoing.\nSimilarly, following the issuance of MD-102 in 2008, FEMA focused on managing major acquisitions before placing an emphasis on non- major acquisition management in 2015. According to component officials, FEMA is now developing a more robust management process for non-major acquisitions. They said that the first step toward increasing the management rigor for these acquisitions is to accurately identify them.\nIneffective procedures: Officials from 2 components stated that they lack effective procedures for identifying non-major acquisitions. USCG and USCIS officials acknowledged that their procedures for identifying these acquisitions need improvement. Specifically, a USCG official told us that USCG procedures do not always successfully distinguish IT acquisitions from non-acquisition activities. According to the official, many non-major IT acquisition activities may be occurring, but the USCG acquisition support staff may not be aware of them. USCG officials said that the component has approximately 400-500 IT investments to assess to determine whether they should be identified as acquisitions. As a result, USCG may be underreporting the dollar value of non-major acquisitions. According to USCG officials, the process of identifying all such acquisitions is underway.\nAdditionally, a senior USCIS official stated that his component’s method for identifying its smaller non-major acquisitions needs improvement. USCIS combines its smallest acquisitions—those valued at less than $50 million—into a single acquisition, aligns each combined acquisition to specific offices within USCIS, such as the Office of Information Technology, and tracks each combined acquisition as a single acquisition. Using this approach, USCIS may be underreporting the number of non-major acquisitions, as multiple acquisitions may be counted as one, and the CAE may be missing opportunities to influence the acquisitions at key decision events. To improve tracking of these acquisitions, the official told us that USCIS is evaluating each individual acquisition to determine if it is active, and if it should be managed as a stand-alone acquisition. In addition, according to USCIS officials, USCIS has recently revised its non- major acquisition policy, which will change the acquisition tracking requirement. This revision is expected to be finalized in 2017.\nDHS component officials told us that they were working to improve their ability to identify non-major acquisitions. For example, officials from 4 components stated that they were using new guidance provided in a 2016 update to the DHS Instruction Manual to more consistently categorize all acquisitions as (1) capital acquisitions, (2) service acquisitions, or (3) simple procurements. The guidance includes a series of yes-or-no questions that acquisition officials answer to categorize a particular acquisition. Component officials said these categorizations are helping them identify all of the non-major acquisitions in their respective portfolios. For example, FEMA officials said they have used the new guidance to determine whether acquisitions considered procurements should actually be managed as non-major acquisitions. Officials from the other components reported efforts such as updating component policies and performing ongoing reviews to identify which activities are acquisitions. However, it was unclear when these various efforts to identify the full scope of all non-major acquisitions would be complete because no timelines had been established by DHS headquarters, which may have resulted in components losing traction in their efforts. Federal internal controls standards establish that management should obtain relevant data from reliable sources in a timely manner. Until components have identified all of their non-major acquisitions, they cannot effectively manage their acquisition portfolios or apply the level and type of oversight that complies with department policy. Having an established time frame should help ensure that the actions underway are seen to completion.", "In addition to the components’ inability to identify all non-major acquisitions, our analysis and information received from component officials identified a number of data reliability issues. Specifically, our analysis found that the data provided by 8 of the 11 components were not complete. For example, several life cycle cost estimates did not include government personnel costs. In addition, most of the components that reported active acquisitions could not provide approved baselines supporting the data they provided, in part because some components did not require approved baselines. Officials from 6 components also acknowledged they have issues with data reliability, specifically with accuracy and completeness, which could hinder their CAEs’ ability to manage non-major acquisitions in accordance with DHS acquisition policy.\nOur analysis of all non-major acquisition data provided by the DHS components found that the data were complete for over 60 percent of the acquisitions reported and that data for active acquisitions had fewer issues with incomplete data than acquisitions that were post-FOC. In responding to our requests for information, 5 components did not provide a complete FOC date or cost information for at least one of their active non-major acquisitions. Although the components have different requirements for documenting such information, key acquisition management best practices recommend that all acquisitions have well defined requirements and establish realistic cost and schedule estimates. Table 1 describes the data reliability issues that we identified in the component-reported non-major acquisition data.\nCost, schedule, and capability information are basic acquisition data that would be included in an acquisition baseline, and we have previously found that these types of information help senior leadership manage acquisitions more effectively. However, most of the components that reported active acquisitions could not provide approved baselines for all of their non-major acquisitions since not all of them were required to provide approved baselines.\nIn addition to the completeness issues we identified, officials from 6 components acknowledged that they have issues with data reliability, specifically with accuracy and completeness.\nAccuracy: Officials from 5 components reported issues with the accuracy of the non-major acquisition data they provided. Data accuracy refers to the extent that recorded data reflect the actual underlying information. For example, DNDO officials stated they did not have full confidence in 20 percent of the acquisition data they reported because most DNDO non-major acquisitions were not required to have program baselines. Instead, DNDO is using rough order of magnitude cost estimates for these acquisitions, which they acknowledged are inherently inaccurate.\nCompleteness: Officials from 3 of the 6 components also told us that their non-major acquisitions data were incomplete. Data completeness refers to the extent that relevant records are present— an issue addressed in the scope discussion above—and that the fields in each record are populated appropriately. For example, FEMA officials said that they had limited cost value data for non-major acquisitions because many of these acquisitions have not had formal life cycle cost estimates, and that improvements to their non-major acquisitions data are required in order to provide such estimates.\nTable 2 lists the components we reviewed, whether we identified data reliability issues—specifically incomplete data—in the non-major acquisition data reported by the components, and whether component officials self-identified data reliability issues in that data. For 9 components, we identified data reliability issues through our analysis, component officials identified data reliability issues themselves, or both.", "In accordance with the CAE responsibilities outlined in the DHS Instruction Manual, CAEs have developed a variety of processes to maintain and report data on non-major acquisitions. For example, USCG officials reported using the INVEST system and three of their own systems to track and report data on non-major acquisitions. They told us their non-major acquisition data and corresponding documentation is regularly compiled and CAE staff review it every month. Meanwhile, CBP officials reported using a less centralized approach. CBP officials track non-major acquisition data in two department-level systems and multiple component-level systems, including several Microsoft Excel spreadsheets and Microsoft Access databases. CBP officials reported that their component lacks a systematic data review process, and that they had to manually aggregate their data to respond to our queries.\nAdditionally, components’ policies for managing non-major acquisitions vary. For example, at the start of fiscal year 2017, 7 components had policies in place requiring component leadership to approve program baselines for active non-major acquisitions. However, the 4 other components did not. Our prior work and DHS acquisition policy emphasize the importance of the critical cost, schedule, and performance parameters that a baseline provides. As our work showed in 2012, the baseline is a critical tool for managing an acquisition. First, it is an agreement between program-, component-, and department-level officials establishing what the capabilities being acquired should cost, when they should be delivered, and how they should perform. DHS acquisition policy for major acquisitions requires that the ADA approve a program’s baseline before it initiates design and development activities, and this baseline then serves as a performance management tool to monitor and measure an acquisition’s execution. Second, baselines can help acquisition leaders secure funding needed for programs to meet critical cost, schedule, and performance parameters. If a program is not fully funded, a baseline can help leaders identify the trade-offs needed to fund the program with existing resources. Our prior work has demonstrated that resources, including time and funding, should be consistent with performance requirements. For major programs, the ADA confirms the program is fully resourced through the next 5 years when the ADA approves the program’s baseline.\nAt the start of fiscal year 2017, the majority of DHS’s active non-major acquisitions did not have component-approved baselines, though 3 components—NPPD, USCG, and USSS—did have baselines for all of the active non-major acquisitions they identified. Across the 11 components, over half of the reported active non-major acquisitions (23 of 38) did not have approved baselines, including both of the active services acquisitions. The baselines provided by the components for the remaining 15 acquisitions varied in length and detail, but each included the cost, schedule, and performance parameters needed to monitor a program over time. Some components provided other types of acquisition documentation, such as an Operational Requirements Document or Test and Evaluation Master Plan. However, in each case, we determined that the documents submitted did not effectively define the acquisitions by linking their cost, schedule, and performance parameters. As such, we did not consider these documents to represent a baseline. Figure 5 shows the number of active non-major acquisitions and the number of component-approved baselines at each component.\nWe found that the 21 capital acquisitions without CAE-approved baselines constituted a 47 percent share ($3.0 billion) of the approximately $6.4 billion components reported as the total value of their non-major capital acquisitions. Figure 6 shows the value of non-major acquisitions with CAE-approved baselines and the value of those without CAE-approved baselines.\nComponent officials offered a variety of reasons why their CAEs had not approved baselines for non-major acquisitions. For example, they said that (1) the baselines for these acquisitions have been a relatively low priority and were therefore still pending development or approval; (2) their components chose not to require program baselines for non-major acquisitions; or (3) while the component requires baselines for future non- major acquisitions, the acquisitions were initiated prior to the establishment of that requirement.\nHowever, this situation is likely to change, given that, in February 2017, DHS issued a new policy specifically focused on managing non-major acquisitions. In response to our preliminary findings, during the course of our audit, the Under Secretary for Management included in this policy a requirement that component leadership approve baselines for these acquisitions. This new requirement should help components execute their acquisitions more effectively. Specifically, as identified above, CAEs are likely to: (1) accurately understand the size of their portfolio; (2) have adequate knowledge about execution against cost, schedule and performance parameters when making acquisition decisions; and (3) secure the funding the acquisition needs to meet those parameters. Establishing a program baseline need not be a significant program burden. Baselines should reflect basic, existing acquisition information in a format that is effective for component management.", "DHS headquarters officials have increased their focus on non-major acquisitions, and a new policy may help DHS’s component agencies establish effective management controls, particularly by helping ensure the new baseline policy is implemented. In 2015, DHS headquarters officials established an annual review process for non-major acquisitions with life cycle cost estimates greater than $50 million, and they now plan to use this process to ensure that components are assessing acquisition performance against approved cost, schedule and performance baselines. DHS leadership has also added new reporting requirements for these acquisitions, and, in response, all components have started entering non-major acquisition data into INVEST, DHS’s central acquisition information system. The data component officials entered into INVEST during 2016 were unreliable, but headquarters officials are taking steps to improve the reliability of this data. Further, DHS headquarters officials have defined roles and responsibilities for managing non-major acquisitions, hired an oversight official specifically responsible for these acquisitions, and elevated selected non-major acquisitions for department-level oversight.", "MD-102 establishes that the Executive Director of PARM should ensure CAEs are overseeing their components’ non-major acquisitions appropriately. Specifically, the policy states that the Executive Director shall review CAE governance activities and monitor the performance of non-major acquisitions. To this end, PARM has implemented a series of annual reviews of components’ non-major acquisitions with a life cycle cost greater than $50 million that have not yet achieved FOC. According to our analysis, the $50 million threshold provides PARM insight into the bulk of the resources components plan to allot to these acquisitions. Components valued 21 of their 38 reported active non-major acquisitions at more than $50 million, and these acquisitions account for approximately 95 percent—$6.1 billion—of the roughly $6.4 billion components reported as the total value of their active non-major acquisitions.\nPARM initiated these reviews in 2015, and, during the first round, officials said they reviewed the components’ non-major acquisition policies in an effort to determine whether these policies aligned with departmental guidance. PARM officials also said the components provided updates on the acquisitions’ costs, key milestones, and capabilities.\nFor the second series of annual reviews in 2016, the DHS Under Secretary for Management issued a memorandum intended to increase the rigor of PARM’s non-major acquisition reviews. The memorandum stated that the components must provide PARM “evidence of sufficient acquisition documentation as tailored by the CAE” and report cost, schedule, and performance metrics with associated milestones. However, the memorandum did not identify (1) any minimum requirements for sufficient acquisition documentation; or (2) the specific cost, schedule, and performance metrics the components should report to PARM. To clarify the requirements, later in 2016, PARM developed more detailed instructions for the 2016 annual review. PARM instructed the components to identify whether they had an overarching policy or set of policies that were specific to non-major acquisitions, and whether these policies aligned with departmental guidance. PARM instructed the components to report the annual costs associated with each acquisition, provide a high- level schedule, include a description of the capability or service being acquired, and discuss issues such as the CAE’s confidence in the program’s meeting the metrics in the program baseline, if a baseline was indeed in place.\nAdditionally, in response to our preliminary findings, a new policy that DHS finalized in February 2017 includes a requirement that component leadership approve baselines for non-major acquisitions that have not yet achieved FOC, and states that PARM’s Executive Director will leverage its reviews to assess whether CAEs are (a) baselining these acquisitions in accordance with the requirement; and (b) tracking the acquisitions’ progress against cost, schedule, and performance parameters from approved baselines. These reviews would help PARM’s Executive Director determine whether CAEs are overseeing their non-major acquisitions in accordance with MD-102. Federal internal control standards state that management should monitor program results and evaluate these results against a previously established baseline.", "As part of its efforts to increase oversight of non-major acquisitions, DHS leadership now requires components to enter data into the INVEST system for all non-major acquisitions valued at greater than $50 million that have not yet reached FOC. INVEST, DHS’s central system for acquisition information, is used by program-, component-, and department-level officials to enter and obtain information for monthly reporting and monitoring. In the past, components were required to enter non-major acquisition data into INVEST only for IT acquisitions valued at greater than $50 million as part of the DHS IT Capital Planning and Investment Control process. In March 2016, DHS’s Under Secretary for Management issued a memo requiring components to enter data into INVEST for both IT and non-IT non-major acquisitions valued at greater than $50 million.\nHowever, we found that the data component officials had entered into INVEST for non-major acquisitions through 2016 were unreliable. Only about half of the acquisitions eligible for entry into INVEST had been entered into the system. As of January 2017, component officials had entered data into INVEST for 10 of the 21 programs that were eligible for entry into the system—i.e., active non-major acquisitions valued at greater than $50 million. For the majority of the non-major acquisitions in INVEST, we found few source documents—particularly baselines—that CAEs could use to validate the data. A December 2016 requirement states that CAEs must validate the accuracy of these data in INVEST twice a year, mirroring the current certification requirement for major acquisitions. This recent requirement, combined with the February 2017 baselining requirement, will likely improve the reliability of the data.\nAdditionally, component officials have reported challenges when trying to enter non-major acquisition data into INVEST. PARM did not initially provide specific guidance on entering the data, and officials from some components said they were confused about the amount and type of information that should be entered into INVEST. In response to this confusion, PARM officials created a new guidebook in October 2016 and issued additional instructions in a December 2016 memo intended to clarify the INVEST data-entry process.", "In addition to PARM’s implementation of annual non-major acquisition reviews and the requirement to enter non-major acquisition data into INVEST, DHS headquarters has taken several additional actions to help improve the components’ management of these acquisitions. These actions include the following:\nDefining roles and responsibilities for managing non-major acquisitions. In February 2017, the DHS Under Secretary for Management more clearly defined CAEs’ roles and responsibilities for managing non-major acquisitions. PARM also issued new non-major acquisition management guidance specific to the DHS Management Directorate in February 2017. The new policy consolidates the Management Directorate’s CAE authority by designating the Deputy Director of PARM the CAE for all of the Management Directorate’s non-major acquisitions. Previously, offices within the Management Directorate, such as the OCIO and the Office of the Chief Readiness Support Officer, had their own CAEs. One such office in the scope of our review—OCIO—did not use the acquisition lifecycle process for its acquisition management. This new policy could help to ensure the various offices take a consistent approach.\nHiring an oversight official specifically responsible for non-major acquisitions. In light of the billions of dollars the department is spending on these acquisitions, in May 2016, PARM hired an official to focus solely on DHS’s non-major acquisitions. This official’s responsibilities and goals include working with the DHS components to develop and improve their policies and processes for managing non-major acquisitions, in part by ensuring that they align with departmental guidance.\nFormalizing the process for identifying/categorizing acquisitions.\nDHS’s Master Acquisition Oversight List identifies the department’s acquisitions and categorizes them by component, major or non-major status, and acquisition type, in order to help DHS’s acquisition managers apply the appropriate oversight requirements. In 2015, PARM established a DHS Master Acquisition Oversight List Governance Board. This body reviews and approves major and non- major acquisition additions, removals, and other updates to the department’s Master Acquisition Oversight List. The board members consist of representatives from the department’s lines of business, including the Office of the Chief Financial Officer, OCIO, and the Office of the Chief Procurement Officer.\nElevating non-major acquisitions for department-level oversight.\nFinally, in some circumstances, the DHS Under Secretary for Management has elevated selected non-major acquisitions to major acquisition status, and, as a result, these acquisitions have received greater department oversight. For example, in April 2016, the Under Secretary for Management elevated CBP’s Remote Video Surveillance System to major acquisition status in response to an expansion in the acquisition’s scope that increased its value above the non-major acquisition dollar threshold. Similarly, at FEMA’s request, the Under Secretary for Management elevated FEMA’s Integrated Public Alert and Warning System acquisition to major status because of its complexity, cross-component impact, and high visibility outside of the department. DHS officials stated that the Under Secretary for Management may elevate non-major acquisitions for other reasons, including external events such as congressional and media interest, if a program’s importance to DHS’s strategic and performance plans is disproportionate to its size, and if an acquisition has significant program or policy implications.\nThese actions reflect DHS leadership’s increased focus on non-major acquisitions as the department continues to work to mature its acquisition management processes across all of its component agencies.", "Over the past 8 years, DHS leadership has taken several steps to mature its acquisition management processes. More recently, DHS leadership has increasingly focused on its non-major acquisitions, which is fitting, given the billions of dollars going to these programs. Primary responsibility for managing these acquisitions rests, appropriately, with component officials. However, the fact that officials from few components could confidently identify the full scope of their non-major acquisitions is problematic. Understandably, the focus to date has been on active acquisitions, but it is also important that components understand the extent of their non-major acquisitions that have been fielded but are still receiving taxpayer funds to operate. Without an established time frame for components to identify the full picture of their non-major acquisitions— particularly given their acknowledged resource constraints and competing priorities—progress may not have been sustained.", "To improve the management of DHS’s non-major acquisitions, we recommended that the Secretary of Homeland Security direct the Under Secretary for Management to establish a time frame for components to identify all of their non-major acquisitions.", "We provided a draft of this product to DHS for comment. In its written comments, reproduced in appendix II, DHS concurred with our recommendation and indicated that the Under Secretary for Management has directed Component Acquisition Executives to identify all Level 3 acquisitions across DHS by no later than October 31, 2017. We reviewed the supporting documentation provided by DHS, reproduced in appendix III, and determined that this direction addressed the recommendation.\nDHS also provided technical comments that we addressed as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of the Department of Homeland Security, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4841 or mackinm@gao.gov. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "The objectives of this audit were designed to examine the Department of Homeland Security’s (DHS) management of non-major acquisitions. This review addresses both the components’ management of non-major acquisitions as well as the department’s oversight role. Specifically, this report assesses (1) the extent to which component leadership is effectively overseeing non-major acquisitions and (2) the extent to which DHS headquarters has helped components establish effective management controls for non-major acquisitions.\nTo identify the extent to which component leadership is effectively overseeing non-major acquisitions, we attempted to identify all non-major acquisitions within DHS. We asked officials from DHS’s Office of Program Accountability and Risk Management (PARM), which are responsible for overseeing the department’s acquisitions, to identify the components that manage non-major acquisitions. PARM identified 14 DHS components in response. We requested data from the 14 DHS components and obtained non-major acquisition data from 11 components. Officials from the 3 remaining components stated that they did not manage non-major acquisitions. For example, officials from the DHS Science and Technology Directorate stated that their component does not identify any acquisition valued at less than $50 million as a non-major acquisition and, based on that definition, the component does not have any non-major acquisitions to report. For this reason, we removed the Science and Technology Directorate from our scope. The 11 DHS component offices and agencies we reviewed are:\nCustoms and Border Protection,\nDomestic Nuclear Detection Office,\nFederal Emergency Management Agency,\nFederal Law Enforcement Training Centers, Immigration and Customs Enforcement,\nNational Protection and Programs Directorate,\nOffice of the Chief Information Officer,\nTransportation Security Administration,\nU.S. Citizenship and Immigration Services,\nU.S. Coast Guard, and\nU.S. Secret Service.\nWe developed a data collection instrument, sent it to each component, and requested the acquisition name, capability description, total acquisition cost, acquisition type, most recent acquisition decision events, full operational capability (FOC) date, and acquisition lifecycle phase for all of the component’s non-major acquisitions. We used a data collection instrument to obtain non-major acquisitions data based on preliminary discussions with DHS and component officials that indicated we should work directly with the components to collect this information.\nTo assess the reliability of the data provided by components, we reviewed the data to identify outliers, missing data and other potential errors, and compared the data to source documents when available. In interviews and via e-mail correspondence; we provided component officials an opportunity to review, discuss, and, where applicable, correct any completeness and accuracy issues. In addition, we requested that each component update its non-major acquisition data to be accurate as of October 1, 2016. We also requested and reviewed information on how the components enter, store, access, update, and review non-major acquisition data, as well as component officials’ comments on the reliability of the data they provided. Based on this assessment, we determined that the population of current non-major acquisitions and their associated acquisition costs could not be reliably determined. However, we determined that the data were sufficiently reliable to identify the minimum number of non-major acquisitions, and the general magnitude of the minimum acquisition costs associated with active non-major acquisitions. For those acquisitions that components could identify, we found that the data components provided for these non-major acquisitions were generally unreliable as further discussed in the report.\nIn addition to the non-major acquisitions at the components that PARM identified, with the assistance of component officials we also identified one non-major acquisition at the DHS Office of the Chief Readiness Support Officer and one non-major acquisition at the DHS Office of the Chief Security Officer. We included these acquisitions in our scope when working to identify the universe of non-major acquisitions at DHS. As a final quality assurance step, we returned the collected and updated data collection instruments to the respective components, and requested officials verify and, when applicable, correct the data.\nTo designate each acquisition active, pre-active, or post-FOC, we reviewed the FOC and acquisition phase data that the component officials provided. We designated an acquisition active if it had reached Acquisition Decision Event 2A but had not reached FOC by October 1, 2016. If any increment, project, or segment of an acquisition was active, we designated the entire acquisition active. We designated acquisitions with an FOC date on or before October 1, 2016 post-FOC, and those that had not yet reached Acquisition Decision Event 2A by October 1, 2016 pre-active. For acquisitions with conflicting data, we confirmed our designation with component officials. In addition, we collected acquisition cost information for each acquisition, specifically, life cycle cost estimates for capital asset acquisitions and annual expenditure data for services acquisitions. For active acquisitions that did not have final cost estimates in place, we accepted and reported the preliminary information that was available, such as rough order of magnitude estimates or life cycle cost estimates with lower confidence levels.\nTo understand the processes components use to manage non-major acquisitions and assess the extent to which components were consistently baselining these acquisitions, we reviewed draft and final DHS acquisition policy, and component-level non-major acquisition policies and guidance. We also requested and reviewed acquisition decision memos and component-approved acquisition program baselines—or any equivalent documents containing cost, schedule, and performance parameters—for all acquisitions that were active as of October 1, 2016. We then reviewed each baseline document to determine whether it actually contained cost, schedule, and performance parameters in accordance with key acquisition management practices we established in previous reports. We also interviewed department and component officials to expand our understanding of component management processes, and determine why the components were or were not approving baselines for non-major acquisitions.\nTo identify the extent to which DHS headquarters has helped components establish effective management controls for non-major acquisitions, we reviewed draft and final department acquisition policy, guidance, and memos to identify how PARM and other headquarters entities contribute to non-major acquisition management. We also reviewed this documentation to identify existing and planned oversight mechanisms for non-major acquisitions. We requested information from officials at nine DHS headquarters entities and the 11 DHS components in our scope to identify how, if at all, DHS headquarters entities other than PARM monitor or interact with non-major acquisitions during the acquisition process. We interviewed officials from PARM to discuss PARM’s annual review process, DHS’s Master Acquisition Oversight List, and other efforts to address non-major acquisitions. Finally, we interviewed officials from PARM and the components to better understand ongoing efforts to enter non-major acquisition data into DHS’s Investment Evaluation, Submission, & Tracking (INVEST) system, which is the department’s central system for information on its acquisitions. We also interviewed officials to better understand the circumstances under which DHS headquarters elevates non-major acquisitions to major acquisition status, increasing headquarters oversight.\nTo assess the reliability of the data in the INVEST system, we traced non- major acquisition data from INVEST to available source documents. We collected INVEST reports for active non-major acquisitions and compared cost information in those reports to available source documents, such as acquisition program baselines and life cycle cost estimates. To assess relevant internal controls, we reviewed the DHS INVEST User Guide and Training Manual and identified the purpose and structure of the INVEST system. We subsequently evaluated INVEST reports and identified the forms each component used to enter data into INVEST, as well as the level of completeness of the forms and any system-generated errors. Finally, we interviewed component and PARM officials to understand what, if any, internal controls headquarters and components were using for the non-major acquisition data before, during, and after entering that data into INVEST. We found the data in INVEST not to be sufficiently reliable for our purposes of reporting on the universe of non-major acquisitions.\nWe conducted this performance audit from February 2016 to April 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "In addition to the contact listed above, Nathan Tranquilli (Assistant Director), Katherine Trimble (Assistant Director), Betsy Gregory-Hosler (Analyst-in-Charge), Andrew Fisher, Javier Irizarry, Kirsten Leikem, and John Rastler made significant contributions to this report. Peter Anderson, Christopher Businsky, Lorraine Ettaro, and Sylvia Schatz also made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 3, 3, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_full h2_full", "h0_full", "h0_title", "h0_full", "", "", "h2_full h1_full", "h1_full", "", "h2_full", "", "", "", "", "", "", "" ] }

{ "question": [ "Why does DHS lack the information to effectively oversee their non-major acquisitions?", "What did GAO find to support this claim?", "What might have caused this issue?", "What do federal internal controls standards dictate?", "What are baselines?", "How are baselines causing an additional challenge?", "What is DHS taking steps to do?", "What did DHS do to help reach this goal in 2015?", "What did DHS do to help reach this goal in 2017?", "What additional steps has DHS taken to help reach this goal?", "What does DHS acquire each year?", "What has GAO previously reported regarding these acquisitions?", "What has GAO recently reported on?" ], "summary": [ "The Department of Homeland Security's (DHS) component agencies—such as the U.S. Coast Guard and Customs and Border Protection—lack the information needed to effectively oversee their non-major acquisitions because they cannot confidently identify all of them.", "They identified over $6 billion in non-major acquisitions; however, GAO found 8 of the 11 components could not identify them all.", "Several officials indicated that their focus had been on major acquisitions historically, and they had not turned their attention to non-major acquisitions until more recently. Many component officials said they were still in the process of identifying all of these acquisitions, but it was unclear when they would complete these efforts. DHS headquarters had not established time frames for components to do so, which may have resulted in components losing traction in their efforts.", "Federal internal controls standards establish that management should obtain relevant data from reliable sources in a timely manner.", "Another key challenge involves the use of baselines, which establish a program's critical cost, schedule, and performance parameters.", "Component officials identified 38 non-major acquisitions that were active at the start of fiscal year 2017 (as opposed to acquisitions that have been delivered to end users and are considered to be non-active). GAO found that most of the active non-major acquisitions (23 of 38) did not have approved baselines, and that the value of the acquisitions without baselines constituted nearly half of the total value of the active acquisitions.", "DHS headquarters is taking steps to help components establish more effective management controls for non-major acquisitions.", "In 2015, DHS headquarters officials established a process to review them annually.", "In February 2017, in response to GAO's preliminary findings, DHS established that components shall use the annual reviews to assess the extent to which non-major acquisitions are on track to meet cost, schedule, and performance parameters from approved baselines.", "DHS leadership has also established ongoing reporting requirements for non-major acquisitions. All components have started entering non-major acquisition data into DHS's central acquisition information system, and headquarters officials are taking steps to improve the reliability of these data.", "Each year, DHS acquires a wide array of systems intended to help its component agencies execute their many critical missions.", "GAO has previously reported that DHS's process for managing its major acquisitions is maturing. However, non-major acquisitions (generally those with cost estimates of less than $300 million) are managed by DHS's component agencies and have not received as much oversight.", "Recently GAO reported on a non-major acquisition that was executed poorly, limiting DHS's ability to address human capital weaknesses." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 4, -1, 0, 0, 0, -1, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 5, 5, 5, 5, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Carbon Tax Design Considerations", "Point of Taxation", "Rate of Carbon Tax", "GHG Emissions Target Approach", "Marginal Benefits or \"Social Cost of Carbon\" Approach", "Other Considerations", "Border Carbon Adjustments", "Applications for Carbon Tax Revenue", "Economy-Wide Impacts", "Household Impacts", "Industry Impacts and Transition Assistance", "Other Policy Objectives", "Additional Considerations", "Impacts on GHG Emission Levels", "Potential to Generate Revenues", "Effects on Energy Prices and Energy Use", "Concluding Observations", "Appendix. Potential Applications of a Carbon Tax" ], "paragraphs": [ "", "The U.S. Fourth National Climate Assessment, released in 2018, concluded that \"the impacts of global climate change are already being felt in the United States and are projected to intensify in the future—but the severity of future impacts will depend largely on actions taken to reduce greenhouse g as [GHG] emissions and to adapt to the changes that will occur.\" Although a variety of efforts seeking to reduce GHG emissions are currently underway on the international and sub-national level, federal policymakers and stakeholders have different viewpoints over what to do, if anything, about future climate change and related impacts. Their views regarding climate change cover a wide range of perspectives.\nFor example, some contend that climate change poses a \"direct, existential threat\" to human society and that nations must start making significant reductions in GHG emissions in order to avoid \"dire effects.\" To support this argument, proponents of climate change mitigation highlight the evidence and conclusions from recent reports that are generally considered authoritative, including:\n1. The Intergovernmental Panel on Climate Change, Global W arming of 1.5°C , 2018; and 2. The U.S. Global Change Research Program, Fourth National Climate Assessment , Volume II: Impacts, Risks, and Adaptation in the United States , 2018.\nOn the other hand, some question whether there are sufficient risks of climate change to merit a federal program requiring GHG emission reductions. In addition, others argue that a unilateral approach to climate change by the United States could disproportionately impact domestic industries while achieving minimal results in global climate change mitigation.\nIf Congress were to consider establishing a program to reduce GHG emissions, one option would be to apply a tax or fee on GHG emissions or the inputs that produce them. This type of approach is commonly called a carbon tax or a GHG emissions fee (see \"Terminology Issues: A Carbon Tax or an Emissions Fee?\").\nThis report does not compare and analyze the multiple policy tools available to Congress that could address climate change (see text box \"Other Policy Options for Addressing GHG Emissions\"). This report focuses on the policy considerations and potential impacts of using a carbon tax or GHG emissions fee to control GHG emissions.\nThe key human-related GHG is CO 2 , which is generated primarily through the combustion of fossil fuels: coal, oil, and natural gas. In 2016, fossil fuel combustion accounted for 94% of U.S. CO 2 emissions and 76% of U.S. GHG emissions. A carbon tax could apply either directly to GHG emissions or to the materials—based on their carbon contents—that ultimately generate the emissions (i.e., \"emissions inputs\"). A carbon price on emissions or their emissions inputs—mainly fossil fuels—would increase the relative price of the more carbon-intensive energy sources, particularly coal. This result could spur innovation in less carbon-intensive technologies (e.g., renewable energy, nuclear power, carbon capture and sequestration [CCS]) and stimulate other behavior that may decrease emissions, such as efficiency improvements. The energy price increases could also have both economy-wide impacts and negative effects on specific industries and particular demographic groups.\nA carbon tax approach has received some attention and debate in recent years. In the 115 th Congress, Members introduced nine carbon tax or fee proposals. Outside of Congress, the Climate Leadership Council—a bipartisan group of former policymakers and industry leaders—published a conceptual carbon tax approach in 2017 that generated some interest. Some of the industry leaders on the council represent major energy companies, including Shell, BP, and ExxonMobil.\nOn the other hand, many Members have expressed their opposition to a carbon tax. Starting in the 112 th Congress and going through the 115 th Congress, Members have introduced resolutions in both the House and Senate expressing the view that a carbon tax is not in the economic interests of the United States. In 2018, the House passed a resolution \"expressing the sense of Congress that a carbon tax would be detrimental to the United States economy\" ( H.Con.Res. 119 ). An analogous resolution was not introduced in the Senate in the 115 th Congress.\nThe first section of this report examines carbon tax design issues, including the point of taxation, the rate of taxation, and potential border carbon adjustments. The second section discusses issues related to the distribution of carbon tax revenues. The third section discusses additional considerations associated with a carbon tax program, including estimates of GHG emissions, federal revenue, and fossil fuel prices and changes in energy use. The fourth section provides concluding observations.", "If policymakers decide to establish a carbon tax system, Congress would face several key design decisions, including the point of taxation—where to impose the tax and what to tax—the rate of taxation, and whether and/or how to address imported carbon-intensive materials.\nAlternatively, Congress could direct one or more federal agencies to determine these design features through a rulemaking procedure. Although a few of the GHG emission reduction proposals in prior Congresses delegated such authority to an agency, such as the U.S. Environmental Protection Agency (EPA), all of the proposals since the 111 th Congress have included some degree of design details in the statutory language. (A later section discusses carbon tax revenue application considerations.)", "The point of taxation would determine which entities would be required to (1) make tax payments based on emissions or emission inputs, such as fossil fuels, (2) monitor emissions or emission inputs, and (3) maintain records of relevant activities and transactions. This section provides some considerations for policymakers deciding which GHG emissions and/or emission sources to cover in a carbon tax system.\nThroughout the U.S. economy, millions of discrete sources generate GHG emissions: power plants, industrial facilities, motor vehicles, households, commercial buildings, livestock, etc. Administrative costs and challenges would likely increase with a broader scope of an emissions tax.\nA carbon tax may apply to CO 2 emissions alone, which account for most U.S. GHG emissions, or to multiple GHGs. Carbon tax proposals that apply only to CO 2 generally attach a price to a metric ton of CO 2 emissions (mtCO 2 ). Some sources emit non-CO 2 GHGs, such as methane, nitrous oxides, and sulfur hexafluoride. GHG emissions from these sources could be addressed by attaching a price to a metric ton of CO 2 emissions-equivalent (mtCO 2 e). This term of measure is used because GHGs vary by global warming potential (GWP). At these sources, the determined GWP values would be an important issue.\nPolicymakers may consider limiting the tax to sectors or sources that emit above a certain percentage of total U.S. GHG emissions, many of which currently report their emissions to the government. For more than 20 years, monitoring devices or systems have been installed in smokestacks of most large facilities, such as power plants, which are required to periodically report emissions data to EPA. In addition, since 2010, EPA has collected annual emissions data from approximately 8,000 facilities that directly release above certain amounts of GHG emissions. Using these established monitoring frameworks, policymakers could employ a \"downstream\" approach, applying a carbon tax at the point where the GHGs from these facilities are released to the atmosphere.\nAlternatively, the tax could be applied to reliable proxies for emissions, such as emission inputs. For example, the carbon content of fossil fuels—coal, natural gas, petroleum—can serve as a proxy for the emissions released when the fuels are combusted. Applying a tax on emission inputs allows for the consideration of various points of taxation. For instance, emission inputs could be taxed at \"upstream\" (e.g., wells) or \"midstream\" stages in that process (e.g., refineries), the latter allowing for potential tax administration advantages that may be provided by specific infrastructure chokepoints in the fossil fuel market. For example, with respect to petroleum, the number of upstream sources—wells that produce crude oil—is over 445,000, but the number of midstream sources—facilities that refine crude oil—is only 137.\nTable A-1 (in Appendix A) lists the top GHG emission sources in the United States. These sources combined to account for approximately 95% of U.S. GHG emissions in 2016. Table A-1 identifies the number of entities for each source category (e.g., number of coal mines, number of steel production facilities) and the percentage of total U.S. GHG emissions the category contributes.\nIn the case of fossil fuel combustion—which accounted for 76% of total U.S. GHG emissions—the table provides several options for segmenting the universe of sources if policymakers choose to implement a carbon tax. It identifies the number of entities that might be subject to the carbon tax under a particular option (pending any exclusions). For example, policymakers could address fossil fuel combustion emissions by applying a carbon tax to fossil fuels (based on their carbon content) at the following entities, which include both upstream and midstream infrastructure chokepoints:\n137 petroleum refineries (based on 2017 data) and 166 petroleum importers (based on 2018 data); 671 coal mines and eight companies supplying imported coal (based on 2017 data); and 1,679 entities that report natural gas deliveries to the Energy Information Administration (EIA) on Form EIA-176 and 123 natural gas fractionators (based on 2016 data).\nSome of the above points of taxation might take advantage of the administrative frameworks for existing federal excise taxes. For example, a per-barrel federal excise tax on crude oil at the refinery supports the Oil Spill Liability Trust Fund. An excise tax on the sale or use of coal supports the Black Lung Disability Trust Fund.", "A central policy choice when establishing a price on GHG emissions is the rate of the carbon tax. Several approaches, which are discussed below, could inform the decision.", "One approach would set the carbon tax rate at a level or pathway—based on modeling estimates—that would achieve a specific GHG emissions target. For example, a 2018 study estimated the carbon tax rate needed to meet the U.S. GHG emission reduction targets established under the 2015 Paris Agreement: 26%-28% below 2005 net GHG emission levels by 2025. The study found that a constant tax rate of $43/ton starting in 2019 would meet the 2025 reduction target.\nEmissions reduction estimates from carbon tax programs are based on multiple assumptions. Accordingly, such estimates provide different tax rates needed to meet a particular emissions target depending on these assumptions. See \" Impacts on GHG Emission Levels \" for selected analyses of emission reductions for a given carbon price and rate of price increase.", "Under another approach, policymakers could base the carbon tax rate on the estimated marginal net benefits associated with reduced CO 2 emissions. The net benefits would be the avoided net damages (i.e., costs) of climate change. The estimates of net benefits of avoided emissions often rely on analyses of the social cost of carbon (SC-CO 2 ) or the social cost of greenhouse gases (SC-GHG ). Therefore, policymakers could use SC-CO 2 measurements—as the basis for an estimate of the net benefits of a marginal change in emissions—to set the rate of a carbon tax or emissions fee.\nOne potential challenge of relying on SC-CO 2 estimates to set a carbon fee are methodological concerns. For example, the existing estimates in peer-reviewed research cover a wide range. In addition, some argue that the underlying simulation models for estimating the SC-CO 2 values are insufficient. For any level of emissions, the projected increase in global average temperature may cover multiple degrees Fahrenheit, and other measures of climate change, such as precipitation patterns, may encompass directional uncertainties. No estimates of impacts are comprehensive at this time, and many of the risks are difficult to estimate and value.\nWhen valuing the SC-CO 2 , analysts encounter a range of views on methods and assumptions, and establishing study parameters may be challenging. For example, estimates of the monetary values of climate change impacts may be difficult or controversial to estimate, such as the monetary values associated with human deaths or sickness. A related framework question is whether to include global climate impacts or just domestic impacts.\nIn addition, the element of time in climate change impacts particularly complicates the valuation. The fact that many impacts of climate change will occur in the distant future requires consideration of society's willingness to pay in the near term to reduce emissions that would cause future damages, mostly to future generations. To take time into account, economists discount future values to a calculated \"present value.\" Economists do not agree on the appropriate discount rate(s) to use for a multi-generational, largely nonmarket issue such as human-induced climate change. The choice of discount rate can significantly increase or decrease values of the SC-CO 2 . A low discount rate would give greater value today to future impacts than would a higher discount rate. High discount rates can reduce the value today of future climate change impacts to a small fraction of their undiscounted values. A high discount rate would recommend applying fewer of today's resources to addressing climate change impacts in the future.\nSince 2008, federal agencies have used SC-CO 2 estimates in dozens of final rulemakings as a method to estimate the net benefits of abating CO 2 emissions. An Interagency Working Group prepared SC-CO 2 estimates, which were updated over time and subjected to expert and public comment. On March 28, 2017, President Trump issued Executive Order 13783, \"Promoting Energy Independence and Economic Growth,\" which effectively withdrew the federal SC-CO 2 estimates. Nonetheless, federal agencies have used new, interim values generated by EPA in 2017, modified from the withdrawn technical support documents, in regulatory and other decisions. Legislation could set a carbon price citing any of these SC-CO 2 values or others available from nonfederal researchers or prescribe methods for estimating new ones.\nUsing SC-CO 2 estimates to set the tax rate would involve a cost-benefit framework. Although many posit that a cost-benefit framework remains the best option, some economists argue that a cost-benefit framework may be inappropriate for climate change policy for these reasons\nMany experts expect climate change—and policies to address it—to cause nonmarginal changes to economies and ecosystems. The changes are expected to increase disproportionately with incremental climate change with a potential for crossing critical \"tipping points\" after which systems change dramatically and rapidly. Climate change impacts are multi-generational, and uncertainty and disagreement exists about whether and how to assign a present value to social costs and benefits over generations. Some impacts from climate change may be irreversible on the timescale of human civilizations, such as melting of major ice sheets in Antarctica or Greenland.", "Policymakers might consider a carbon tax as a fiscal tool to help reduce the federal deficit, reduce other taxes, or pay for specific programs that may or may not be related to climate change policy. In addition, some have proposed a phased-in approach, setting a rate that is initially lower but increases at an announced or adjustable rate either for a fixed period or indefinitely. Advantages of this approach include providing an opportunity for consumers and investors to adjust their behavior before the higher tax rates go into effect, such as purchasing more energy efficient appliances or investing in low-emissions technologies. Phasing in a carbon tax, however, could delay climate-related benefits.\nIf Congress finds agreement in principle on carbon pricing, the rate(s) could emerge from the process of reaching political agreement. Elements that might be considered include the options described above or consideration of the magnitude of overall economic impact; impacts on certain economic sectors, regions, or population groups; timing to motivate and allow an orderly transition to a lower-GHG economy; or other factors.", "Many stakeholders have voiced concerns over how a U.S. carbon price system would interact with policies in other nations, particularly if the United States were to enact a carbon tax system that covers more sources or is more stringent than enacted elsewhere. A central concern is that a U.S. carbon tax could raise U.S. prices more than the prices of goods manufactured abroad, potentially creating a competitive disadvantage for some domestic businesses. Certain businesses may become less profitable, lose market share, and reduce jobs.\nThe industries generally expected to experience disproportionate impacts under a U.S. carbon tax are often described as \"emission-intensive, trade-exposed\" industries. An industry's CO 2 emission intensity is a function of both direct CO 2 emissions from its manufacturing process (e.g., CO 2 from cement or steel production) and indirect CO 2 emissions from the inputs to the manufacturing process (e.g., electricity, natural gas). Such industries are likely to experience greater cost increases than less carbon intensive industries, all else being equal. In general, trade-exposed industries are those that face greater international competition compared to other domestic industries. A carbon tax could present a particular challenge for these industries, because they might be less able to pass along the tax in the form of higher prices, because they may lose global market share—and jobs—to competitors in countries lacking comparable carbon policies.\nPolicymakers might consider approaches to mitigate these potential economic impacts in several ways. One approach that has received interest in recent years is a border adjustment mechanism, which is often described as a border carbon adjustment (BCA) in the carbon tax context. A BCA would apply a tariff to emission-intensive, imported goods such as steel, aluminum, cement, and certain chemicals. Each of the carbon price proposals in the 115 th Congress would have established a BCA to address emission-intensive imports.\nAnother rationale for adding a BCA to a carbon tax system is the possibility that it would encourage other nations to adopt comparable carbon price policies. Many of the recently proposed BCA mechanisms allow for exemptions for nations with comparable programs.\nTo date, no nations have implemented a BCA as part of their climate change policies. Establishing an economically efficient BCA would likely present substantial challenges. For example, policymakers must decide which goods and/or industries would be covered by a BCA and how the adjustment program would assess the comparability of varied climate-related policies in other nations. In addition, accurately determining and verifying the volume of GHG emissions embodied in a particular imported product would be data intensive and challenging. To alleviate some of the measurement complexity, policymakers could limit the program to selected industries and apply default values and assumptions to particular manufacturing processes. However, this simplified approach could result in less accurate import price adjustments, which could potentially affect the accuracy of GHG emission reductions achieved by the carbon tax program. Another option would be to allow companies to provide measured, independently verified emissions data as an alternative to default values.\nIn addition, the border adjustment approach would likely raise concerns of violating international trade rules. Further, some researchers have highlighted the potential for unintended consequences from a BCA. For example, some studies have found that a border adjustment may lead to lower net exports than the carbon price alone, due to the adjustment's terms-of-trade effect on U.S. currency. These issues are beyond the scope of this report, but some of the concerns may be lessened to some degree if a larger number of nations establish comparable emission reduction policies, as many have agreed to do under the Paris Agreement.\nAnother possible rationale for a BCA is to address the concern of \"emissions leakage\" (or \"carbon leakage\"). Emissions leakage \"occurs when economic activity is shifted as a result of the emission control regulation [e.g., a carbon tax program] and, as a result, emission abatement achieved in one location that is subject to emission control regulation is [diminished] by increased emissions in unregulated locations.\" The concern of emissions leakage has been central in the debate over whether the United States (or any nation) should unilaterally address GHG emissions. A BCA may diminish the potential for emissions leakage by reducing the incentive to shift economic activity to a nation without a comparable carbon tax. However, some recent studies raise questions regarding the degree to which emissions leakage would be a concern under a unilateral U.S. carbon tax.", "Although a tax may be levied on fossil fuels or GHG emission sources at various points in the economy, the carbon tax impacts may be experienced elsewhere. Policymakers have multiple options to address these expected impacts. Policymakers would face challenging decisions regarding the distribution of the new carbon tax revenues. As discussed below, some economic analyses indicate that certain distributions of tax revenue—depending on the level of the tax—would have a greater economic impact than the direct effects from the tax or fee on GHG emissions.\nCarbon tax revenues could be treated as general fund revenue without a dedication to a specific purpose in the enacting legislation (i.e., subject to the annual appropriations process), or policymakers could state that the new revenues would support deficit (or debt) reduction. Alternatively, the enacting legislation could return the tax revenue to the economy in some manner, sometimes called \"revenue recycling.\" All of the carbon tax legislative proposals in recent Congresses have proposed some manner of revenue recycling, specifically directing the carbon tax revenue to support specific policy objectives.\nCarbon tax revenues may be used to support a variety of policy goals. When deciding how to allocate the new revenue stream, policymakers would likely encounter trade-offs among objectives, including:\nreducing the economy-wide costs resulting from a carbon tax program; alleviating the costs borne by subgroups in the U.S. population, particularly low-income households and/or communities most dependent on carbon-intensive economic activity; and supporting specific policy objectives, such as domestic employment, climate change adaptation, energy efficiency, technological advance, energy diversity, or federal deficit reduction, among others.\nIn general, economic carbon tax studies have found that the relative ranking of revenue recycling options to mitigate the economy-wide impacts is generally the opposite of the relative ranking for alleviating distributional impacts. The contrasting relative rankings highlight a central tradeoff policymakers would face when deciding how to allocate carbon tax revenues.\nThe following sections discuss these trade-offs and some of the revenue application options that have received attention in recent years. A large body of economic literature has examined the economic impacts of hypothetical carbon tax programs, particularly the impacts of using the carbon tax revenues for different purposes. Many of the economic studies cited below were prepared prior to the enactment of the Tax Cuts and Jobs Act (TCJA, P.L. 115-97 ). Signed by President Trump in December 2017, the act changed various elements of the U.S. federal tax system. In particular, the act lowered the corporate income tax rate from 35% to 21%. As discussed below, adjusting the corporate income tax rate is one of the central policy options generally considered in carbon tax economic literature both before and after enactment of P.L. 115-97 . Based on a selected review of the economic literature that includes the tax code changes in P.L. 115-97 , the central conclusions from carbon tax literature regarding revenue recycling appear to be largely unchanged.", "A primary concern with a carbon tax is the potential economy-wide costs that may result. Generally, a tax or fee on GHG emissions or the fuels that generate them would increase certain energy prices, namely fossil fuels, in the near- to medium-term as well as the prices of goods and services produced using these materials, like electricity. This outcome is inherent to the carbon tax, as its purpose is to increase the relative price of the more carbon-intensive energy sources compared to less carbon-intensive alternatives, encourage innovation in less carbon-intensive technologies, and promote other activity (e.g., energy efficiency) that may decrease emissions. These expected outcomes will have some economy-wide impacts.\nUltimately, the economy-wide effects would depend on a number of factors, including, but not limited to, the magnitude and scope of the carbon tax and, most importantly, use of the ensuing revenues. Economy-wide costs (referred to as macroeconomic costs) are often measured in terms of changes in projected gross domestic product (GDP) or another societal-scale metric, such as economic welfare. The magnitude of macroeconomic impacts from a carbon tax has been a subject of debate among policymakers and stakeholders. In addition, results of economy-wide impacts will not include comparisons of impacts to different subpopulations or geographic regions, which may be of interest to policymakers.\nMultiple economic studies and models have examined and compared various options for addressing the economy-wide impacts that may result from a carbon tax. One option for reducing the economic cost of a carbon tax is using the revenue to reduce existing taxes, such as those on labor, income, and investment. Economists generally describe such taxes as distortionary, because the taxes discourage economically beneficial activity, such as employment and investment.\nAnother option for policymakers is to use the tax revenues to address the national debt. Fewer studies have examined deficit reduction scenarios, because \"modeling the effects of budget deficits is much more difficult than modeling the effects of tax cuts.\" Some studies have concluded that using tax revenues for this purpose would help alleviate economy-wide costs from a carbon tax because of the reduced need to impose distortionary taxes in the future. These studies indicate that the economy-wide benefit would be delayed and its realization assumes policymakers would, sometime in the future, address the deficit by raising taxes.\nMany recent legislative proposals would distribute the carbon tax revenue back to households in lump-sum payments. Policymakers have generally included this carbon tax revenue application to address distribution impacts (discussed below). These payments could take multiple forms. Economic analyses typically assume an equal payment to individuals or households regardless of their income or location or the effects of the carbon price on them individually. Alternatively, payments could be targeted or scaled to different segments of the population.\nAmong the options mentioned above, economic studies indicate that using carbon tax revenues to offset reductions in existing, distortionary taxes would be the most economically efficient use of the revenues and yield the greatest benefit to the economy overall. This concept is sometimes referred to as a \"tax swap.\"\nUsing carbon tax or fee revenues to offset other distortionary taxes (e.g., labor or capital) may yield a \"double-dividend,\" which includes:\nreduced GHG emissions; and reduced market distortions by reducing other distortionary taxes, such as investment or income.\nThe economic models that examine the economic impacts of a carbon tax differ in their frameworks and underlying assumptions and often include multiple scenarios involving different uses of carbon tax revenue. In general, the economic models find that certain revenue recycling options may reduce the economy-wide carbon tax impacts but may not eliminate them entirely.\nSome studies cite particular economic modeling scenarios in which a carbon tax with certain revenue recycling applications would produce a net increase in GDP or economic welfare compared to a baseline scenario. These results indicate that, in certain modeling conditions, the economic improvements gained by reducing existing distortionary taxes would be greater than the costs imposed by the new carbon tax (without including the intended climate benefits of the policy). For example, results from a 2018 study demonstrated a net increase in GDP, compared to baseline conditions, when carbon tax revenues were used to finance proportionate reductions in labor tax rates (payroll tax).\nIn general, the economic carbon tax studies usually agree on the relative ranking of revenue recycling options in terms of their ability to mitigate the economy-wide impacts of a carbon tax program. The studies indicate that the approaches that use carbon tax revenue to proportionately lower existing tax rates are able to mitigate more of the carbon tax economy-wide costs than using the revenue to provide a lump-sum distribution to individuals or households.\nResearchers prepared multiple carbon tax analyses prior to the enactment of the TCJA in 2017 that estimated the magnitude GDP impacts. As with other estimates relating to carbon tax impacts, the results depend on the scope of the carbon tax, underlying assumptions in the analytical model, and the terms of measurement: Some estimates measure GDP growth rates; others measure actual GDP.\nFigure 1 illustrates the modeled GDP results from a 2018 carbon tax analysis that includes the changes made by the TCJA. This study assessed the GDP impacts under a $50/mtCO 2 e carbon tax (starting in 2020 and increasing by 2% annually) that would apply to CO 2 emissions from fossil fuel combustion and methane emissions from fossil fuel production activities. The figure compares projected GDP impacts under a baseline scenario (i.e., no carbon tax) with three carbon tax revenue applications: a payroll tax rate reduction tax swap, a lump-sum distribution to households, and a scenario that would use tax revenue to reduce the national debt for 10 years and then use revenues for a lump-sum distribution to households. The figure projects GDP impacts in 2020, 2024, 2029, and 2039.\nAs the figure indicates, the payroll tax rate scenario would result in a 0.1% loss of GDP in the first year (2020), but would yield GDP gains in subsequent years compared to baseline. The lump-sum distribution approach would yield GDP losses each year, ranging from 0.3% to 0.4% below the projected baseline. The deficit reduction approach would yield a range of GDP losses in the first 10 years—ranging from 0.4% to 0.04%—but would yield a GDP gain in 2039 (if not before), compared to baseline.\nOpponents of a carbon tax approach often highlight the GDP losses that would result from a carbon tax. Policymakers and stakeholders may have different perspectives regarding whether the magnitude of the GDP impacts are significant. In addition, GDP impact estimates may be presented in several ways. For example, one could compare the differences in GDP value for a particular year between carbon tax scenarios and a baseline scenario. This approach is employed in the above figure. Alternatively, one could present the GDP losses with a cumulative measure. For instance, if one were to add up the annual GDP losses (for example, over a 10-year period) from the lump-sum scenario compared to the baseline scenario, the resulting sum would be much larger. These types of calculations would require assumptions about annual GDP growth rates.\nSome may point out that the GDP impact estimates do not account for the environmental and public health benefits for reducing GHG emissions and that the GDP projections should be compared with the climate benefits achieved from the program as well as the estimated costs of taking no action. As discussed above, estimates of climate-related benefits and costs often contain considerable uncertainty and have generated debate in recent years.", "Many economic analyses have found that a carbon tax (before revenue recycling) would produce a regressive outcome among households, with lower-income households facing a larger impact from the tax than higher-income households. However, \"the degree to which a carbon tax is found to disproportionately burden low-income households varies across studies, based on the metrics against which analysts measure costs.\"\nEntities that pay the carbon tax may pass its costs back to fuel producers or forward to fuel consumers. If entities pass the costs forward, consumers would face higher prices for fuels and electricity and carbon-intensive products. When the carbon tax is passed forward to consumers, lower-income households in particular would likely face a disproportionate impact (i.e., regressive outcome), because a larger percentage of their income is used to pay for energy needs, such as electricity, gasoline, or home heating oil.\nMany economic analyses of carbon price scenarios assume that the vast majority (if not all) of the carbon tax impact is passed forward to consumers, leading to a regressive outcome. On the other hand, if entities pass the costs backward to producers, the tax impacts would fall on labor through reduced wages or owners of capital through reduced returns on investment. Economic models that assume this outcome produce more progressive results (absent revenue recycling), with lower-income households experiencing smaller impacts than higher-income households.\nThe economic analyses appear to agree that the distributional effects among households (i.e., regressive vs. progressive) of a carbon tax program would be largely dependent on how the carbon tax revenues were used. A number of economic studies have used models to estimate the impacts of a carbon tax across households under several revenue distribution scenarios. The results vary because the studies use different modeling frameworks, carbon tax rates and scopes, underlying assumptions, and ways to measure impacts.\nFor example, a 2018 study assessed the impacts to household income for different household quintiles under a carbon tax of $50/mtCO 2 e, starting in 2020. This study examined four revenue distribution scenarios:\n1. reduce federal deficit, 2. reduce corporate income tax rate, 3. reduce payroll tax rate, and 4. provide a per-capita rebate to households.\nThis report highlights this study, because it includes carbon tax revenue applications that have generated interest in recent years. In addition, this analysis was prepared after the 2017 tax rate changes in P.L. 115-97 .\nFigure 2 illustrates the modeled results, which the study measured as percentage reductions to household income. Thus, negative percentages illustrated in the figure are gains to household income. The per-capita rebate approach provides the most progressive result, yielding a net benefit for the bottom three household quintiles but a net loss for the top quintile. The fourth quintile impact is zero. By comparison, the other approaches produce varying degrees of regressive outcomes while providing a net gain for wealthier groups in two particular instances. Of the four options, the payroll tax rate reduction approach estimates the smallest variance between the income quintiles, ranging from a 0.5% loss for the lowest quintile to a 0.2% gain for the fourth quintile. The fifth quintile impact is zero.\nThe relative ranking among options for progressivity is generally the opposite of the relative ranking for mitigating economy-wide impacts. Other economic analyses have found similar relative rankings of revenue recycling options. The contrasting rankings highlight a central tradeoff policymakers would face when deciding how to allocate carbon tax revenues.\nPolicymakers could allot some portion of the revenues to partially support both objectives. In a 2018 carbon tax study, economic modelers assessed a scenario in which a portion of the revenue was used to offset the welfare impacts for the lowest-income household quintile and the remaining revenue supported reductions in capital tax rates. The study's models estimated that a carbon tax's impacts on the lowest-income household quintile could be counteracted with approximately 10% of the revenue. This would allow for 90% of the revenue to be used to reduce capital tax rates and thus address the economy-wide impacts from the carbon tax.", "As discussed above, a carbon tax is projected to disproportionately impact certain industries, particularly those that are described as \"emission-intensive, trade-exposed industries.\" To address these concerns, many of the recent carbon tax legislative proposals have included design mechanisms that would attach a carbon price to certain imported materials and products (see \" Border Carbon Adjustments \").\nAnother approach to addressing the competitiveness concerns of domestic industries would involve distributing a portion of the carbon tax revenues to emission-intensive, trade-exposed industries as rebates based on their output. Output rebate proposals generally determine rebate amounts by measuring emissions intensity at the relevant sector level or by a benchmark that would encourage facilities to reduce their emissions intensity. These rebates could be phased out over time or continue until other nations adopt comparable carbon price policies. Under a carbon tax system in Canada, which is scheduled to take effect in 2019, industries will be subject to an \"output-based pricing system.\" Some contend that the data and administrative resources necessary to implement such a program would be substantial.\nA carbon tax system is also expected to disproportionately impact fossil fuel industries and the communities that rely on their employment. In particular, coal-mining communities are expected to experience substantial impacts based on the coal production declines predicted in carbon tax analyses. For example, one model estimates that under a $50/mtCO 2 e carbon tax, annual U.S. coal production would decline by almost 80% in 2030 compared to a reference case. Policymakers may consider supporting worker transition or community transition assistance to help mitigate the economic impacts. Several of the recent carbon tax proposals would have devoted carbon tax revenues for this objective.", "Policymakers may also consider using the carbon tax revenues to provide funding to support a range of objectives, which may include policy goals that are not directly related to climate change. Some options are identified below, and many have been included in recent legislative proposals or in state GHG mitigation programs that raise revenues:\nTechnology development and deployment: Efforts to reduce the costs of emission mitigation technologies—particularly carbon capture, utilization, and sequestration—are often considered in carbon tax programs, and Congress has funded such programs in other legislation. Energy efficiency programs: Although a carbon tax would likely stimulate energy efficiency to some degree, Congress may consider using the revenues to provide additional incentives and/or technical assistance, particularly to encourage households and small businesses to increase efficiency, which would also reduce the effects of the tax on their energy bills. States in the Regional Greenhouse Gas Initiative (RGGI) have used revenues from the program to support efficiency improvements, among other objectives. Biological sequestration: Trees, plants, and soils sequester carbon, removing it from the earth's atmosphere. Revenues could be used to promote carbon sequestration efforts, particularly forestry or agricultural activities, which would supplement the GHG reductions of the carbon tax. Adaptation to climate change: Regardless of emission reduction efforts taken today, climatic changes are expected due to the ongoing accumulation of GHGs in the atmosphere. Therefore, some advocate using revenues to reduce potential damage—domestically and internationally—of a changing climate. Deficit reduction: The possible contribution of a carbon tax to deficit reduction would depend on the magnitude and scope of the carbon tax, various market factors, and assumptions about the size of the deficit. Some carbon tax proposals in recent congressional sessions would have allotted a portion of revenues for deficit reduction. Infrastructure funding: Some recent proposals have provided funding for infrastructure projects. This objective could be combined with funding for adaptation activities.", "", "Multiple economic studies have estimated the emission reductions that particular carbon tax designs could achieve. Economic models provide estimates based on the best information available at the time. Comparing results from different studies is problematic, because the studies' scenarios differ in multiple ways, including the tax rate, start date, scope of the program, assumptions about economic growth and technological advances, and assumptions about other federal and state policies and their effects.\nA 2018 study avoided some of these comparison difficulties by inviting modeling teams to analyze a coordinated set of scenarios. The 2018 Stanford Energy Modeling Forum study (\"EMF 32\") assembled 11 modeling teams to analyze the economic impacts of four carbon tax scenarios starting in 2020: a $25/metric ton and $50/metric ton carbon tax, increasing annually by 1% and 5%. Within each of these carbon price frameworks, the models ran separate revenue distribution scenarios: a reduction in labor tax rates, a reduction in capital tax rates, and household rebates.\nFigure 3 illustrates the study's estimates of CO 2 emissions from fossil fuel combustion. The red lines in the figure display the average values for the 11 models. The shaded areas illustrate the range of results, highlighting the uncertainties in emission reduction estimates. Based on these results, the study authors concluded that each of the tax rate scenarios would likely achieve the U.S. CO 2 emission reduction targets under the Paris Agreement.\nAs Figure 3 indicates, a carbon tax or emissions fee could be set with the expectation that it would achieve an emissions reduction target, but the resulting level of emissions would be uncertain. The uncertainty of resulting emissions may lead some stakeholders to disfavor a carbon tax or fee option to control GHG emissions. Although uncertain emissions are inherent with a carbon tax approach, Congress could employ certain design elements to enhance the emission control certainty. For example, the existing GHG emission reporting data could be used to track the impact and performance of a carbon price. If policymakers determine that emission reduction is not occurring at a desired pace, the price could be amended. Legislation could establish the conditions and process by which price changes could occur.\nSome may argue that adjusting the carbon price to reflect actual emissions performance would undermine the benefits of price certainty. Others may point out that unplanned adjustments to the carbon price could be politically unpalatable. For example, it may be difficult for policymakers to increase the tax rate, especially during periods of high energy prices. Some have suggested that Congress authorize an independent board or agency with the mandate to modify the tax rate administratively in order to meet pre-determined emission reduction objectives. Although this approach would likely improve emission certainty, long-term price certainty may be sacrificed to some degree, depending on the authority of the delegated entity to adjust the tax rate.\nSome would argue that potential year-to-year emission variations under a carbon tax would not undermine efforts to control climate change so long as long-term emission goals are achieved. Indeed, they would assert that annual emission fluctuations are preferable to price volatility that could result from an emissions cap program. They support their preference for price control by suggesting that CO 2 generates damages through its overall accumulation as concentrations in the atmosphere, not its annual flow.\nA potential concern of a carbon tax is whether it would be effective in reducing GHG emissions in all of its covered sectors, particularly emissions in the transportation sector. As of 2016, the transportation sector contributes the largest percentage (36%) of CO 2 emissions from fossil fuel combustion, with electric power second at 35%. Carbon tax analyses generally agree that the majority of the emission reductions resulting from a carbon tax program would occur in the electricity sector. By comparison, economic models generally conclude that a carbon tax would have much less of an impact on emissions in the transportation sector. Several factors explain this projected outcome. The transportation sector offers fewer opportunities to switch to less carbon-intensive fuels in the short term than does the electric power sector, which can displace coal with natural gas relatively quickly. In addition, short-term emission changes in the transportation sector are largely influenced by changes in driving demand, which has historically been relatively insensitive to gasoline price increases.\nBased on these projected outcomes, some may contend that to achieve deeper, long-term reductions in total GHG emissions, policymakers would need to complement a carbon tax with other programs, such as vehicle technology standards (e.g., Corporate Average Fuel Economy, CAFE) or fuel performance standards, among other options.", "The quantity of revenues generated under a carbon tax system depend on the program's design features, namely the tax base and rate, as well as such independent factors as prices in global energy markets. They would also depend on how covered emission sources respond to the carbon price, for example by adopting alternative technologies or changing behavior. Several carbon tax studies have prepared revenue estimates, which are presented in Table 1 .\nFrom a public finance perspective, a carbon tax may not be a reliable source of long-term funding, because a primary goal of the carbon tax is to reduce its tax base—GHG emissions. The estimates in Table 1 project carbon tax revenue values in 2020. Multiple studies have projected carbon tax revenue trajectories beyond 2020. In the 2018 EMF 32 study, all but one of eight models projected carbon tax revenue increases from 2020 through 2040. The carbon tax scenarios with larger annual rate increases resulted in steeper trajectories of increasing revenues through 2040. The models' estimates of annual carbon tax revenue in 2040 ranged from approximately $250 billion to $475 billion (under the tax rate scenario of $50/metric ton, increasing 5% annually).", "Fossil fuels have a wide range of CO 2 emission intensity (i.e., emissions per unit of energy). As illustrated in Figure 4 , the CO 2 emission intensity of coal is approximately 30% more than oil and approximately 80% more than natural gas. These emissions intensity differences would lead to different tax rates per unit of energy across different fuels in a carbon tax regime.\nCarbon taxes could affect fuel prices in complex ways. The change in consumer fuel prices would likely not be the same as the price paid by the party directly subject to the tax. Actual price impacts for consumers would depend on multiple factors, including whether:\na carbon tax is applied at the beginning of the production process (\"upstream\") to fossil fuels; and the price impacts are passed through to end users and not absorbed by upstream energy producers or midstream entities, such as retailers.\nIn addition, market participants such as electric power plant operators can avoid paying the increased costs by substituting fuels or technologies. Energy consumers may modify their behavior in the marketplace—energy conservation, consuming less or different products and services—to mitigate impacts from the increased prices.\nTable 2 includes estimates of price increases on coal, crude oil, natural gas, home heating oil, and motor gasoline based on a carbon tax rate of $25/mtCO 2 that applies CO 2 emissions from fossil fuel combustion. As indicated in the table, a carbon tax would have the greatest impact on the price of coal due to coal's relatively high CO 2 emissions intensity. By comparison, a carbon tax is expected to have less of an impact on the price of gasoline, increasing its price by 8%.\nEconomic models have projected how carbon prices would impact energy use, particularly the consumption of different fossil fuels and less carbon-intensive alternatives, such as renewables or nuclear power. For example, the 2018 EMF 32 study, which included results from 11 modeling groups, assessed how several carbon tax scenarios would impact energy consumption. Highlights of these models' results (compared to reference case scenarios) include the following:\nCoal consumption could decline by 40% to nearly 100% by 2030 under a $50/mtCO 2 carbon tax, though one model projected an increase in coal due to the model incorporating CCS technology. Natural gas consumption estimates vary across the models, with some showing minimal change in 2030 and others showing declines ranging between 40% and 60%. Oil consumption estimates indicate that the largest decline (approximately 4% by 2030) would occur under the $50/mtCO 2 carbon tax scenario. Wind energy consumption could increase by 48% to 300% by 2030 under a $50/mtCO 2 carbon tax scenario.", "A carbon tax is one policy option to address U.S. GHG emission levels, which contribute to climate change and related impacts. Economic modeling indicates that a carbon tax would achieve emission reductions, the level of which would depend on which GHG emissions and sources are covered and the rate of the carbon tax.\nA carbon tax would generate a new revenue stream. The magnitude of the revenues would depend on the scope and rate of the tax and multiple market factors, which introduce uncertainty in the revenue projections. A 2018 CBO study estimated that a $25/metric ton tax on CO 2 emissions from energy-related activities and other selected GHG emission sources would yield approximately $100 billion in the first year of the program. To put this estimate in context, the CBO projected that total federal revenue would be $3.5 trillion in FY2019.\nPolicymakers would face challenging decisions regarding the distribution of the new carbon tax revenues. Depending on the level of the tax, some economic analyses indicate that the distribution of tax revenue could yield greater economic impacts than the direct impacts of the tax. Some models indicate that the economic impacts are greatest in the early years of the carbon tax.\nPolicymakers could apply the tax revenues to support a range of policy objectives. When deciding how to allocate the revenues, policymakers would encounter trade-offs among objectives. The central trade-offs involve minimizing economy-wide costs, lessening the costs borne by specific groups—particularly low-income households—and supporting a range of specific policy objectives.\nA primary concern with a carbon tax is the potential economy-wide costs that may result. The potential costs would depend on a number of factors, including the magnitude, design, and use of revenues of the carbon tax. In general, economic literature finds that some of the modeled revenue applications would reduce the economy-wide costs imposed by a carbon tax but may not eliminate them entirely.\nPolicymakers and stakeholders may have different perspectives regarding whether these estimated economy-wide costs (typically measured in terms of GDP loss) represent a significant concern. Some argue that the estimated economy-wide costs should be compared with the policy option of not establishing a carbon tax. This comparison is uncertain as carbon tax analyses do not generally consider the benefits that would be gained by reducing GHG emissions and avoiding climate change and its adverse impacts.\nSome studies cite particular economic modeling scenarios in which a carbon tax and revenue recycling could produce a net increase in GDP or economic welfare, compared to a baseline scenario. These scenarios involve using carbon tax revenues to offset reductions in existing, distortionary taxes, such as corporate income or payroll taxes. Although the models indicate that these revenue applications would yield the greatest benefit to the economy overall, the models also find that lower-income households would likely face a disproportionate impact under such revenue applications. As lower-income households spend a greater proportion of their income on energy needs, these households are expected to experience disproportionate impacts from a carbon tax if revenues were not recycled back to them in some fashion, such as a lump-sum distribution. Carbon tax revenues that are used to offset the burden imposed on various sectors or specific population groups would not be available to support other objectives.\nAn additional concern with a carbon tax involves potential disproportionate impacts to \"emission-intensive, trade-exposed industries.\" Policymakers could select among several options to address these concerns, either by establishing a border carbon adjustment program or allocating some of the carbon tax revenues to selected industry sectors based on an output-based metric. If other nations were to adopt comparable carbon price policies, this concern may be alleviated to some degree.\nRelatedly, a carbon tax is projected to disproportionately impact fossil fuel industries, particularly coal, and the communities that rely on their employment. To alleviate these impacts, policymakers could allocate some of the carbon tax revenue to provide transition assistance to employees or affected communities.", "Table A-1 identifies sources of GHG emissions that account for 0.5% or more of total U.S. GHG emissions. The sources are listed in descending order by their percentage contribution. CO 2 emissions from fossil fuel combustion, which accounts for almost 76% of total U.S. GHG emissions, are broken down by fossil fuel type: petroleum, coal, and natural gas.\nThe table identifies potential points in the economy at which a carbon tax could be applied. The table lists the approximate number of entities that would be involved with different tax applications. The number of entities listed is current as of the most recent data available and varies accordingly by category. See table notes for details.\nThe right-hand column of the table provides additional comments for some of the emission sources. In some cases the comments discuss potential opportunities for additional GHG emissions coverage at a particular source. In other cases, the comments address potential limitations of covering all of the emissions from a particular source." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2 ], "alignment": [ "h5_title h0_title h2_title h4_title h3_title h1_title", "h0_full", "h1_title", "", "h1_title", "h1_full", "", "", "", "h5_title h3_full h4_title", "h3_full h4_full", "", "h5_full", "", "h1_title", "h1_full", "", "", "h5_full h3_full h2_full h4_full", "" ] }

{ "question": [ "What did the U.S. Fourth National Climate Assessment conclude?", "How has Congress responded to the issue of climate change?", "How could Congress help lessen the impact of climate change?", "How has this approach been criticized?", "What have multiple economic studies estimated?", "What is an example of such an estimate?", "What did this study conclude?", "What would a carbon tax system generate?", "According to CBO's estimate, what volume of revenue would this generate?", "What is the primary argument against a carbon tax?", "What should economic impacts be compared to when deliberating on a carbon tax?", "What factors would the economic impacts of a carbon tax depend on?", "What does economic literature indicate regarding the effects of a carbon tax?", "How has this been demonstrated by economic modeling scenarios?", "How might such an approach negatively impact lower-income households?", "What disadvantages might a price on GHG emissions create?", "How could this concern be addressed?", "How will a carbon tax system's impact likely be distributed?", "How might this impact be alleviated?" ], "summary": [ "The U.S. Fourth National Climate Assessment, released in 2018, concluded that \"the impacts of global climate change are already being felt in the United States and are projected to intensify in the future—but the severity of future impacts will depend largely on actions taken to reduce greenhouse gas [GHG] emissions and to adapt to the changes that will occur.\"", "Members of Congress and stakeholders articulate a wide range of perspectives over what to do, if anything, about GHG emissions, future climate change, and related impacts.", "If Congress were to consider establishing a program to reduce GHG emissions, one option would be to attach a price to GHG emissions with a carbon tax or GHG emissions fee. In the 115th Congress, Members introduced nine bills to establish a carbon tax or emissions fee program.", "However, many Members have expressed their opposition to such an approach. In particular, in the 115th Congress, the House passed a resolution \"expressing the sense of Congress that a carbon tax would be detrimental to the United States economy.\"", "Multiple economic studies have estimated the emission reductions that particular carbon tax would achieve.", "For example, a 2018 study analyzed various impacts of four carbon tax rate scenarios: a $25/metric ton of CO2 and $50/metric ton of CO2 carbon tax, increasing annually by 1% and 5%.", "The study concluded that each of the scenarios would likely achieve the U.S. GHG emission reduction target pledged under the international Paris Agreement (at least in terms of CO2 emissions).", "A carbon tax system would generate a new revenue stream, the magnitude of which would depend on the scope and rate of the tax, among other factors.", "In 2018, the Congressional Budget Office (CBO) estimated that a $25/metric ton carbon tax would yield approximately $100 billion in its first year. CBO projected that federal revenue would total $3.5 trillion in FY2019.", "A primary argument against a carbon tax regards it potential economy-wide impacts, often measured as impacts to the U.S. gross domestic product (GDP).", "Some may argue that projected impacts should be compared with the climate benefits achieved from the program as well as the estimated costs of taking no action.", "The potential impacts would depend on a number of factors, including the program's magnitude and design and, most importantly, the use of carbon tax revenues.", "In general, economic literature finds that some of the revenue applications would reduce the economy-wide costs from a carbon tax but may not eliminate them entirely.", "In addition, some studies cite particular economic modeling scenarios in which certain carbon tax revenue applications produce a net increase in GDP compared to a baseline scenario. These scenarios involve using carbon tax revenues to offset reductions in other tax rates (e.g., corporate income or payroll taxes).", "Although economic models generally indicate that these particular revenue applications would yield the greatest benefit to the economy overall, the models also find that lower-income households would likely face a disproportionate impact under such an approach. As lower-income households spend a greater proportion of their income on energy needs (electricity, gasoline), these households are expected to experience disproportionate impacts from a carbon tax if revenues were not recycled back to them in some fashion (e.g., lump-sum distribution).", "A price on GHG emissions could create a competitive disadvantage for some industries, particularly \"emission-intensive, trade-exposed industries.\"", "Policymakers have several options to address this concern, including establishing a \"border carbon adjustment\" program, which would levy a fee on imports from countries without comparable GHG reduction programs. Alternatively, policymakers could allocate (indefinitely or for a period of time) some of the carbon tax revenues to selected industry sectors or businesses.", "Relatedly, a carbon tax system is projected to disproportionately impact fossil fuel industries, particularly coal, and the communities that rely on their employment.", "To alleviate these impacts, policymakers may consider using some of the revenue to provide transition assistance to employees or affected communities." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 1, -1, 0, -1, 0, 0, -1, 0, 0, -1, 0, 0, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 2, 2, 4, 4, 4, 5, 5, 5, 6, 6, 6, 6 ] }

{ "title": [ "Background", "Tax-Time Financial Products", "Participants in the Tax- Time Financial Products Industry", "Regulators", "Federal Banking Regulators", "Tax Credits and Protecting Americans from Tax Hikes Act of 2015", "IRS Data on Use of Tax-Time Financial Products Have Some Limitations, but When Combined with Other Available Data Suggest Product Offerings Have Evolved IRS Data for 2016–2018 Do Not Accurately Reflect Product Use and IRS Has Not Updated Reporting Guidance to Tax Preparers", "Tax-Time Financial Products Have Evolved Since 2012", "Refund Anticipation Loans", "Refund Transfers", "Refund Advances", "Limited Public Data Suggest Refund Transfer Fees Generally Increased in 2018", "Comparative Fee Scenarios", "Tax-Time Financial Products Have Continued to Evolve Since 2016", "Lower-Income and Some Minority Taxpayers Were More Likely to Use Tax- Time Financial Products for Various Reasons", "Our Analysis Found That Lower-Income, African- American, and Single Taxpayers Were More Likely to Use Tax-Time Financial Products", "Income-Related Characteristics", "Other Characteristics, Including Race, Age, and Household Head", "Reasons for Using Refund Products Include Obtaining Cash Faster and Not Paying Tax Preparation Fees Up Front", "Quick Access", "Tax Preparation Fees Not Paid Out of Pocket", "Higher Refunds and Tax Preparation Assistance", "Tax-Time Financial Products Cheaper Than Alternatives", "Providers We Reviewed Generally Disclosed Required Information but Some Disclosure Practices May Hinder Consumer Decision- Making", "Industry Participants Are Subject to Varying Levels of Oversight", "Banks and Settlement Service Providers", "Software Developers", "Tax Return Preparers", "Banks and Tax Preparers in Our Review Generally Followed Guidance for Disclosing Product Fees, but All Related Fees Were Not Always Disclosed Clearly or Early in Process", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Analysis of Characteristics Associated with Tax-Time Financial Product Use", "Data", "Methodology", "Caveats and Limitations", "Results", "Appendix III: Disclosure of Product and Related Fees and Terms", "Disclosure of Product Fees and Terms", "Undercover Visits", "Website Content Analysis", "Document Review", "Disclosure of Disbursement Fees, Including on Prepaid Cards", "Appendix IV: Comments from the Internal Revenue Service", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Table 1 provides an overview of tax-time financial products based on information gathered during our review.", "The tax-time financial products industry consists of four main groups of participants: banks, paid providers of tax preparation services, settlement service providers, and software developers.\nProviders of tax preparation services include paid tax return preparers or electronic return originators (ERO). Not all tax preparers are EROs, but because IRS generally requires returns to be filed electronically for tax preparers filing more than 10 returns, tax preparers generally work with or for an ERO that also may be a tax preparer. Paid preparers and EROs offer their services in-person, on the Internet, or through software sold to taxpayers. They generally offer different refund disbursement options to taxpayers and may partner with banks to offer tax-time financial products.\nSoftware developers provide software needed to file tax returns electronically and offer tax-time financial products through their software to taxpayers. The largest tax preparation companies have their own software that allows them to prepare returns as well as offer tax-time financial products. Applications for the products generally can be completed through the same software used to file the return.\nBanks provide tax-time financial products. They also may approve and process product applications and perform settlement services (discussed below).\nSettlement service providers serve as intermediaries in transactions to deliver tax-time products. They work with banks to accept and process applications for tax products; allocate payments due to paid preparers, other providers, banks, and taxpayers; and provide distribution instructions to banks. Some banks have affiliates that perform settlement services, and some banks perform these functions themselves.\nFigure 1 illustrates the roles of these groups, using the example of a refund transfer transaction.", "", "The purpose of federal banking supervision is to help ensure that banks throughout the financial system operate in a safe and sound manner and comply with banking laws and regulations in the provision of financial services. At the federal level, banks are supervised by one of the following three prudential regulators and CFPB:\nThe Federal Reserve supervises state-chartered banks that opt to be members of the Federal Reserve System, bank holding companies and savings and loan holding companies (and the nondepository institution subsidiaries of those organizations), and nonbank financial companies designated for Federal Reserve supervision by the Financial Stability Oversight Council.\nFDIC supervises all FDIC-insured state-chartered banks that are not members of the Federal Reserve System as well as state savings associations and insures the deposits of all banks and thrifts approved for federal deposit insurance.\nOCC supervises federally chartered national banks, federal savings associations (federal thrifts), and federally chartered branches and agencies of foreign banks.\nCFPB has rulemaking authority to implement provisions of federal consumer financial law and enforces various federal laws and regulations governing consumer financial protection. CFPB also examines banks with more than $10 billion in assets and their affiliates and certain nonbanks for compliance with federal consumer financial laws, accepts consumer complaints on topics such as debt collection and other consumer financial products or services, and educates consumers about their rights under federal consumer financial laws.\nFDIC, the Federal Reserve, and OCC are required to conduct a full- scope, on-site risk-management examination of each of their supervised banks at least once during each 12-month period. The regulators may extend the examination interval to 18 months, generally for banks and thrifts that have less than $3 billion in total assets and that meet certain conditions (for example, if they have satisfactory ratings, are well capitalized, and are not subject to a formal enforcement action).\nThe prudential regulators generally conduct consumer compliance examinations every 12–36 months and Community Reinvestment Act examinations every 12–72 months. The specific timing depends on a bank’s size and its previous consumer compliance and Community Reinvestment Act rating. But the Dodd-Frank Wall Street Reform and Consumer Protection Act transferred consumer protection oversight and other authorities over certain consumer financial protection laws from multiple federal regulators to CFPB. Additionally, for the transferred laws such as Truth in Lending Act (TILA) and Equal Credit Opportunity Act, CFPB has examination and primary enforcement authority for banks with assets of more than $10 billion and any affiliates of such institutions.\nThe three prudential regulators also are responsible for supervising for compliance with federal consumer financial laws for insured depository institutions with total assets of $10 billion or less. For example, they examine depository institutions for compliance with consumer financial laws including the Fair Housing Act, the Servicemembers Civil Relief Act, and Section 5 of the Federal Trade Commission Act.\nFTC can enforce Section 5 of the Federal Trade Commission Act, which prohibits unfair or deceptive acts or practices affecting commerce, and TILA, which seeks to promote the informed use of consumer credit. TILA requires disclosures about the terms and cost of credit and standardizes the manner in which costs associated with borrowing are calculated and disclosed.\nFTC can enforce a number of additional statutes against certain entities; they include portions of the Gramm-Leach-Bliley Act, which requires financial institutions, including those providing tax-time financial products, to protect consumer data; the Telemarketing and Consumer Fraud and Abuse Prevention Act, which prohibits telemarketers from making misrepresentations in the sale of goods or services, which could include tax-time financial products; and the Military Lending Act, which provides important protections for servicemembers and their dependents seeking and obtaining certain types of consumer credit, including refund anticipation loans.\nThe Office of Professional Responsibility within IRS is responsible for ensuring all tax practitioners (defined as certified public accountants, attorneys, enrolled agents, enrolled actuaries, appraisers, and enrolled retirement plan agents) and other individuals authorized to practice before IRS adhere to regulations relating to Circular 230, which governs practice before IRS.\nAccording to IRS, IRS is neither involved in offering, nor responsible for, tax-time financial products. Nonetheless, IRS stated that it addresses these types of products on its website because it is important for taxpayers to understand the terms of the loan products, which constitute an agreement between them and the third-party lender. Although IRS is not statutorily required to collect data on tax-time products, according to IRS officials, the agency retains information on use of the products. Specifically, IRS compiles information from tax returns that indicates whether the taxpayer also applied for a financial product. IRS also issues guidance to EROs on reporting these data through its Handbook for Authorized IRS e-File Providers of Individual Income Tax Returns (Pub. 1345). IRS makes the usage data publicly available on its website, and provides it on a biweekly basis to industry participants that are members of an IRS working group on security issues. In addition to researchers and consumer advocacy groups, federal entities also use these data, including the National Taxpayer Advocate, who leads IRS’s Taxpayer Advocate Service—an independent office in IRS whose objectives include mitigating systemic problems that affect large groups of taxpayers. As industry data on product use are generally limited, agencies and researchers rely on IRS for this information.", "Refundable tax credits include the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC). The credits are termed refundable because, in addition to offsetting tax liability, any excess credit over the tax liability is refunded to the taxpayer. EITC provides tax benefits to eligible workers earning relatively low wages. For tax year 2018, the maximum EITC amount available was $6,431 for taxpayers filing jointly with three or more qualifying children, and $519 for individuals without children. In 2017, EITC provided more than $65 billion to about 27 million taxpayers. ACTC is the refundable portion of the Child Tax Credit and provides tax relief to low-income families with children.\nThe Protecting Americans from Tax Hikes Act of 2015 (PATH Act) made several changes to the tax law. One of its provisions stipulates that funds owed taxpayers claiming EITC or ACTC refunds for a tax year cannot be released before February 15 to allow IRS time to review these returns for potential fraudulent activity. This change became effective on January 1, 2017. For the 2018 tax filing season (January through April 2018), refunds for taxpayers who claimed these tax credits were not available in bank accounts or prepaid cards until February 27, 2018.", "IRS data on tax-time financial products for 2016–2018 do not accurately reflect product use and IRS has not updated reporting guidance to tax preparers. IRS data for 2008–2016 and information from industry participants and a consumer advocacy group’s reports suggest that trends in the market for tax-time financial products include the decline of refund anticipation loans and that refund transfers became the most used product. Industry data also indicate that product fees for refund transfers increased in 2018; multiple other fees can be associated with tax-time products. New tax-time products and product features continue to be introduced.\nData collected by IRS are the primary source of information on the use of tax-time financial products and are used by federal entities, policymakers, regulators, researchers, and consumer groups. However, we identified some limitations in the IRS data related to use of refund anticipation loans, refund advances, and refund transfers.", "Despite limitations with IRS data on product use by tax year, our analysis of multiyear trends from these data, supplemented with data collected by the National Consumer Law Center and from Securities and Exchange Commission filings, suggests that use of refund anticipation loans declined, the refund advance was introduced while refund transfers have become the most used tax-time product.", "Applications for refund anticipation loans declined sharply from 2010 to 2012, according to IRS data and consumer groups reports. According to a 2010 study, the volume of refund anticipation loans peaked in 2002 with 12.7 million taxpayers. Volume began to decline at a faster rate between 2010 and 2011. According to a report by the National Consumer Law Center and the Consumer Federation of America, banks stopped offering the products in 2012 after the loans came under the scrutiny of federal banking regulators. IRS data continued to show use of refund anticipation loans after 2012 but with banks out of the market for refund anticipation loans, it is unclear what types of financial institutions were offering the loans. Consumer advocates with whom we spoke agree that nonbank lenders such as payday lenders likely offered the loans; however, we were not able to identify any. The consumer advocates, researchers, and industry participants with whom we spoke also were not able to provide us with any current information about these lenders.\nThe IRS Taxpayer Advocate Office, the Financial Crimes Enforcement Network, and consumer advocates have long raised concerns about refund anticipation loans. For example, in 2007 the National Taxpayer Advocate expressed concerns about how the loans were offered to consumers and whether consumers adequately understood the product. Consumer advocates questioned the high interest rates the loans could carry, how loan fees reduced EITC benefits taxpayers received, and the ramifications of borrower default. In a 2008 advance notice of proposed rulemaking, IRS and the Department of the Treasury also shared concerns that refund anticipation loans offered tax preparers an incentive to fraudulently inflate refund claims and to market the loans to taxpayers who might not understand the full cost of the product.\nBanking regulators raised concerns as well. OCC and FDIC noted consumer protection and safety and soundness risks to banks that offered refund anticipation loans. FDIC encouraged consumers to have tax refunds directly deposited into their own bank accounts and raised concerns about other options that claimed to speed up a refund for a sizable cost, according to FDIC officials. The Office of Thrift Supervision, which had supervisory authority over federal thrifts at the time, ordered a medium-sized thrift to cease making refund anticipation loans in 2010. In part due to concerns expressed by OCC, national banks stopped offering the loans by 2010 and FDIC-supervised banks stopped offering them by 2012.\nAn IRS decision also contributed to FDIC enforcement actions on refund anticipation loans. Before 2011, IRS used a tool called the debt indicator that acknowledged whether any of a taxpayer’s refund could be used to pay certain outstanding debts. IRS provided the debt indicator to tax preparers at the time the taxpayer’s return was filed electronically. Banks used the debt indicator in their underwriting tools to help determine a borrower’s likelihood of loan repayment. FDIC determined that without the debt indicator, a bank would have to develop and adopt a more robust underwriting process to make these loans in a safe and sound manner. According to FDIC, IRS’s elimination of the debt indicator created a safety and soundness concern because it removed a key data element used for determining a borrower’s ability to repay. Losing this information increased the risk of loss for lenders and at that time helped inform FDIC’s consent orders with two banks under its supervision to stop offering refund anticipation loans. In 2011 (the first tax season without the debt indicator), the number of returns with a refund anticipation loan indicator reported by IRS decreased to 1.17 million from 6.9 million in the prior year.\nIRS data continue to show use of refund anticipation loans after 2012, albeit at a much lower volume. For example, in 2016, IRS data show about 468,500 returns with a refund anticipation loan indicator and in 2017 the number appeared to spike to about 1.7 million. However, as discussed earlier, the data for these two years may be misleading because they likely conflate refund anticipation loans with refund advances. In 2018, IRS created a separate reporting category for refund advances and the 2018 data show about 356,000 returns with a refund anticipation loan indicator as of October 2018.", "Use of refund transfers—which allow for direct deposit of refund checks through temporary accounts that banks open for taxpayers—far exceeded use of refund anticipation loans and refund advances since 2008, according to IRS data. The number of taxpayers who used a refund transfer more than doubled from 2008 through October 2018 to exceed 21 million. As banks stopped offering refund anticipation loans in 2012, refund transfers (also known as refund anticipation checks) began to increase. Unlike other tax-time financial products generally only available early in the tax season (which generally runs through mid-April), refund transfers are usually available after April.\nHowever, IRS data on refund transfers since 2016 have limitations. Although a refund transfer is not required to get a refund advance, a number of industry experts told us that almost all taxpayers who apply for a refund advance also apply for a refund transfer. But because tax preparers could select only one product indicator when reporting use of tax-time financial products, they could report a refund advance or a refund transfer, but not both. As discussed previously, IRS made changes in 2018 to allow preparers to add information about other product use but has not issued explanatory material about the changes.", "In 2016, a few banks began offering refund advances to taxpayers. Refund advances are no-fee, nonrecourse loans.\nIt is difficult to determine usage trends for this product, although available data indicate an increase in use from 2016 to 2017.\nFirst, accurate IRS data on refund advances are not available for 2016 and 2017 because IRS did not provide an option for tax preparers to report refund advance products. As previously discussed, IRS added a separate reporting category for refund advances in 2018. As of October 17, 2018, IRS data show about 1.65 million returns with a refund advance indicator.\nSecond, publicly available data from industry and other sources (consumer advocacy and research organizations) are limited. According to data reported by the National Consumer Law Center, major tax preparation companies facilitated the sale of about 365,000 refund advances in 2016. According to industry sources, use increased to about 1.63 million in 2017, when one of the largest tax preparation companies began offering refund advances. Industry data for 2018 were not yet publicly available at the time of this report.\nThird, taxpayers often obtain refund advances and refund transfers in tandem. But as discussed previously, IRS reporting indicators did not include an option for reporting use of multiple products until 2018.\nUse of refund advances also may have increased in 2017 because tax preparers increased the size of the advances. One lender that offers refund advances to tax preparers told us that the driving factor in demand for refund advances was the available loan amount. The maximum advance amount that tax preparers offered taxpayers in 2016 was $750. In 2017, the maximum increased to $1,300.\nMost industry participants and consumer groups told us that they believe that provisions of the PATH Act requiring IRS to delay issuance of EITC or ACTC returns and associated refunds until after February 15 led to an increase in demand for refund advances. They said that the delay puts pressure on taxpayers eligible for EITC or ACTC who depend on getting their refund early in the tax season (a refund advance can help mitigate the impact of this delay). Others stated that an increase in demand due to the PATH Act is possible, but the correlation between the two cannot be determined. One industry provider suggested that increased demand for refund advances also could be the result of marketing by tax preparation companies.", "Our analysis of publicly available data about product fees for refund transfers showed that fees increased in 2018. In particular, our analysis of fee data collected by the National Consumer Law Center shows that in 2014–2017 refund transfer fees charged by paid tax preparers remained generally unchanged at between $32.95 and $34.95. According to fee information we were given during our undercover visits, paid tax preparers generally charged their customers $39.95 or $49.95 during the 2018 tax filing season for a refund transfer that sometimes included both federal and state tax refunds. In one case the fee was $65, which included a paper check disbursement. Also in 2018, we found that online providers of tax filing services and software charged online filers who prepared their own returns between $12 and $39.99 for a refund transfer.\nAccording to our analysis, factors that can affect the fee a taxpayer pays for a refund transfer include the following:\nFiling method. Our review of providers’ websites shows that taxpayers who filed their own returns online using preparer software paid an average fee of $31.13 in 2018, which was lower than the $39.95 or $49.95 that paid preparers charged their customers.\nDisbursement method. The manner in which the taxpayer chooses to receive a tax refund may affect the fee. For example, our review of industry literature indicates that one bank set the fee at $29.95 if the refund was disbursed to a prepaid card offered by an affiliate vendor or at $39.95 if the refund was directly deposited or disbursed as a check. Another bank gave tax preparers the option to offer a free refund transfer for disbursement onto a prepaid card, $15 for a direct deposit, or $20 for a paper check.\nIncentives offered to tax preparers by banks. Incentives from banks for tax preparers can increase fees for taxpayers. Our review of banks’ promotional materials for tax preparers also indicates that some bank providers offer tax preparers different fee structures for a product—that is, the preparers can charge a higher fee to earn a rebate. For example, one bank offered a tax preparer the option to provide a refund transfer to clients for $39 (which includes an $8 incentive paid to the tax preparer) or for $29 (no incentive payment). On their websites, two banks marketed the no-incentive option to tax preparers as a way to be competitive (by offering low-cost options to their customers).\nUsing a refund advance. According to a report by the National Consumer Law Center, one bank set a higher fee for a refund transfer if taxpayers also applied for a refund advance. When taxpayers used only a refund transfer, the fee was $29.95 for the federal refund and an additional $9.95 for the state refund, for a total of $39.90. If the taxpayer also applied for a refund advance (a no-fee product), the refund transfer fee was $44.95. Thus, taxpayers paid $5.05 more for a refund transfer if they also received a refund advance.\nOur analysis found that, in addition to the product fee, taxpayers may be charged other fees when they use a refund transfer.\nState refund transfer. In some cases, the refund transfer fee covered the deposit of a federal and a state refund. In other cases, the fee only covered the federal refund. In these cases, if the taxpayer received a state refund, the tax preparer charged an additional fee of $10 or $12.\nDisbursement services. According to documentation we reviewed, a tax preparer may charge an additional fee of $25 if taxpayers choose to get their refund as a paper check or $7 for a cash transfer to a third party.\nPrepaid card use. The long-term use of prepaid cards used to disburse a refund may add to the overall cost of getting a tax product. We reviewed cardholder agreements and fee schedules for several prepaid cards commonly used to disburse funds from a tax refund and found they generally carry monthly fees of about $5. The issuer of the prepaid cards also may charge consumers a fee every time they access cash at automated teller machines, deposit more money onto the card, or do not use the card for a certain period of time.\nSoftware fees. Companies that design tax preparation software may charge a fee or fees associated with the tax product. Taxpayers may pay one or more of these fees when they use a refund transfer to receive their tax refund. The bank deducts these fees from the taxpayer’s refund after receiving funds from IRS or the state taxing authority. The fee categories are technology fee (up to $18 in our review), a transmission fee that may be a fixed amount (such as $2) or a variable amount, and a processing fee of $6.", "To determine how the fees associated with a refund transfer can affect the total tax preparation fees a provider may charge a taxpayer, we reviewed fee data we collected. We then identified the types and totals of fees generally associated with tax products and created four possible scenarios based on this analysis (see fig. 2). We designed two scenarios with online self-filers (taxpayer uses a refund transfer and taxpayer does not use a refund transfer) and two scenarios with paid preparers performing the filing (taxpayer uses a refund transfer and taxpayer does not use a refund transfer).", "Recent and emerging developments in the market for tax-time financial products include higher loan amounts and new products, according to our analysis of selected tax preparers’ websites and marketing materials, and information we were given during our undercover visits. For example, in 2018 refund advances became available to online filers. They previously were offered only to taxpayers who obtained paid tax preparation services in person (at a “storefront”).\nThe maximum amount for a refund advance has continued to increase. In 2016, the maximum loan amount available to a taxpayer was $750. In 2018, the maximum loan amount available was $3,250 and for 2019, one preparer has offered an advance of up to $3,500. One industry participant told us that the industry in general is in a race to increase borrowing limits to remain competitive and attract more customers.\nIn 2018, banks offered a new product that combines the features of a refund anticipation loan and a refund advance. The product allows the taxpayer to apply for a refund advance (up to a fixed amount) with no fee or finance charges, the option to apply for an additional loan with a fee (similar to a refund anticipation loan), or a combination of the two products known as a hybrid. For 2018, two banks offered this additional loan (not to exceed $1,000) at an annual percentage rate of 29.9 percent. For 2019, one bank offered taxpayers the option of a no-fee advance of up to $1,000, or an interest-bearing loan of $2,000, $3,000, or $5,000 based on the expected refund. The interest-bearing loans would carry an annual percentage rate of 26.07 percent in addition to a fee of $30–$75, depending on the loan amount. Also for 2019, one national tax preparation company has offered the option of a no-fee advance of up to $3,500 or a fee-based advance of up to $7,000, which would carry an annual percentage rate of 35.9 percent.\nIn addition, demand for refund transfers has increased among online self- filers. As more people file their own tax returns by using web-based software, the number of refund transfers used by self-filers may continue to increase. Because few tax preparers offer refund advances to online self-filers, taxpayers are still more likely to get a refund advance from a paid tax preparer.\nFinally, issues relating to the applicability of TILA disclosure requirements to refund transfers could affect the market for tax-time products. According to representatives of two consumer advocacy organizations, deferment of tax preparation fees until the refund is received constitutes an extension of credit; therefore, refund transfers should be treated as loan products. Tax preparers and a policy research and education organization with whom we met do not believe that refund transfer fees meet the definition of a loan.\nShould regulators decide that a refund transfer constitutes an extension of credit, and would therefore be a credit transaction with a finance charge, refund transfers would become subject to provisions of TILA. These changes could affect taxpayers’ access to this product as well as product pricing. According to Securities and Exchange Commission filings of some tax preparers, if refund transfers were successfully characterized as such, the additional requirements and costs could limit their ability to offer these products to clients.\nRefund advances were promoted by providers as a fee-free, interest-free credit product, and thus TILA disclosure requirements are generally not considered applicable for them. However, new interest-bearing credit products announced for 2019 may be subject to consumer protection regulations.", "", "Using FDIC data, we conducted a multivariate regression analysis to examine the relationship between economic and demographic variables and tax-time financial product use. This approach allowed us to test the significance of the relationships between each variable and the likelihood of using tax-time financial products, while controlling for other factors.", "Lower-income households were more likely to use tax-time financial products than higher-income households, particularly when they used paid tax preparers to file their taxes, according to our analysis of 2017 FDIC data. More specifically, we estimated that households with incomes between $20,000 and $39,999 were more likely to use tax-time financial products to receive their tax refunds more quickly through paid tax preparers than households with incomes of $60,000 or more. For example, we estimated that households with incomes between $20,000 and $29,999 were 34 percent more likely to use tax-time financial products than households with incomes of $60,000 or more; and households with incomes between $30,000 and $39,999 were 61 percent more likely to use the products than households with income of $60,000 or more.\nMoreover, our analysis of FDIC data suggests that households that received EITC were more likely to use tax-time financial products, compared to households that did not receive EITC.\nOur results also suggest that wealth, as measured by homeownership, was associated with the household decision whether to use tax-time financial products. Homeowners were 34 percent less likely to use tax- time financial products than non-homeowners, controlling for other factors.", "Households of some minority groups were more likely to use tax-time financial products when filing tax returns than white households. For example, using FDIC data, we estimated that African-American households were 36 percent more likely to use tax-time financial products than white households after controlling for other factors. Other research (a 2013 study) found that African Americans were more likely to use refund anticipation loans than white individuals.\nAccording to our analysis of 2016 IRS data, which included information about tax-time financial product use and locality, use of tax-time financial products was more concentrated in some areas of the South and the West (see fig. 3).\nOur analysis of FDIC data further suggests that other characteristics associated with use of tax-time financial products include age and household type. For example, households headed by younger persons (15–39 years old) were more than twice as likely to use the products as households headed by older persons (60 or older), controlling for other factors.\nHouseholds headed by single adults with families were more likely to use tax-time financial products than households headed by married couples. For example, according to our analysis of FDIC data, we estimated that households headed by unmarried females with families were 76 percent more likely to use tax-time financial products than households headed by married couples, controlling for other factors. Using IRS data from 2016, we found that a higher proportion of product users filed as unmarried heads of household, compared to the general tax filing population. Among those who used tax-time financial products, about 39 percent filed as single, 22 percent filed as married, and 37 percent as unmarried heads of household.", "Reasons to use tax-time financial products include more quickly obtaining cash from the expected tax refund, not having to pay tax preparation fees out of pocket, and obtaining cash more cheaply than with alternative short-term funding options, according to our review of federal and industry reports.", "Taxpayers generally might have to wait weeks for refunds from IRS:\nTaxpayers who file paper returns can expect to receive their refund about 6–8 weeks after the date on which IRS receives their return, according to IRS guidance.\nTaxpayers who file electronically generally can expect to receive their refunds within 21 days, or faster if they opt to have refunds deposited directly into their bank accounts.\nAs previously discussed, IRS must delay payments of refunds on which EITC, ACTC, or both are claimed until at least February 15 of each year. Effectively, the refunds might not be disbursed to bank accounts (or prepaid cards) of tax filers until the end of the month.\nIn contrast, users of tax-time products can obtain cash very quickly. For example, refund advance recipients generally receive loan funds within 24 hours of applying, and in some instances within the same hour they apply, according to selected tax preparer documents and websites that we reviewed. Refund transfer products also allow those who do not have the option of directly depositing refunds into a temporary account instead of waiting longer to receive a paper check. According to our analysis of IRS data from 2016, tax-time financial product users were more likely than other taxpayers to receive their tax refunds by direct deposit.\nTaxpayers may use tax-time financial products because they need cash quickly. Studies we reviewed found that product recipients tend to have pressing financial obligations. One study’s review of available literature from 2010 found that product recipients tend to live paycheck-to- paycheck or lack sufficient savings to cover prior, current, or future spending. Another study published in 2010 found that recipients use the products to pay for pressing financial obligations, both expected and unexpected, and for their tax preparation. According to the study, many users of tax-time products become delinquent on rent, utilities, and other expenses during the winter with the expectation that they will be able to pay obligations after receiving tax refunds. As one study found, the annual tax refund represents the largest single cash infusion received all year by about 40 percent of checking account holders.", "Lower-income taxpayers also use tax-time financial products to defer payment of fees related to tax return preparation, according to federal government and industry reports that we reviewed. Tax preparation fees vary greatly based on the tax forms used, including the EITC worksheet. One of the largest national tax preparation chains reported that its average tax preparation fee was between $205 and $240 in 2017.\nFree Filing Services The Internal Revenue Service (IRS) offers the following free filing services: Fillable forms. IRS offers forms that can be completed online and electronically submitted to IRS. The forms are available without age, income, or residency restrictions. Free file software. IRS, in partnership with the Free File Alliance (members of the tax software industry), provides free online filing options to eligible taxpayers. Twelve leading tax software providers make a version of their products available exclusively at IRS.gov for taxpayers with an adjusted gross income up to $66,000 (in 2018). Volunteer Income Tax Assistance. The program provides free basic income tax preparation with electronic filing by IRS- certified volunteers to qualified individuals, including to persons who earn $55,000 or less, have disabilities, or have limited proficiency in English. Tax Counseling for the Elderly. The program provides free tax preparation by IRS- certified volunteers to all taxpayers, particularly those 60 or older. Program volunteers specialize in pension and retirement-related issues unique to seniors.\nConsumers may perceive any costs associated with tax-time financial products and tax return preparation as lower than they actually may be because the costs are not paid out of pocket. Fees for the products and tax return preparation are deducted from the refund before it reaches the consumer. In general, studies have found that the transparency of a payment method affected the payer’s willingness to spend. One consumer advocacy organization representative posited that paying for tax-time financial products and tax preparation from a refund makes consumers less sensitive to the real cost of tax-time products and preparation services.\nInstead of using tax-time financial products to defer payment of tax preparation fees, lower-income taxpayers can access free filing services through several IRS programs (see sidebar). However, these options do not allow taxpayers to use tax-time financial products to access refunds faster.\nIRS estimates that about 70 percent of taxpayers are eligible to access its free filing software, and we estimated about 3 percent of taxpayers use this service. According to IRS officials, while IRS does not have a marketing budget to promote the free file programs, the predominant reason so few taxpayers use them is because there are many free tax preparation options on the market, such as tax preparation software.", "Taxpayers also may use paid tax preparers because they do not think they can fill out tax returns on their own, believe that preparers will help them receive higher refunds, or both, according to federal government and industry reports we reviewed. For taxpayers who did not use tax-time financial products, we did not find a clear association between paid tax preparation and higher average refunds. On the other hand, for taxpayers who used tax-time financial products, we found that average tax refunds were higher for taxpayers who filed through paid tax preparers than for taxpayers who self-filed online (see table 2). According to IRS data, nearly all taxpayers who used refund loan products filed their taxes through paid tax preparers, as refund advances were not available online until the 2018 tax filing season. There may be various reasons for the association between higher refunds, paid tax preparation, and product use. Those who use tax-time financial products tend to be eligible for tax credits such as EITC, which can increase the size of tax refunds. Fifty- four percent of EITC claimants used a paid preparer. However, a 2017 study found that the combination of paid tax preparation and tax-time financial product use was associated with relatively high incorrect tax payments (specifically, overpayments of EITC compared to online self- filing and product use or no product use).\nFurthermore, our analysis of IRS data found that taxpayers who used tax- time financial products received higher refunds on average than those who did not use tax-time financial products, regardless of tax filing method—although other factors might explain this association. For example, taxpayers who have high refunds have a greater incentive to use the products than taxpayers who have relatively small refunds or owe taxes.", "For lower-income taxpayers, tax-time products generally provide more cash at a lower cost than other small-dollar loan alternatives such as payday loans, auto title loans, and pawnshop loans, according to our review of federal government and industry reports. The amounts of alternative loan products are based on the value of the collateral the consumer provides. Average loan amounts are $150 for pawnshops, about $500 for payday loans, and under $1,000 for automobile title loans, according to industry statistics and CFPB and other studies. In contrast, refund advances were offered for up to $3,250 for the 2018 tax filing season.\nFurthermore, the alternative products generally include fees, unlike refund advances. For example, fees for payday loans generally range from $10 to $30 per $100 borrowed. Automobile title lenders generally charge a fixed price per $100 borrowed, with a common fee limit of 25 percent of the loan per month. In contrast, refund advances are offered at no cost to the consumer.\nTax-time financial products also may be easier to access because, unlike alternative loans, they generally can be obtained without regard to credit history. However, tax-time financial products generally are only available during tax season.\nLoans provided by nonfinancial companies (often called fintech firms) are another source of short-term financing. However, fintech firms generally provide much larger loan amounts than tax-time financial products, and include fees, unlike refund advances.", "The federal banking regulators oversee banks that offer tax-time financial products and IRS sets standards of practice for certain service providers (including some tax preparers). While our nongeneralizeable review found that selected banks and tax preparers generally followed existing OCC and IRS disclosure requirements, some tax preparers’ disclosure practices may present challenges for consumers trying to compare product options.", "", "FDIC, the Federal Reserve, or OCC are responsible for the safety and soundness supervision of banks within their authority (which offer tax-time financial products) and may have supervisory authority over third-party service providers (which provide settlement services). We identified five banks that partnered with several national tax preparation chains in recent years to offer tax-time financial products (refund transfers and refund advances). Of the five banks, FDIC supervised one medium-sized and one small bank, OCC supervised two medium-sized banks, and Federal Reserve supervised one medium-sized bank.\nAs previously discussed, FDIC, the Federal Reserve, and OCC are to conduct full-scope, on-site risk-management examinations of each of their supervised banks at least once in each 12–18 month period. FDIC officials told us that its regular safety and soundness examinations may include an examination of the bank’s tax-time financial product offerings. OCC officials told us that they examine tax-time financial products in every annual examination of the banks they supervise that offer these products.\nBecause the five banks each has total assets of less than $10 billion, the three regulators also are responsible for enforcing compliance with federal consumer financial laws (such as TILA and the Electronic Fund Transfer Act) that govern disclosure requirements for certain tax-time financial products. Officials from the regulators told us that they received few complaints about tax-time financial products offered by their supervised banks. We discuss the disclosure requirements and compliance with the requirements in more detail later in this section.\nThe regulators’ consumer compliance examiners also may review a bank’s tax-time financial products—if, for example, a bank offers a new product or there are a number of consumer complaints about a current product. Examiners employ a risk-focused approach with a focus on consumer harm in selecting products to evaluate for compliance with applicable consumer laws and regulations. Furthermore, compliance examiners may decide, based on the potential for consumer harm and a bank’s compliance management system, that there is enough residual risk to scope the product into the examination. FDIC officials said that a bank with a lot of activity in the market for tax-time financial products would have to assure examiners that it had performed appropriate due diligence.\nRegulators also can take other oversight actions, ranging from enforcement to raising awareness among consumers. In 2015, CFPB took an enforcement action, along with the Navajo Nation, to ban an owner of four tax preparation franchises from the market and levy civil penalties for understating refund anticipation loan rates and deceiving customers about the status of their tax refunds. Our search of CFPB’s complaint database did not identify any consumer complaints on tax-time financial products. CFPB published a blog post in February 2018 that describes the different tax-time financial product options and the process for obtaining them, and cautions consumers to consider all fees, charges, and timing associated with the products.\nFTC staff we interviewed told us that supervision authority over many financial services providers has been given to CFPB, but that FTC still has the authority to enforce many financial statutes and rules, including rules administered by CFPB. FTC brought an enforcement action in 2017 against an online tax preparation provider alleging that it failed to secure consumer accounts. FTC officials also told us that, while they received numerous complaints on tax-related issues, FTC’s complaint database does not separately classify complaints based exclusively on tax-time financial products.\nFTC also has issued guidance to educate consumers regarding tax- related scams and other consumer protection issues that arise during tax time, and to businesses, including tax professionals, to help them detect cyber threats. FTC also co-sponsors a series of educational events for consumers and businesses surrounding tax identity theft awareness week.", "Software companies we interviewed stated that they are subject to IRS regulations relating to electronic filing of tax returns. Software developers provide tax software to tax preparers so that they may file tax returns electronically and assist taxpayers in obtaining tax-time financial products. One software company told us that this involves working with IRS to ensure that returns can be electronically submitted, IRS can receive data, and the software is in compliance with IRS’s required data schemas.", "IRS officials said that IRS does not monitor or have direct oversight authority over tax-time financial products, but requires some paid tax preparers to meet standards of practice or other requirements. The extent to which IRS has oversight over paid preparers depends partly on whether the preparer is a tax practitioner or unenrolled preparer.\nTax practitioners are subject to regulations (Circular 230) that establish standards of practice. For example, practitioners must return tax records to clients, exercise due diligence in preparing tax returns, and submit records and requested information to IRS in a timely manner. IRS officials told us that they monitor the suitability of these practitioners and their adherence to the rules. Additionally, certain tax practitioners known as enrolled agents generally are required to pass a three-part examination and complete annual continuing education, while attorneys and certified public accountants are licensed by states but are still subject to Circular 230 standards of practice if they represent taxpayers before IRS.\nAlternatively, unenrolled preparers—the remainder of the paid preparer population and the majority of paid preparers—generally are not subject to these requirements. In 2011, IRS issued final regulations to establish a new class of registered tax return preparers to support tax professionals, increase confidence in the tax system, and increase taxpayer compliance. However, the U.S. District Court for the District of Columbia ruled in 2013 and the U.S. Court of Appeals for the District of Columbia Circuit affirmed in 2014 that IRS lacked sufficient authority to regulate all tax preparers. IRS officials also told us that all authorized IRS e-file providers have to follow certain requirements to be able to file tax returns electronically.", "We found selected authorized IRS e-file providers generally followed the requirements established by IRS on the disclosure of product fees, and banks generally followed the disclosure guidance relating to tax-time financial products issued by OCC. (We conducted nongeneralizeable reviews of website content, industry documents, and disclosures made during our undercover visits.) Two of the five banks we reviewed are regulated by OCC. One of the two FDIC-supervised bank and the Federal Reserve-supervised bank told us that they voluntarily follow OCC guidance.\nMore specifically, IRS established the following disclosure requirements for authorized IRS e-file providers, generally known as EROs, that relate to tax-time financial products:\nEROs must obtain taxpayers’ written consent before disclosing any tax return information to other parties in relation to an application for a tax product.\nEROs must ensure taxpayers understand that if they use a tax product, the refund will be sent to the bank and not to them.\nIf taxpayers choose to use a fee-based loan, EROs must advise that the product is an interest-bearing loan and not an expedited refund.\nEROs must advise taxpayers that the bank may charge them interest, fees, or both, in the case of any shortages on the refund.\nEROs also must disclose all deductions to be made from the expected refund and the net amount of the refund.\nIn 2015, OCC issued risk-management guidance for national banks that offer tax refund-related products. This guidance advises that banks should specify to customers, as applicable, the total cost of the tax product, separately from the tax preparation cost; that total costs will be deducted from and reduce the refund amount; that tax refunds can be sent directly to the taxpayer without the additional costs of a tax product; that customers with deposit accounts can receive their refund without incurring fees through direct deposit in about the same time as it would take to receive a tax refund-related product; and the ongoing periodic maintenance and transaction fees related to any product intended for long-term use.\nIn addition, OCC’s guidance establishes that banks should clearly disclose all material aspects of the product in writing before the consumer applies or pays any fees for a tax-time financial product.\nAlso, representatives of the American Coalition for Taxpayer Rights, a group representing the leading tax preparation, tax software, and bank providers, told us that its members signed a joint statement with attorneys general from six states on disclosure practices for refund transfers. The member providers agreed to explain to taxpayers the different options for filing and receiving a tax refund, including no-cost options, and the associated costs and features of each option. The providers also agreed to disclose the optional nature of the products, the timing of the refund, and to present the disclosures in a clear and conspicuous manner understandable by a reasonable consumer.\nOur nongeneralizeable review of documents received from selected banks and tax preparers found disclosures generally followed OCC guidance or IRS requirements, respectively. However, our review of these documents and selected tax preparer websites also found—and our undercover visits of selected tax preparers suggested—that the level of transparency on product fees varied and product fees and information were not always clearly disclosed.\nBank documents were more likely than information provided by paid preparers (in person or online) to include more disclosures about the fees and terms of tax-time financial products. For example, of the 12 bank documents we reviewed, all disclosed that funds would be sent to the bank if the taxpayer used a tax product. Almost all the bank documents disclosed the fees associated with the product and all disclosed that the fees would be deducted from the refund. In contrast, while written disclosure is not required, less than one third of ERO documents disclosed that the taxpayer using a tax-time financial product would receive funds from the bank instead of IRS.\nHowever, almost all the documents are presented to taxpayers after returns have been prepared and preparers have determined that taxpayers qualified for a product. The timing of when a tax preparer makes these disclosures would pose a challenge for taxpayers looking to compare prices for different providers. That is, they would not learn of the total fees—partly because the paid preparer could not determine the amount of some tax preparation fees until well into the preparation of the tax return.\nA taxpayer trying to determine the cost of using a tax refund to pay for online tax preparation services only would be able to compare the prices of two of the eight online providers we reviewed. The remaining six did not disclose this fee in a prominent way—with some disclosures made in small print or requiring navigation through several pages after the product page—or at all.\nA taxpayer choosing to file taxes using the services of a paid tax preparer in a brick-and mortar-location, and opting to use the refund to pay for tax preparation fees, would be unlikely to be able to compare prices among different providers. For example, during six of our undercover visits, our investigators explicitly requested literature on product fees. However, the preparers stated that they did not have the literature available or only provided us with business cards and other promotional material.\nOur analysis shows that providers do not consistently explain products or disclose fees to taxpayers. For example, providers told us, and industry documents show, that a refund transfer is not required to get a refund advance. However, during our site visits, tax preparers tied the use of a refund transfer to a refund advance four out of five times. In two of these cases, the tax preparer included the fee for a refund transfer as part of processing an advance product, while in another two cases the tax preparer said that a refund transfer was required with the advance. Also, during our site visits, three of the nine tax preparers did not disclose the cost of a refund transfer.\nAppendix III provides more information on our analysis of bank and tax preparer disclosure practices.\nAccording to industry participants, only taxpayers expecting a refund can qualify for a tax product; consequently, the tax preparer generally cannot determine whether the taxpayer qualifies until after the tax return is completed. Once this is determined, the tax preparer must request the taxpayer’s consent to offer a tax product. EROs with whom we met told us they may disclose fee information at various points throughout the process of tax preparation, and do so verbally or through their in-store computer interface. Bank disclosures are provided to the taxpayer before the product application has been submitted.\nSome researchers and representatives from consumer advocacy organizations with whom we met were concerned about the timing of disclosures of tax-time financial product fees. Consumer advocates said disclosures given to taxpayers were inadequate, unhelpful, or timed in such a way as to prevent meaningful comparison shopping. Specifically, one consumer advocacy organization said that taxpayers they serve do not understand the fees associated with filing through preparers. Representatives from another consumer advocacy organization said that taxpayers do not know the total cost for tax-related financial products and services until they already have taken steps to file their returns. In its 2017 Report to Congress, the National Taxpayer Advocate recommended that IRS require all e-file participants offering tax-refund financial products to provide a standard “truth-in-lending” statement to help taxpayers better understand the terms of the refund anticipation loan product. IRS did not adopt the National Taxpayer Advocate’s recommendation but agreed that e-file providers should be transparent about the costs associated with the loan products offered to taxpayers as part of the return preparation process.\nAs previously discussed, courts have determined that IRS does not have sufficient authority to regulate individuals who are solely tax preparers and not licensed by IRS—in effect, the majority of the paid preparer population. Previously, we asked Congress to consider legislation granting IRS the authority to regulate paid tax preparers, if it agreed that significant paid preparer errors existed. As of March 2019, this Congressional action we have recommended remains open. The lack of consistency about the timing of fee disclosures for tax-time financial products may add to the rationale for Congress to consider regulating preparers. Such statutory authority could allow IRS to require that tax preparers make tax-time financial product disclosures or ensure meaningful transparency in the sale of the products.", "For lower-income taxpayers with pressing financial obligations, tax-time financial products can offer an alternative to higher-cost short-term products such as payday loans. Taxpayers can purchase tax-time financial products from many tax preparers; however, according to our review of selected tax preparers and banks, the price and associated fees of these products can vary. And disclosure practices by some paid tax preparers may pose challenges for consumers looking to compare prices for different providers.\nIRS is an essential source for data on tax-time financial products, but to date IRS has offered limited options to tax preparers for accurately reporting usage of all available tax-time products. Furthermore, IRS has not informed tax preparers about changes made in reporting options and has not informed users of IRS’s product data about known issues with the data. Consequently, data on product usage are not reliable. Improving the quality of data collected on these products would help ensure that federal agencies, policymakers, regulators, consumer advocacy groups, and researchers have quality information to report on tax policy and consumer protection issues and inform their decision-making.", "We are making a total of two recommendations to IRS.\nThe Commissioner of Internal Revenue Service should communicate data issues regarding the refund anticipation loan indicators for tax years 2016 and 2017 and the refund transfer indicators since tax year 2016—for example, by attaching explanatory material to the dataset. (Recommendation 1)\nThe Commissioner of Internal Revenue Service should improve the quality of tax-time financial product data collected; for example, by allowing authorized e-file providers to indicate more than one type of tax- time financial product for each return or by informing tax preparers of the addition of new product definitions and instructions on how to accurately code the products. (Recommendation 2)", "We provided a draft of this report to IRS, FDIC, Federal Reserve, OCC, CFPB, and FTC for review and comment. IRS provided written comments, which are reproduced in appendix IV and discussed below. FDIC, Federal Reserve, OCC, CFPB, and FTC provided technical comments, which we incorporated as appropriate.\nIn its comments, IRS concurred with both recommendations, and described how it planned to address them. In response to our first recommendation, IRS stated that it plans to provide the appropriate notations with the datasets. In response to our second recommendation, IRS stated that it plans to pursue programming changes and clarify instructions for tax return preparers to promote accurate coding of refund- related products. We believe that these actions, if implemented, would address our recommendations and improve the quality of data IRS reports on these products.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees and IRS, FDIC, Federal Reserve, OCC, and FTC. This report will also be available at no charge on our website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8678 or clementsm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V.", "This report (1) describes trends in the market for tax-time financial products and product fees and examines the reliability of IRS data on these trends, (2) describes characteristics of those who use tax-time financial products and factors that influence the decision to obtain the products, and (3) describes regulatory oversight of industry participants and the disclosure of information on product fees and terms.\nTo examine trends in the use of tax-time financial products, we used 2008–2018 Internal Revenue Service (IRS) data compiled from tax filings to determine the types and use of these products. We assessed the reliability of these data by interviewing IRS officials about the controls and quality assurance practices they used to compile these data. We determined the data alone did not provide a reliable count of refund transfers, refund anticipation loans, or refund advances in 2016, 2017, and 2018, but were adequate to suggest general trends when supplemented with other information. To supplement the IRS data, we collected information from reports issued by the National Consumer Law Center, reviewed Securities and Exchange Commission filings for two selected tax preparers, and interviewed representatives from National Consumer Law Center and both tax preparers on the offerings of tax-time financial products. We selected these preparers because they are major providers of tax preparation services and tax products.\nTo identify and review trends in product offerings, we reviewed the websites, promotional materials, and other industry literature including Securities and Exchange Commission filings of a nongeneralizeable selection of four providers of online tax preparation services, three tax preparers with physical locations that also offer services online, and four banks. We also discussed changes in the market and product offerings with nine of the industry providers with whom we met. We accessed provider websites before and during the 2018 tax season. The tax preparation firms were selected because they are national tax preparation chains, and the five banks were selected because they partnered with the national tax preparation chains and major developers of tax preparation software. In addition, we reviewed studies related to these products published by GAO, federal agencies, four consumer advocacy and research groups, and two academic researchers. We used these studies primarily to corroborate findings from our data analysis. We focused on studies from 2010 and later; however, we also reviewed an older report to gain a greater understanding of how the market for tax-time financial products evolved. We identified these studies through expert recommendations and citations in studies.\nTo examine trends in fees for tax-time financial products, we collected fee-related information from several different sources (because of limited publicly available industry data). All of the information cannot be used to generalize our findings to the retail tax preparation industry.\nProduct fees. For 2018, we collected information on product fees from six paid tax preparers and four banks. For tax years 2014 to 2017, we used product fee information as reported by the National Consumer Law Center. For 2018, we also reviewed fee data from six providers of online tax preparation software, two that provide services in person and online, and four that only provide services online. We selected these providers after conducting internet searches and reviewing reports by consumer advocates and federal agencies. Data elements included fees for refund transfers and refund advances. For 2018, data elements also included the dollar amount for the incentives banks offered tax preparers for each refund transfer sold.\nAncillary product fees. We collected information on ancillary product fees from four tax preparers, four banks, and three software developers for tax years 2017 and 2018. Data elements included fees for disbursement methods such as prepaid cards and paper checks and other charges related to the use of a tax-time financial product such as technology and transmission fees.\nTax preparation fees. We collected information on tax preparation fees from eight tax preparers with physical locations and eight online providers of tax preparation services for 2018. Data elements included fees for federal and state filing.\nAggregate fees. We collected aggregate tax-time financial product, ancillary product, and tax preparation fee information from studies issued by consumer protection advocates.\nWe collected the above information from websites, advertising materials, and public filings with the Securities and Exchange Commission of tax preparers, banks, and software developers.\nTo identify some of the demographic and economic characteristics of product users, we used data from the Bureau of the Census and the Federal Deposit Insurance Corporation (FDIC) from 2011, 2013, 2015, and 2017 to conduct a multivariate regression analysis to determine the influence of individual characteristics on the decision to obtain a product. We statistically controlled for various income, education, and demographic factors. While the FDIC data contain a rich set of demographic and economic variables, they include limited data on characteristics specifically related to tax filing. To identify specific tax-filing characteristics associated with product use, we also used a probability sample of data from IRS from the 2014, 2015, and 2016 tax years to calculate the percentages of taxpayers who used tax-time financial products according to various tax-filing characteristics, including tax filing status and tax filing method. We also used the sample data to calculate the percentage of taxpayers who used free filing services, including free file software, programs, and fillable forms. We reviewed documentation on and conducted testing of the data we used and determined they were sufficiently reliable for reporting economic, demographic, and tax-filing characteristics associated with product use. For more detailed information on our analysis of characteristics associated with tax-time financial product use, see appendix II.\nTo better understand user characteristics associated with the decision to obtain a tax-time financial product identified by our analysis, we reviewed relevant federal and industry reports on the financial needs of individuals with characteristics similar to taxpayers who obtained these products. We focused on reports from 2010 and later. We also reviewed our prior studies and studies from the Consumer Financial Protection Bureau (CFPB) on alternative credit products and compared their features and fees to those of tax-time financial products. In addition, we interviewed representatives from consumer groups, four Low-Income Taxpayer Clinics, and IRS’s Taxpayer Advocate Service to obtain their perspectives on characteristics associated with tax-time financial product users.\nTo describe the regulatory oversight of industry participants associated with tax-time financial products, we reviewed relevant federal laws and regulations, and reports and guidance documents from IRS and federal regulators, including the CFPB, FDIC, the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency (OCC), and Federal Trade Commission. We inquired about consumer complaint data related to tax-time financial products at the federal regulators and interviewed officials from the federal agencies and representatives from five tax preparation providers, five banks and bank affiliates such as settlement service providers, four consumer advocacy organizations, three software developers, two researchers, one provider of alternative financial services, and one industry group to gain their perspectives on the benefits and risks of the tax-time financial products and how any related concerns were being addressed. The tax preparation firms were selected because they are national tax preparation chains, and the five banks and three software developers were selected because they partnered with the national tax preparation chains. The four consumer advocacy organizations, two researchers, alternative financial service provider, and industry group were selected for their experience and to provide a range of perspectives.\nTo review how product terms and fees are disclosed by tax preparers, in February 2018 GAO investigators acting in an undercover capacity visited a nongeneralizeable sample of nine randomly selected tax preparers in Washington, D.C., Maryland, and Virginia to inquire about tax-time financial products. We selected the two states and Washington, D.C. to ensure a mixture of state and local laws governing the products and providers. From the two states and Washington, D.C., we selected one metropolitan statistical area based on the concentration of product users and the proximity to lower-income households. We randomly selected three individual tax preparers in each of the three metropolitan statistical areas to visit, based on proximity to taxpayers in lower-income households and to ensure a mixture of urban and rural communities and company sizes. We visited offices of large tax preparation chains and single-office tax preparation businesses. Results cannot be used to generalize our findings to the retail tax preparation industry. Our investigators posed as taxpayers seeking tax preparation services who wanted to pay for the tax preparation fees with the expected refund or obtain an advance based on their anticipated tax refund. They requested available documents associated with tax preparation, refund advance and refund transfer products, and different disbursement options and fees. Because GAO investigators did not experience the tax preparation or the product application process, we were not able to assess the timing of any disclosures typically made after the tax return preparation process would begin. In addition, we received some consumer-facing disclosures and product agreements that were typically provided during the product application process from two tax preparers and two banks.\nWe also conducted a content analysis of websites of eight selected tax preparers that offer tax-time financial products. The tax preparers were selected as national providers of tax preparation services with an online presence, and the results are not generalizeable to the retail tax preparation industry. Three of the providers offer tax preparation services online and through physical retail locations and five of the providers offer their services online only. We reviewed these websites to understand the extent to which they disclose fees to the taxpayer for tax preparation services, tax-time financial products, disbursement, and additional products or services, and to review the ease with which these disclosures are accessible.\nIn addition to consumer-facing disclosures we received from providers with whom we met, we searched online for additional disclosures provided by the tax preparers and banks in our review and reviewed seven disclosures from two national tax preparation chains and 12 disclosures from five banks offering tax-time financial products. We then compared the disclosures against IRS and OCC requirements for disclosure for product terms and conditions. IRS established certain disclosure requirements for authorized IRS e-file providers. OCC instructs banks it supervises to make certain disclosures to product consumers. More specifically, we analyzed tax products and fee disclosures obtained from our undercover visits of selected tax preparers, online reviews, and directly from tax preparers and banks to determine the type and timing of disclosures made in these instances and whether they were consistent with IRS disclosure requirements and followed OCC guidance.\nWe conducted this performance audit from July 2017 to April 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We conducted our related investigative work in accordance with standards prescribed by the Council of the Inspectors General on Integrity and Efficiency.", "This technical appendix outlines the development, estimation, results, and limitations of the econometric model and other data analysis we described in the report. We undertook this analysis to better understand the characteristics associated with the decision to obtain a tax-time financial product.", "Federal Deposit Insurance Corporation. To assess the characteristics associated with tax-time financial product use, we used data from the Federal Deposit Insurance Corporation’s (FDIC) National Survey of Unbanked and Underbanked Households for 2011, 2013, 2015, and 2017, which is a supplement of the Current Population Survey. We used the following variables on households and heads of households to examine how various demographic and economic characteristics are related to the use of tax-time financial products:\nHousehold income.\nHousehold type.\nHomeownership status.\nRace and ethnicity of the head of household.\nEducational attainment of the head of household.\nAge of the head of household.\nHead of household has children.\nHousehold used refund anticipation loan or a tax preparation service to receive a tax refund faster than the Internal Revenue Service (IRS) would provide it in the past 12 months. This is a dummy variable, which equals 1 if the household used products and 0 otherwise.\nA refund anticipation loan is a tax-time financial product. Based on our interviews and other research reports, refund anticipation loans and other tax-time financial products (including refund anticipation checks) may be used by consumers to get their tax return faster than IRS could provide it. We refer to this variable as “used tax-time financial product” for simplicity in the report, and we explain the relevant caveats and limitations below.\nThis variable is the basis for the sample used for this analysis.\nSee table 3 for the estimated distributions of these variables for all households, as well as households that used tax-time financial products in 2017.\nWe also examined the relationship between the use of tax-time financial products and being unbanked, as well as the association between using tax-time financial products and alternative financial services (those offered outside the banking system). We used additional data from FDIC’s National Survey of Unbanked and Underbanked Households on the following variables:\nHousehold used other alternative financial services in the past 12 months, including nonbank check cashing, nonbank money orders, payday loans, and pawn shops.\nHousehold used prepaid card(s) in the past 12 months.\nHousehold was unbanked in the past 12 months.\nSee table 4 for estimated distributions of household responses to questions related to unbanked status and usage of other alternative financial services for all households, as well as households that used tax- time financial products in 2017.\nIRS. To further identify tax-filing characteristics associated with tax-time financial product use and trends, we also used data from a probability sample of 2 percent of all electronically filed tax returns from IRS for tax years 2014, 2015, and 2016. In 2016, the sample size was 2,952,418, representing a population of 147,625,598 tax returns. According to IRS, the sample is representative of all electronically filed tax returns for the relevant tax years. In this sample, IRS provided data on the following variables:\nTax filing method, including online (self-filed using tax software) or through a paid practitioner (including tax preparers with physical storefronts).\nTaxpayer used free filing services from IRS, including the Free File program and free fillable forms.\nTax filing status, including single, married, and head of household.\nDisbursement options for tax refunds (direct deposit or paper check) or tax balance due.\nTax refund amount.\nTax year.\nTax-time financial product use, including refund anticipation loans, refund anticipation checks, or no tax-time financial products. In tax year 2016, we estimated that about 18 percent of taxpayers used a tax-time financial product, plus or minus less than 1 percentage point.\nWe also used IRS data from the Statistics of Income division for tax year 2016 to assess the geographical concentration of product use at the zip- code level. Zip code data from the IRS Statistics of Income division are based on population data that was filed and process by IRS in tax year 2016. Due to some data suppression from IRS for privacy purposes, zip codes with less than 100 tax returns are excluded from the data. As a result, in 2016 the total returns represented in the IRS zip code data are 145,302,140 and the number of tax returns with a tax-time financial product was 21,654,760, meaning about 15 percent of tax filing units in these data used a tax-time financial product.", "Regression analysis using FDIC data. Using FDIC data, we conducted a multivariate regression analysis to examine the relationship between each explanatory variable and tax-time financial product use. Specifically, we estimated multivariate logistic regression models. Regression models allow us to test significant relationships between economic and demographic variables and the likelihood of using tax-time financial products, while controlling for other factors.\nWe used logistic regression models because our dependent variable is binary. The dependent variable represents whether a household used tax-time financial products. We collapsed “no” and “did not know/refused” into a single category for our regression analysis, so that the dependent variable is equal to 1 if the household used tax-time financial products and 0 otherwise.\nLogistic regressions allow the relationships between various characteristics and tax-time financial product usage to be described as odds ratios. Odds ratios that are statistically significant and greater than 1.00 indicate that households or heads of households with those characteristics are more likely to use tax-time financial products. Odds ratios that are less than 1.00 indicate that households or heads of households with those characteristics are less likely to use tax-time financial products. For categorical variables, this increase or decrease in the likelihood of product use is in comparison to an omitted category, or reference group. For example, the odds ratio for households headed by African Americans is statistically significant and 1.36. This implies that the odds of tax-time financial product use for households headed by African Americans are 1.36 times the odds of use for households headed by whites, holding other factors constant. Put another way, households headed by African Americans are about 36 percent more likely to use tax- time financial products than households headed by white individuals, if other conditions remain constant. This result and others are discussed further in the results section below. We also present 95 percent confidence intervals, which helps clarify the statistical significance of the odds ratios.\nOur baseline estimates were derived from logistic regressions that accounted for the survey features of the FDIC data. Our main regression results used data from the 2017 survey year. We also estimated logistic regressions using data from the 2015, 2013, and 2011 survey years, using the same variables when possible. Our baseline specification includes explanatory variables for race and ethnicity, education, age, household type, income, and homeownership. We used groups of indicator variables or categorical variables to control for all characteristics. In other specifications, we included controls for children, unbanked status, use of alternative financial services other than tax-time financial products, state indicators, and region indicators to check the robustness of our results.\nWe also assessed the sensitivity of our analyses by restricting the analysis to households that only answered “yes” or “no” to tax-time financial product use. We excluded answers of “did not know/refused,” so that the dependent variable is equal to 1 if the household used tax-time financial products and 0 if the household did not use tax-time financial products.\nIn a more limited analysis, we merged data from the 2017 FDIC data, which is the June 2017 supplement of the Current Population Survey, with the 2017 Annual Social and Economic Supplement, which is the March 2017 supplement of the Current Population Survey. We performed the additional analysis because the March 2017 supplement has data on tax-filing characteristics, including tax credits used by households. Given the structure of the Current Population Survey, some households were surveyed in both the March and June 2017 supplements, and those households comprise the sample used in this part of the analysis. We identified those represented in both supplements using household and person identifiers, as well as data on sex, race and ethnicity, and age. Using this merged sample, we estimated logistic regressions that both did and did not account for the survey features of the data. We included the same explanatory variables as our baseline estimates, along with indicators for use of the Earned Income Tax Credit, Additional Child Tax Credit, and Child Tax Credit.\nAnalysis of IRS data. Using the 2 percent sample of IRS data, we estimated the percentages of tax filers with varying tax-filing characteristics by year and average refund amounts by year. All estimates are weighted at the tax filing unit level. Using the IRS’s zip code data from the Statistics of Income division for 2016, we calculated the number of total tax filing units and tax filing units who used tax-time financial product at the zip code level.", "Regression analysis using FDIC data. Our results have limitations and should be interpreted with caution. For example, our analysis identifies correlations between characteristics and tax-time financial product use and not causal relationships. Moreover, there may be variables that are correlated with tax-time financial product use that are not included in our models. For example, we are not able to account for community characteristics that may influence the decision to use the products due to data limitations. We used statistical tests for multicollinearity (high intercorrelations among two or more independent variables) and goodness of fit to check the validity of the model to the extent possible, given the use of complex survey data.\nOur analysis of the characteristics associated with the use of tax-time financial products uses a relatively small number of observations. For example, we observe 798 households that used these products in the 2017 survey year, representing about 2.4 percent of households (plus or minus 0.2 percentage points), and that is the benchmark utilization rate against which the results should be interpreted. Moreover, IRS data indicate that more than 20 million tax filers used tax-time financial products in 2016, representing about 20 percent of tax filers who filed their taxes electronically. These data sets use different units of analysis, and there can be multiple tax filers in one household, especially for those who use Earned Income Tax Credit. However, comparing the two suggests that the survey data may not include all users of tax-time financial products. Given the question used to measure the dependent variable, our analysis focuses on those who use tax-time financial products to get their tax refund more quickly. While a key reason people use tax-time financial products is to meet cash needs, there may be other reasons people use the products, including covering the cost of tax preparation.\nOur results may not generalize to other time periods. There have been a number of changes in the market for tax-time financial products in recent years. Our results may not generalize to all products currently available in the market. However, our results from 2017 are generally similar with the 2015, 2013, and 2011 survey years, despite a number of changes to the tax-time financial product market during these years. Our findings suggest that similar types of households have utilized tax-time financial products regardless of industry and market changes, particularly if households used paid preparers and tax-time financial products to expedite their tax refunds.\nOur analysis focuses on households that used tax-time financial products and accessed them through paid preparers. However, taxpayers also may have accessed specific types of tax-time financial products when they used online software to file their own taxes. For example, individuals who file their own taxes online may use the products to cover the cost of the software that helps them prepare their taxes. The characteristics of people who use products for these reasons may be different than what we found in our analysis.\nAnalysis of IRS data. The IRS data are representative of tax returns filed electronically and not of tax returns filed by other means, including by paper. The results may not generalize to years for which we do not have data.\nThe indicators in the data for specific types of tax-time financial products, including the indicators for refund anticipation loans and refund anticipation checks have some significant limitations. In tax years 2014– 2016, IRS only allowed tax-time financial products to be coded as refund anticipation loans or refund anticipation checks (that is, there was no code to indicate that two or more products were used together). However, there were some major changes in the industry during this period, particularly with regards to refund anticipation loans, that suggest that these indicators do not measure the same types of products over time. Given the limitations of the definitions of specific tax-time financial products, most of our analysis focuses on the universe of tax-time financial products in the IRS data and not on differences by specific types of products.", "Regression analysis using FDIC data. Our analysis suggests a number of economic and demographic characteristics are associated with tax- time financial product use, particularly when purchased through a tax preparer to expedite the tax refund, after controlling for other factors. In 2017, relatively lower-income households were more likely to use the products than higher-income households. Households headed by single women with families were more likely to use tax-time financial products than households headed by married couples. Furthermore, householders who owned their homes were less likely to use tax-time financial products. African American households were more likely to use the products compared to white households. Finally, relatively younger households were more likely to use the products than older ones. The results of the main specification of our logistic regression are presented in table 5.\nOur results for other specifications using 2017 data were generally similar. For example, adding an additional control for unbanked status did not substantively change the results. In alternative specifications that included an indicator for use of other alternative financial services, we found a significant and positive correlation between using tax-time financial products and other alternative financial services, including nonbank check cashing, nonbank money orders, payday loans, and pawn shops. Moreover, including state and region indicators did not substantively affect the results. Using the sample restricted to just “yes” and “no” responses also did not substantively change the results.\nOur results for other years were generally similar, with some exceptions. For example, in other survey years prior to 2017, we found that in addition to African American households, Native American households also were more likely to use tax-time financial products than white households. Moreover, education and children were significant correlates in prior survey years.\nAnalysis of IRS data. We found that nearly 1 in 5 taxpayers who filed their taxes electronically used tax-time financial products each year from 2014 to 2016, while less than 3 percent of filers used free filing services available through IRS during the same period.\nWe also found that in 2016, tax-time financial product use was associated with receiving tax refunds through direct deposit, which is a faster way to receive a tax refund than paper check. Users of tax-time financial products also were more likely to file as heads of household (tax filing status) than taxpayers who did not use tax-time financial products. Moreover, taxpayers who used the products received higher tax refunds on average than taxpayers who did not use the products, especially when they used paid tax preparers to file their taxes.\nFinally, analyzing the zip code of the filers, we found that use of tax-time financial product was concentrated in some areas of the South and the West.", "", "Our limited nongeneralizeable review of documents received from selected banks and tax preparers found disclosures generally followed Office of the Comptroller of the Currency (OCC) guidance or Internal Revenue Service (IRS) requirements for fees disclosure, respectively. However, we noted from our undercover visits of selected tax preparers that the extent and clarity of the disclosures offered to customers varied. Furthermore, in our review of selected tax preparers’ websites, we found that fees and information about products were not always clearly disclosed.", "All nine tax preparers we visited offered the option to pay for the tax preparation fees with the tax refund by using a refund transfer, but they did not always clearly communicate how these options work. For example, three preparers did not disclose the refund transfer fee, and in a few instances, the refund transfer was provided alongside a refund advance and we were not given the option to pay for the tax preparation fees out of pocket. In other cases, the refund transfer fee was disclosed, but the product was not always identified as optional (that is, not required for tax preparation).\nDuring six of our undercover visits, our investigators explicitly requested literature on product fees. However, the preparers either stated they did not have the literature available or only provided us with business cards and promotional material. The other three times we did not ask for, and were not offered literature on product fees, features, or terms.\nIn two of our visits, the tax preparers offered our investigators a refund advance after we expressed an interest in getting the refund quickly. In another two visits, we were offered unsolicited refund advances. When offering the product, these four tax preparers bundled the refund advance with a refund transfer (an optional product). By adding a refund transfer, the tax preparer effectively added a fee-based product to the refund advance, a product that otherwise is free to the taxpayer. During one of the visits, we were offered a refund advance only after we specifically asked for it.", "We reviewed the websites of eight selected providers of tax preparation services. We found that while these providers generally disclosed product fees, these disclosures were not made in a consistent manner. For example, all eight of the websites we reviewed offered taxpayers the option to use the expected refund to pay for tax preparation fees. Most of the time, the fee associated with this option was not clearly disclosed on the website. Only two of the eight providers clearly disclosed this fee on the products page; the other six did not disclose the fee in a prominent way or at all. In addition, all five providers that offered refund advances fully disclosed fee information for this product.\nThree of the eight online tax preparation service providers had physical locations in addition to their online presence. Of these three, only one disclosed on its website the refund transfer fee for taxpayers who filed a return in-person at one of their offices. For the second preparer with a physical presence, the refund transfer fee quoted for the online service was significantly lower than the fee we were quoted for in-person services at an office. The third preparer with a physical and online presence did not disclose the refund transfer fee for either the in-person service or online filing.", "We received and reviewed seven disclosure documents originated by two national tax preparation companies both of which are electronic return originators (ERO) and 12 bank documents from five banks in the industry. We compared the disclosure documents against IRS requirements for disclosure of fees for tax products and we compared the bank documents to OCC guidance related to disclosure of product, disbursement, and additional fees. Both sets of documents in our nongeneralizeable review generally disclosed the product fees in accordance with IRS requirements or OCC guidance as appropriate. Bank forms, including disclosures, are presented to taxpayers once they have decided to apply for a tax product. This practice is consistent with OCC’s guidance, which states that the details of a product should be provided to consumers before they apply for it. However, our analysis found that almost all of these documents are presented to taxpayers after returns have been prepared and tax preparers have determined the taxpayers were qualified for a tax-time financial product. The timing of when a tax preparer make these disclosures would make it challenging for a taxpayer to compare product prices from different providers or make more informed purchasing decisions.\nMoreover, all the ERO documents we reviewed with information on refund advances disclosed that the taxpayer would be receiving a loan and not a refund. However, of the six ERO disclosure documents that disclosed fees, four disclosed additional fees that might be associated with tax refund products, such as disbursement fees.\nOf the 12 bank documents we reviewed, all disclosed that funds would be sent to the bank if taxpayers used a tax product. Almost all the documents disclosed the fees associated with the tax product and that the fees would be deducted from the refund. And four of five documents related to a loan product disclosed that the taxpayer would be receiving a loan and not a tax refund. The majority of the documents also disclosed that the taxpayer may receive the refund directly from the taxing authority without incurring additional costs and within the same time frame without using a tax product.\nAll the tax preparer documents and the banks’ disclosure documents were brief and written in plain language. However, almost all the bank application documents were longer than four pages and included technical and industry language.", "Based on our document reviews of selected tax preparers and banks and as suggested by our undercover visits of nine selected tax preparers, the disclosure of fees for disbursing funds was inconsistent, particularly around prepaid cards. Prepaid cards are often used to disburse funds from a tax-time product. Based on our analysis of providers’ promotional content, in some cases a tax preparer will offer prepaid cards as the only disbursement option. The cards generally carry additional fees for long- term use (such as monthly, withdrawal, reload, and inactivity fees). Prepaid cards usually are reloadable and can be used to pay bills and make retail purchases. IRS does not have guidelines for disclosing fees for the long-term use of prepaid card. However, OCC requires that banks disclose if a tax product may be used on a long-term basis and disclose fees associated with extended use of the product.\nDuring our visits, seven of the nine tax preparers provided the option to have the tax refund deposited on a prepaid card. However, only two of the seven preparers noted any potential fee information associated with the short or long-term use of prepaid cards. These two preparers said that there was no additional charge to have the taxpayer’s refund deposited on a prepaid card, and the other five did not explain whether any fees would be charged for this transaction.\nFive of the seven preparers that offered a prepaid card explained that the card could be used for transactions other than receiving the tax refund. However, only two of the five disclosed any fee information associated with long-term use of the card. Another two of the five preparers referred our undercover agents to the issuer of the card for additional information. The remaining preparer did not disclose that additional fees would apply to long-term use of the card.\nFour of the eight tax preparation websites we reviewed disclosed partial information about fees related to the disbursement of funds to the taxpayer. Three of the eight websites only disclosed disbursement fee information related to use of prepaid cards. We found fee information in one of the eight websites only after doing a word search. Fees associated with the long-term use of prepaid card fees were not disclosed by three of the six preparers that offered this disbursement option. Two websites disclosed partial fee information and only one disclosed all the fees and terms associated with the long-term use of a prepaid card. Six of these websites advised the taxpayer to see the terms and conditions of the card, four included a link to the terms and conditions of the card, and two did not include a link.\nBank documents generally disclosed the fees associated with different disbursement methods such as paper checks and prepaid cards; however, fees related to the long-term use of prepaid cards were not always disclosed. Almost half of the documents we reviewed that include the use of a prepaid card did not acknowledge that fees were associated with the long-term use of prepaid cards, while others included only partial information or a general statement that “fees may apply.”", "", "", "", "In addition to the contact named above, Karen Tremba (Assistant Director), Nathan Gottfried (Analyst in Charge), Jessica Artis, Maurice Belding, Evelyn Calderón, Farrah Stone, Kathleen McQueeney, Marc Molino, Neil Pinney, Barbara Roesmann, Jessica Sandler, Erinn Sauer, Erin Saunders-Rath, Michael Walton, and Helina Wong made significant contributions to this report." ], "depth": [ 1, 2, 2, 2, 3, 2, 1, 2, 3, 3, 3, 2, 3, 2, 1, 2, 3, 3, 2, 3, 3, 3, 3, 1, 2, 3, 3, 3, 2, 1, 1, 1, 1, 1, 2, 2, 2, 2, 1, 2, 3, 3, 3, 2, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "h0_full", "", "", "", "", "", "", "", "h1_title", "h1_title", "h1_full", "h1_full", "h1_title", "", "", "", "h1_full", "", "", "", "", "", "", "h0_full", "", "", "h0_full h2_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What IRS data limitations has GAO identified?", "How has the IRS failed to address these limitations?", "What issues might this lack of communication cause?", "What did GAO's 2017 analysis of IRS, Census, and Federal Deposit Insurance Corporation data indicate?", "What data supports this conclusion?", "Why were users motivated to use IRS products over alternatives?", "What did GAO analyze?", "Why did GAO conduct nongeneralizable undercover visits of tax preparers in the D.C. area?", "How were preparers selected?", "How else did GAO collect data?" ], "summary": [ "However, GAO identified some limitations in Internal Revenue Service (IRS) data on product use, including over- or under-counting of certain types of products.", "IRS has not communicated these data issues to users and has not updated guidance to tax preparers on how to report new product use.", "As a result, data users (including federal agencies and policymakers) have inaccurate information to inform their findings and decision-making.", "Lower-income and some minority taxpayers were more likely to use tax-time financial products, according to GAO analysis of 2017 data from IRS, the Bureau of the Census, and the Federal Deposit Insurance Corporation.", "Specifically, taxpayers who made less than $40,000 were significantly more likely to use the products than those who made more. African-American households were 36 percent more likely to use the products than white households.", "Product users tend to have immediate cash needs, according to studies GAO reviewed. For these users, tax-time financial products generally provide easier access to cash and more cash at a lower cost than alternatives such as payday, pawnshop, or car title loans.", "GAO reviewed fee and product usage data; conducted a multivariate regression analysis to determine user characteristics; and analyzed disclosures of selected providers that are national chains and those of their bank partners.", "GAO conducted nongeneralizeable undercover visits of nine randomly selected tax preparers in the Washington, D.C. area to understand how they communicate fees and terms to taxpayers.", "Preparers were selected to ensure a mixture of regulatory jurisdictions, among other factors.", "GAO reviewed laws, regulations, and guidance on the products, and interviewed IRS and other government officials and a nongeneralizeable selection of product and service providers, tax preparation companies, consumer groups, and academics." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 0, -1, -1, 1, -1 ], "summary_paragraph_index": [ 8, 8, 8, 9, 9, 9, 2, 2, 2, 2 ] }

{ "title": [ "Background", "Fraud Prevention System", "Medicare Program Integrity", "CMS’s Prepayment Edits Process", "Healthcare Fraud Prevention Partnership", "CMS Program Integrity Contractors Reported That FPS Speeds Up Certain Investigation Processes and Has Contributed to Program Savings", "CMS Program Integrity Contractors Reported That FPS Speeds Up Certain Investigation Processes, and CMS Is Taking Steps to Track Data on Timeliness", "FPS Accounted for About 20 Percent of Investigations in 2015 and 2016 and Contributed to Program Savings", "FPS Denies Payments Based on Medicare Rules or Policies and Not Fraud Risk", "Participants Reported That HFPP Efforts Furthered Their Ability to Address Health Care Fraud", "Participants Reported That Information Sharing through HFPP Furthered Efforts to Address Fraud", "HFPP Addressed Initial Data Sharing Concerns and Is Pursuing a New Data Sharing Strategy to Further Participants’ Ability to Address Fraud", "Agency Comments", "Appendix I: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "To advance CMS’s efforts to prevent fraud, waste, and abuse in the Medicare fee-for service program, the Small Business Jobs Act of 2010 appropriated $100 million for CMS to implement a data analytic system. The law required CMS to implement a system that could analyze claims prior to payment to identify suspect claims and provider billing patterns and prevent payment of improper and potentially fraudulent claims, among other things. In April 2011, CMS awarded almost $77 million to a contractor to implement, operate, and maintain FPS and design analytic models for the system. CMS awarded about $13 million to a second contractor in July 2011 to develop additional analytic models for FPS. As the original FPS contract was set to end, CMS awarded a nearly $92 million contract in April 2016 for a new, upgraded FPS system—FPS 2.0. FPS 2.0 was fully implemented in March 2017.\nCMS’s Center for Program Integrity (CPI)—which oversees the agency’s Medicare program integrity efforts—employs FPS as a key component of its strategy to move beyond the “pay and chase” approach of recovering improper and potentially fraudulent payments to focusing on prevention. FPS screens fee-for-service claims prior to payment in order to help identify and prevent improper and potentially fraudulent payments by performing two primary functions:\nDevelop leads for fraud investigations. FPS compares provider billing patterns and other data against models of potentially fraudulent behavior to identify providers with suspect billing patterns. For example, an FPS model identifies providers that bill for a disproportionate number of services in a single day relative to other providers. FPS simultaneously risk-scores providers identified by the models to prioritize them for potential investigation. In developing these leads, FPS is intended to help CMS prevent potentially fraudulent payments by furthering the agency’s ability to more quickly identify and investigate suspect providers, and take more timely corrective actions.\nExecute automated prepayment edits. FPS edits deny certain improper payments, and some edits compare information from multiple claims to do so. For example, FPS may deny physician outpatient claims based on information from an inpatient claim associated with the same episode of care.\nCMS submitted three annual reports on FPS’s implementation to Congress in response to requirements established by the Small Business Jobs Act of 2010. In these reports, CMS provided information on the corrective actions taken and savings achieved from FPS. In its most recent report, CMS reported that FPS had cumulatively helped prevent or identify nearly $1.5 billion in improper and potentially fraudulent payments from its implementation through the end of calendar year 2015.", "CMS uses contractors to support the agency’s program integrity activities, including program integrity contractors to identify and investigate providers engaged in potential Medicare fee-for-service fraud. CMS is currently in the process of transitioning Medicare program integrity contracts from ZPICs to new contract entities, UPICs. ZPICs operated in seven geographical jurisdictions across the country. UPICs will operate in five jurisdictions and combine Medicare and Medicaid program integrity efforts under a single contracting entity (fig. 1 depicts the geographic jurisdictions of ZPIC and UPIC zones). As of May 2017, two of the five UPICs—the Midwestern and Northeastern—were operational.\nThe program integrity contractors identify leads for provider investigations from three categories of sources:\nReferrals. A number of entities, including CMS, law enforcement agencies, and the MACs, refer leads about suspect providers to the program integrity contractors. The program integrity contractors also receive leads based on beneficiary and provider complaints and allegations.\nProgram integrity contractor data analysis. Program integrity contractors use postpayment claims to conduct their own data analyses to identify providers with suspect billing patterns.\nFPS. FPS identifies providers with suspect billing patterns and prioritizes leads based on provider risk-scores.\nThe program integrity contractors generally have a triage process to review leads and determine whether the leads are indicative of potential fraud (see fig. 2 for information on program integrity contractor investigation processes). Leads that are determined to be suspect become formal investigations, and the program integrity contractors perform a range of investigative activities to gather evidence and determine if providers are engaged in potential fraud. These activities include conducting beneficiary and provider interviews, site visits of provider facilities, and manual reviews of provider claims.\nBased on their investigations, the program integrity contractors may take corrective actions by referring providers engaged in potential fraud to law enforcement and initiating administrative actions. Specifically, if the program integrity contractors uncover evidence of potential fraud, they refer the investigation to the Department of Health and Human Services Office of Inspector General (HHS OIG) for further examination, which may lead to possible criminal or civil prosecution by the Department of Justice. The program integrity contractors may also recommend a range of administrative actions to CMS for approval and implementation. Such actions include revocation of providers’ billing privileges and payment suspensions (table 1 describes the administrative actions the program integrity contractors may recommend against providers).", "CMS’s claims processing systems apply prepayment edits to all Medicare fee-for-service claims in an effort to pay claims properly. Most of the prepayment edits are automated, meaning that if a claim does not meet the criteria of the edit, it is automatically denied. Other prepayment edits flag claims for manual review, in which trained clinicians and coders examine claims and associated medical records to ensure that the claims meet Medicare rules and requirements. Many improper and potentially fraudulent claims can be identified only by manually reviewing associated medical records and beneficiary claim histories, and exercising clinical judgment to determine whether services were reasonable and necessary. Whereas automated edits are applied to all claims, manual edits are applied to very few—less than 1 percent of claims undergo manual review.\nCMS contracts with the MACs to process and pay Medicare fee-for- service claims and implement prepayment edits in the Medicare claims processing systems. The claims processing systems consist of three systems—the MAC front-end systems, shared systems, and Common Working File—that carry out a variety of functions and execute prepayment edits (see fig. 3). When implementing FPS, CMS integrated FPS with the claims processing systems and claims are screened by FPS prior to payment. Unlike the claims processing systems, CPI maintains FPS.", "HFPP is a voluntary public-private partnership established by HHS and the Department of Justice to facilitate collaboration in addressing healthcare fraud. The membership includes Medicare- and Medicaid- related federal agencies and several state agencies, other federal agencies with responsibility for federal health care programs such as the Department of Defense and Department of Veterans Affairs, law enforcement agencies, private payers, and antifraud and other healthcare organizations. HFPP was established, in part, to help payers identify schemes and providers engaged in potential fraud that individual payers may not be able to identify alone. HFPP began in 2012 with 20 members and, as of June 2017, had grown to 79 members. As of the end of calendar year 2016, CMS had cumulatively spent $30.3 million on HFPP.", "", "ZPIC officials stated that FPS helps them identify suspect providers quickly. Because FPS analyzes claims prior to payment, providers with suspect billing patterns can be identified quickly relative to other sources of leads. In particular, several ZPIC officials stated that the leads they develop from their data analyses of postpayment claims are not as timely. Officials from two ZPICs estimated that the postpayment claims they use for their analyses may have been for services rendered 1 to 2 months prior, while the claims analyzed by FPS may have been for services recently rendered.\nZPIC officials also said the information associated with FPS leads allows them to examine and triage those leads quickly to determine whether to initiate investigations. FPS leads provide specific information about the type of potential fraud identified, along with claims data and other supporting information. ZPIC officials further stated that they use information from FPS when triaging leads from other sources. In contrast to FPS leads, several ZPIC officials noted that reviewing and triaging leads based on referrals often necessitates additional time and resources. In particular, allegations associated with some referrals can be vague, which makes it difficult for ZPICs to identify the relevant provider claims data and other information needed to assess the validity of the allegations.\nHowever, once an investigation is initiated, officials stated that FPS has generally not sped up the process for investigating providers. Several ZPIC officials noted that investigations based on FPS leads are similar to those from other sources in that they require further investigation, such as manual claim reviews or site visits of provider facilities, to substantiate the leads and gather evidence of potential fraud. However, while ZPIC officials said that FPS does not speed up investigations, officials from several ZPICs noted that FPS can help improve the quality of beneficiary interviews. Since FPS leads are based on prepayment claims data, ZPICs can conduct beneficiary interviews shortly after the services have been rendered, when beneficiaries may be better able to recall details about their care.\nCMS has not tracked data to assess FPS’s effect on the timeliness of investigation processes. CMS has lacked such timeliness data because of limitations with its IT system for managing and overseeing ZPICs. However, as of May 2017, CMS was in the process of implementing a new IT system that could be used to assess FPS’s effect on the timeliness of program integrity contractor investigation processes. In transitioning to UPICs, CMS is implementing a new contractor workload management system that will capture data on the timeliness of UPIC investigation processes. For example, the system will be able to capture information on the amount of time it takes a UPIC to evaluate a lead or conduct an investigation. CMS officials said that the agency plans to use the information tracked by the system to monitor program performance, including assessing FPS’s effect on UPIC investigation processes and the timeliness of corrective actions. The officials also stated that they may not be able to conduct such an assessment for several years as CMS is still in the process of transitioning to UPICs and implementing the new IT system. Further, the officials said that they subsequently would want to collect several years’ worth of such data to ensure a reliable assessment.", "In fiscal years 2015 and 2016, about 20 percent of ZPIC investigations were initiated based on FPS leads, according to our analysis (see table 2). In both years, nearly half of ZPIC investigations were based on referrals.\nThe proportion of investigations based on FPS leads is poised to increase as CMS changes program integrity contractor requirements for using FPS with the transition from ZPICs to UPICs. CMS has required the ZPICs to review all FPS leads that met high-risk thresholds. CMS is instead requiring that the UPICs derive 45 percent of new investigations from FPS. ZPIC officials stated that the new UPIC requirement should allow UPICs flexibility to focus their reviews on the FPS leads that are most applicable to their geographic region. For example, a UPIC with high levels of home health agency fraud within its jurisdiction can focus its reviews of FPS leads on those providers.\nFor total actions, CMS tracked the number of investigations referred to law enforcement. For actions associated with FPS, CMS tracked the number of providers referred to law enforcement. These data are not directly comparable.\nIn addition to tracking the corrective actions and savings associated with FPS, CMS also measures the extent to which investigations initiated from FPS leads result in actions against providers engaged in potential fraud. CMS reported that, in fiscal year 2015, 44 percent of FPS-initiated investigations resulted in administrative actions, which met the agency’s fiscal year goal of 42 percent of investigations leading to administrative actions. In fiscal year 2016, 38 percent of FPS-initiated investigations resulted in administrative actions, which did not meet the agency’s fiscal year goal of 45 percent.", "FPS prepayment edits screen individual claims to automatically deny payments that violate Medicare rules or policies. For example, some FPS edits deny claims that exceed coverage utilization limits for a service. FPS edits do not analyze individual claims to automatically deny payments based on risk alone or the likelihood that they are fraudulent. According to CMS officials, the agency does not have the authority to use FPS to automatically deny individual claims based on risk without further evidence confirming that the claims are potentially fraudulent.\nAlthough the prepayment edits in FPS are functionally similar to those in CMS’s claims processing systems, the FPS edits specifically target payments associated with potential fraud schemes. Like edits executed elsewhere in the claims processing systems, FPS edits deny payments based on rules or policies. Unlike the edits in the claims processing systems, all of the edits in FPS are designed to address identified payment vulnerabilities associated with potential fraud, according to CMS officials. Payment vulnerabilities are service- or system-specific weaknesses that can lead to improper payments, including improper payments that may be due to fraud. For example, CMS implemented an FPS edit that denies physician claims that improperly increase payments by misidentifying the location that the service was rendered. The payments are denied based on the rule that physician claims must correctly identify the place of service. The edit helped address a payment vulnerability identified by HHS OIG that found millions of dollars in overpayments.\nAccording to CMS officials, the advantage of using FPS to implement prepayment edits is that the system allows CMS to prioritize edits intended to address payment vulnerabilities associated with potential fraud. Because CPI maintains FPS, CMS can quickly implement edits into FPS. In contrast, edits that are implemented in the claims processing systems are queued as part of quarterly system updates, and may need to compete with other claims processing system updates. CPI is not subject to such limitations when implementing edits in FPS, and officials said that edits can be developed and implemented in FPS more quickly compared to the claims processing systems.\nAs of May 2017, CMS had implemented 24 edits in FPS. CMS reported that in fiscal year 2015, FPS edits denied nearly 169,000 claims and saved $11.3 million. In fiscal year 2016, the edits denied nearly 324,000 claims and saved $20.4 million. CMS officials stated that the number of prepayment edits implemented in FPS thus far has been limited, but that the agency is taking steps to address certain challenges that would allow the agency to develop and implement edits more quickly. For example, because of their role and expertise in processing claims, the MACs advise CPI and help develop and test FPS edits before they are implemented in the system to ensure they will work as intended. However, CPI has been limited in the amount of MAC resources that it can engage to help develop FPS edits under existing contracts. According to officials, CPI is planning to take steps to more directly involve the MACs in FPS edit development, which officials said should accelerate the edit implementation process. Additionally, CMS officials said that they plan to utilize FPS functionality to implement new edits by expanding existing edits to apply to other services. All of the 24 current FPS edits were developed from the ground up, a time and resource consuming process, according to CMS officials. In contrast, developing new edits by expanding existing edits will allow CMS to more quickly develop and implement new edits.", "", "HFPP participants we interviewed, including CMS officials, reported that sharing data and information within HFPP has been useful to their efforts to address health care fraud. The principal activity of HFPP is generating studies that pool and analyze multiple payers’ claims data to identify providers with patterns of suspect billing across multiple payers. Study topics examine known fraud vulnerabilities important to the participating payers and are selected through a collaborative process. As an example, one study used pooled data to identify providers who were cumulatively billing multiple payers for more services than could reasonably be rendered in a single day. In another study, HFPP pooled payer information on billing codes that are frequently misused by providers engaged in potential fraud, such as codes commonly used to misrepresent non-covered services as covered. See table 4 for a description of HFPP’s completed studies as of May 2017.\nParticipants reported that HFPP’s studies helped them to identify and take action against potentially fraudulent providers that would otherwise have gone unidentified. For instance, both public and private payers reported that HFPP’s non-operational providers report uncovered providers that they had not previously identified as suspect. CMS officials and one private payer we interviewed said that they used information from this study to conduct site visits of reportedly non-operational providers. CMS officials told us that they revoked a number of the providers after confirming that they were indeed non-operational. CMS officials also said that they review the results of HFPP studies and provide information on potentially fraudulent providers to ZPICs when appropriate. The information may either serve as new leads or help support existing investigations.\nParticipants also reported that study results have helped them uncover payment vulnerabilities of which they might not otherwise have been aware. For example, CMS officials stated that they used the HFFP report on misused procedure codes to evaluate several Medicare payment vulnerabilities and then implemented edits to address them. In instances where participants reported that HFPP studies revealed suspect providers or schemes that were known to them, participants stated that HFPP study results helped them to confirm suspicions, better assess potential exposure, and prioritize and develop internal investigations.\nSeveral participants we interviewed noted that even though HFPP study results can help them identify suspect providers, they may still face challenges using the information to take corrective actions. HFPP participation rules require payers to examine their internal data and claims to investigate and build cases against suspect providers before taking any corrective actions, partly in order to minimize the risk of payers taking action on false positive study results. For certain types of fraud schemes, however, the participants’ internal information alone may not provide enough evidence of improper billing. For instance, although an HFPP study may reveal clear evidence that a provider is billing multiple payers for an unreasonable number of services in a single day, the provider may have only billed individual payers for a limited, reasonable number of services.\nParticipants reported that HFPP has also facilitated both formal and informal information sharing among payers, and indicated that it has helped them learn about fraud vulnerabilities and strategies for effectively addressing them. Formal information sharing includes presentations at HFPP meetings and a whitepaper on how payers can help address beneficiary opioid abuse and reduce opioid-related fraud. HFPP also manages a web portal where participants can share individual best practices and post “fraud alerts” about emerging fraud schemes or suspect providers. Informal information sharing includes knowledge exchanged through the networking and collaboration that occurs among HFPP participants, both at in-person HFPP meetings and through collaboration that occurs via the web portal’s participant directory.", "Although HFPP began operations in 2012, participants we interviewed stated that much of the initial work of the partnership involved negotiating the logistics for collecting and storing participants’ claims data. CMS contracts with a trusted third party (TTP) entity to administer HFPP. The TTP consolidates, secures, and confidentially maintains the claims data shared by participants, and conducts studies that analyze the pooled data to identify potential fraud across payers. According to several participants we interviewed, some payers were initially reluctant to share claims data with the TTP because claims contain sensitive provider and beneficiary information and private payers may view them as proprietary. Accordingly, it took time for the TTP to demonstrate to payers its ability to securely store and use pooled claims data. Payers’ reluctance resulted in an early time- and resource-intensive data sharing strategy that relied upon payers submitting a limited amount of claims data on a study-by- study basis, in a particular format, stripped of beneficiaries’ personally identifiable information and protected health information.\nRecently, HFPP began to pursue a new data sharing strategy. According to the TTP and participants we interviewed, payers will send in generalized data, reducing the data sharing burden on payers and enabling HFPP to conduct new types of studies to combat fraud. The data can be submitted in various formats, relieving payers from the need to extract and clean study-specific data. All participant data will be pooled and stored, and multiple studies will be run on the data submitted. Payers may voluntarily submit data that includes beneficiaries’ personally identifiable information and protected health information. According to CMS officials, collection of personally identifiable information and protected health information will allow HFPP to conduct studies that involve identifying beneficiaries across payers, such as studies examining fraud schemes in which multiple providers fraudulently bill for the same beneficiaries.\nSeveral HFPP participants we spoke with indicated their support of the new strategy and willingness to provide beneficiaries’ personally identifiable information and protected health information for more in-depth HFPP studies. As of May 2017, 38 partners had signed data sharing agreements with the new TTP. However, not all payers that previously shared claims data have agreed to participate in the new data sharing strategy and those payers are still working with the TTP to formalize agreements regarding how their claims data will be stored and used.", "GAO provided a draft of this report to HHS. HHS provided technical comments, which GAO incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretary of Health and Human Services, the Administrator of CMS, appropriate congressional requesters, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-7114 or at kingk@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff that made key contributions to this report are listed in appendix I.", "", "", "In addition to the contact named above, Martin T. Gahart (Assistant Director), Michael Erhardt (Analyst-in-Charge), Muriel Brown, Cathleen Hamann, Colbie Holderness, and Jennifer Whitworth made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 2, 2, 1, 1, 2, 2 ], "alignment": [ "h2_title h1_title", "h2_full", "", "", "h2_full h1_full", "h3_title", "", "h3_full", "h0_full", "h2_title h1_title h3_title", "h3_full h2_full h1_full", "", "", "", "", "" ] }

{ "question": [ "What claims for payment does FPS deny?", "What do these prepayment edits target?", "How are claims analyzed?", "How was this process effective in 2017?", "What is the HFPP?", "How has the HFPP benefited participants?", "What does the HFPP do?", "How are such studies useful?", "Why does CMS analyze Medicare fee-for-service claims data?", "How does the CMS analyze Medicare claims data?", "Why did CMS establish the HFPP in 2012?", "What is the purpose of the HFPP?", "What was GAO asked to review?", "What does this report examine?", "How did GAO Collect data for this report?" ], "summary": [ "FPS denies individual claims for payment that violate Medicare rules or policies through prepayment edits—automated controls that compare claims against Medicare requirements in order to approve or deny claims.", "FPS prepayment edits specifically target payments associated with potential fraud. For example, an FPS edit denies physician claims that improperly increase payments by misidentifying the place that the service was rendered, which helped address a payment vulnerability associated with millions in overpayments.", "FPS edits do not analyze individual claims to automatically deny them based on risk alone or the likelihood that they are fraudulent without further investigation.", "As of May 2017, CMS had implemented 24 edits in FPS. CMS reported that FPS edits denied nearly 324,000 claims and saved more than $20.4 million in fiscal year 2016.", "The Healthcare Fraud Prevention Partnership (HFPP) is a public-private partnership that began in 2012 with the aim of facilitating collaboration among health care payers to address health care fraud.", "The HFPP had 79 participants as of June 2017. Participants, including CMS officials, stated that sharing data and information within HFPP has been useful to their efforts to address health care fraud.", "HFPP conducts studies that pool and analyze multiple payers' claims data to identify providers with patterns of suspect billing across payers.", "Participants reported that HFPP's studies helped them to identify and take action against potentially fraudulent providers and payment vulnerabilities of which they might not otherwise have been aware. For example, one study identified providers who were cumulatively billing multiple payers for more services than could reasonably be rendered in a single day. Participants also stated that HFPP has fostered both formal and informal information sharing among payers.", "CMS analyzes Medicare fee-for-service claims data to further its program integrity activities.", "In 2011, CMS implemented a data analytic system called FPS to develop leads for fraud investigations conducted by CMS program integrity contractors and to deny improper payments. In developing leads, FPS is intended to help CMS avoid improper payment costs by enabling quicker investigations and more timely corrective actions.", "Additionally, in 2012, CMS helped establish the HFPP to collaborate with other health care payers to address health care fraud.", "One of the key activities of the HFPP is to analyze claims data that are pooled from multiple payers, including private payers and Medicare.", "GAO was asked to review CMS's use of FPS and the activities of the HFPP.", "This report examines 1) CMS's use of FPS to identify and investigate providers suspected of potential fraud, 2) the types of payments that have been denied by FPS, and 3) HFPP efforts to further CMS's and payers' ability to address health care fraud.", "GAO reviewed CMS documents, including reports to Congress on FPS, contractor statements of work, and information technology system user guides, and obtained fiscal year 2015 and 2016 data on FPS fraud investigations and claim denials. GAO also interviewed CMS officials and CMS program integrity contractors regarding how they use FPS, and a non-generalizable selection of HFPP participants regarding information and data sharing practices, and anti-fraud collaboration efforts." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, 2, -1, 0, 0, 2, -1, -1, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction and Background", "Policy Evolution", "Bradley Amendment (1986)", "Family Support Act of 1988", "1996 Welfare Reform Law", "Deficit Reduction Act of 2005", "Current Policy", "Current Practices", "Arrearages", "Public Policy Concerns", "Are Arrearages Too High?", "Are Garnishment Limits Too High?", "Should CSE Agencies Provide Work-Related Services to Noncustodial Parents?", "Is There Inequitable Treatment Among Various Categories of Nonpaying Noncustodial Parents?" ], "paragraphs": [ "", "Child support is the cash payment that noncustodial parents are legally obligated to pay for the financial support of their children. It is generally established when parents divorce or separate or when the custodial parent applies for welfare. It is usually paid on a monthly basis. 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 child-rearing costs.\nThe Child Support Enforcement (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.\nThe CSE program is administered by the federal Office of Child Support Enforcement (OCSE), which is in the Department of Health and Human Services' (HHS's) Administration for Children and Families (ACF). The federal government and the states share CSE program costs at the rate of 66% and 34%, respectively.\nOCSE does not provide services directly to families. Instead, it partners with federal, state, tribal, and local governments and others to promote parental responsibility so that children receive reliable support from both of their parents as they grow to adulthood. OCSE helps CSE agencies in the states and tribes develop, manage, and operate their CSE programs effectively and according to federal law.\nThe CSE program provides eight major services on behalf of children, which include establishing, reviewing, and modifying child support orders. The child support order is established administratively by a state/county CSE agency or through a state court (or mixture of both—quasi-judicial). The Family Support Act of 1988 ( P.L. 100-485 ) required states to use their state-established guidelines in establishing child support orders.\nChild support guidelines are a set of rules and tables that are used (by states and tribes) to determine the amount of the child support order. Child support guidelines are designed to (1) protect the best interests of the children by trying to ensure that the child or children in question continue to benefit from the financial resources of both parents in situations in which the parents go their separate ways and (2) make the calculation of child support fair, objective, consistent, and predictable (which in many instances has the added benefit of reducing conflict and tension between the parents).\nChild support guidelines were created to address three major problems in the issuance of child support orders. First, guidelines were needed to bring uniformity and consistency to the issuance of child support orders, so as to result in greater fairness to families. Second, the predictability resulting from guidelines was intended to promote settlement and reduce conflicts, to the benefit of both the parties and the courts. Third, research at the time (i.e., during the 1980s) showed that orders were too low to reflect the real needs of children.\nChild support guidelines are part of a process that orders a noncustodial parent to pay financial support for the care of his or her children based on the parent's income (and other factors) and that allows the child to share in the increases (or decreases) in the parent's income as if the parent and child lived together. The guidelines also permit the courts to set child support without the necessity of a review of individual costs of care. The amount of child support is based primarily on how much the parent would share with the child if the parent and child lived together. States decide child support amounts based on the noncustodial parent's income or on both parents' income; other factors may include the age of the child, whether a stepparent is in the home, whether the child is disabled, and the number of siblings. Guidelines ensure the adequacy of child support orders by taking into account economic evidence on the cost of raising children, thereby improving children's well-being.\nGuidelines development requires making value judgments and balancing competing interests to allocate limited economic resources between children, parents, other relatives, the state CSE agency, courts, taxpayers, and society at large.\nStates currently use one of three basic types of guidelines to determine child support award amounts (i.e., the child support order):\nincome shares , which is based on the combined income of both parents (37 states and Guam); 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 (10 states and the District of Columbia); 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 (three states).\nInformation was not available for Puerto Rico and the Virgin Islands.\nAccording to the OCSE, \"setting accurate initial child support orders helps to ensure regular payments of child support, facilitating two key goals: economic stability and paternal [or maternal] engagement.\" Child support orders almost always are expressed in fixed dollar amounts, and over time the needs of the child and the financial circumstances of one or both parents may change. However, without periodic modifications, child support obligations can become inadequate and/or inequitable, or they may not correspond to the noncustodial parent's income or ability to pay. The rationale behind review and modification of child support orders is to ensure that child support orders are equitable, sufficient, and commensurate with a parent's income and/or ability to pay.\nIt is important for custodial parents facing higher child-rearing costs or other substantial changes in circumstance (e.g., increased housing or living expenses) to seek a modification so their children's needs are sufficiently met. Custodial parents who know that the noncustodial parent is experiencing a higher standard of living (e.g., higher-paying job, promotion) are advised to request a modification so their children can share in the other parent's good fortune.\nLikewise, it is important for noncustodial parents facing job loss or other substantial changes in circumstances to seek a modification to their order quickly so they do not fall behind in their payments and thereby have to contend with child support arrearages (i.e., past-due child support payments). When child support modification policies and procedures are not effective, child support debt increases. In FY2014, $114.8 billion in child support arrearages was owed to families receiving CSE services, but less than 7% ($7.6 billion) of those arrearages was actually paid. Child support debt, in the aggregate, negatively impacts children, custodial parents, and noncustodial parents, and it forces states to expend greater resources on collection and enforcement efforts.", "From 1975, when the CSE program was enacted (by the Social Services Amendments of 1974; P.L. 93-647 ) until 1988, the only way to modify a child support order was to require a party to petition the court for a modification based on a change in circumstances . What constituted a change in circumstances sufficient to modify the order depended on the state and the court. The person requesting modification was responsible for filing the motion, serving notice, hiring a lawyer, and proving a change in circumstances of sufficient magnitude to satisfy statutory standards. The modification proceeding was a two-step process; the court first determined whether a modification was appropriate and then determined the amount of the new obligation.", "Especially during the early 1980s, a major issue in the modification of orders was the practice of retroactive modifications. Most of these retroactive modifications had the effect of reducing the amount of child support ordered. Thus, for example, an order of $150 a month for child support, which was unpaid for 36 months, should accumulate an arrearage of $5,400. However, if the noncustodial parent was brought to court, having made no prior attempt to modify the order, the order might be reduced to $100 a month retroactive to 36 months prior to the date of modification. This retroactive modification would reduce the arrearage from $5,400 to $3,600.\nCases such as this, which had serious impacts on custodial parents and their children, convinced Congress to take action. Thus, in 1986 Congress passed legislation that required states to change practices involving modification of child support arrears. Pursuant to Section 9103 of the Omnibus Budget Reconciliation Act of 1986 ( P.L. 99-509 ; Section 466(a)(9) of the Social Security Act), often referred to as the Bradley Amendment (named after former Senator Bill Bradley of New Jersey), state child support orders may not be retroactively modified, except back to the date of service on the other party. Pursuant to the Bradley Amendment, a child support payment becomes a judgment by operation of law when it becomes due and unpaid, and it is entitled to full faith and credit (in the originating state and in any other state) to be enforced as any other judgment of the initiating state.\nThe 1986 provision greatly restricted retroactive modification to make it more difficult for courts and CSE agencies to forgive or reduce arrearages. More specifically, child support orders can be retroactively modified only for a period during which there is pending a petition for modification and only from the date on which notice of the petition has been given to the custodial or noncustodial parent.", "The Family Support Act of 1988 ( P.L. 100-485 ) required states both to use guidelines as a rebuttable presumption in all proceedings for the award of child support and to review and adjust child support orders in accordance with the guidelines. These provisions reflected congressional intent to simplify the updating of child support orders by requiring a process in which the standard for modification was the state child support guidelines. They also reflected recognition that the traditional burden of proof for changing the amount of the child support order was a barrier to updating. The 1988 law addressed the need for states to at least expand, if not replace, the traditional \"change in circumstances\" test as the legal prerequisite for updating support by making state guidelines the presumptively correct amount of child support to be paid.\nTo ensure that the use of the guidelines would result in appropriate child support award amounts, the Family Support Act required states to review their guidelines at least once every four years and have procedures for review and modification of orders, consistent with a plan indicating how and when child support orders are to be reviewed and modified. Review could take place at the request of either parent subject to the order or at the request of a state child support agency. Any modification to the award had to be consistent with the state's guidelines, which were required to be used as a rebuttable presumption in establishing or adjusting the child support order.\nIn addition, the Family Support Act required states to review all orders being enforced under the CSE program within 36 months after establishment or after the most recent review of the order and to adjust the order in accordance with the state's guidelines. It required review in child support cases in which child support rights were assigned to the state, unless the state had determined that review would not be in the best interests of the child and neither parent had requested a review. This provision applied to child support orders in cases in which benefits under the TANF, foster care, or Medicaid programs were currently being provided. It did not include child support orders for former TANF, foster care, or Medicaid cases, even if the state retained an assignment of support rights for arrearages that accumulated during the time the family was on welfare. In child support cases in which there was no current assignment of support rights to the state, review was required at least once every 36 months only if a parent requested it. If the review indicated that modification of the support amount was appropriate, the state had to adjust the award accordingly.\nThe Family Support Act also required states to notify parents receiving CSE services of their right to request a review, of their right to be informed of the forthcoming review at least 30 days before the review began, and of any proposed modification to the award or determination that there should be no change in the award amount. In the latter case, the parent was to be given at least 30 days after notification to initiate proceedings to challenge the proposed adjustment or determination.", "The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ; referred to as the 1996 welfare reform law) somewhat revised the review and modification requirements. It slightly modified the mandatory three-year review of child support orders to permit states some flexibility in determining which reviews of welfare cases should be pursued and in choosing methods of review. States had to review orders every three years (or more often at state option) if either parent or the state requested a review in welfare cases or if either parent requested a review in non-welfare cases. The law also required states to notify parents of their review and adjustment rights at least once every three years. It gave states the option of using one of three different methods for adjusting orders: (1) the child support guidelines; (2) an inflation adjustment in accordance with a formula developed by the state; or (3) an automated method to identify orders eligible for review followed by an appropriate adjustment to the order, not to exceed any threshold amount determined by the state. If either an inflation adjustment or an automated method was used, the state had to allow either parent to contest the adjustment.", "The most recent changes to provisions related to the modification of child support orders were part of the Deficit Reduction Act of 2005 ( P.L. 109-171 ). P.L. 109-171 eliminated state flexibility and discretion and instead required states to adjust child support orders of TANF families once every three years (i.e., returned to the 1988 Family Support Act policy). For more information, see the \" Current Policy \" section below.", "Under current law (pursuant to P.L. 109-171 ), states are required to review and, if appropriate, adjust child support orders at least once every three years in cases in which the family is receiving TANF assistance. In the case of a non-TANF family, the CSE agency is to review the child support order at least once every three years at the request of either parent. Moreover, either parent may request a review at any time based on a substantial change in circumstances. States must notify parents of their review and modification rights at least once every three years. Depending on the state, a child support order may be modified through an administrative process or through a judicial process (or a combination of both approaches).\nAfter child support is initially ordered by the CSE agency or the court, a modification to the child support order generally occurs when any of the following situations occur: the financial situation of one or both parents changes; the support order is no longer adequate to meet the needs of the child; there is no provision for medical support; or the circumstances of either parent or the child have changed substantially.\nStates can use one of three different methods for adjusting orders: (1) the state child support guidelines; (2) an inflation adjustment in accordance with a formula developed by the state; or (3) an automated method to identify orders eligible for review followed by an appropriate adjustment to the order, not to exceed any threshold amount determined by the state. If a state uses either an inflation adjustment or an automated method, it must allow either parent to contest the adjustment.\nAccording to a report by OCSE,\nMost States' child support guidelines contain quantitative thresholds that must be met before the order can be modified. These thresholds are defined as a percentage and/or dollar change in the current child support obligation. For example, guidelines may provide that an order cannot be modified unless the new financial circumstances result in at least a 15% change in the order amount, either upward or downward.\nThe report further states that the use of the quantitative thresholds contained in child support guidelines\nsets the parameters for when modification actions are appropriate; helps manage the expectation of the parties about when a change in circumstances might warrant a modification to the support order; ensures stability in order levels when the parties' circumstances have not changed substantially; limits the number of modification actions the CSE agency or private parties pursue; and allows the CSE agency to manage its resources more efficiently.", "About 20 states have implemented programs that seek to simplify the modification process and help parents to request a modification of their child support order. According to the OCSE, states are using the following four approaches to improve their modification process.\n1. Technology and automation. Several CSE programs have improved their modification processes by making forms available online and easier for parents to use. In addition, many state CSE programs are making an effort to reduce delay through the use of automated review and modification and electronic systems monitoring. 2. Target specific populations. Some CSE programs offer streamlined or expedited review for persons who have experienced a change in income, such as newly unemployed noncustodial parents. Providing this proactive enhanced case management and customer service helps to ensure that parents with changed circumstances receive necessary modifications. 3. Address temporary changes in circumstances. Several CSE programs have procedures so that parents may receive a modification for a period of time. 4. Outreach materials and increased publicity. Some CSE programs publicize the benefits of child support modification to encourage parents to seek modifications when they have experienced a significant change in circumstances.\nFor a detailed profile of each state's procedures for modifying a child support order, see the OCSE website.", "Many noncustodial parents 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 be reduced or discounted later by the court when an explanation for nonpayment is given. However, this sort of retroactive reduction is not permitted under current law. If the 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 he or she owes.\nAs mentioned earlier, child support arrearages are unpaid child support. Child support arrearages generally result from (1) noncompliance with child support orders; (2) child support orders that are not commensurate with the noncustodial parent's ability to pay; (3) inclusion of birth costs (i.e., health care costs related to the pregnancy, as well as the birth of the child) in the child support order; (4) lower rates of collections on arrearages compared to current support; and (5) the practice of assessing interest on unpaid child support.\nResearch indicates that a relatively small number of noncustodial parents owe the majority of child support arrearages. These noncustodial parents are more likely than other noncustodial parents to (1) have no or low reported income; (2) not have paid child support in the past year; (3) have no address on file or an out-of-state address; and (4) have multiple current child support orders.\nIn aggregate, child support arrearages increased in nominal dollars from $84 billion in FY2000 to $114.8 billion in FY2014 (a 37% increase). During that 14-year period, the percentage of those arrearages that actually was paid remained at about 7%. According to a recent OCSE report, \"most arrears are owed by parents who owe substantial amounts of arrears, have little or no income, and have owed arrears for some time.\"\nLarge child support arrearages may\nresult in millions of children receiving less than they are owed in child support; cause a reduction in the cost-effectiveness of the CSE program; result in 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; hinder a noncustodial parent's ability to make regular child support payments in full and on time; become a source of uncollectible debt; cause added friction in the relationship with the child's other parent, which may negatively impact the noncustodial parent-child relationship; and block work opportunities for noncustodial parents because past-due child support obligations are reported to credit reporting agencies, which provide the information, upon request, to employers.\nAn Urban Institute study revealed several shared characteristics among those individuals with the largest child support arrearages. According to the study, noncustodial parents who owed $30,000 or more in child support arrearages, known as high debtors, were\nexpected 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 with 13% for non-debtors and 22% for those who owed less than $30,000 in child support arrearages; more likely than other obligors to have older orders if they had a current support order; more likely to have multiple current child support orders than non-debtors; less likely to pay support than non-debtors; less likely to have a known address; and twice as likely to have an interstate child support case as a non-debtor.", "One of the stated goals of OCSE's strategic plan for the CSE program is to ensure reliable payment of child support. For child support to be reliable, child support orders must be set accurately and based on a noncustodial parent's actual ability to pay them. Research shows that setting a realistic order improves the chances that child support payment will continue over time. In cases in which the initial child support was not adequate to meet the child's needs and/or did not adequately reflect the noncustodial parent's ability to pay, or a significant change in circumstances occurred, modification of the child support order may resolve long-standing or recently developed issues.\nUnder the CSE program, states are given significant latitude regarding review and modification 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. It appears that this approach may be unsuccessful because parents may not know how to request a modification or they may not be aware of the consequences of a buildup of arrearages until it becomes a problem that is difficult to overcome.\nTo prevent large child support arrearages (on an individual level and in aggregate), some policymakers and analysts argue that child support modification laws should be changed so that they are more sensitive to the noncustodial parent's ability to pay child support. These individuals contend that it is virtually impossible for most low-income noncustodial parents to stay current in meeting their monthly child support payments and still have enough money to meet their own needs for food and shelter.\nThis section discusses several concerns about the current child support review and modification process in the context of the following questions: Are arrearages too high? Are garnishment limits too high? Should CSE agencies provide work-related services to noncustodial parents? Is there inequitable treatment among various categories of nonpaying noncustodial parents?", "As stated above, in FY2014, $114.8 billion in child support arrearages was owed to families receiving CSE services, but less than 7% ($7.6 billion) of those arrearages was actually paid. A significant accumulation of child support arrearages is a concern because it means that children and families are not getting a large amount of income to which they are entitled, income that could significantly improve their well-being.\nIn FY2014, 63% of noncustodial parents with arrearages continued to make payments on their child support arrearages. One interpretation of this information is that many noncustodial parents want to fulfill their child support obligations but simply have too many financial obligations (e.g., food and shelter for themselves) to cover with their limited incomes; therefore, they may always be a little or a lot behind in meeting their child support obligations.\nThere is widespread agreement that preventing the buildup 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 low-income children whose parents are unemployed or underemployed.\nOver the years, the OCSE has proposed the following procedures for reducing high child support arrearages:\nUpdate child support guidelines regularly and simplify child support order modification. Modify orders to ensure that child support obligations stay consistent with the noncustodial parent's ability to pay. Use automated systems to detect noncompliance as early as possible and contact noncustodial parents soon after a scheduled child support payment is missed. Use automated systems to detect changes in circumstances and intervene early to review and modify child support orders. Update child support guidelines to recognize modern family dynamics and realities (e.g., shared custody, incomes of custodial parents). 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 to consistently paying current child support payments.\nWith 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 in exchange for the noncustodial parent's participation in specified employment, training, or other activities.\nResearch from the University of Wisconsin suggests that reduction of large child support debts may increase child support payments. The study suggests that higher arrears, in themselves, substantially reduce both child support payments and formal earnings for the noncustodial parents and families that already likely struggle in securing steady employment and coping with economic disadvantage.\nAlthough many custodial parents agree to a certain extent 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 his or her children.", "Title III of the Consumer Credit Protection Act (CCPA; 15 U.S.C. 1673(b)) limits the amount of an employee's earnings that may be garnished. Under the CCPA, 50%-65% of disposable earnings may be garnished or withheld from a noncustodial parent's paycheck for child support purposes. Specifically, the CCPA allows up to 50% of a worker's disposable earnings to be garnished to pay child support if the worker is currently supporting a spouse or a child who is not the subject of the order. If a worker is not supporting a spouse or child, up to 60% of the worker's disposable earnings may be taken. An additional 5% may be garnished for support payments more than 12 weeks in arrears.\nThe intent of Congress in the CCPA was to put a limitation on the garnishment of wages to \"relieve countless honest debtors driven by economic desperation from plunging into bankruptcy in order to preserve their employment and ensure a continued means of support for themselves and their families.\" Thus, federal law provides a consumer with protection from court-ordered deductions that go beyond a certain percentage of an individual's disposable income.\nAccording to an OCSE report, research consistently finds that noncustodial parents are more likely to stay current on their child support payments if the child support obligation is 20% of their earnings or lower. Therefore, it is understandable that many noncustodial parents argue that garnishment of up to 65% of their paycheck for child support is unreasonable. They claim that having to make do on so little of their income discourages work and reinforces the perception that the CSE agency is dismissive of their financial condition as it continues to garnish unreasonable child support obligations even when it is obvious that the noncustodial parents can barely support themselves.\nWhen wages are garnished, an employer withholds money from an employee's paycheck and sends those funds to a creditor until the debt is paid in full. Most child support is collected through mandatory payroll withholding.\nCSE officials have the authority to require employers to garnish or withhold as much as 65% of a noncustodial parent's disposable wages toward the payment of child support obligations. For low-income noncustodial parents who are unemployed or underemployed, the current garnishment limits may be too high. The maximum garnishment percentage of 65% may increase the difficulty of securing and maintaining housing, transportation, and employment that are essential for providing the stability and income necessary for making future child support payments.\nSeveral studies indicate that some low-income noncustodial parents facing substantial child support arrearages and income withholding sometimes become discouraged and leave formal employment. Some research suggests that when noncustodial parents perceive that the CSE system is unfair, the likelihood that they will pay any child support decreases.", "Most families that receive CSE services have low and moderate incomes. According to OCSE data, about half of the families in the CSE program have income at or below 150% of the poverty level; 90% of CSE families have income at or below 400% of the poverty level. Moreover, a downward trend in male employment, together with the last recession, increases the probability that many noncustodial parents are unemployed or sporadically employed.\nGiven that no and low incomes are at the crux of many noncustodial parents' inability to meet their child support obligations, whether it is the initial child support order or a subsequent modified order, many policymakers and CSE administrators contend that providing work-oriented services and programs to noncustodial parents is an effective method of increasing child support payments to families.\nAccording to OCSE,\nThe child support program is uniquely positioned to effectively manage the delivery of employment services and assure results for children. Prior research shows that child support-led employment programs are more likely to yield results for noncustodial parents and their children. The child support program serves 80 percent of poor custodial families and has a strong stake in seeing that poor noncustodial parents are able to support their children. Managing employment programs allows the child support program to ensure that noncustodial parents receive the services they need to find work. Once they find a job, wage withholding ensures that child support goes to custodial families.\nAs of February 2014, 30 states and the District of Columbia were operating work-oriented programs for noncustodial parents with active CSE agency involvement. Although most of the programs are not statewide, some are. Many of these work-oriented programs were established in partnership with state and local workforce development boards and local courts for noncustodial parents regardless of whether the child is enrolled in the TANF program. Most of the work-oriented programs are child support led, which means the CSE program is the lead agency and is accountable for results. In other models, the CSE program is actively involved but is not the lead agency and usually is not held accountable for results. Sources of funding for these work-oriented programs for noncustodial parents are CSE grant funds, CSE incentive funds, TANF funds, responsible fatherhood grant funds, Workforce Investment Act funds, Department of Labor grant funds, and state funds.\nThe OCSE recently issued a proposed rule stating the following:\nIn an effort to make the program more effective and to increase regular child support payments, we propose program standards related to providing certain job services for eligible noncustodial parents responsible for paying child support. These services are designed to complement traditional enforcement tools and to help noncustodial parents find suitable employment opportunities so they can support their children.\nThere has been some controversy regarding the OCSE proposing in federal regulations new services and programs eligible for CSE funding. Some have argued that this issue should be addressed through legislation, not regulation. However, many policymakers agree that helping low-income noncustodial parents find work often leads to such parents making their child support payments on a more consistent and timely basis.", "According to one study, states indicate that 30%-40% of their \"hard to collect from\" cases consist of noncustodial parents who have a criminal record. Many incarcerated parents have child support orders that were established before they entered jail or prison but after incarceration no longer have the income to pay child support. The average incarcerated parent with a child support order reportedly has $10,000 in child support arrearages when entering state prison and $20,000 in child support arrearages when leaving prison. In recent years, policymakers have focused on implementing strategies to help incarcerated and formerly incarcerated noncustodial parents modify their child support orders to enable them to pay those orders on a consistent basis.\nSeveral recommendations of policymakers and observers specifically related to incarcerated parents 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 modify (or forgive) automatically 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.\nSome observers contend that there has been too much focus on the need to help noncustodial parents who are in prison. They argue that persons who suffer a long-term injury or illness and those who are unemployed or underemployed face the same challenges with regard to no income or lower income as those who are in jail or prison. They argue that child support modification laws should be changed so they are more sensitive to periods during which the noncustodial parent's ability to pay child support decreases, regardless of whether the decline in income is from unemployment, injury or illness, or incarceration. They maintain that states should offer enhanced review and modification assistance to all vulnerable noncustodial parents, not just those who are incarcerated.\nSome observers argue that policymakers, when considering policies related to reducing the child support obligations of prisoners, also must consider equity issues related to the treatment of low-income noncustodial parents who may be unemployed as opposed to being 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." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2 ], "alignment": [ "h0_title h1_title", "h0_full", "h0_title", "", "h0_full", "h0_full", "", "h0_full", "", "", "h1_full", "h1_full", "", "", "" ] }

{ "question": [ "What are states required to do under current law?", "What occurs if the family is not receiving TANF benefits?", "What occurs if a request is made outside of the three-year cycle?", "Why must child support modifications be made?", "What is there widespread agreement on?", "What other public policy concerns are there?", "How might addressing these concerns be beneficial?" ], "summary": [ "Under current law (pursuant to P.L. 109-171, the Deficit Reduction Act of 2005), states are required to review and, if appropriate, adjust child support orders at least once every three years in cases in which the family is receiving Temporary Assistance for Needy Families (TANF) benefits.", "In the case of a non-TANF family, one of the parents has to request a review within the three-year time frame for a review and modification to occur.", "If a request for review and modification is made outside the three-year cycle, the requesting party must demonstrate that there was a substantial change in circumstances.", "Child support modifications must be in accordance with a state's child support guidelines. The rationale behind review and modification of child support orders is to ensure that these orders are equitable, sufficient, and commensurate with a parent's income and/or ability to pay.", "There is widespread agreement that preventing the buildup of unpaid child support through early intervention rather than traditional enforcement methods is essential to the future success of the CSE program.", "Other public policy concerns include examining whether garnishment limits are too high; deciding whether incorporating work-oriented services into the basic CSE program would result in more consistent and timely child support payments; and providing equitable enhanced services and assistance to vulnerable noncustodial parents, regardless of whether they are in jail or prison, unemployed, underemployed, or injured or sick.", "Commentators maintain that addressing these concerns may help many low-income children." ], "parent_pair_index": [ -1, 0, 0, 0, -1, -1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 5, 5, 5 ] }

{ "title": [ "Background", "Selected Agencies Vary in Their Management of Unobligated Balances, Including Use of Balances to Mitigate Effects of the 2013 Sequestration and Government Shutdown", "In Reviewed Accounts, Agencies Generally Addressed Key Questions for Evaluating Unobligated Balances", "What Mission and Goals is the Account or Program Supporting?", "What Are the Sources and Fiscal Characteristics of the Funding?", "What Factors Affect the Size or Composition of the Carryover Balances?", "How Does the Agency Estimate and Manage Carryover Balances?", "For Reviewed Accounts, Agencies Actively Estimate and Manage Unobligated Balances; However, for Two of the Accounts, Balances Exceeded Target Levels", "For Reviewed Accounts, Officials Reported Having a Process to Regularly Review Unobligated Balances throughout the Year", "Although Agencies Tracked the Appropriation Year of Unobligated Balances for Reviewed Accounts with Multi- Year Funds, Some Funds Expired in All Such Accounts during Fiscal Years 2012 through 2014", "Three Agencies Identified a Need to Retain Unobligated Balances in Three of the Reviewed Accounts, but Unobligated Balances Exceeded Target Levels in Two of These Accounts", "Agency Officials Said Unobligated Balances May Result from, or Be Affected by, Events outside an Agency’s Control", "Four of Eight Reviewed Accounts Used Unobligated Balances to Mitigate the Effects of Sequestration in Fiscal Year 2013", "Six of Eight Reviewed Accounts Used Unobligated Balances to Fund Activities during the October 2013 Government Shutdown", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objective, Scope, and Methodology", "Appendix II: Key Budget Questions Applied to Reviewed Budget Accounts", "Unobligated Balances as a Proportion of Total Unexpended Balances", "Unobligated Balances by Category of Spending", "Unobligated Balances by Budget Function", "Unobligated Balances by the Top Eight Agencies", "Appendix IV: Comments from the Department of Energy", "Appendix V: Comments from the Department of State", "Appendix VI: Glossary of Budget Terms", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Congress provides budget authority to federal agencies to incur financial obligations through annual appropriations acts or other legislation. An obligation is a definite commitment that creates a legal liability of the government for the payment of goods and services, or a legal duty that could mature into a legal liability by virtue of actions that are beyond the control of the United States. Based on the authority provided in legislation, agencies obligate and expend funds. For example, an agency incurs an obligation when it places an order, signs a contract, awards a grant, or purchases a service. Expenditures or outlays occur when funds that have been obligated are transferred for payment. See figure 1 for an overview of this process.\nOne of the limits set by appropriations acts is the period of availability of budget authority: periods of availability include one-year, multi-year, and no-year. Although federal funding may be available to obligate for one year, multiple years, or until expended (no-year), only accounts with multi- year or no-year funds may carry forward amounts that remain legally available for new obligations from one fiscal year to the next. Such amounts are referred to as unobligated balances. Agencies may also carry forward obligated balances. As shown in figure 1 and previously described, obligated balances are the amount of obligations already incurred for which payment has not yet been made while an unobligated balance is the portion of available budget authority that has not yet been obligated. If the agency does not obligate one-year or multi-year funds by the end of the period of availability, the budget authority will expire. The agency may not incur new obligations using expired budget authority, unless otherwise provided by law. The sum of unobligated and obligated balances is referred to as unexpended balances.\nFederal spending is categorized as discretionary or mandatory. This distinction refers to the way budget authority is provided. Discretionary spending is controlled through annual appropriations acts (plus, in some cases, supplemental appropriations acts). In contrast, mandatory spending accounts, which include “entitlement authority,” receive budget authority through laws other than appropriations acts. This distinction affects the management of unobligated balances because mandatory funding may require programmatic changes to authorizing legislation to affect unobligated balances, while discretionary accounts are controlled through the annual appropriation process.\nIn 2013, we reported that reviewing unexpended balances—and in particular, unobligated balances—may provide an opportunity to identify potential budgetary savings and direct those resources towards other programs or priorities. We identified four key questions that agencies and decision makers should answer during a review of unexpended balances, and used those questions for this review to evaluate unobligated balances at selected agencies. These questions can provide insights into why a balance exists, what size balance is appropriate, and what opportunities (if any) for savings exist (see text box).\nUnobligated balances can provide agencies with flexibility when responding to unexpected budget events. For example, agencies faced with reduced budget authority—such as during a sequestration—or with a lapse in annual appropriations may choose to use unobligated balances from prior year appropriations that remain available for new obligations to ensure continuity of agency activities. In 2014, we reported that unobligated balances that remain legally available from prior year appropriations could provide agencies with funding flexibility to respond to sequestration. Similarly, in September 2013, OMB issued guidance to agencies that said unobligated balances could be used to fund activities during the government shutdown.\nSequestration. On March 1, 2013 the President ordered a sequestration of $85.3 billion across federal government accounts. Final appropriations enacted on March 26, 2013 had the effect of reducing this amount to $80.5 billion. The reductions were to be split evenly between defense and nondefense functions. Under current law, a sequestration of mandatory spending will occur through fiscal year 2024, and another sequestration of discretionary appropriations could occur in any fiscal year through 2021. The fiscal year 2013 sequestration reduced funding to selected components of federal agencies and their program partners— such as state and local governments—that assist in carrying out agency missions. As a result, the selected components and their partners reduced or delayed some services to the public and operations in 2013. As we found in March 2014, agencies reported that sequestration reduced assistance for education, housing, and nutrition, as well as health and science research and development grants. We also found that agencies delayed investments such as information technology and facilities projects.\nIn 2013, both mandatory spending and discretionary appropriations were subject to sequestration. In accounts with budgetary resources classified as defense spending, prior year unobligated balances were also subject to sequestration. Prior year unobligated balances in nondefense accounts were exempt. This means that only prior year balances for some agencies’ accounts were affected by sequestration, while others were not. Figure 2 shows the breakdown of unobligated balances by different types of accounts and how these different balances were treated under sequestration in fiscal year 2013.\nIn fiscal year 2013, agencies had the ability to reprogram funds and had various transfer authorities to respond to sequestration. Reprogramming is the shifting of funds from one program activity to another within an appropriation account for purposes other than those contemplated at the time of appropriation. Generally, no statutory authority is necessary for agencies to reprogram funds, but in some instances the ability to reprogram funds may be limited by law for certain purposes or amounts. A transfer is the shifting of funds between appropriation accounts. Agencies must have statutory authority to transfer funds, and that authority may also be limited by purpose or amount.\nGovernment Shutdown. The federal government partially shut down for 16 days in October 2013 because of a lapse in appropriations. According to OMB, about 850,000 federal employees were furloughed for part of this time, and agencies furloughed federal employees for a combined 6.6 million work days. Over the past 20 years, there have occasionally been federal lapses in appropriations that led to government shutdowns.\nDuring a government shutdown, one of the key issues OMB and agencies must determine is what activities and programs an agency is permitted or required to continue when faced with a funding gap. The Antideficiency Act generally restricts agencies from continuing operations funded by annual appropriations during a government shutdown. However, there are some categories of activities that are permitted to continue during an appropriations lapse. This includes activities funded through multi-year appropriations that did not expire at the end of the fiscal year or no-year appropriations.", "", "As described earlier in this report, in September 2013 we identified four key questions for evaluating balances in budget accounts, including unobligated balances or the portion of the available budget authority that has not yet been obligated, to help agencies more effectively manage public funds. For the eight accounts we reviewed across the four agencies, the agencies generally addressed the key questions in their management and ongoing review of unobligated balances. We describe the four key questions below and provide examples of how the selected agencies applied the questions to the reviewed accounts (see text boxes).", "Understanding the mission activities, goals, and programs the account supports provides information about whether a program needs to maintain an unobligated balance to operate smoothly, what size balance is appropriate, and whether opportunities for savings exist. Such context can inform assessments of whether, and how, to reduce unobligated balances and what effect a reduction would have on the agency’s ability to carry out its mission. The text box below describes two examples from the reviewed accounts.\nMission Activities and Goals and Unobligated Balances Western Area Power Administration (WAPA) Construction, Rehabilitation, Operation and Maintenance (CROM). Energy’s WAPA CROM account supports critical energy function across the central and western region of the United States. The agency holds unobligated balances in the account from one year to the next to maintain operations in case unexpected events, such as a droughts or economic downturns, lead to lower than expected power sales.\nEconomic Development Assistance Programs (EDAP). Among its missions, Commerce’s Economic Development Administration (EDA) provides grants to public and private non-profit organizations to mitigate sudden and severe economic impacts, such as natural disasters, through the EDAP account. According to EDA officials, funding in this account that is appropriated for specific disaster relief programs cannot be spent for other activities. A delay in assistance applications for EDA’s grants could result in unobligated balances for those program funds. For example, EDA officials attributed the majority of the $185 million unobligated balance at the end of fiscal year 2012 to the additional $200 million appropriated by Congress in fiscal year 2012 to fund disaster relief efforts in areas with major disaster designations in 2011, which included areas affected by Hurricane Irene. According to officials, communities eligible to apply for this relief were focused on short-term recovery in 2012 and were not in a position to apply for EDAP funds until long-term recovery plans were in place, generally after the end of fiscal year 2012.", "The sources and fiscal characteristics of the funding influence what opportunities may exist for budgetary savings. Sources of funding include appropriations acts (i.e. discretionary spending) and laws other than appropriations acts (i.e. mandatory spending). Budget accounts can have both discretionary and mandatory amounts: these are known as split accounts. Discretionary and mandatory budget authority presents different issues for Congress in its oversight of the size of any balance. Specifically, if amounts are mandatory, Congress must make programmatic changes to authorizing legislation in order to begin to affect the size of any unobligated balance. Fiscal characteristics include the period of availability for new obligations and are also important to evaluating unobligated balances. If an account receives multi-year or no- year appropriations, an unobligated balance can be expected in some accounts or programs. Accounts that receive funding primarily from outside sources, such as fees, have their own unique considerations when evaluating unobligated balances. The text box below describes three examples from the reviewed accounts.\nSources and Fiscal Characteristics of Funding and Unobligated Balances Diplomatic and Consular Programs (D&CP). State’s D&CP account is composed of both discretionary and mandatory authority that come from various sources including annual appropriations, Overseas Contingency Operations appropriations, offsetting collections derived from services to the public for visas and passports, and reimbursements from other agencies. Almost all of the unobligated balances support activities funded by discretionary appropriations. The account includes no-year, multi- year, and one-year appropriations. In fiscal year 2014, D&CP’s appropriation did not provide multi-year authority as in previous years, but rather, permitted the extension of up to about 15 percent of new one-year authority to two-year authority. State officials reported that this change led to greater scrutiny of the balances, as well as closer work with the Department of the Treasury to transfer funds into the two-year portion of the account.\nInternational Narcotics Control and Law Enforcement (INCLE). State’s INCLE account receives two-year appropriations. Therefore, these funds must be obligated within the two-year period or they will expire. INCLE officials said that they strive to obligate all funds within this period of availability.\nUnited States Patent and Trademark Office (USPTO) Salaries and Expenses (S&E). The USPTO S&E account at Commerce is composed of receipts from patent and trademark fees. USPTO receives congressional authority in annual appropriations acts to spend a fixed amount of these receipts. Funds are obligated in this account as salaries are earned and expenses incurred. The unobligated balance in this account therefore depends on the volume of fee collections going in and salaries and expenses going out.", "It is important to consider which factors affecting unobligated balances are within the agency’s control and which are not. The rate at which obligations are incurred and subsequently liquidated in a fiscal year can vary with the nature of the activity. External events beyond agencies’ control—such as natural disasters or economic crises—can also affect unobligated balances. The text box below describes two examples from the reviewed accounts.\nFactors Affecting Size and Composition of Unobligated Balances Science. NASA officials said that while they attempt to obligate funds during the first year of appropriation within the Science account, a delayed project may result in an unobligated balance in the account. For example, in fiscal year 2014, the Europa mission funding for the Jet Propulsion Laboratory was delayed while officials conducted a July progress review, resulting in a delay of obligations and an unobligated balance at the end of the year.\nDefense Environmental Cleanup (DEC). Officials managing Energy’s DEC account said that unobligated balances in fiscal year 2014 resulted from a variety of reasons, including contracts that could not be awarded before the end of the fiscal year, delays in hiring employees, and funding allocated for a finished construction project.", "Understanding an agency’s processes for estimating and managing carryover balances provides information to assess how effectively agencies anticipate program needs, and ensure the most efficient use of resources. Agency management and estimation of unobligated balances also helps to ensure that any amounts carried over into the next year meet the targets the agency has determined are necessary to continue activities. The text box below describes three examples from the reviewed accounts.\nManagement and Estimation of Unobligated Balances Economic Development Assistance Programs (EDAP). In managing the EDAP account, EDA tracks expended, obligated, and unobligated balances, and reports weekly on these fund balances to program staff. The budget office estimates the likelihood of the remaining unobligated funds being obligated during the fiscal year, and continually revises these estimates, putting forward a final estimate of the unobligated balance that is expected to be carried over at the end of the fiscal year.\nEnergy Efficiency and Renewable Energy (EERE). EERE officials monitor unobligated balances monthly, with a more thorough analysis at the end of the fiscal year. According to officials, there is no set formula for estimating unobligated balances in future years; project managers are asked in the fourth quarter for their expected level of obligations which helps the agency estimate current year unobligated balances.\nScience. Unobligated balances for NASA’s Science account are monitored monthly. Specifically, budget analysts compare actual and planned spending, and monitor the level of unobligated balances. If an analyst believes that there is a significant difference between expected and actual unobligated balances, then he or she can flag those balances for further review.", "Of the four key questions, agency management of balances is especially important in that it highlights how ongoing, routine estimation, and agency management of unobligated balances throughout the year is critical to help ensure the effective use of program resources. Our work shows that actively managing unobligated balances involves (1) regular review of unobligated balances, including ongoing monitoring and tracking, throughout the year; (2) tracking the appropriation year of the balances; (3) estimating projected annual unobligated balances and identifying the amount of unobligated balances that may be necessary to retain the following year; and (4) recognizing how unobligated balances may result from, or be affected by, events outside of an agency’s control.\nIf an agency does not have a robust strategy in place to manage unobligated balances, or is unable to adequately explain or support the reported unobligated balances, then a more in-depth review is warranted. In those cases, balances may either fall too low to efficiently manage operations, or rise to unnecessarily high levels. This produces potential opportunities for those funds to be used more efficiently elsewhere.", "For all of the eight accounts we reviewed, agency officials reported having a process for managing unobligated balances throughout the year, including ongoing monitoring and tracking of the balances. Having a process to regularly review unobligated balances throughout the year allows agencies and decision makers to better understand the size and nature of their balances and determine if actions should be taken to increase or reduce these balances. Specific examples include the following:\nOfficials for State’s D&CP account reported that they monitor unobligated balances monthly to ensure that program spending is on track, with more frequent monitoring of some subaccounts with large balances, such as the Overseas Contingency Operations (OCO) subaccount. Frequent monitoring may make it easier to identify whether unobligated balances will meet program needs.\nOfficials managing NASA’s Science account said their monthly monitoring of unobligated balances begins the first day of each month when obligations are transferred from the agency’s accounting system into a project management system, which is used to compare planned and actual expenditures. Budget analysts monitor the level of unobligated balances, taking into account obligations from the prior month. NASA officials said it is the responsibility of the budget analyst for the account to raise significant differences between planned and actual levels of unobligated balances for further review by the Budget Director, the Deputy Chief Financial Officer, and the Chief Financial Officer.\nCommerce’s USPTO finalized an operating reserve policy on September 25, 2015. This policy includes a regular process for monitoring unobligated balances within the S&E account. In the S&E account, which is funded through fees that are paid by customers to obtain and renew patents and trademarks, USPTO sets aside its unobligated balances as an operating reserve. In April 2012, we recommended that the Secretary of Commerce direct the USPTO Director to finalize an operating reserve policy, including the expected level of reserves, to smooth economic downturns on operations and to ensure its use aligns with agency goals. The finalized policy was developed in response to our recommendation. The policy requires monthly monitoring of the operating reserve balance compared to the established minimum level, among other things.", "We have previously reported that the time limits imposed upon the budget authority are important when evaluating unobligated balances. If an account receives multi-year or no-year appropriations, an unobligated balance can be expected in some cases. Similarly, if an account receives multi-year supplemental appropriations late in the fiscal year or for long- term projects, there is an increased likelihood of, and perhaps expectation for, an unobligated balance in the account. It is important to track the year of appropriation for accounts with multi-year budget authority to obligate the authority in the order appropriated to maximize resources for program implementation and prevent budget authority that otherwise could have been used from expiring. There may be different periods of availability for funds within the same agency, program, or account. As shown in table 2 below, six of the eight accounts we reviewed received no-year funds, which do not expire, and two of the accounts received only multi-year funds. One account received no-year, multi-year, and one-year funds.\nMulti-year Funds. Five of the accounts we reviewed receive multi-year funds in the form of 2-year funds—NASA’s Science account, State’s INCLE and D&CP accounts, and Energy’s EERE and DEC accounts. Officials managing each of these five accounts reported tracking the appropriation year of the funds to help ensure that the agency incurs new obligations only during the appropriation’s period of availability. Since funds are available for only 2 years, in most cases they will expire at the end of the 2-year period. For example, officials managing State’s INCLE account said that they divide responsibility for tracking funds between budget execution analysts and program staff. While the budget execution analysts are responsible for tracking funds in the accounting system and highlighting any problems as they arise, it is ultimately the responsibility of program staff to ensure that the agency incurs new obligations only during the appropriation’s period of availability.\nAlthough officials in the five reviewed accounts with two-year funds said they track the appropriation year of funds to help ensure effective use of current budget authority within the appropriation’s period of availability, all of the accounts had unobligated balances that expired during fiscal years 2012 through 2014. Expiration of funds can occur for a variety of reasons including contract adjustments, delays in entering contracts because of continuing resolutions, or poor management. See table 3 for the amounts of expired funds in five reviewed accounts and an explanation of the expiration, according to agency officials.\nState officials managing the D&CP account told us that they attempt to avoid cancellation of expired funds and their unavailability for future use by using four separate authorities to transfer expired funds for specific uses such as offsetting overseas price inflation for projects and wages paid to local employees, making reward payments for captured terrorists, and reimbursing New York City for the protection of foreign missions and officials at the United Nations. According to officials, State notifies OMB and Congress regarding the Department’s intent to transfer expired funds for such purposes. Officials said they transfer the oldest expired funds first, such as those nearing the end of their expiration period, which would be the first to be cancelled, before obligating the more recently expired funds. In fiscal year 2014, D&CP’s appropriation consisted of primarily one-year authority, of which State could extend up to about 15 percent for an additional year, versus the primarily two-year authority generally appropriated to D&CP. Officials said that all expired fiscal year 2014 funds ($369 million) were transferred to the two-year portion of the account because the $369 million fell within the 15 percent limit.\nFor the INCLE account, State has the authority to extend the availability of certain balances that would have otherwise expired after 2 years. When funds are obligated during their initial period of availability, those funds remain available to incur new obligations for an additional 4 years from the date on which the availability of such funds would have otherwise expired. To enter into new obligations during this extended period of availability, State officials must deobligate previously obligated funds. State reported that deobligated amounts are moved from an expired account into what officials call an “extended account” and are available to be reobligated. State officials said that expired funds reflected in the President’s budget may actually be in a holding status awaiting coordination, including coordination with Congress. However, State’s Office of the Inspector General (OIG) also identified issues with the process of tracking obligations within the INCLE account. State’s OIG recommended that the agency should develop a list of bureaus’ requirements related to tracking and reporting foreign assistance funds by program, project, and country, among other things, and develop and implement a comprehensive plan with target completion dates to address foreign assistance tracking and reporting requirements. State agreed and initiated a working group to address the recommendation.\nNo-year Funds. In accounts with no-year funds, agencies may choose to track the year in which such funds were appropriated, but such funds do not expire. Officials managing the three reviewed accounts at Energy— DEC, EERE, and WAPA CROM—each reported tracking no-year funds by the year of appropriation. In contrast, officials from the other three reviewed accounts with no-year funds reported that they did not do this. For example, at Commerce, officials managing EDA’s EDAP account reported that the agency does not track the appropriation year of the unobligated balances. Officials managing the EDAP account said they track the funds by program, such as Economic Adjustment Assistance or Public Works, but do not track funds by year because these are no-year funds. When a grant funded from the account is completed, officials said any remaining funds tied to that grant are deobligated, and may be used to fund a new grant that would qualify under the parameters of the original activity or subprogram.", "As we have previously reported, both the necessity for and appropriate size of minimum unobligated balances varies among agencies and within agencies. It is important for agencies to estimate the projected unobligated balances for the fiscal year and identify the amount of the balances, if any, which may be necessary to carryover into the following year to sustain agency operations. For five of our reviewed accounts— Energy’s DEC and EERE, Commerce’s EDAP, State’s INCLE, and NASA’s Science—agency officials said a minimum level or consistent target of unobligated funds was not necessary to maintain operations across fiscal years. For example, Energy officials managing the DEC account told us that a minimum level of unobligated funds was not necessary for their operations and that their goal is to obligate all of their funds in the first year. Energy officials reported they obligate more than 99 percent of DEC funds, on average, within the first year of appropriations. Similarly, officials managing the INCLE account said they would obligate all funds in the first year if possible. However, planning and reporting requirements often delay obligations leading to significant unobligated balances each year.\nWe have previously reported that unobligated balances in some instances support an agency’s ability to carry out its mission by providing flexibility for the agency to respond to contingencies or emergencies. In three of the eight accounts we reviewed—USPTO’s S&E, State’s D&CP, and Energy’s WAPA CROM—officials reported that a certain level of unobligated balances was necessary to properly execute activities and manage financial risk for certain programs within the accounts.\nIn our prior work, USPTO officials reported that maintaining an operating reserve is important for the user fee funded agency because, without an unobligated balance, its businesslike operations would leave the agency vulnerable to financial risk and threaten long- term operational stability. All unobligated balances within USPTO’s S&E account are considered part of this operating reserve. In response to our 2012 recommendation, USPTO drafted and, as of September 25, 2015, has finalized a policy to guide its management of this operating reserve. The policy describes a method for determining an acceptable minimum size for the operating reserve as well as a model for determining its optimal size. This model takes into account the likelihood and consequence of seven different spending and fee collection risk factors such as economic uncertainty and climate, unexpected costs, and fee and workload projection uncertainties. Depending on the levels of risk and consequence, the model calls for maintaining, in addition to the established minimum reserve requirement, between 0- and 4-months of operating expenses in its reserve.\nAdditionally, for the Consular and Border Security Programs (CBSP) within the D&CP account, State officials said they have a target to carryover approximately 25 percent of projected program expenditures for the next year to manage complex global visa and passport operations. CBSP is fully fee funded, which means that all appropriations for the program are offsetting collections from consular fees and surcharges. These fees and surcharges include the Passport Security Surcharge, the Diversity Visa Lottery fee, and the Machine Readable Visa fee. Congress has permanently appropriated these collections to State as no-year authority for CBSP’s use. State set this target of 25 percent based on activity-specific analysis using historical data and projections. However, officials did not report using models or formulas to help anticipate how certain factors would impact the financial risk of the account. Our previous work has found that unobligated balances in fee-based accounts should be subject to the same scrutiny as unobligated balances in accounts funded by general revenues. Based on our findings from this review, we continue to believe that agencies need to understand the vulnerabilities of user fees and to be deliberate in their design of a reserve fund to effectively manage them.\nSpecifically, we found that in fiscal year 2014 unobligated balances for CBSP accounted for 38 percent, or approximately $1.3 billion, of projected program expenditures for fiscal year 2015 for the program. This exceeded the 25 percent target of approximately $850 million by approximately $440 million. Similarly, in fiscal years 2012 and 2013, unobligated balances for CBSP accounted for approximately 40 percent of program expenditures for the next fiscal year. State officials reported that unobligated balances were higher than the predetermined target, in part, because of limitations on the purposes for which fees collected under CBSP may be used. In particular, fees collected for fraud prevention and detection on certain types of visas can only be spent on specific fraud activities. State officials reported that annual revenue from this fee is usually higher than the cost of these activities, resulting in an annual increase in unobligated balances. However, this limitation on how fees can be spent accounts for only a small proportion of the excess unobligated balances (approximately $97 million of the total excess unobligated balance of $440 million in fiscal year 2014).\nState officials within the Bureau of Consular Affairs said that they began drafting a plan in 2013 for managing and monitoring funding for each program within CBSP. According to officials, this plan will include a strategy on how unobligated balances will be tracked and managed to reach the identified target of 25 percent. Officials said that the plan is awaiting clearance by leadership and they anticipate that it will be finalized by June 2016. While unobligated balances for CBSP were greater than the 25 percent target in recent years, State officials reported that they have taken steps to regulate and reduce unobligated balances. According to officials, these steps included decreasing fees or delaying fee increases when unobligated balances were adequate to cover costs; realigning spending, consistent with authorities, to better coincide with actual costs; and improving internal coordination to better track and model revenues and obligations. For example, officials reported that since fiscal year 2012, the cost of the Passport Security Surcharge service was higher than the $40 fee charged. In 2015, State announced that it intended to raise the fee to $60. Officials said that this delay of the fee increase allowed them to spend down existing unobligated balances. According to data provided by State, unobligated balances for the Passport Security Surcharge decreased from 95 percent of next year’s program expenditures in fiscal year 2012, to 72 percent in fiscal year 2014.\nSimilarly, the unobligated balances in WAPA’s CROM account exceeded the level officials said was necessary to maintain certain activities and manage risk for those activities. Specifically, officials said that for two of the account’s four use categories—the annual expense fund, and purchase power and wheeling—they set a target level of unobligated balances as contingency funds against unexpected events. For the annual expense fund, officials set a target to retain up to one quarter, or 25 percent, of the yearly budget requirement. For purchase power and wheeling, the target was equal to 25 percent of each region’s maximum annual receipts. WAPA officials explained that WAPA’s mission to market hydroelectric power to multiple regions across the western United States can be affected by a number of environmental factors such as drought, animal breeding seasons, and flood prevention—all of which may affect the function of power generating dams and introduce financial risk. WAPA officials reported addressing these environmental factors and potential financial risks by carrying over unobligated funds. WAPA officials told us that while a carryover of up to or equal to 25 percent in unobligated balances is the current target for these two use categories, they are continuing to refine and evaluate the necessary level of unobligated balances. These officials added that they do not have a model or formula to estimate anticipated environmental factors, and how those factors would have a fiscal impact on the agency.\nFor fiscal year 2014, unobligated balances for purchase power and wheeling fell below the 25 percent target. However, for the annual expense fund, unobligated balances were above this previously identified target. For the annual expense fund, officials estimated that the 25 percent target for the unobligated balance would be about $52 million for fiscal year 2014. The unobligated balance, however, for the annual expense fund was $92 million, or $40 million more than officials deemed necessary to avoid risk. According to WAPA officials, the annual expense fund’s unobligated balance for fiscal year 2014 was higher than the predetermined target partially because they forecasted a 3 percent cost of living increase for personnel, which never occurred. WAPA officials reported that they developed a strategy in fiscal year 2013 for managing unobligated balances in the annual expense fund within the CROM account. According to officials, the draft strategy includes three alternatives for reducing unobligated balances in the annual expense fund, including one to decrease future budget requests and rely on existing unobligated balances to cover expenses. Officials said that this alternative was approved by WAPA senior management. However, officials acknowledged that this strategy would not be fully implemented until officials assess the outcomes of the strategy at the end of 2015. WAPA officials also reported that they are considering other strategies for reducing unobligated balances to required targets. As of October 2015, WAPA had not finalized or fully implemented a strategy to reduce unobligated balances.\nWithout a finalized and fully implemented strategy for reducing unobligated balances in excess of the agencies’ predetermined targets for necessary balances for the identified programs or activities in these two accounts, Energy and State are missing opportunities to actively manage unobligated balances. Thus, they should consider whether actions such as reprogramming or transferring unobligated balances, reevaluating the necessary threshold of unobligated balances, or reducing funding requests in future appropriations for these accounts are appropriate courses of action for using their resources effectively.", "We have previously reported that the nature of some accounts may routinely cause unobligated balances that result from events outside of an agency’s control. Spending in some accounts may require processes to be completed by state, local, or private entities that receive funds from federal agencies. If these processes are not completed in a time frame necessary to obligate the funds in the current fiscal year, funds may remain unobligated at the end of the fiscal year and be carried over. These events are separate from the active estimation of the necessary size of unobligated balances described above. Nevertheless, as we have previously noted, it is important for agencies to understand how these events may influence the level of their balances.\nFor example, in EDA’s EDAP account, officials said that many of their programs are driven from the bottom up in that funding cannot be obligated until potential recipients apply for grants. Specifically, EDA officials told us that unobligated balances for the Reshoring program have been carried over for 3 years while the program waits to receive applications from eligible public and private non-profit organizations. The Reshoring program, a subprogram under EDA’s Economic Adjustment Assistance program, provides aid to businesses bringing jobs from overseas to the U.S. It received approximately $5 million each year for fiscal years 2013 and 2014. However, funds cannot be obligated until eligible recipients take actions outlined in programmatic rules and regulations and these funds were carried over as unobligated balances.\nAs we have previously reported, for agencies that rely on user fees for funding, economic factors may impact the amount of fees collected and contribute to unobligated balances. For example, officials at USPTO said that an economic downturn can decrease USPTO’s collected fees. This would create an imbalance with planned spending, and lead to a decrease in its operating reserve of unobligated balances.\nContinuing resolution (CR): an appropriation act that provides budget authority for federal agencies, specific activities, or both to continue operation when Congress and the President have not completed action on the regular appropriations acts by the beginning of the fiscal year. A CR may be enacted for a full year, up to a specified date, or until regular appropriations are enacted. CRs have been passed in all fiscal years since 1997, the most recent fiscal year that all regular appropriations bills were completed on time. During this time, CRs funded an average of 5 months each fiscal year.\nUncertain budget environments can also affect the level of unobligated balances. As we reported in March 2013, under a continuing resolution (CR) agencies may have difficulty making long-term decisions due to uncertainty about, both, when they will receive their final appropriation, and what level of funding ultimately will be available. Agencies are directed to operate at a conservative rate of spending while CRs are in effect, thus compressing the time period to obligate funds once final appropriations decisions are made. State officials managing the D&CP account said that they will limit the obligation of funds until full-year appropriations are made. Officials said that higher obligation rates occur in the third and fourth quarters of the fiscal year as the agency obligates money for procurement purposes. On the other hand, obligations for salaries and personnel expenses remain relatively consistent across quarters. Depending on a number of factors, including the timing of appropriations for the rest of the year, agencies may not be able to obligate funds before the end of the fiscal year and so will carryover unobligated funds. For example, although Energy has a goal for its EERE account to obligate all funds in the first year of appropriations, in fiscal year 2014 it carried over unobligated balances of $408 million. Energy officials said that the majority of the unobligated balance resulted from delays in issuing funding opportunity announcements associated with EERE’s research and development programs in the areas of solar energy, bioenergy, advanced manufacturing, and water power. Officials said that they delayed the issuance of funding announcements during the 3-month continuing resolution of fiscal year 2014 following the government shutdown.", "According to guidance for the fiscal year 2013 sequestration, OMB recommended early budget planning to minimize the impact on essential activities tied to an agency’s mission. These activities include identifying opportunities for reprogramming or transferring funds (including unobligated balances and new budget authority), and reviewing grants and contracts for possible cost savings and reviewing reductions in personnel costs, such as hiring freezes.\nUnobligated balances that remain legally available from prior year appropriations could provide agencies with funding flexibility to respond to sequestration. Agency officials for four of the eight reviewed accounts— Energy’s EERE and WAPA CROM accounts, State’s D&CP account, and USPTO’s S&E account—reported using unobligated balances to mitigate the effects of sequestration in fiscal year 2013.\nUsing prior year unobligated funds, Energy officials managing the EERE account reported reprogramming approximately $80 million of the unobligated balances. Officials reported deobligating previously obligated amounts that had not yet been expended from various projects and activities. They then reobligated these amounts for other activities, such as the Weatherization Assistance Program, which funds weatherization of homes through grants to states, territories and some Native American lands.\nOfficials managing Energy’s WAPA CROM account reported using unobligated balances to mitigate the effects of sequestration by reprogramming approximately $4.7 million in funds within the account. Reductions based on sequestration resulted in lower than needed funds for construction projects related to WAPA’s delivery of cost- based federal hydroelectric power and related services across the western United States. As a result, officials said they reprogrammed approximately $4.7 million from the program direction portion of the account (which supports activities such as personnel salaries) to mitigate the effect of sequestration on the construction portion of the account.\nAt State officials reported that they reprogrammed $64 million in unobligated balances from non-Overseas Contingency Operation (OCO) Iraq funding within the non-OCO portion of the D&CP account to about 40 other activities within the account. These activities included personnel salaries and benefits, facility operating and maintenance costs, travel, and other operational requirements. They said this decision was made because there was a reduction of needs in Iraq due to lower than anticipated costs. This resulted in higher than necessary unobligated balances that could be better used for other activities. State officials said they notified OMB and Congress of this reprogramming.\nOfficials managing other accounts we reviewed—State’s INCLE, Energy’s DEC, and NASA’s Science accounts—reported that no unobligated balances were used to mitigate the effects of sequestration.\nFor example, for State’s INCLE account, officials reported that Foreign Assistance funds, including INCLE and other accounts, were not reprogrammed to mitigate the effects of sequestration to maintain fairness among the countries that receive assistance. As we previously reported, officials said it would be easier to explain to foreign partners that these cuts to programs and commitments were mandated by U.S. law, and that they were being applied equally.\nOfficials managing Energy’s DEC account reported that they reprogrammed funds from new budget authority for fiscal year 2013, and did not use unobligated balances from previous years. Unlike the other seven accounts we reviewed, the DEC account is categorized as a defense account with its unobligated balances subject to sequestration. Officials reported that $1 million was sequestered from fiscal year 2012 unobligated balances in the DEC account during the 2013 sequestration.\nThe funds in Commerce’s EDAP account were not subject to sequestration. Therefore, unobligated balances did not need to be used to mitigate its effects. As previously reported in our work on sequestration, the account’s funding was not sequestered in fiscal year 2013 due to a reduction in funding for the account.", "In the event of a government shutdown, OMB is responsible for ensuring agencies have taken the essential actions needed to manage the shutdown effectively. It does so by providing policy guidance and shutdown-related instructions. For example, OMB guidance to agencies for the October 2013 government shutdown permitted them to use unobligated funds to continue operations on activities.\nSix of the eight accounts we reviewed—State’s INCLE and D&CP, USPTO’s S&E, and Energy’s EERE, DEC and WAPA’s CROM accounts—used unobligated balances to fund activities during the October 2013 government shutdown. For these selected accounts, agency officials reported that having no-year or multi-year funds made it possible to continue to carry out agency missions, such as allowing WAPA to continue providing electrical energy to customers and USPTO to continue to review patent and trademark applications.\nOfficials at Energy reported that, in anticipation of the shutdown, agency officials reviewed program data to assess how much of the unobligated balances would be available for specific activities for the next fiscal year. This would allow the funds to be obligated during the shutdown to ensure operations could continue. This is consistent with our prior work on the government shutdown in which we reported that Energy reevaluated its budget priorities to have funds available to meet payroll and to help ensure that the highest priority activities, such as providing electrical power to customers, could continue during the shutdown.\nOfficials from USPTO’s S&E and WAPA’s CROM accounts described continuing normal activity for their business-like accounts. Both accounts receive either all or most of their funding from customer receipts. All appropriated funds for USPTO’s S&E account come from receipts, while approximately 90 percent of appropriated funds for CROM come from customer advances and receipts for services such as construction improvements and providing electrical energy to customers from federally owned dams and other infrastructure. For these accounts, agency officials reported that they were able to use unobligated balances to continue to operate and provide services directly to their customers during the shutdown.\nTwo of our reviewed accounts, NASA’s Science account and EDA’s EDAP account, did not use unobligated balances to continue to fund activities or operations. For example, EDA officials reported that account balances are specifically appropriated to support grant funding, and, therefore, could not fund salaries and expenses for EDA employees.", "Given the significant events during the last 2 years—sequestration and the government shutdown—and the potential for budget uncertainties in the future, effective management of unobligated balances is critical for agencies to ensure the most efficient use of resources and to effectively respond to budget uncertainties. Understanding the justification for or impact of unobligated balances requires a close look at individual accounts and agencies, and how they manage unobligated balances. We found that officials generally managed unobligated balances effectively by tracking balances, having a process to estimate balances, and identifying necessary balances to carryover each year to fulfill their missions. However, there are opportunities for improvement in the way agencies manage unobligated balances in two of the reviewed accounts. Specifically, agency officials managing Energy’s WAPA CROM account and State’s CBSP within the D&CP account are not taking sufficient steps to ensure that the accounts only carryover the necessary unobligated balances into the next year. Without proper management of unobligated balances, opportunities for budgetary savings or funding activities may be missed.", "To ensure effective use of federal funds and management of unobligated balances, the Secretary of Energy should direct WAPA’s Administrator and Chief Executive Officer to finalize and implement a strategy to reduce excess unobligated balances within the CROM account. Similarly, the Secretary of State should direct the Assistant Secretary of State for Consular Affairs to finalize Consular Affair’s strategy for the management of its unobligated balances, and to continue efforts to reduce excess unobligated balances allocated to CBSP in the D&CP account. For both the CROM and D&CP accounts, as appropriate, these strategies may include reprogramming or transferring funds to other activities, as allowed by appropriation law, reevaluating fees to ensure fee revenues match program needs, or reducing budget authority requests in future years.", "We provided a draft of this report to the Secretaries of Commerce, Energy, and State; and the Administrator of NASA for comment. Energy and State concurred with our recommendations and provided written comments that are reproduced in appendixes IV and V, respectively. In its letter, Energy said that it agrees with the need to avoid excess unobligated balances and reported that WAPA is finalizing a plan to better manage unobligated balances in the CROM account.\nAfter receiving the draft report, officials from State discussed our findings, conclusions, and recommendation with us and provided additional information on unobligated balances. Based on these discussions and information provided, we made minor revisions to the body of the report, including the recommendation, to reflect actions taken by Bureau of Consular Affairs officials to reduce unobligated balances. In its letter, while State concurred with the revised recommendation, officials noted that they disagreed with the use of the term “excess” to describe the unobligated balances in CBSP. State said it will continue efforts to better align unobligated balances and finalize the plan for CBSP to maintain balances at optimal levels. We maintain that the unobligated balances for CBSP are “excess” because they are above the agency’s own target of 25 percent of projected program expenditures for the next year. We received technical comments from Commerce, Energy, and State, which we have incorporated into the final draft where appropriate. NASA did not have any comments on the draft report.\nWe are sending copies of this report to the appropriate congressional committees; the Secretaries of Commerce, Energy, and State; the Administrator of NASA; and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact Susan J. Irving at (202) 512-6806 or irvings@gao.gov. Contact points for our Office of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix VII.", "Our objective was to evaluate how selected agencies managed and used unobligated balances in reviewed accounts, focusing on fiscal years 2012 through 2014, which covers the fiscal year 2013 sequestration and fiscal year 2014 government shutdown. In addition, we analyzed the size and composition of unexpended balances in the federal budget from fiscal years 2012 through 2014, and compared those balances to previously reported balances for fiscal years 2007 through 2012. To address this objective, we examined selected agencies’ management of unobligated balances in reviewed accounts both during fiscal years 2012 through 2014, and the current management of the reviewed accounts. We focused on unobligated balances because our prior work has shown that agencies used unobligated balances to offset reductions from the 2013 sequestration and the government shutdown. For this review, we selected a nongeneralizable sample of four agencies—the National Aeronautics and Space Administration (NASA) and the Departments of State (State), Commerce (Commerce) and Energy (Energy). To select these four agencies, we identified all budget accounts having unobligated balances in fiscal years 2012, 2013, or 2014 in the Office of Management and Budget (OMB) MAX database. We then reviewed the data for each of the 24 Chief Financial Officer Act agencies, as well as agency plans to use unobligated balances to offset sequestration, according to our previous work on the 2013 sequestration. We selected the four agencies based upon whether they had accounts with significant unobligated balances, as well as whether they used or were planning to use reprogramming of funds, transfers among accounts, and/or multi-year funding to mitigate the effects of sequestration.\nWithin the four selected agencies, we identified a nongeneralizable sample of eight accounts. To select the eight accounts, we reviewed OMB MAX data for every budget account in the four agencies for fiscal years 2012 through 2014. In 2013, the most recent end of year data available at that time of our initial selection, these four agencies had a total of 157 budget accounts. From these accounts, we selected eight accounts for in-depth review based on whether the agencies reprogrammed funds within accounts, transferred funds among accounts, and/or used multi-year funds to mitigate the effects of the 2013 sequestration. We also selected accounts that had particularly large unobligated balances or significant changes in unobligated balances during fiscal years 2012 through 2014. We selected only accounts with discretionary appropriations and split authority—a combination of discretionary appropriations and mandatory budget authority—and excluded mandatory accounts from our review to avoid duplication with our ongoing review of mandatory accounts. See table 4 for a list of accounts selected.\nTo evaluate how the selected agencies managed and used unobligated balances in the reviewed accounts, we reviewed agency budget reports and guidance, congressional budget justifications, and congressional notifications. We interviewed agency officials at the department (or agency), the bureau, and the account levels about account management policy and practice, especially with regard to unobligated balances, using the four key questions from our prior work as criteria. To analyze agency budget data from fiscal years 2012 through 2014, we asked agency officials to explain the size of the balances, any balance changes, how and whether balances were used to mitigate the effects of the 2013 sequestration and the government shutdown, discuss any expired funds, and whether any transfers or reprogramming occurred during this time. We discussed with agencies the four key questions described earlier from our prior work, including the mission and goals of programs supporting the accounts, sources and fiscal characteristics of the funding, factors that affect the size and composition of unobligated balances, and agency estimation and management of balances.\nTo describe unexpended balances—including unobligated balances—in appendix III, we analyzed data on government-wide unexpended balances across all federal budget accounts for fiscal years 2007 through 2014. For our analysis, we obtained government-wide data on obligated and unobligated balances. We queried OMB’s MAX database for data by account on obligated and unobligated balances, including budget function, and composition of the account (e.g., mandatory, discretionary, split), for fiscal years 2012 through 2014. We found the data to be sufficiently reliable for the purpose of our report. We also drew from data reported in our previous report on unexpended balances from fiscal years 2007 through 2012 to add context to the new analysis. Although we did not attempt to identify causal links, two significant events occurred during fiscal years 2013 through 2014—sequestration and the government shutdown—which may have affected unexpended balances, possibly causing agencies to use unobligated balances to mitigate effects of the budget events.\nWe conducted our review from December 2014 to October 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "In this appendix, we summarized how the selected agencies are managing and using unobligated balances in the eight reviewed accounts according to the four key questions from our prior work.\nWhat Mission and Goals Is the Account or Program Supporting?\nWhat are the Sources and Fiscal Characteristics of the Funding?\nWhat Factors Affect the Size or Composition of the Carryover Balance?\nHow Does the Agency Estimate and Manage Carryover Balances?\nWe also included analysis of the ways agencies used unobligated balances to mitigate the effects of the 2013 sequestration and government shutdown. Each template includes a graphic which shows the unobligated balance as a percentage of budgetary resources.", "Federal agencies reported unexpended balances—the sum of obligated and unobligated balances—in 1,358 of 1,493 active budget accounts from fiscal year 2012 through 2014. Total unexpended balances fluctuated from $2.23 trillion in fiscal year 2012 to $2.27 trillion in fiscal year 2014. This represents an overall increase of approximately $41 billion with a decrease in 2013. About 91 percent of active accounts carried unobligated balances with total unobligated balances increasing from $788 billion to $872 billion during this period.\nAs shown in figure 11, unobligated balances were more than one-third of total unexpended balances from fiscal year 2012 through 2014, which is generally consistent with data from fiscal years 2007 through 2011.", "Each budget account is assigned a category of spending—discretionary, mandatory, or split, which is a combination of both discretionary and mandatory. As shown in figure 12, mandatory accounts represent about 50 percent of total unobligated balances in fiscal years 2012 through 2014. From fiscal year 2009 through 2011 the share of unobligated balances in mandatory accounts was relatively stable at about 52 percent of total unobligated balances. This comes after a growth in the mandatory share of the balances from about 25 percent in fiscal year 2007 to about 47 percent in fiscal year 2008.\nThe percentage of unobligated balances in split accounts remained at about 32 percent in fiscal years 2012 through 2014, which has been generally consistent since 2010.\nFrom fiscal years 2012 through 2014, unobligated balances in discretionary accounts were between approximately 16 and 19 percent of all unobligated balances. As shown in figure 12, this has been the case since 2010, before which discretionary balances represented higher proportions of unobligated balances, including nearly 26 percent in fiscal year 2007.\nAs shown in table 5, the three mandatory accounts with the largest amount of unobligated balances in fiscal year 2014 were more than 12 times larger than the top three discretionary account balances.", "Each budget account appears in 1 of the 19 budget functions that best reflects its major purpose or important national need. These functions include income security, national defense, and transportation. Accounts under a particular budget function may support programs and activities at multiple agencies. For example, accounts that are categorized as within the “national defense” budget function may support activities at multiple agencies such as operations and maintenance at the Department of Defense, infrastructure protection at the Department of Homeland Security, and defense environmental cleanup at the Department of Energy.\nAs shown in figure 13, the majority of unobligated balances were in accounts classified under three budget functions: (1) commerce and housing credit, (2) international affairs, and (3) national defense. These three functions combined accounted for around 65 percent of unobligated balances in all budget accounts from fiscal years 2012 through 2014. This is consistent with data from fiscal years 2008 through 2011.", "From fiscal years 2012 through 2014 and consistent with earlier years, the majority of unobligated balances were in eight agencies: Departments of Defense, Health and Human Services, Housing and Urban Development, State, Transportation, and the Treasury, and the Office of Personnel Management and the Federal Deposit Insurance Corporation (see figure 14). These eight agencies had between 81 and 83 percent of unobligated balances across all budget accounts from fiscal years 2012 through 2014—approximately the same percentages since 2008. From 2008 through 2014, the agencies combined together in the “all other” category represented between 16 percent and 20 percent of all unobligated balances.", "", "", "Apportionment: The action by which the Office of Management and Budget distributes amounts available for obligation, including budgetary reserves established pursuant to law, in an appropriation or fund account. An apportionment divides amounts available for obligation by specific time periods (usually quarters), activities, projects, objects, or a combination thereof. The amounts so apportioned limit the amount of obligations that may be incurred. An apportionment may be further subdivided by an agency into allotments, suballotments, and allocations.\nAppropriation: Budget authority to incur obligations and to make payments from the Treasury for specified purposes. An appropriation act is the most common means of providing appropriations; however, authorizing and other legislation itself may provide appropriations.\nAvailability: Budget authority that is available for incurring new obligations.\nBudget authority: Authority provided by federal law to enter into financial obligations that will result in immediate or future outlays involving federal government funds.\nBudget function: The functional classification system is a way of grouping budgetary resources so that all budget authority and outlays of on-budget and off-budget federal entities and tax expenditures can be presented according to the national needs being addressed. National needs are grouped in 17 broad areas to provide a coherent and comprehensive basis for analyzing and understanding the budget.\nDiscretionary spending: Budget authority that is provided in and controlled by appropriation acts other than those that fund mandatory programs.\nExpenditure: The actual spending of money; an outlay.\nExpired budget authority: Budget authority that is no longer available to incur new obligations but is available for an additional 5 fiscal years for disbursement of obligations properly incurred during the budget authority’s period of availability. Unobligated balances of expired budget authority remain available for 5 years to cover legitimate obligation adjustments, or for obligations properly incurred during the budget authority’s period of availability that the agency failed to record.\nObligated balance: The amount of obligations already incurred for which payment has not yet been made.\nObligation: A definite commitment that creates a legal liability of the government for the payment of goods and services ordered or received, or a legal duty that could mature into a legal liability by virtue of actions on the part of the other party beyond the control of the United States. For example, an agency incurs an obligation when it places an order, signs a contract, awards a grant, or purchases a service.\nMandatory (or direct) spending: Budget authority that is provided in laws other than appropriation acts and the outlays that result from such budget authority. Mandatory spending includes entitlement authority (for example, the Food Stamp, Medicare, and veterans’ pension programs), payment of interest on the public debt, and nonentitlements such as payments to states from Forest Service receipts.\nMulti-year funds: Budget authority available for a fixed period of time in excess of 1 fiscal year. This authority generally takes the form of 2-year, 3-year, and so forth availability, but may cover periods that do not coincide with the start or end of a fiscal year.\nNo-year funds: Budget authority that remains available for obligation for an indefinite period of time.\nReappropriation: Legislation permitting an agency to obligate, whether for the same or different purposes, all or part of the unobligated portion of budget authority that has expired or would otherwise expire if not reappropriated.\nReprogramming: Shifting funds within an appropriation or fund account to use them for purposes other than those contemplated at the time of appropriation; it is the shifting of funds from one object class to another within an appropriation or from one program activity to another.\nRescission: Legislation enacted by Congress that cancels the availability of budget authority previously enacted before the authority would otherwise expire.\nSpendout rate: The rate at which budget authority becomes outlays in a fiscal year.\nTransfer: Shifting of all or part of the budget authority in one appropriation or fund account to another. Agencies may transfer budget authority only as specifically authorized by law.\nUnexpended balance: The sum of obligated and unobligated balances.\nUnobligated balance: The portion of obligational authority that has not yet been obligated. For an appropriation account that is available for a fixed period, the budget authority expires after the period of availability ends. However, its unobligated balance remains available for 5 additional fiscal years for recording and adjusting obligations properly chargeable to the appropriations period of availability. For example, an expired, unobligated balance remains available until the account is closed to record previously unrecorded obligations, or to make upward adjustments in previously under recorded obligations (such as contract modifications properly within scope of the original contract). At the end of the fifth fiscal year, the account is closed and any remaining balance is canceled. For a no-year account, the unobligated balance is carried forward indefinitely until (1) specifically rescinded by law, or (2) the head of the agency concerned (or the President) determines that the purposes for which the appropriation was made have been carried out, and disbursements have not been made from the appropriation for 2 consecutive years.", "", "Susan J. Irving, (202) 512-6806 or irvings@gao.gov.", "In addition to the contact named above, Janice Latimer, Assistant Director; Mary C. Diop; Steve Berke; and Shelby Kain made major contributions to this report. Also contributing to this report were Shari Brewster, Deirdre Duffy, John Mingus Jr., Robert Robinson, and Cynthia Saunders. In addition, the following individuals provided programmatic and subject matter expertise: Johana Ayers, Allison Bawden, Carol Henn, Jon Ludwigson, Christine Kehr, Farahnaaz Khakoo, Thomas James, Judith McCloskey, Leah Q. Nash, Shelby Oakley, Michelle Sager, Robert Sanchez, Roger Stoltz, and Matthew Ullengren." ], "depth": [ 1, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 2, 1, 1, 1, 1, 1, 2, 2, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "h0_title h1_title", "h1_title", "h1_full", "", "", "", "h0_full h1_title", "", "h0_full", "h1_full", "", "", "", "", "", "", "h2_full", "", "", "", "", "", "", "", "h1_full", "", "", "" ] }

{ "question": [ "According to officials, what did agencies track?", "Why is tracking the year of appropriation important?", "What did officials find when tracking these accounts?", "What is an example of such special authority?", "What need did officials identify as important for sustaining agency operations?", "How was this demonstrated by officials managing WAPA's CROM account?", "What steps have WAPA officials taken to manage excess balances?", "How was this demonstrated by officials managing State's D&CP account?", "What steps have D&CP officials taken to manage excess balances?", "What did the 2013 sequestration and government shutdown highlight?", "Why is effective management of balances important?", "What does this report evaluate?" ], "summary": [ "Officials reported that agencies tracked the year of appropriation for the five reviewed accounts that receive multi-year budget authority.", "This action is important to help ensure that the agency obligates the authority in the order appropriated to maximize resources.", "All five accounts had balances that expired during fiscal years 2012 through 2014; however, there can be various reasons for an agency to not obligate funds late in the fiscal year, and in some cases, special authority expands the use of certain budget authority.", "For example, for State's Diplomatic and Consular Programs (D&CP) and International Narcotics Control and Law Enforcement accounts, State has the authority to use expired funds beyond their initial period of availability for specific purposes and to extend the availability of certain funds.", "Officials managing three of the eight reviewed accounts identified a need to retain unobligated balances to sustain agency operations and manage financial risk.", "For example, officials responsible for managing Energy's Western Area Power Administration (WAPA) Construction, Rehabilitation, Operation and Maintenance (CROM) account said that two of the account's four use categories have a target to carryover equal to or up to 25 percent of funds against unexpected environmental factors that could introduce financial risk to their mission of marketing hydroelectric power. However, in fiscal year 2014, the balance for one category exceeded its target by approximately $40 million.", "WAPA officials reported that they have drafted a strategy to manage excess balances, but the strategy has not been fully implemented.", "Similarly, in fiscal year 2014, within State's D&CP account, officials reported exceeding the target to carryover about 25 percent of projected program expenditures for the next year to manage complex global visa and passport operations for the Consular and Border Security Programs (CBSP) by approximately $440 million.", "State officials said that they have developed a draft strategy for reducing excess unobligated balances. Officials said that they plan to finalize the strategy by June 2016. In the meantime, they reported taking steps to reduce unobligated balances for CBSP. These steps include decreasing fees or delaying fee increases when unobligated balances were adequate to cover costs.", "Both the 2013 sequestration and government shutdown highlighted the importance of actively managing public funds.", "Effective management of unobligated balances that are carried over for use in the next fiscal year presents agencies with an opportunity to better respond to unexpected events in the future. GAO was asked to review how balances have changed since 2012.", "This report evaluates how selected agencies managed and used unobligated balances in reviewed accounts, focusing on fiscal years 2012 through 2014, which covers the 2013 sequestration and shutdown." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, 1, 0, 3, -1, 0, -1 ], "summary_paragraph_index": [ 4, 4, 4, 4, 5, 5, 5, 5, 5, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "U.S. Natural Gas Market Trends", "U.S. Natural Gas Exports to Date", "Pipeline Exports Increase", "LNG Activity on the Move", "LNG Re-Exports: A Temporary Fix", "Exports of Domestically Produced Natural Gas as LNG", "Alaska LNG Project", "Trade: Agreements or Disagreements?", "The Global LNG Market", "Federal Approvals Required for LNG Exports", "Overview of Approvals Required Under the NGA", "Summary of DOE Public Interest Evaluation Process", "Reports Informing DOE's Public Interest Evaluation", "NEPA and Other Federal Requirements Applicable to LNG Exports", "DOE Permit Application Order of Precedence", "New Sources of Natural Gas", "Projected Future Growth", "Natural Gas Liquids: A Production Driver", "Congressional Actions and Considerations", "Issues and Interests" ], "paragraphs": [ "", "The United States has exported natural gas for close to 100 years, but has generally exported less natural gas than it has imported. U.S. gas exports have been primarily via pipeline to Mexico and eastern Canada. Historically, the United States has also exported liquefied natural gas (LNG) from Alaska—almost exclusively to Japan—but the volumes of those shipments have been relatively small and Alaska's natural gas market has been isolated from the rest of the United States. Natural gas companies are now considering exporting greater quantities of U.S. LNG by tanker ship to a number of other countries. Increased development of U.S. natural gas resources—primarily shale gas—along with low domestic prices and idle LNG import infrastructure, have driven the change in the U.S. position.\nWithin the next several years, the United States may become a much larger natural gas exporter, particularly in the form of LNG. However, natural gas exports from the United States require federal approval pursuant to Section 3 of the Natural Gas Act (NGA, 15 U.S.C. §717b). The Department of Energy's (DOE's) Office of Fossil Energy and the Federal Energy Regulatory Commission (FERC) must authorize the export of the commodity and related facilities, respectively. This overarching federal role in the expansion of U.S. natural gas exports has been the subject of ongoing oversight and debate in Congress.\nThe prospect of the United States supplying a global market with large quantities of LNG from the lower-48 states raises concerns in Congress, particularly about a potential rise in what consumers pay for natural gas and effects on the economy. Developers of natural gas export projects and natural gas producers argue that domestic gas prices will not rise significantly if U.S. natural gas exports increase because the United States has ample gas resources to meet both export and domestic demand. They argue that any domestic gas price increases due to exports would be more than offset by benefits from the increased gas production, such as higher employment and an improved trade balance. DOE has used the results of several studies it commissioned about the impact on domestic natural gas prices of exports and the effect on the U.S. economy to justify the approval of LNG export proposals. However, some stakeholders disagree with the agency's conclusions.\nU.S. natural gas prices are lower than those in other international markets, partly because of the nature of the natural gas resources and partly due to competition in the U.S. market. Nevertheless, natural gas prices within the United States vary by region because of transportation limitations, access to supplies, and differences in demand. As new volumes of shale gas are developed, these supplies seek markets where little or no natural gas production has existed before. Over time, the U.S. natural gas market is reconfiguring itself to balance supply and demand regionally and nationally. But getting new natural gas supplies to market may be an ongoing challenge for the industry, whether within the United States or abroad. Infrastructure constraints, such as limited pipeline capacity, environmental regulations, and other regulatory requirements will play a part in how the natural gas market adjusts. Exports of natural gas either by pipeline or as LNG will be a factor as the market seeks balance, especially on a regional basis. Hence the potential export of more U.S. natural gas may have economic effects that vary significantly from region to region, and regional impacts may diverge from impacts on the nation as a whole. (For an illustration of regional natural gas price differentials in the lower-48 states, see Appendix B ).\nOther issues have also been raised regarding natural gas exports. Environmental groups are divided on the desirability of greater use of natural gas at home and abroad. Advocates see it as reducing emissions compared to other hydrocarbons, especially coal, whereas opponents point out that natural gas still emits carbon dioxide and other pollutants. Concerns about contamination of water supplies during gas production have been raised because of hydraulic fracturing (\"fracking\")—which uses water, sand, and chemicals to create fissures in shale, allowing the trapped natural gas to be cost-effectively extracted. Other groups want to see greater use of natural gas in the U.S. economy for economic and national security concerns before it is exported overseas.\nThe prospect of growing U.S. natural gas exports, particularly LNG, continues to be a factor as Congress debates the economy, energy independence, climate change, and energy security. Bills to expedite and expand LNG exports have been introduced in the 114 th Congress, including the LNG Permitting Certainty and Transparency Act ( H.R. 351 and S. 33 ), the American Job Creation and Strategic Alliances LNG Act ( H.R. 287 ), the Crude Oil Export Act ( H.R. 156 ), the Domestic Prosperity and Global Freedom Act ( H.R. 89 ), and the Export American Natural Gas Act of 2015 ( H.R. 428 ). This report examines what has changed in the U.S. natural gas market and the prospects and implications of the United States becoming a larger net exporter of natural gas.", "Heading into the 2000s, the United States was expected to be a growing importer of natural gas because domestic gas production was declining and demand was rising ( Figure 1 ). The U.S. Energy Information Administration (EIA) in its 1999 Annual Energy Outlook forecasted that net natural gas imports between 1997 and 2020 would grow from 12.9% of consumption to 15.5%, based on consumption growing faster than production. To accommodate the potential increase in imports, five new LNG import terminals were built by industry in the latter half of the 2000s, and some existing LNG import facilities were re-commissioned and expanded. The United States currently has LNG import capacity of almost 14 billion cubic feet per day (bcfd) or over 5 trillion cubic feet (Tcf) per year. However, higher domestic production has made imports largely unnecessary, leaving existing import capacity mostly idle. In its Annual Energy Outlook 201 4 , EIA projects that the United States will be an overall net natural gas exporter by around 2016, when U.S. production exceeds domestic consumption ( Figure 1 ).\nThe abundance of new domestic natural gas supplies shifted industry interest from building LNG import terminals to constructing LNG export terminals. As of the beginning of January 2015, there have been 48 applications for permits either to construct liquefaction facilities at existing LNG import terminals (also known as regasification facilities) or for new LNG export facilities, in order to export domestically produced natural gas as LNG. The total capacity proposed is approximately 42 bcfd. In addition, companies have active permits to re-export LNG cargos from existing import terminals, which involves taking in foreign LNG cargos, holding them in storage, and then reloading them onto LNG tankers for shipment to foreign markets. Increased pipeline exports to Canada and Mexico may also continue to rise if their domestic demand continues to increase.\nLow U.S. natural gas prices (especially in the Gulf of Mexico) relative to other international markets have spurred interest in exporting U.S. produced natural gas ( Figure 2 ). What effect exporting natural gas will have on U.S. prices and the overall U.S. economy are central questions in the debate over whether to export. DOE has commissioned several studies as part of its evaluation of whether LNG exports to non-free-trade-agreement (non-FTA) countries are in the public interest, further discussed later in this report.\nLower U.S. natural gas prices since 2008 along with a large and growing resource base have also prompted calls for greater use of natural gas in the nation's overall fuel mix. Natural gas comprised about 27% of U.S. primary energy consumption last year and has averaged approximately 24% per year since 1973. Instead of exporting U.S. natural gas, some say, the United States should increase 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. Some transition to natural gas is already occurring, particularly in the electric power sector. However, the EIA's annual average projected prices to 2040 (which assume no changes in U.S. policy) never reach the price peaks of the latter 2000s ( Figure 3 ).", "Total U.S. natural gas exports are relatively small but have grown since 1999, increasing more than 15-fold through 2012 ( Figure 4 ). The United States has been exporting natural gas since at least the 1930s, primarily to Canada and Mexico. In 2013, over 99% of exports were by pipeline to these two countries. Starting in 1969, a small amount of natural gas was also exported as LNG to Japan via the Kenai LNG terminal in Alaska. Kenai LNG operated continuously from its opening until its temporary idling in 2012. In April 2014, the facility's owner announced that it would reopen the Kenai LNG terminal because the local area gas supply forecast had increased, providing a renewed opportunity to export Alaskan natural gas production in excess of local demand. It remains the only completed LNG export facility in North America although it is currently not shipping any LNG.\nIn 2010, the United States, through DOE's Office of Fossil Energy, allowed LNG import terminals to re-export foreign-sourced LNG to international markets. LNG volumes that are re-exported from the United States after being imported from third countries are not treated the same way as exports of domestically produced natural gas for the purposes of federal regulation. LNG re-export volumes are small, but have exceeded U.S. LNG export volumes in recent years due to the steady decline of LNG exports since 2005 ( Figure 4 ).\nGrowing U.S. natural gas production, primarily from shale gas, has decreased the demand for both pipeline imports and LNG imports, leaving the import terminals mostly idle. Although most of the applications for LNG exports would build new facilities, the projects considered most viable are those that add liquefaction to existing import terminals. In some cases companies that have partnered in a facility have both applied for licenses, but the volumes are only included once in DOE's data.", "Natural gas exports by pipeline have risen since 1999, increasing over 15 times through 2013 and accounting for over 99% of total natural gas exports that year. Canada and Mexico, both free trade partners, are the only recipients of U.S. natural gas exports by pipeline. As countries with which the United States has free trade agreements (FTAs), exports of natural gas to both are assumed to be in the national interest by statute, thereby expediting the approval process for projects. The St. Clair, MI, transit point to Canada and the Roma, TX, transit point to Mexico are the busiest for U.S. natural gas exports ( Appendix A ).\nGross exports to Canada and Mexico have both increased since 1999, growing 24-fold and 10-fold, respectively. Facilitated by the 1994 North American Free Trade Agreement, new cross border natural gas pipelines have expedited this trade. However, Canadian natural gas production has declined almost 17% since peaking in 2002, but still remains above the level of Canadian consumption. Some of Canada's \"imports\" of natural gas from the United States are actually from gas produced in Canada's western provinces, imported into the United States, and re-exported to Canada's eastern provinces. This is a cost-effective way to transport the natural gas given pipeline constraints within Canada. Mexican natural gas consumption has increased about 80% since 2002, growing more than Mexico's production.", "As stated above, U.S. LNG exports began in 1969 with the opening of the Kenai LNG export terminal in Alaska. While this facility was the only U.S. LNG export terminal for several decades, numerous new LNG export projects have been advancing in the United States.", "As stated above, some U.S. LNG exporters try to take advantage of the idle U.S. import terminals to store foreign-sourced LNG and wait for higher world prices. This trend almost doubled U.S. LNG exports to other countries, including new recipients such as Brazil, India, Spain, and the United Kingdom. Using these idled LNG facilities for re-export helps maintain their operating capabilities in light of significantly decreased use to import LNG. Currently, seven companies have received permission to re-export LNG cargos from foreign countries with four applications pending. In order to re-export LNG, minimal or no additional equipment may need to be added to an import terminal. As mentioned above, DOE's Office of Fossil Energy must approve the change as does FERC.", "There have been 48 applications for permits to export domestically produced natural gas as LNG, with a cumulative capacity of almost 15,330 billion cubic feet (bcf) per year or almost 63% of current U.S. production ( Table 1 ). Eight of these liquefaction projects plan to adapt an existing LNG import terminal for export, which would require construction of liquefaction facilities at the import terminals, a major financial investment in the range of $6 billion to $10 billion per terminal, mostly depending on capacity. The other projects would construct new LNG export terminals, costing in the range of $20 billion each. Almost all the projects have received approval to export to free trade countries, but only the Sabine Pass Liquefaction (first application), Freeport LNG Expansion, Cameron LNG, and Carib Energy projects have received DOE final approval to export U.S. produced natural gas to non-FTA countries. Of the FTA countries, only Canada, Chile, Dominican Republic, Mexico, and South Korea have existing LNG import terminals. South Korea is the second-largest importer of LNG globally.\nThe modification or expansion of existing LNG terminals to incorporate liquefaction equipment, storage tanks, compressors, piping, and other equipment, requires authorization from FERC. Depending on the nature of individual facility modifications, compliance with additional state or federal statutory or regulatory requirements may also be required. For example, facility modifications would be subject to environmental review under the National Environmental Policy Act (NEPA). Potential regulatory requirements are discussed later in this report.", "As stated earlier, Alaska represents a distinct natural gas market with substantial natural gas resources. The U.S. Geological Survey (USGS) has estimated that conventional natural gas reserves on Alaska's North Slope potentially exceed 200 trillion cubic feet (Tcf), over eight times the total annual gas consumption of the United States. Alaskan officials and North Slope producers have been pursuing a proposal to construct a pipeline from the North Slope to Nikiski, on the Kenai Peninsula, where a new LNG terminal would be constructed for LNG export. The project—Alaska LNG Project L.L.C. (Alaska LNG)—would consist of a gas treatment plant on the North Slope, an 800-mile pipeline, and a new LNG liquefaction plant and marine terminal at a total project cost estimated between $45 billion and $65 billion.\nOn July 18, 2014, Alaska LNG's sponsors applied to the DOE for authorization to export approximately 929 billion cubic feet of LNG annually to both FTA and non-FTA countries over a 30-year term (beginning no later than 12 years after authorization is granted). In submitting its application, Alaska LNG requested expedited review and exemption from new procedures under DOE's current Order of Precedence administrative queue on the grounds that the project's gas reserves were \"more than sufficient\" to serve local demand as well as exports and were \"geographically isolated from the lower-48 states.\" Energy Secretary Moniz reportedly agreed to \"treat Alaska differently\" from the other export applications because export of natural gas from Alaska would not affect markets in the lower-48 states and, therefore, the \"public interest is not an issue\" for the DOE. On September 5, 2014, Alaska LNG submitted a request to FERC to commence the commission's pre-filing process in preparation for filing an application for the facility authorization.", "Most companies seeking permits to export LNG have applied to export LNG to countries with which the United States does not have a free trade agreement (FTA) in addition to those with which the United States does have an FTA. As mentioned above, exports to FTA countries are presumptively considered \"in the public interest\" under the Natural Gas Act, as amended. Of the 38.07 bcfd non-FTA applications, 5.74 bcfd have received final approval from DOE. As noted above, South Korea is the only major importer of LNG of the countries with which the United States has a free trade agreement. Of the other FTA countries, four have LNG import terminals, while the rest 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.\nThe United States is in negotiations on two multi-nation free trade agreements: the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). Both these agreements would give the signatories free trade status when it comes to U.S. natural gas exports. TPP includes Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Japan is the largest LNG importer in the world and would add significantly to potential markets for U.S. LNG exports. Of the four U.S. LNG export projects that have received approval to export to non-FTA countries, Japanese companies have signed contracts with two of the projects directly and one indirectly. Japan was a late participant in the TPP process; one of its motivations for joining was access to U.S. LNG exports. TTIP is a proposed agreement between the United States and the European Union. Among other negotiating objectives, the EU is seeking to gain access to U.S. LNG through a comprehensive energy chapter in the TTIP, to lessen its dependence on Russian and other sources of natural gas and to increase purchasing options or a stronger position in price negotiations.\nThe prospect of the United States limiting or restricting LNG exports has raised questions, particularly as a member of the World Trade Organization (WTO). The General Agreement on Tariffs and Trade's (GATT's) Article XI, General Prohibition Against Quantitative Restraints, states:\nNo 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.\nThere 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 earths and other metals. The position of the United States as a promoter of free trade may also be challenged.\nNatural gas imports and exports comprise a small fraction of overall U.S. international trade, totaling about $25.7 billion in 2013, with a little more than half of the value coming from imports. While the United States was a net importer of natural gas of almost $8 billion in 2012, U.S. net imports were only about $650 million in 2015. LNG imports and exports accounted for 5% of total trade in petroleum gases and gaseous hydrocarbons (HTS2711) in 2013. Since 2000, the value of HTS 2711 exports has averaged almost $6.1 billion per year while imports averaged $24.9 billion.", "If all the proposed U.S. LNG export projects were operational today, the United States would rank first in the world, by far, for global export capacity. However, 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 50% by 2020 ( Figure 5 ), including only one of the U.S. projects. Many non-U.S. projects are much further along than the U.S. projects. In 2013 LNG trade accounted for 31% of all natural gas traded internationally.\nMost LNG sold in the 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 natural gas market-based, which can give U.S. LNG export projects an advantage because the differential with oil-indexed natural gas prices can be large compared to the U.S. price ( Figure 2 ). 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. Several recent LNG supply contracts with proposed U.S. exporters are of this type. However, recent declines in global oil prices have reduced the oil-indexed versus gas-indexed price differential. Furthermore, U.S. LNG export contracts will still need to be long-term (usually 20 or longer) to obtain financing. For some facilities, this may be a difficult hurdle to overcome given market and financial conditions and recent price volatility. Providing LNG to countries that use oil for heating, industrial processes, or electricity generation could also decrease demand for petroleum products, putting further downward pressure on oil prices.\nThe dip in 2012 in Figure 5 is due to major declines in Algeria, Trinidad & Tobago, Oman, and Indonesia. Algeria's two export terminals have been undergoing maintenance and one is being rebuilt. Trinidad & Tobago's decline is mostly because the United States is no longer a big importer of LNG. Egypt and Libya declined because of the turmoil in those countries.\nMany 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, scheduled to be completed in 2015, would contribute to U.S. competitiveness in Asia. Europe has a lot of LNG import capacity and growing demand, but needs to continue to improve its infrastructure connections to transport gas to markets. Russia, the main supplier of natural gas to Europe, 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.", "", "Pursuant to Section 3(a) of the Natural Gas Act, 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. Pursuant to Section 3(e) of the NGA, the siting, construction, expansion, or operation of an LNG export terminal, onshore or in state waters, requires approval from FERC. Depending on the details of the commodity export or terminal facility, compliance with requirements established under additional state, tribal, or federal law may also apply to the project.\nLNG permit approvals from DOE and FERC are federal actions subject to environmental review under the National Environmental Policy Act (NEPA, 42 U.S.C. 4321 et seq .). For DOE, this means that, before it can decide whether to approve a request to export natural gas, it must complete its public interest evaluation of the export, to ensure compliance with the NGA, and its review of the environmental impacts of the export, to ensure compliance with NEPA. If an application to DOE to export LNG requires a separate approval from FERC, DOE does not prepare a separate environmental review under NEPA. Instead, DOE has chosen to adopt FERC's review of environmental impacts related to the LNG export terminal.", "The NGA does not detail what DOE must evaluate to make a public interest determination. According to DOE, its primary public interest evaluation is on the domestic need for natural gas that is proposed to be exported, but may consider any other issues determined to be appropriate. Those other factors may include U.S. energy security, economic impacts (e.g., domestic natural gas prices), and environmental considerations, among others. Generally, the administrative process for reviewing applications to export natural gas includes the following steps:\nAn entity submits an application to DOE with information regarding the proposed export; After ensuring it has all necessary information about the project, DOE publishes a notice in the Federal Register inviting public participation and comment on the proposed project; DOE and, typically, the applicant respond to comments or protests; DOE considers any other relevant information included in the administrative record and issues a final opinion and order on the application, attaching any necessary conditions it determines are needed to ensure the project is in the public interest.\nIn addition to public comments and protests and responses to those comments and protests, the administrative record for any given request for export authorization will include, among other information, the necessary NEPA documentation (see discussion in \" NEPA and Other Federal Requirements Applicable to LNG Exports \") and reports prepared by or for DOE that evaluate issues that are broadly applicable to the export of natural gas (see discussion in \" Reports Informing DOE's Public Interest Evaluation \").", "The administrative record for a given request to export LNG includes certain reports that DOE will use to inform its decision related to natural gas exports. In particular, as part of its process in determining whether LNG exports to non-FTA countries are \"not consistent with the public interest,\" DOE's Office of Fossil Energy has commissioned three studies: (1) a domestic price impact study by EIA and released in January 2012; (2) an economic impact study by NERA Economic Consulting (NERA) and released in December 2012; and (3) another domestic price impact study by EIA and released October 2014.\nBoth the first EIA price analysis and the subsequent NERA economic study were criticized. When EIA released its 2012 price analysis study, the scenarios it examined per DOE's request were viewed as unrealistic. The high export scenario EIA examined was for 12 bcf/d, which is now well below the cumulative volumes for which companies have applied to DOE. According to EIA's analysis, the range of increases to domestic prices was 9.6% to 32.5%. Proponents of exports emphasized the former figure, while opponents focused on the latter. The basic conclusion of the 2012 NERA study was that LNG exports would benefit the overall U.S. economy. The study acknowledged that there would be parts of the economy that would be hurt by LNG exports, mainly large consumers of natural gas, but that on a net basis the U.S. economy would be better off in all export cases. The net benefits would be highest if the United States could produce large quantities of low cost shale gas and global demand for natural gas increases rapidly. Criticism of the NERA report from some Members of Congress focused on the narrowness of its results, the use of outdated data, and incomplete market information, among other things. Both reports left enough latitude in their results for supporters and opponents of exports to promote their opinions.\nThe overall conclusions of EIA's 2014 price study were generally in line with those of the two prior studies from 2012. Among its specific findings were the following:\nIncreased LNG exports in the scenarios considered lead to projected average natural gas prices in the lower-48 states 4% (12 bcfd scenario) to 11% (20 bcfd scenario) higher than their base projection over the 2015-2040 period. Natural gas markets in the United States balance in response to increased LNG exports mainly through increased natural gas production. Supply from higher domestic production is augmented by reductions in natural gas use by domestic end-users, who respond to higher domestic natural gas prices. Increased LNG exports result in higher total primary energy use and energy-related CO 2 emissions in the United States. Consumer expenditures for natural gas and electricity increase modestly with added LNG exports. Added U.S. LNG exports, and associated investment, result in higher levels of real gross domestic product (GDP), which more than offsets the adverse impact of somewhat higher energy prices when the export scenarios are applied.\nLike the earlier studies, however, some opponents have focused on the higher ranges of the projected price impacts in the EIA's 2014 study, or have been critical of its methodology.\nCriticism of the DOE's studies is open to debate. For example, in its conditional approval to export to non-FTA countries for the Cove Point LNG terminal, DOE defended its data use from EIA's Annual Energy Outlook 2011 due to timing, but also noted that critics often cite the subsequent rise in demand projected in EIA's Annual Energy Outlook 2012 and the Early Release data from EIA's Annual Energy Outlook 2013 while neglecting to highlight the corresponding rise in domestic production. These studies are predicated upon a predetermined a set of parameters (e.g., volumes of LNG exported) to examine and asked for the impact on the overall U.S. economy.\nA full analysis of the NERA and EIA studies, as well as the myriad of other studies that have also been undertaken by other groups, is beyond the scope of this report. It is important to remember, however, that these price studies are just one part of DOE's criteria for determining whether LNG exports to non-FTA countries are or are not in the public interest. In its approval of Cheniere Energy's non-FTA permit, DOE listed other criteria it used to make that determination: domestic need, adequacy of supply, the environment, geopolitics, and energy security. DOE has also provided insights into the \"public interest\" evaluation in a set of Policy Guidelines issued in 1984, Order No. 1471, and Delegation Order No. 0204-111. These were mostly to assess imports, but DOE has held that they also apply to exports.", "NEPA requires federal agencies to identify and consider the environmental impacts of an action and to inform the public of those impacts before a final agency decision is made. To demonstrate compliance with NEPA, a federal agency must prepare an environmental impact statement (EIS) if a 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 its regulations implementing NEPA, DOE identifies the types of projects that it is authorized to approve and the level of review generally required for those actions. With regard to actions it is authorized to approve under Section 3 of the NGA, DOE identifies—\na ctions that require an EIS to include export approvals 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 to include export approvals that would require minor new construction (e.g., adding new connections to an existing LNG pipeline); a ctions approved as a CE to include export approvals that would require minor operational changes (e.g., changes in natural gas throughput or storage operations), but not new construction.\nIt would appear that DOE's determination of whether or not an LNG export approval would result in significant impacts on the environment is largely dependent on factors related to an export terminal (i.e., actions subject to FERC approval). To date, FERC's evaluation of impacts related to export terminals has involved the preparation of an EA/FONSI or EIS. As required under NEPA, FERC serves as the lead agency responsible for preparing those documents and DOE serves as a \"cooperating agency.\" Once completed by FERC, DOE adopted FERC's final EIS or EA/FONSI to serve as its own NEPA document. However, DOE has also issued the following environmental reports that address issues more broadly related to LNG exports:\nAddendum to Environmental Review Documents Concerning Exports of Natural Gas From the United States ; and Life Cycle Greenhouse Gas Perspective on Exporting Liquefied Natural Gas from the United States .\nEach report has been and will be included as part of the public record for requests to export LNG. With regard to the first report, DOE stated that it was prepared to evaluate the environmental impacts associated with natural gas exploration and development. DOE did so to be responsive to concerns raised by the public, but asserted that it was not required to do so to comply with NEPA. DOE stated that the purpose of the second report is to provide additional information to both the public and to DOE to inform its decisions regarding the life cycle greenhouse gas (GHG) emissions of U.S. LNG exports for use in electric power generation.\nGenerally, within the context of identifying potential environmental impacts of an action, under NEPA, a federal agency identifies any environmental compliance requirements that would apply to the project as a result of those impacts. Compliance may require FERC or DOE to obtain some level of input, analysis, or approval from another federal agency, or possibly a tribal or state agency, before a final decision on the application is made. For example, the following are federal statutes that often apply to the construction or expansion of LNG export terminals and the agencies that may be required to evaluate and/or approve some element of the project:\nClean Water Act—the U.S. Army Corps of Engineers, the Environmental Protection Agency (EPA), the U.S. Coast Guard, and state environmental protection agencies; Clean Air Act—EPA and state environmental protection agencies; Endangered Species Act—the Department of the Interior's U.S. Fish and Wildlife Service, the National Oceanic and Atmospheric Administration Fisheries Service, and state natural resource agencies; National Historic Preservation Act—the Advisory Council on Historic Preservation, the State Historic Preservation Officer, or Tribal Historic Preservation Officer; and Rivers and Harbors Act—the U.S. Coast Guard.\nIn addition to meeting applicable environmental requirements, a project may be subject to safety or security-related requirements implemented by agencies including, but not limited to:\nThe Department of Homeland Security's U.S. Coast Guard and Department of Transportation's Office of Pipeline Safety (OPS) within the Pipeline and Hazardous Materials Safety Administration (PHMSA); National Fire Protection Association (NFPA); and Federal Emergency Management Agency (FEMA).\nFor additional information on siting a liquefied natural gas terminal see CRS Report RL32205, Liquefied Natural Gas (LNG) Import Terminals: Siting, Safety, and Regulation , by [author name scrubbed] and [author name scrubbed].", "DOE has not laid out a specific timetable for when it will process pending LNG export applications. Prior to August 15, 2014, the department followed an export approval process involving \"conditional\" approvals for commodity exports prior to FERC's issuance of terminal facility authorization. At any point before issuing a final order to authorize an applicant's request to export natural gas, DOE may issue a conditional authorization/approval to that applicant. Conditional decisions to approve natural gas exports were issued after completion of the public notice and comment process, but before completion of DOE's NEPA review (i.e., adoption of FERC's NEPA document). When it issued such an approval, DOE stated that it considered all factors relating to the public interest, other than environmental factors, and that it would reconsider all relevant issues associated with the conditional approval once the required NEPA documentation is complete. Under this scheme, DOE processed LNG export applications in the following order of precedence:\n1. All pending DOE applications where the applicant had received approval (either on or before December 5, 2012) from the FERC to use the FERC pre-filing process, in the order the DOE application was received, 2. Pending DOE applications in which the applicant did not receive approval (either on or before December 5, 2012) from FERC to use the FERC pre-filing process, in the order the DOE application was received, 3. Future DOE applications, in the order the DOE applications are received.\nOn August 15, 2014, DOE announced its new \"Procedures for Liquefied Natural Gas Export Decisions.\" In that announcement, DOE stated that the new procedures do not amend existing regulations to eliminate conditional authorizations, but that it will cease the practice of issuing such approvals. Instead, DOE will now act on an application for non-FTA exports when it is \"ready for final action,\" described by DOE as when it has sufficient information on which to base a public interest determination and when it has completed its NEPA review. More specifically, for projects requiring an EIS, that would be 30 days after publication of a final EIS; for projects requiring an EA, that would be upon publication of a FONSI; or upon DOE's determination that an application may be approved as a CE. DOE has not further specified conditions under which it may have sufficient information to base a public interest determination. The change was made in part because the DOE had concluded that conditional approvals were not necessary for LNG projects to secure financing, as was assumed under the prior process. The department also wished to focus its resources more effectively on those LNG export proposals most likely to proceed.\nRegardless of whether an entity received a conditional authorization from DOE, no applicant can export natural gas until it receives a final order and approval from DOE and, if needed, approval from FERC. Further, since the adoption of the FERC NEPA document currently serves as DOE's NEPA compliance process, DOE cannot finalize its public interest review until FERC's NEPA review is complete.", "The growth in U.S. natural gas resources, particularly from shale gas, and the projected continued growth are what make increased natural gas exports a possibility. U.S. natural gas reserves have climbed approximately 80% since 2000 and 60% since 2005 ( Figure 6 ). These data include reductions for natural gas extracted during the period and so are net increases. In recent years, the increase in reserves is mostly attributed to development of shale gas, which has grown from 10% of U.S. natural gas reserves in 2007 to 45% in 2013. By comparison, conventional U.S. natural gas reserves declined between 2007 and 2008, and fell again in 2010. Though the decline was marginal, it highlights the importance of shale gas to future U.S. natural gas production. Many industry analysts expect shale gas reserves to continue to rise and make up a greater portion of U.S. natural gas reserves unless new restrictions are placed on the industry, such as rules related to hydraulic fracturing, power plant emissions, pipeline development, or other factors.", "In 2012, natural gas became the most produced fuel, on an energy equivalent basis, in the United States, surpassing coal for the first time. This change was driven by the success of shale gas development. EIA, which makes projections based on current policy and information, estimated in its Annual Energy Outlook 2014 that overall U.S. natural gas production will grow 56% between 2012 and 2040 ( Figure 7 ). Shale gas will comprise over 50% of that production.", "Natural gas liquids (NGLs) have taken on a new prominence as shale gas production has increased and prices have fallen. NGL is a general term for all liquid products separated from natural gas at a gas processing plant including ethane, propane, butane, and pentane. When NGLs are present with methane, which is the primary component of natural gas, the natural gas is referred to as either \"hot\" or \"wet\" gas. Once the NGLs are removed from the methane the natural gas is referred to as \"dry\" gas, which is what most consumers use. Each NGL has its own market and its own value. As the price for dry gas has dropped because of the increase in supply and other reasons such as the warm winter of 2011, the natural gas industry has turned its attention to producing more wet gas in order to bolster the value it receives. Some companies have shifted their production portfolios to tight oil formations, such as the Bakken in North Dakota, to capitalize on the experience they gained in shale gas development. Historically, the individual NGL products have been priced against oil, except for ethane, and as oil prices have remained higher since 2005 relative to natural gas, it has driven an increase of wet gas production, thereby maintaining the amount of dry gas as a production \"byproduct\" despite its low price.", "Several bills in the 114 th Congress directly relate to LNG exports, primarily facilitating the approval of exports to non-FTA countries. Both the House and Senate versions of the LNG Permitting Certainty and Transparency Act ( H.R. 351 and S. 33 ) would impose a 30-day or 45-day deadline, respectively, on DOE export permit decisions after a final environmental impact statement is issued under NEPA, among other provisions. The Domestic Prosperity and Global Freedom Act ( H.R. 89 ) would impose a similar 30-day deadline on DOE permit decisions. The Export American Natural Gas Act of 2015 ( H.R. 428 ) would impose a 60-day deadline on DOE permit decisions beginning on the date the DOE receives a completed application, an applicant signs an LNG export contract, or enactment of the bill, whichever is later. The American Job Creation and Strategic Alliances LNG Act ( H.R. 287 ) would extend FTA nation treatment to World Trade Organization member nations with respect to LNG export permitting by DOE. The Crude Oil Export Act ( H.R. 156 ) would repeal limitations on export of Outer Continental Shelf natural gas under Section 28 of the Outer Continental Shelf Lands Act (43 U.S.C. 1354). Other bills, such as the Natural Gas Pipeline Permitting Reform Act ( H.R. 161 ), would also affect natural gas production and infrastructure affecting LNG exports.", "The public focus on U.S. exports of natural gas has been on the applications to export LNG, despite the United States exporting much more natural gas by pipeline. Groups such as the Industrial Energy Consumers of America (IECA), a national association of manufacturing companies, and the American Public Gas Association (APGA), a national association of publicly owned natural gas distribution systems, have filed motions to intervene against or have lobbied Congress in opposition to various LNG export projects or bills to facilitate exports. Both of these organizations represent firms that use natural gas and would be negatively affected if natural gas prices rose. Natural gas producers and certain local businesses have supported the projects, as they would benefit from access to new overseas markets and higher international prices. Analyses of the price effects of potential natural gas exports likely will receive continued attention as companies move forward with their projects. The Sierra Club has filed against projects on environmental grounds, particularly related to the source of natural gas for export.\nExpectations about the economic impacts of greater U.S. natural gas exports depend on assumptions about the volume of exports, economic growth, market segmentation, and environmental regulations, among other market parameters. Some initial estimates projected a modest rise in absolute terms in domestic natural gas prices if all the proposed export projects are built, premised on a relatively flat supply curve for natural gas. These estimates also projected that U.S. natural gas prices would stay relatively low in historic terms as well as in comparison to global prices. Those in favor of exports add that increased production could result in increased revenue for local, state, and federal governments (through taxes, royalty payments, and economic development), more employment, an improved international trade balance, and reductions in natural gas flaring. Natural gas consumers counter that higher natural gas prices abroad could eventually lead to higher prices in the United States, and possible supply shortages, as producers seek to maximize profits by diverting more and more U.S. natural gas to overseas markets.\nIn the near term, increased use of natural gas in the U.S. economy is limited, primarily to electric power generation. Natural gas-fired electric power plants account for a significant and growing share of U.S. natural gas demand. Although coal remains the dominant fuel for U.S. electric power generation, environmental concerns regarding atmospheric emissions are limiting its use and prompting the retirement of older coal plants that are less equipped to curtail emissions. Switching from coal to natural gas in electric power generation may consume incremental U.S. natural gas supply increases before exports do. There are many proposed petrochemicals projects, but these are at various stages of development and will take a number of years to come to fruition. Other sectors such as transportation, industrial, commercial, and residential are not likely to see a substantial rise in natural gas demand in the next couple of years. This could change if technologies can be improved to increase the use of natural gas in transportation, such as gas-to-liquids, natural gas vehicles, or electric vehicles (assuming the electricity is generated by natural gas). Although proponents see strategic value in such fuel-switching as a means to reduce U.S. dependence on imported oil, high technology costs diminish this prospect in the near term.\nAlthough much less attention is paid to natural gas exports by pipeline, it is anticipated that these will continue to increase. Canada's natural gas production has been declining, but it is possible this will be reversed as Canada develops its own shale gas resources, which are estimated to be large. However, Canadian consumption may also increase as production from oil sands is projected to rise. Natural gas is heavily used in the extraction of petroleum from oil sands. Canada also has at least two of its own LNG export projects being considered. A recent EIA study estimated Canada's technically recoverable shale gas resources at 573 trillion cubic feet, over 100 years' worth at the country's current production rate. If Canada develops these resources, they could be an additional source of natural gas for the United States as well.\nMexico's natural gas production has been rising steadily for the last decade, but not quickly enough to keep up with consumption. Imports now account for almost 27% of consumption compared to under 10% in 2000, and imports from the United States made up over 70% of all natural gas imports to Mexico in 2013. Although Mexico may have significant technically recoverable shale gas resources, 545 trillion cubic feet or 364 years at their current production level, Mexico is much further behind in developing these resources than the United States and Canada, and will likely remain dependent on U.S. supplies to meet growing demand.\nReceiving permits to export natural gas by pipeline to Canada and Mexico is typically easier than receiving a permit to build an LNG export facility, even though pipeline projects require authorization from the Secretaries of Defense and State. Both Canada and Mexico are FTA countries and exports are assumed to be in the U.S. national interest by statute. Pipeline export projects tend to be less costly and easier to finance than LNG export projects may be.\nAs highlighted above, the development of shale gas resources will be a key factor in the United States becoming a net natural gas exporter. Infrastructure constraints within some of the major shale gas producing areas may limit the amount of natural gas that can reach markets and be available for export. Changes to the regulatory environment would also have an impact on natural gas production.\nEnvironmental groups differ on the desirability of greater natural gas use in general. Although burning natural gas produces less pollution than burning other fossil fuels, it still emits greenhouse gases and other atmospheric pollutants. Some environmental groups view natural gas as a necessary bridge fuel to a zero carbon economy, while others want to go to the zero carbon economy directly. Some environmental groups see natural gas exports raising domestic natural gas prices, making renewables more viable. Additionally, there are concerns about risks to water supplies associated with hydraulic fracturing, the technique for extracting shale gas which uses water, sand, and chemicals to create fissures in shale, allowing the trapped natural gas to be cost-effectively extracted. The possibility of increased shale gas development and pipeline construction in the United States to supply overseas LNG buyers troubles some environmental advocates.\nAppendix A. Select U.S. Natural Gas Import and Export Infrastructure\nAppendix B. Lower-48 States Natural Gas Hub Map" ], "depth": [ 0, 1, 1, 1, 2, 1, 2, 3, 2, 2, 1, 1, 2, 3, 3, 2, 2, 1, 2, 2, 1, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full h1_full", "h0_full h3_full h1_full", "h0_title", "h0_full", "", "", "", "", "", "", "h1_title", "h1_title", "", "h1_full", "", "", "h0_full", "", "", "h3_full h2_title h1_title", "h2_full h1_full" ] }

{ "question": [ "What changes can we expect in the US natural gas industry?", "Why are US producers looking for new markets?", "How is the gas industry growing?", "What are the roles of the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC)?", "What is the main question with exporting natural gas?", "What are factors that will affect prices?", "What are some concerns with gas prices due to exporting?", "What are the findings of the Department of Energy's study on this matter?", "Why are environmental groups split on natural gas?", "Why is hydraulic fracturing causing concern?", "How could the increase in US gas exports affect the industry?", "Where has Congressional interest been focused on?", "What Acts would impose deadlines on DOE export permit decisions?", "What are the effects of the American Job Creation and Strategic Alliances LNG Act (H.R. 287)?", "How would the Crude Oil Export Act(H.R. 156) affect natural gas exports?" ], "summary": [ "As estimates for the amount of U.S. natural gas resources have grown, so have the prospects of rising U.S. natural gas exports. The United States is expected to go from a net importer of natural gas to a net exporter by 2016.", "With recent natural gas prices relatively low compared to global prices and historically low for the United States, producers are looking for new markets for their natural gas.", "Projects to export liquefied natural gas (LNG) by tanker ship have been proposed—cumulatively accounting for over 60% of current gross U.S. natural gas production. Pipeline exports, which accounted for 99% of all exports of U.S. natural gas in 2013, are also likely to continue rising.", "However, under the Natural Gas Act, the Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) must authorize the export of the natural gas commodity and related facilities, respectively. This overarching federal role in the expansion of U.S. natural gas exports has been the subject of ongoing oversight and debate in Congress.", "What effect exporting natural gas will have on U.S. domestic prices is a central question in the debate over whether to export.", "There are numerous factors that will affect prices: export volumes, economic growth, differences in local markets, and government regulations, among others.", "Producers contend that increased exports will not raise prices significantly as there is ample supply to meet domestic demand, and there will be the added benefits of increased revenues, trade, and jobs, and less flaring. Consumers of natural gas, who also benefit from the current low prices, fear prices will rise if natural gas is exported.", "The DOE's most recent price study concluded that greater LNG exports \"result in higher levels of real gross domestic product (GDP), which more than offsets the adverse impact of somewhat higher energy prices.\" Export opponents have been critical of DOE's conclusions.", "Environmental groups are split regarding natural gas use, with some favoring increased use to curb emissions of certain pollutants, while others oppose expanded use of natural gas because it is not as clean as renewable forms of energy, such as wind or solar.", "The use of hydraulic fracturing to produce shale gas for export markets has also raised concerns among environmental groups particularly concerned with its possible impacts on groundwater quality.", "The possibility of a significant increase in U.S. natural gas exports will factor into ongoing debates on the economy, energy independence, climate change, and energy security.", "Congressional interest has focused on the DOE's process and criteria for approving LNG commodity exports to non-free trade agreement (FTA) countries.", "Both the House and Senate versions of the LNG Permitting Certainty and Transparency Act (H.R. 351 and S. 33), the Domestic Prosperity and Global Freedom Act (H.R. 89), and the Export American Natural Gas Act of 2015 (H.R. 428) would impose various deadlines on DOE export permit decisions.", "The American Job Creation and Strategic Alliances LNG Act (H.R. 287) would extend free trade treatment to World Trade Organization member nations with respect to LNG export permitting by DOE.", "The Crude Oil Export Act (H.R. 156) would repeal limitations on export of Outer Continental Shelf natural gas under the Outer Continental Shelf Lands Act (43 U.S.C. 1354)." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, -1, -1, -1, -1, -1, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Overseas Foreign Service Vacancies Have Persisted over Time While Overseas Foreign Service Staffing Has Increased, Staffing Gaps Persist", "State’s Data Show Higher Vacancy Rates in Foreign Service Specialist Positions Compared to Foreign Service Generalist Positions", "Foreign Service Generalists", "State Faces Challenges Recruiting Personnel to Fill Some Foreign Service Specialist Positions That Often Require Specialized Skills and Competencies", "State’s Data Show Persistent Foreign Service Vacancies at Overseas Posts with State’s Highest Foreign Policy Priorities", "State’s Data Show Higher Vacancy Rates in Regions with Security Risks That Could Threaten U.S. Foreign Policy Interests", "Overseas Foreign Service Vacancies Have Adverse Effects on State’s Diplomatic Readiness Vacancies in Overseas Foreign Service Positions Increase Workloads and Affect Employee Morale, According to Staff at Overseas Posts", "Vacancies in Overseas Foreign Service Generalist Positions, Especially in the Political and Economic Career Tracks, Adversely Affect State’s Diplomatic Readiness", "Vacancies in Overseas Foreign Service Specialist Positions May Heighten Security Risks at Overseas Posts and Disrupt Post Operations", "Security Officer", "Information Management", "Office Management Specialist", "State Described Various Efforts to Address Overseas Foreign Service Vacancies, but These Efforts Are Not Guided by an Integrated Action Plan to Reduce Persistent Vacancies State Officials Described Various Efforts to Help Address Vacancies", "State’s Efforts to Address Overseas Foreign Service Vacancies Are Not Guided by an Integrated Action Plan to Reduce Persistent Vacancies", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Analysis of Vacant Foreign Service Positions at Overseas Posts in Various Categories as of March 31, 2018", "Management 10 largest specialist skill groups at overseas posts Security Officer", "Staffed positions at overseas posts Overseas posts by Overseas Staffing Model category Embassy 1 or 2 655", "Appendix III: Comments from the Department of State", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "State is the lead agency involved in implementing American foreign policy and representing the United States abroad. According to State and USAID’s joint strategic plan for fiscal years 2018 through 2022, State’s goals are to (1) protect America’s security at home and abroad, (2) renew America’s competitive advantage for sustained economic growth and job creation, (3) promote American leadership through balanced engagement, and (4) ensure effectiveness and accountability to the American taxpayer.\nState’s Foreign Service employees serve in a variety of functions at overseas posts as either generalists or specialists. Foreign Service generalists help formulate and implement U.S. foreign policy and are assigned to work in one of five career tracks: consular, economic, management, political, or public diplomacy. Generalists at overseas posts collect information and engage with foreign governments and citizens of foreign countries and report the results of these interactions back to State headquarters in Washington, D.C., among other functions. Foreign Service specialists abroad support and maintain the functioning of overseas posts and serve in one of 25 different skill groups, in positions such as security officer or information management. Specialists at overseas posts play a critical role in ensuring the security and maintenance of the posts’ facilities, computer networks, and supplies as well as the protection of post staff, their family members, and local staff, among other functions.\nState may require Foreign Service employees to be available for service anywhere in the world, as needed, and State has the authority to direct Foreign Service employees to any of its posts overseas or to its headquarters in Washington, D.C. However, as noted in our 2012 report, State generally does not use this authority, preferring other means of filling high-priority positions, according to State officials. The process of assigning Foreign Service employees to their positions typically begins when they receive a list of upcoming vacancies for which they may compete. Foreign Service employees then submit a list of positions for which they would like to be considered, known as bids, to the Office of Career Development and Assignments and consult with their career development officer. The process varies depending on an officer’s grade and functional specialty, and State uses a variety of incentives to encourage Foreign Service employees to bid on difficult-to-fill posts.\nState groups countries of the world—and corresponding U.S. overseas posts in these countries—into areas of responsibility under six geographic regional bureaus:\nBureau of African Affairs\nBureau of East Asian and Pacific Affairs\nBureau of European and Eurasian Affairs\nBureau of Near Eastern Affairs\nBureau of South and Central Asian Affairs\nBureau of Western Hemisphere Affairs Overseas posts report to State headquarters through their respective regional bureaus. For example, because the Bureau of African Affairs has responsibility for developing and managing U.S. policy concerning parts of the African continent, U.S. overseas posts in Nigeria report through the bureau to State headquarters.\nAccording to State officials, State maintains personnel data on State employees in its GEMS database. GEMS includes information on Foreign Service and Civil Service positions; in particular, it shows the total number of authorized Foreign Service positions at State and whether each position is currently filled or vacant. As displayed in figure 1, the GEMS data show that the majority of Foreign Service employees (73 percent) work in positions at overseas posts. However, some Foreign Service staff (27 percent) are assigned to positions in the United States, where they may complete required language or other training, serve as desk officers for the regional bureaus, or work in other functions at State headquarters.", "According to State data, the number of both staffed and vacant overseas Foreign Service positions increased between 2008 and 2018. As shown in figure 2, the number of positions staffed grew from 6,979 in 2008 to 8,574 in 2018—a more than 20 percent increase. Despite the increase in the number of positions staffed, our analysis found that as of March 31, 2018, overall, 13 percent of State’s overseas Foreign Service positions were vacant. This vacancy percentage is similar to the percentages of vacancies in overseas Foreign Service positions that we reported in 2012 and 2008. In 2012, we reported that 14 percent of State’s overseas Foreign Service positions were vacant as of October 31, 2011, and we reported that the same percentage of overseas Foreign Service positions—14 percent—were vacant as of September 30, 2008.\nAccording to State officials, State’s ability to hire Foreign Service employees to fill persistent vacancies has been affected by factors such as reduced appropriations. For instance, according to State officials and State’s Five Year Workforce Plan, because of funding cuts enacted in fiscal year 2013, State could only hire one employee for every two leaving the Foreign Service. From fiscal years 2014 to 2016, funding for State’s annual appropriations supported hiring to replace Foreign Service employees projected to leave the agency, according to State officials. These officials indicated, however, that Foreign Service hiring was again impacted from January 2017 through May 2018 by a hiring freeze. As a result, State hired below levels required to replace full projected attrition of Foreign Service employees.", "While State’s data show persistent vacancies in both generalist and specialist positions at overseas posts, specialist positions remain vacant at a higher rate. State’s data show that 12 percent (680 of 5,660) of overseas Foreign Service generalist positions were vacant as of March 31, 2018, a slight decrease from the 14 percent of overseas Foreign Service generalist positions that we reported vacant in 2012. State’s data also show that 14.2 percent (594 of 4,188) of all overseas Foreign Service specialist positions were vacant, close to the 14.8 percent vacancy rate that we reported in 2012.", "State’s data show persistent vacancies in Foreign Service generalist positions responsible for analysis, engagement, and reporting at overseas posts. As shown in table 1, among Foreign Service generalist career tracks, the political, economic, and “other” tracks had the largest percentage of vacant positions, with, respectively, 20 percent, 16 percent, and 14 percent of positions vacant as of March 31, 2018. Our 2012 report noted vacancies in the same three career tracks. Political officers at overseas posts are responsible for collecting and analyzing information on political events, engaging with foreign governments, and reporting back to State headquarters. Economic officers at overseas posts work with foreign governments and other U.S. agencies on technology, science, economic, trade, and environmental issues. The “other” generalist career track includes positions designated as “Executive” or “International Relations,” which, according to State officials, may be filled by generalists from any of State’s five career tracks.\nState’s data show persistent vacancies in Foreign Service specialist positions that support and maintain the functioning of overseas posts. Among the 10 largest Foreign Service specialist skill groups, security officer, office management specialist, and information management had the largest percentages of vacant positions. As shown in figure 3, in these three groups, respectively, 16 percent, 16 percent, and 14 percent of positions were vacant. The vacancies in these three specialist skill groups are persistent; in 2012, we reported that the same three groups had the largest numbers of vacant positions. Security officers are typically responsible for responding to various threats to the physical security of overseas posts and for ensuring the protection of post staff, their family members, and local staff. Office management specialists provide professional management and administrative support. Information management staff are typically responsible for maintaining and ensuring the security of State’s computer networks and communications systems at overseas posts.", "State officials said that State has had difficulty in recruiting and hiring Foreign Service employees to fill specialist positions in some skill groups at overseas posts. According to State officials and staff at overseas posts, some vacant specialist positions are more difficult to fill than others because candidates for these positions must often possess skills in fields such as medicine or information technology that tend to be highly sought after in the private sector. According to staff at overseas posts, it is not uncommon for specialist candidates in these fields to choose higher- paying jobs in the private sector rather than specialist positions in the Foreign Service. Additionally, in some circumstances, State must compete with other federal agencies to recruit specialists from the same limited pool of talent. Consequently, according to State officials, State has been unable to attract and retain personnel with the skills necessary to fill some Foreign Service specialist positions, which has led to persistent vacancies in specialist positions.\nVacancies in Foreign Service specialist positions at overseas posts present additional challenges because specialized skills and competencies are often required to perform the work of these positions. According to State officials, because Foreign Service generalists may be assigned to work outside of their career tracks, in some circumstances, State has more flexibility in filling a generalist vacancy than a specialist vacancy. For example, generalists outside the consular career track can serve as a consular officer for one or more tours of duty. However, specialist positions often require specialized skills or experience that generalists may not possess. In addition, according to staff at overseas posts, it is generally not possible for a Foreign Service specialist from one skill group to perform the work of a Foreign Service specialist from a different skill group. For instance, a Foreign Service specialist assigned to the medical section at a post will not be able to help address the workload of a vacant position in the information management section. Thus, according to staff at overseas posts, vacancies in specialist positions at the posts may create greater challenges than vacancies in generalist positions.", "According to State’s data, as of March 31, 2018, overseas posts with State’s highest foreign policy priorities had the highest percentages of vacant Foreign Service positions. Using its Overseas Staffing Model process, State assigns each embassy to one of seven categories based primarily on the level and type of work required to pursue the U.S. government’s diplomatic relations with the host country at post. As we previously reported, the rankings are closely associated with the department’s foreign policy priorities; the higher the category, the greater the resources needed to conduct the work of the overseas post and the higher the post’s foreign policy priority. For example, the highest-level category, level 5+, includes the largest, most comprehensive full-service posts, where the host country’s regional and global role requires extensive U.S. personnel resources. The lowest-level category includes small embassies with limited requirements for advocacy, liaison, and coordination in the host country’s government. As shown in table 2, according to State’s data, as of March 31, 2018, overseas posts in the “Embassy 5+” category had the highest percentage of vacant positions. The results of this analysis were similar to those we reported in 2012.", "While State has Foreign Service vacancies worldwide, as of March 31, 2018, the highest percentages of vacancies were in the South and Central Asian Affairs Bureau (SCA) and Near Eastern Affairs Bureau (NEA)—bureaus representing regions with heightened security risks that could threaten U.S. foreign policy interests, according to State. SCA, which includes countries such as Afghanistan, Pakistan, and India, faces a host of security and stability challenges that could threaten U.S. interests, according to a February 2018 report from State’s Office of Inspector General. NEA includes countries, such as Egypt, Iraq, and Saudi Arabia, which have faced numerous security threats in recent years that could also threaten U.S. interests overseas.\nAs shown in figure 4, among State’s regional bureaus, as of March 31, 2018, SCA and NEA had the highest percentages of overseas Foreign Service vacancies at 21 percent (238 of 1,115 positions) and 18 percent (234 of 1,279 positions), respectively. In 2012, we reported that these two bureaus also had the highest percentages of overseas Foreign Service vacancies among regional bureaus.", "Vacancies in Foreign Service positions at overseas posts increase workloads and adversely affect the morale of Foreign Service employees. According to State officials in headquarters and staff at overseas posts, when a Foreign Service position at an overseas post is vacant, Foreign Service employees at that post are generally responsible for covering the workload of the vacant position. Further, Foreign Service employees at some posts—particularly posts with fewer Foreign Service staff—may be responsible for covering the workload of multiple vacant positions. For example, at two African posts we heard examples of Foreign Service employees covering the workload of multiple vacant Foreign Service positions. As a result of increased workloads, Foreign Service employees are also more likely to have less time available to perform some important functions, according to staff at overseas posts. According to staff at overseas posts, such functions include training and supervising entry- level Foreign Service employees, local staff, and eligible family members (EFM); reducing the risk of fraud, waste, and abuse; improving and innovating processes at post that could reduce inefficiencies; initiating and implementing projects that could enhance various diplomatic efforts; and conducting maintenance of systems.\nIn addition, according to staff at overseas posts, vacancies adversely affect staff morale. Staff at multiple posts said that vacancies and the resulting increased workloads had created substantial stress and increased “burnout” of Foreign Service employees at the posts. They noted that these levels of stress and burnout had contributed to Foreign Service employees’ ending their overseas assignments early for medical or personal reasons. These curtailments, in turn, had increased the overall vacancies and their effects at overseas posts.", "According to staff at overseas posts, vacancies in Foreign Service generalist positions at overseas posts adversely affect State’s diplomatic readiness. Among Foreign Service generalist career tracks, the political and economic career tracks had the two largest percentages of vacant positions—20 percent and 16 percent, respectively—as of March 31, 2018.\nAccording to staff at overseas posts, vacancies in political and economic positions at overseas posts—particularly posts with fewer Foreign Service employees—limit the amount of reporting on political and economic developments that posts are able to submit back to State headquarters. For example, Foreign Service employees from three posts in Africa told us that persistent, long-term vacancies in those posts’ political and economic positions had constrained their abilities to provide full reporting on political and economic developments in their host countries. According to staff at overseas posts, reporting on political and economic developments in other countries—submitted by overseas posts back to State headquarters—is essential for State to make informed foreign policy decisions. Foreign Service employees from two posts in large countries in East and South Asia also told us that vacancies in these sections had limited their capacity to engage with host government officials on important, strategic issues for the United States, such as reducing nuclear proliferation or enhancing trade and investment relationships with the United States. Vacancies in the political and economic career tracks at overseas posts could adversely affect State’s ability to achieve two of the goals in State and USAID’s joint strategic plan for fiscal years 2018 through 2022—(1) renew America’s competitive advantage for sustained economic growth and job creation and (2) promote American leadership through balanced engagement.", "According to staff at overseas posts, vacancies in Foreign Service specialist positions at overseas posts may heighten the level of security risk at the posts and disrupt post operations. Among Foreign Service specialist skill groups with the highest number of vacant positions, security officer, office management specialist, and information management had the largest percentages of vacant positions—16 percent, 16 percent, and 14 percent, respectively—as of March 31, 2018.", "According to staff at overseas posts, vacancies in security officer positions at overseas posts reduce the amount of time that security staff can spend identifying, investigating, and responding to potential security threats to the post. Security officers are also responsible for identifying and analyzing host-country intelligence-gathering efforts at their respective overseas posts—and post staff told us that, because of vacancies in these positions, some security officers had been unable to complete this work for their posts, potentially increasing the risk of foreign government officials gaining access to sensitive information. Also, post staff told us that security officer vacancies limit the amount of time that security officers present at posts can devote to important security oversight activities, including regular training, drilling, and supervising of local guard forces and security contractors. Post staff noted, for example, that security officers at overseas posts should conduct regular training and drilling exercises to evaluate their local guard force’s effectiveness in searching a vehicle entering the post compound for explosive devices. According to post staff, when these important security oversight activities are not properly and regularly conducted, the level of security risk at these overseas posts may increase.", "According to State officials in headquarters and staff at overseas posts, as well as reporting by State’s OIG, vacancies in information management positions at overseas posts have increased the vulnerability of posts’ computer networks to potential cybersecurity attacks and other malicious threats. State officials told us that the Foreign Service had faced chronic shortages of information management staff available to fill these positions worldwide. According to State officials, because of ongoing information management vacancies, some required tasks—such as conducting planned network maintenance—were performed infrequently or not at all. In another example, staff at overseas posts said that because of vacancies, information management staff had been unable to regularly check their computer system logs to ensure that security breaches had not taken place. Post staff added that, if a breach did occur, vacancies could increase the amount of time needed to identify an attack and deploy countermeasures, further increasing the risks to posts’ computer networks. Inspections conducted by State’s OIG from fall 2014 to spring 2016 found that information management staff at 33 percent of overseas posts had not performed various required information management duties. According to State’s OIG, neglect of these duties may leave the department vulnerable to increased cybersecurity attacks.", "According to staff at overseas posts, the office management specialist position at overseas posts has evolved considerably over time; these specialists increasingly play a critical role in ensuring that the work of overseas posts is effectively completed. Post staff said that office management specialists provide administrative and other support services to other Foreign Service employees and are assigned to various sections of post. For example, staff at one post noted that office management specialists assigned to the Security Officer sections at overseas posts reduce the workload of security officers by completing more routine security tasks and allowing the security officers to focus on more challenging or involved tasks necessary to secure overseas posts. Post staff told us that vacancies in office management specialist positions reduce the amount of work that can be completed by other Foreign Service employees at overseas posts. For example, when office management specialist positions assigned to the Security Officer or Information Management sections of posts are vacant, these vacancies further exacerbate the higher number of vacancies that already exist in these sections. According to staff at overseas posts, higher numbers of office management specialist vacancies require other Foreign Service employees to spend a significant amount of time on administrative tasks, reducing the amount of time these staff can spend on mission-critical activities.", "Officials in headquarters and at overseas posts described various State efforts to help address overseas Foreign Service vacancies. According to State officials, Foreign Service vacancies at overseas posts are a complex problem that multiple offices within State address on an individual basis.", "State’s various efforts to address overseas Foreign Service vacancies are not guided by an integrated action plan to reduce persistent vacancies. Our 2017 High-Risk Series report calls for agencies to, among other things, design and implement action plan strategies for closing skills gaps. The action plan should (1) define the root cause of all skills gaps within an agency and (2) provide suggested corrective measures, including steps necessary to implement solutions. This report also emphasizes the high risk that mission-critical skills gaps in the federal workforce pose to the nation.\nWhile various State offices have implemented the efforts we identified, State lacks an action plan that is integrated—or consolidated—across its relevant offices to guide its efforts to address persistent overseas Foreign Service vacancies. Moreover, some staff at overseas posts acknowledged that the efforts State has taken to help address vacancies have not reduced persistent Foreign Service vacancies, notably in specialist positions. In response to our inquiry about an action plan, State officials said that the agency does not have a single document that addresses Foreign Service staffing gaps at overseas posts. Instead, State officials directed us to State’s Five Year Workforce Plan: Fiscal Years 2016-2020, stating that it was the most comprehensive document that outlines State’s efforts to address Foreign Service vacancies at overseas posts. The workforce plan notes that it provides a framework to address State’s human capital requirements and highlights State’s challenges and achievements in recruiting, hiring, staffing, and training Foreign Service staff. However, in reviewing the portions of the workforce plan that State indicated were most relevant, we found that the workforce plan does not include an integrated action plan that defines the root causes of the persistent overseas Foreign Service vacancies we identified or suggest corrective measures to reduce vacancies in these positions, including steps necessary to implement solutions.\nState officials also noted that they frequently meet to discuss and address workforce issues. For example, they said they convene a multi-bureau planning group that meets biweekly to discuss strategic workforce issues such as hiring needs based on attrition and other issues. However, according to State officials, this group has not developed an action plan to reduce persistent Foreign Service vacancies at overseas posts.\nState lacks an integrated action plan to guide its efforts to address persistent Foreign Service vacancies that includes corrective measures to address the root causes of the vacancies. Without defining the root causes of persistent Foreign Service vacancies at overseas posts and identifying appropriate corrective measures, overseas vacancies may persist and continue to adversely affect State’s ability to achieve U.S. foreign policy goals.", "Foreign Service generalists and specialists at overseas posts are critical to advancing U.S. foreign policy and economic interests abroad. However, for at least a decade, the Foreign Service has had persistent vacancies in both generalist and specialist positions at overseas posts. In particular, large numbers of vacant positions have persisted over time in certain overseas Foreign Service positions, such as information management and security officer positions. These vacancies in critical positions at overseas posts have adversely affected State’s ability to carry out its mission effectively and threaten State’s ability to ensure the security and safety of its employees, their families, and post facilities. While State has made some efforts to address Foreign Service vacancies, addressing chronic vacancies in critical positions at overseas posts requires a thoughtful, coherent, and integrated action plan that defines the root causes of persistent Foreign Service vacancies at overseas posts along with suggested corrective measures to reduce such vacancies, following what was called for in our 2017 High-Risk Series report. Developing such an action plan would help State address its persistent staffing gaps, improve its ability to achieve U.S. foreign policy goals, and help ensure secure and efficient operations.", "The Secretary of State should develop an integrated action plan that defines the root causes of persistent Foreign Service vacancies at overseas posts and provides suggested corrective measures to reduce such vacancies, including steps necessary to implement solutions. (Recommendation 1)", "We provided a draft of this report to State for review and comment. In its comments, reproduced in appendix III, State concurred with our recommendation. State also noted that it has taken actions and identified some causes of vacancies, but acknowledged that it lacks an integrated action plan and will take steps to develop such a plan. State also provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of State, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-6881 or bairj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "This report examines (1) vacancies in the Department of State’s (State) Foreign Service staffing at overseas posts, (2) reported effects of Foreign Service vacancies on diplomatic readiness, and (3) State’s efforts to address Foreign Service vacancies.\nTo address these three objectives, we interviewed State officials from the department’s Bureau of Human Resources and Bureau of Consular Affairs as well as State officials representing the Offices of the Executive Director for State’s six regional bureaus. We also interviewed staff at 10 overseas posts. We conducted in-person interviews with staff at 3 of these posts—the U.S. Embassy in Beijing and the U.S. Consulate in Shanghai, China, and the U.S. Embassy in New Delhi, India. We conducted telephone interviews with staff at the other 7 posts—the U.S. Embassies in Abuja, Nigeria; Bogota, Colombia; Kinshasa, Democratic Republic of the Congo; Kabul, Afghanistan; Mexico City, Mexico; and N’Djamena, Chad; and the U.S. Consulate in Frankfurt, Germany. We used the following criteria to select overseas posts for interviews: (1) posts with larger numbers of Foreign Service vacancies; (2) posts with diversity in the types of Foreign Service positions that were vacant; (3) posts with higher relative importance to U.S. economic, national security, and other foreign policy interests; and (4) posts in a range of geographic locations by State region.\nTo examine vacancies in State’s Foreign Service staffing at overseas posts, we analyzed State’s personnel data on Foreign Service staffing at overseas posts from the department’s Global Employment Management System (GEMS), as of March 2018. Our analysis of the GEMS data includes Foreign Service positions filled by permanent Foreign Service employees as well as positions filled by nonpermanent Foreign Service employees, such as Consular Fellows. This analysis does not include the number of staffed and vacant positions at overseas posts in Libya, Syria, and Yemen, which, at the time of our review, were in suspended operations status, as well as U.S. Mission Somalia, which was operating under special circumstances at a different location.\nTo calculate vacancy rates, we divided the total number of positions by the number of positions listed as vacant in GEMS. For example, a post with 10 positions and 2 vacancies would have a vacancy rate of 20 percent. We calculated vacancy rates for each of the following categories: type (i.e., generalist or specialist), function (e.g., consular or information management), regional bureau (i.e., Bureau of African Affairs or Bureau of Western Hemisphere Affairs), and embassy and nonembassy rankings from State’s Overseas Staffing Model (i.e., Embassy 3+ or 5).\nAccording to State officials, the data in GEMS have a number of limitations:\nThe number of vacant positions at overseas posts listed in GEMS may be overstated, because State has not yet decided to remove some of these positions from its database.\nSome of the vacancies in GEMS are short-term or temporary. Foreign Service employees periodically rotate out of their positions at their overseas posts, sometimes creating temporary vacancies until the positions are filled by incoming Foreign Service employees.\nThe GEMS data show larger numbers of vacant Foreign Service positions at posts in Afghanistan, Iraq, and Pakistan than actually were unstaffed at these posts. According to State officials, this discrepancy results from State’s relying heavily on shorter-term assignments to fill Foreign Service positions at these locations. These shorter-term assignments are not reflected in GEMS, and the positions therefore appear vacant.\nThe GEMS data may not reflect Foreign Service employees who have been temporarily reassigned from one overseas post to another.\nThe GEMS data may show positions as filled although the Foreign Service employee filling the position has not yet arrived at post.\nTo assess the reliability of the GEMS database, we asked State officials whether State had made any major changes to the database since our 2012 report, when we assessed the GEMS data to be sufficiently reliable. State officials indicated that no major changes had been made. We also tested the data for completeness, confirmed the general accuracy of the data with officials at selected overseas posts, and interviewed knowledgeable officials from State’s Office of Resource Management and Organizational Analysis concerning the data’s reliability. We found the GEMS data to be reliable for the purpose of determining the numbers and percentages of vacant Foreign Service positions at overseas posts. We did not validate whether the total number of authorized overseas Foreign Service positions was appropriate or met State’s needs.\nWe also reviewed State workforce planning documents and budget documents, such as State’s Five Year Workforce and Leadership Succession Plan: Fiscal Years 2016-2020 and Quadrennial Diplomacy and Development Review. In addition, we reviewed State Office of Inspector General reports as well as our previous reports on human capital challenges at State and effective strategic human capital management across the federal government. In particular, our report High-Risk Series: Progress on Many High-Risk Areas, While Substantial Efforts Needed on Others notes that strategic human capital management is a high-risk issue across the federal government and lists five key elements as a road map for agency efforts to improve and ultimately address such issues. For our third objective, we assessed whether State’s efforts to address vacancies were guided by a corrective action plan that identifies the root causes of persistent Foreign Service vacancies at overseas posts and suggests corrective measures to reduce such vacancies, including steps necessary to implement solutions.\nWe conducted this performance audit from August 2017 to March 2019 in accordance with generally accepted government auditing standards.\nThose standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "The “Economic” generalist career track includes positions from the “Science Officer” staffing skill group in the GEMS data. 170 Foreign Service employees were not staffed to one of the six regional bureaus.", "", "", "", "In addition to the contact named above, Godwin Agbara (Assistant Director), Ian Ferguson (Analyst-in-Charge), Anthony Costulas, Natalia Pena, Debbie Chung, Chris Keblitis, Reid Lowe, Justin Fisher, and Alexander Welsh made key contributions to this report." ], "depth": [ 1, 2, 2, 3, 2, 2, 2, 2, 2, 2, 3, 3, 3, 1, 2, 1, 1, 1, 1, 1, 2, 2, 1, 1, 2, 2 ], "alignment": [ "h3_full h1_title h0_title", "h0_full", "h0_title", "h0_full", "", "", "h0_full", "h1_full", "", "h1_full", "", "h1_full", "", "h2_full", "h2_full", "h0_full h2_full h1_full", "", "", "h3_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What does the data from the Department of State show for Foreign Service vacancies?", "How are the results similar to the GAO for Foreign Service positions?", "What vacancies does State's data show?", "Where did the data show vacancies and what risk does it produce?", "How did staff at oversea posts say on vacancies?", "How did officials state about vacancies?", "How did vacancies affect overseas post staff?", "How does Foreign Service vacancies affect US foreign policy?", "How has State addressed the issue?", "How has State attempted to fill Foreign Service vacancies?", "What did the GAO's report say about measures to fix this issue?", "What are the key differences between the GAO report and what State is doing?", "What did the GAO report examine?", "What data did GAO analyze to address the objectives of the report?", "What type of data did State's Global Employment Management System contain?", "How did GEO select staff to interview?" ], "summary": [ "The Department of State's (State) data show persistent Foreign Service vacancies at overseas posts since 2008. According to the data, 13 percent of overseas Foreign Service positions were vacant as of March 2018.", "This percentage is similar to the percentages GAO reported for 2008 and 2012, when 14 percent of these positions were vacant.", "In addition, State's data show persistent vacancies at overseas posts in generalist positions that help formulate and implement U.S. foreign policy and in specialist positions that support and maintain the functioning of overseas posts.", "State's data also show persistent Foreign Service vacancies at overseas posts with State's highest foreign policy priorities and in regions with security risks that could threaten U.S. foreign policy interests.", "Staff at overseas posts told us that vacancies increase workloads, contributing to low morale and higher stress for Foreign Service staff and that vacancies in Political and Economic positions—20 percent and 16 percent, respectively—limit the reporting on political and economic issues that posts are able to provide to State headquarters.", "Notably, officials also stated that vacancies in specialist positions may heighten security risks at overseas posts and disrupt post operations.", "For instance, some overseas post staff said that vacancies in Information Management positions had increased the vulnerability of posts' computer networks to potential cybersecurity attacks and other malicious threats.", "According to staff at overseas posts, Foreign Service vacancies adversely affect State's ability to carry out U.S. foreign policy.", "State described various efforts—implemented by multiple offices in the department —to help address overseas Foreign Service vacancies, but these efforts are not guided by an integrated action plan to reduce persistent vacancies.", "An example of State's efforts is the “Hard-to-Fill” program, which allows Civil Service staff an opportunity to fill a Foreign Service vacancy on a single overseas tour.", "According to GAO's 2017 High-Risk Series report, an agency should design and implement an action plan—integrated across its relevant offices—that defines the root causes of all skills gaps and suggests corrective measures.", "However, State has not developed such an action plan for reducing persistent overseas Foreign Service vacancies. Without developing an integrated action plan, overseas Foreign Service vacancies may persist. As a result, State's ability to achieve U.S. foreign policy goals and help ensure secure and efficient operations could be adversely impacted.", "This report examines (1) vacancies in State's Foreign Service staffing at overseas posts, (2) reported effects of Foreign Service vacancies on diplomatic readiness, and (3) State's efforts to address Foreign Service vacancies.", "To address these objectives, GAO analyzed State's Global Employment Management System data as of March 2018.", "The system includes information on Foreign Service and Civil Service positions, including the total number of authorized Foreign Service positions and whether each position is filled or vacant.", "In addition, GAO interviewed State staff at 10 overseas posts, selected on the basis of large numbers of Foreign Service vacancies and diversity in the types of Foreign Service positions that were vacant at these posts, among other factors." ], "parent_pair_index": [ -1, 0, 0, 0, -1, -1, 1, -1, -1, 0, -1, -1, -1, 0, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 1, 1, 1, 1 ] }

{ "title": [ "Background", "PCORI Has Established Priorities and Processes for Funding Comparative Clinical Effectiveness Research and Is Developing Dissemination Plans, Consistent with Its Legislative Requirements", "PCORI Has Established Research Priorities and a Research Agenda", "PCORI Has Established Processes for Funding Research and Monitoring Contractors", "PCORI Is Developing Dissemination Plans and Coordinating Dissemination Activities with AHRQ", "PCORI Has Started Awarding Contracts for Research, and Plans to Award Additional Contracts through 2019", "PCORI Has Established an Evaluation Plan and Anticipates Developing Efforts to Measure Outcomes", "Agency Comments", "Appendix I: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Since the enactment of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), AHRQ, an agency within the Department of Health and Human Services (HHS), has been one of several federal agencies responsible for supporting and disseminating the results of CER. The dissemination of CER refers to developing and distributing information derived from CER for target audiences, such as clinicians, consumers, or policymakers, in order to inform health care delivery or practice. This process involves translating research findings into terminology and materials that are appropriate for the target audience. Specifically, AHRQ has supported CER activities by awarding grants and contracts to research centers and academic organizations to carry out this work, which includes reviewing and synthesizing scientific evidence through research reviews; generating new scientific evidence and analytical tools in original research reports; compiling research findings; and communicating those findings to a variety of audiences. Under the American Recovery and Reinvestment Act of 2009 (Recovery Act), AHRQ received funding of $474 million to support and disseminate the results of CER—$300 million that was appropriated to AHRQ and $174 million that was appropriated to the HHS Office of the Secretary and allocated to AHRQ. The Recovery Act also required the Secretary of HHS to enter into a contract with the IOM to produce a report that included recommendations on research questions that should receive national priority for study with CER funds made available under the act.\nThe result of this work included a list of 100 research questions prioritized for CER.\nIn 2010, PPACA authorized the establishment of PCORI as a nonprofit corporation aimed at advancing the quality and relevance of evidence through CER to help patients, clinicians, purchasers, and policy-makers in making informed health care decisions. The law requires PCORI to perform a number of duties related to CER. (See table 1.)\nPCORI is governed by a 21-member Board of Governors and employs 153 staff, as of September 2014, including directors for its different program areas as well as staff for engagement, communications, contract management, finance, human resources, and information technology. PCORI’s 17-member methodology committee defines methodological standards for its research.", "PCORI has developed five broad research priorities and developed a research agenda to identify how each priority will be addressed. The institute has established a multi-step merit review process to score and identify applications for funding and a process for monitoring contractors. PCORI is also developing a peer review process for primary research and a dissemination plan for completed research.", "In 2012, PCORI established five broad research priorities: (1) assessment of prevention, diagnosis, and treatment options; (2) improving health care systems; (3) communication and dissemination research; (4) addressing disparities; and (5) accelerating patient-centered outcomes research and methodological research. PCORI also developed a research agenda to identify how each priority would be addressed. The research agenda contains a set of more specific research areas within each priority. PCORI expects its research agenda to be updated and refined over time based on more specific analyses of gaps in research. (See table 2.)\nPCORI issued its research priorities and agenda in May 2012, following a process that began in July 2011. In the fall of 2011, PCORI formed two workgroups within its Board of Governors—the National Priorities for Research Workgroup and the Research Agenda Workgroup. Along with PCORI staff and members of the Methodology Committee, these workgroups examined the processes and products of other recent priority- and agenda-setting efforts, including those from AHRQ and IOM. They also engaged with and received input from stakeholder groups through a number of public presentations and other modes of communication, such as press releases, focus groups, and feedback through social media.\nPCORI posted on its website its draft research priorities and agenda for public comment from January 23, 2012 to March 15, 2012. In response, PCORI received and analyzed a total of 474 formal comments, and made changes to the draft priorities and agenda based on these comments. A final version of PCORI’s research priorities and agenda were adopted by the Board of Governors and made publicly available in May 2012.\nPCORI established its research priorities and agenda consistent with PPACA requirements. Specifically, PPACA directed PCORI to establish priorities for research that take into account factors that include disease incidence, prevalence, and burden; gaps in evidence with regard to clinical outcomes; patient needs, outcomes, and preferences; and practice variations and health disparities in terms of delivery and outcomes of care, among other things. The act also directed PCORI to develop a research agenda for addressing these priorities. The act did not specify the content or form of the priorities or agenda. According to documentation on the process PCORI used to develop its research priorities and agenda, the workgroups reviewed and considered these requirements. In the process of developing the research agenda, the workgroups identified where, for example, certain agenda items addressed criteria such as gaps in knowledge, variation in care, and inclusiveness of different populations.\nAccording to PCORI officials, PCORI intended its research priorities to be broad in scope so that they could encompass a broad range of topics in need of study, including different disease areas, conditions, or health care system issues, thus making PCORI’s research agenda more flexible than if it identified specific topics. PCORI noted in its research priorities and agenda document that PCORI did not want to exclude any disease from being studied. Some stakeholders we interviewed expressed concern that PCORI’s research priorities are too broad and lack specificity. While PCORI officials acknowledged that many of the institute’s initial funding announcements were broad in that they did not identify specific topics, they noted that they are in the process of increasing the proportion of funding that goes to specific research topics. For example, PCORI will soon begin funding awards for large pragmatic clinical studies to evaluate patient-centered outcomes. The funding announcement for this effort indicates a number of specific research topics of interest to PCORI. PCORI officials noted that applications which are responsive to these specific research topics will be given priority for funding. The specific research topics identified in this funding announcement were developed using, among other things, stakeholder recommendations, IOM’s CER Priorities, and input from PCORI’s advisory panels.\nTo identify more specific research questions and topics for use in funding announcements, PCORI utilizes advisory panels, as authorized by PPACA. PPACA directed PCORI to establish advisory panels for rare diseases and clinical trials, which PCORI established in November 2013, and also authorized PCORI to establish other advisory panels as needed. In addition to establishing the two advisory panels required by PPACA, PCORI has also established five additional advisory panels: (1) Assessment of Prevention, Diagnosis, and Treatment Options; (2) Improving Healthcare Systems; (3) Addressing Disparities; (4) Patient Engagement; and (5) Communication and Dissemination Research. Four of these advisory panels align with PCORI’s research priorities. To appoint members to its advisory panels, PCORI solicits applications via its website. Advisory panel applicants are reviewed based on common criteria established by PCORI and against the needs of the specific panel for which a position is being filled. The PCORI Board of Governors makes the final selection of advisory panel members.\nPCORI’s advisory panels assist in the prioritization of research topics. PCORI receives suggested research topics through a number of sources, including stakeholders, social media, and workshops, as well as from AHRQ, NIH, and professional and advocacy groups. As part of the prioritization process, PCORI’s advisory panels evaluate and rank suggested research topics using the following criteria: patient- centeredness, potential condition impact, assessment of current options, likelihood of implementation in practice, and durability of information. Topics identified by advisory panels as being of higher priority proceed for further evaluation while the lower-priority topics enter a pool of topics that may be reconsidered at a later date. Recommendations from PCORI’s advisory panels are taken into consideration by PCORI’s staff and Board of Governors and are used to refine and prioritize specific research topics and inform the development of PCORI funding announcements. PCORI may also use recommendations from advisory panels to commission reviews of previous and current research on recommended high-priority topics.\nAccording to PCORI, its processes for identifying research include mechanisms for avoiding unnecessary duplication and coordinating research efforts with NIH and AHRQ. For example, when establishing its broad research priorities, officials from both NIH and AHRQ participated in PCORI’s workgroups to develop these priorities and the related research agenda. As PCORI has developed more specific research priorities for funding announcements, PCORI staff has consulted with relevant NIH staff on specific topics in an effort to obtain expertise and an understanding of what research is being funded on a particular topic. For example, PCORI officials reported and NIH confirmed that when developing a specific research topic related to cardiovascular disease, PCORI coordinated with staff at NIH’s National Heart, Lung, and Blood Institute to ensure that PCORI’s planned research in this area had not already been sufficiently addressed by prior research. NIH submitted to PCORI a list of potential topics it considered important but was not actively funding, according to PCORI officials. PCORI officials also stated that when a new topic is suggested to PCORI for inclusion in a funding announcement, technical briefs are prepared to document the existing work that has been completed on that topic. In addition, PCORI staff stated that they conduct searches in ClinicalTrials.gov, NIH’s Research Portfolio Online Reporting Tools Expenditure and Results (RePORTER), and other research databases to determine if any similar research is in progress or has already been funded.proposed research topic that is unnecessarily duplicative is eliminated.", "PPACA directs PCORI to enter into contracts to carry out its research priorities. PCORI has established a multi-step research funding process, which includes merit review, that is designed to select high quality research that has the best potential to improve patient outcomes, according to PCORI officials. PCORI officials stated that their merit review process is modeled on the peer review processes established by AHRQ and NIH, which are described in law. Unlike AHRQ and NIH, however, PCORI’s merit review process utilizes patients and stakeholders in the review and scoring of applications. Key steps in PCORI’s research funding process include the development and posting of funding announcements, review and scoring of applications, and final approval by the Board of Governors. (See figure 1.)\nSubmitted applications are assessed by reviewers recruited by PCORI and selected based on expertise or knowledge in a particular subject area. Reviewers may be patients, other stakeholders, or scientific reviewers. Prior to reviewing applications, reviewers undergo web-based Reviewers score applications using five standard criteria. (See training.table 3.)\nApplications are scored by reviewers through an online review, and a subset is scored by the full panel during an in-person meeting. For the online review, four reviewers are assigned to evaluate each application— two scientists and two stakeholders (one of them a patient). Scientific reviewers focus on all 5 criteria, while the patient and stakeholder reviewers focus on the potential of the study to improve health care and outcomes, the extent to which the research is patient-centered, and the extent to which the proposed research includes patient and stakeholder engagement. Reviewers assign an overall score to the application and provide written comments on each application’s specific strengths and weaknesses. Scientific reviewers also check to determine if the application adheres to PCORI’s methodological standards.is also involved, working with reviewers to ensure that each reviewer understands how the applications should be assessed. Reviewers have one month to electronically submit both their initial scores and detailed written critiques to PCORI.\nFollowing the online review, applications advance to in-person merit review meetings where they are reviewed again in panels specific to the funding announcement. To determine which applications will advance, PCORI staff considers reviewers’ average overall scores for each application, whether applications have scores that differ significantly among reviewers (and could thus benefit from further discussion), and whether applications received a good score for technical merit criteria and are therefore a strong candidate for funding. Reviewers discuss the applications’ merits and weaknesses and, as a panel, provide a final overall application score. After applications are scored at the in-person meeting, PCORI staff determine the applications that will be submitted for review to a PCORI selection committee, composed of PCORI Board of Governors members and up to one member from PCORI’s methodology committee. The selection committee proposes a list of applications to fund. According to PCORI staff, while the proposed applications generally consist of the top-scoring applications, some lower-scoring applications may be included to achieve program balance or fund research in critical areas. The full Board of Governors votes to approve the recommended applications. While the Board has the authority to make changes, PCORI staff stated that it has not made such changes to date. Once the recommended applications are approved, awards are announced to the public via PCORI’s website, PCORI develops final contract requirements, and research contracts are executed. PCORI officials stated that each cycle of the research funding process takes 9 to 12 months to complete, from the time a funding announcement is posted to the time recommended applications are approved by the Board, of which the merit review process takes about 4 to 6 months. There are currently up to four funding cycles each year and PCORI staff noted that these cycles overlap.\nPCORI officials reported taking steps during the merit review and application selection process to ensure PCORI’s funded research is not duplicative of other research within the federal government or private sector. For example, PCORI officials reported seeking input from NIH and AHRQ during the final selection of awards through each agency’s involvement in the selection committee and membership on PCORI’s Board of Governors. PCORI officials also noted that in some instances NIH and AHRQ staff assist PCORI in reviewing letters of intent submitted in response to PCORI funding announcements. Finally, before funding an application, PCORI program staff check databases that include ClinicalTrials.gov and NIH’s RePORTER to identify any ongoing studies on a particular topic that may be duplicative.\nOnce funded, PCORI contractors are monitored by PCORI staff. According to PCORI staff, following an initial kickoff call with the contractor, PCORI receives a progress report from each contractor every 6 months, and there are additional interactions via phone and through regularly scheduled meetings. Progress reports include updates on key project milestones, a progress statement for public use, a financial status update, and additional documents the contractor deems relevant to the project’s progress during the reporting period. PCORI officials stated that if concerns arise regarding a contractor’s performance, a site visit to the contractor could be conducted. All contractors are required to submit a final report covering their research at the conclusion of the project.\nThe law also requires PCORI to develop a peer review process to assess the integrity of primary research funded by PCORI and its adherence to PCORI’s methodological standards. PCORI officials stated that they are currently developing a peer review assessment process, as required by law, to review final reports submitted by contractors at the conclusion of a project. A draft of this peer review process was posted on PCORI’s website for public comment in September 2014. The draft process requires contractors to submit a draft final report to PCORI within three months of the project’s completion for review by peer reviewers, who will include researchers from outside of PCORI. These reviewers will consider whether the research presented in each final report has scientific integrity and adheres to PCORI’s methodological standards. Following receipt of the draft final report, the peer reviewers may identify revisions, which the contractor is required to respond to within 45 days. After revisions are made and PCORI formally accepts the final report, its draft process states that the institute will create and post on its website a lay abstract intended for the general public, a medical abstract intended for researchers and clinicians, a stand-alone table that presents key findings, and ancillary information such as the identity of the contractor. The contractor also will be required to ensure that the study results are submitted to ClinicalTrials.gov and to include with that submission links to the abstracts posted on the PCORI website.", "PCORI is currently developing a plan for the dissemination of the research it funds, as required by PPACA, and expects to begin disseminating research results as early as 2015. Specifically, PCORI has entered into a contract for the development of a dissemination and implementation plan. A draft framework for this plan was provided by the contractor to PCORI for comment in July 2014 and PCORI anticipates that the contractor will submit the revised framework to PCORI in February 2015. The draft framework identifies five key elements as core components of a dissemination and implementation plan. (See table 4.)\nAccording to PCORI, its dissemination efforts will result in research findings being publicly available within 90 days of receiving final reports from researchers, as required by law. PCORI has determined that this 90-day period will follow the completion of PCORI’s peer review process for completed research. Upon accepting the final report on the research conducted by the contractor, PCORI’s 90-day period will begin, during which time PCORI will develop abstracts and other materials to post publicly on its website. At the conclusion of this 90-day period, PCORI anticipates posting abstracts, a results table that contains key findings, and ancillary information, such as investigators and conflict of interest information, on its website. The contractor will also be required to ensure that the results tables are submitted to ClinicalTrials.gov, which will link to the abstract posted on PCORI’s website. According to PCORI, these dissemination efforts will take place at the end of the 29 to 79 month period for funding, conducting, and disseminating research, depending on the length of the contract. (See figure 2.)\nPPACA gave both PCORI and AHRQ responsibilities for disseminating CER results produced by PCORI. PPACA directs PCORI to make research findings available to clinicians, patients, and the general public within 90 days of the conduct or receipt of research findings. The act also directs AHRQ to disseminate PCORI’s research findings as well as other government-funded research relevant to CER. PCORI officials stated that to coordinate AHRQ’s and PCORI’s dissemination responsibilities, PCORI has formed a workgroup specifically to address engagement, dissemination, and implementation activities, on which both PCORI and AHRQ officials serve. This workgroup currently meets monthly and discusses plans for disseminating CER results, among other things. A PCORI official stated that PCORI and AHRQ are working together to determine which entity will be best suited for disseminating different types of CER results.", "As of October 2014, PCORI has awarded 360 contracts to fund research projects across 12 funding areas. PCORI made a total of $670.8 million in commitments to fund these contracts. Most of PCORI’s projects are funded for periods of between 2 and 3 years, with some larger studies funded for up to 5 years. In total, PCORI expects to make approximately $2.6 billion in commitments for contracts starting as late as 2019, with about $1.9 billion in commitments occurring between fiscal years 2015 and 2019.\nWhile commitments occur when PCORI makes awards to contractors, expenses occur when PCORI pays contractors and spends money for PCORI’s operations. Expenses include not only money spent on research contracts, but also on research support activities—such as merit review and contractor monitoring—and administrative expenses. According to PCORI, from inception through fiscal year 2014, it has incurred a total of $235 million in expenses. fund research contracts, with the remaining amounts for research support activities and administrative expenses. Through fiscal year 2015, PCORI anticipates expending a total of $597 million. Overall, PCORI expects to receive an estimated total of $3.5 billion through fiscal year 2019 from the PCORTF to fund its work.$2.6 billion of its $3.5 billion on contracts for research and research infrastructure, with the remaining amounts spent on research support activities and administrative expenses.\nIn fiscal year 2014, PCORI reported that it was experiencing a “delay in spending,” that is, contractors were submitting invoices to PCORI and collecting money at a slower rate than initially expected. PCORI officials noted that they have undertaken additional efforts to analyze and better plan for such delays, which can result because of the relatively slow pace of spending that occurs during the beginning of research projects. PCORI has adjusted its spending expectations based on the patterns observed to date, and PCORI officials told us that they will monitor actual expenses as one indicator that funded work is progressing at the appropriate pace. Officials anticipate that PCORI’s independent audit of fiscal year 2014 will be issued in early 2015.\nPCORI’s total administrative expenses for fiscal years 2012 and 2013 accounted for 20 percent and 32.5 percent of PCORI’s total operating budget, respectively. Examples of administrative expenses include salaries for PCORI staff, health benefits, rent for PCORI’s headquarters office, and information technology costs. In its fiscal year 2013 financial audit report, issued by a private, independent auditor, PCORI noted that administrative costs for fiscal year 2013 remained high, but were not outside of expected levels given that fiscal year 2013 was a period of investment in systems and infrastructure that would not be sustained at current levels in future years. According to PCORI’s financial projections, it expects that total administrative expenses will constitute 14 percent and 8.2 percent of its total expenses in fiscal years 2014 and 2015, respectively. (See figure 3.)\nEach of the projects PCORI has committed to funding has been awarded within one of twelve funding areas. (See figure 4.) Five of these funding areas closely correspond to PCORI’s priority areas. Some of the other areas—such as reducing disparities in asthma—cover specific topics within a priority area.\nAccording to PCORI officials, approximately $106 million in commitments to date are for the PCORnet data research network, the aim of which is to improve the capacity for and speed of conducting CER. PCORI officials stated that they expect to spend a total of $271 million on PCORnet through 2019. PCORnet is a distributed data research network, which means that no central repository of data exists. Instead, multiple organizations, each with their own data, agree to allow users to query their data and combine it with data from the other organizations on a project-by-project basis. PCORnet consists of 29 separate health data networks called clinical data research networks (CDRN) and patient- powered research networks (PPRN), some of which existed prior to PCORnet and some of which were created with PCORnet funding.\nPCORnet is still undergoing development and testing. CDRNs and PPRNs are currently working to map their data to the PCORnet common data model. The common data model standardizes the definition, content, and format of data aggregated by CDRNs and PPRNs, which is necessary to allow researchers to use data from multiple CDRNs and PPRNs. An initial test query was conducted using PCORnet in September 2014. PCORnet is expected to be used to conduct an initial clinical research trial starting in 2015. Officials stated that limited amounts of data will be available through PCORnet for queries by researchers after September 2015, with the amount of available data increasing over time.\nWhile PCORI officials, stakeholders, and PCORnet contractors noted that PCORnet has the potential to significantly improve the ability to conduct CER, they also noted challenges that PCORI will face with regard to the establishment and future operation of PCORnet. For example, they expect that the process of mapping data to the common data model will be slow and resource intensive because of the lack of standardization among existing data maintained by CDRNs and PPRNs, such as data from electronic health records (EHR). PCORI officials recognize the challenges caused by the lack of standardization. They expect that both the common data model and a future requirement by PCORI for CDRNs to hire additional staff with expertise related to this work will help to address this challenge. PCORnet contractors also noted uncertainty regarding future costs and the sustainability of the network, particularly if the PCORTF is not reauthorized beyond fiscal year 2019. One stakeholder we interviewed noted that some core funding would always be required to maintain the central operation of the network. PCORI officials acknowledge that some future core funding could be needed, but they expect it to be lower than current funding levels. They also expect that future research projects funded by PCORI, NIH, or others such as the pharmaceutical and device industry will pay for the use of PCORnet’s data. PCORI officials also noted that each CDRN and PPRN will be required to provide a sustainability plan for continuing operation once PCORI funds are no longer available. Another concern noted by CDRN officials is that their data does not cover all care received by patients due to the fragmented nature of the U.S. health care system, although such “complete” data would be preferred by PCORI. An official from one PPRN noted that the completeness of CDRN and PPRN data could be improved by having PPRNs and CDRNs share data with one another, which is not current practice. PCORI officials said that they are collaborating with other relevant organizations, including state Medicaid offices and private health insurers, to identify how CDRNs could link their EHR data to claims data, which would improve data completeness. In addition, PCORI officials stated they are requiring CDRNs to identify and implement links with other institutions that have additional patient data.", "PCORI’s evaluation group—a body composed of members from its Board of Governors, methodology committee, advisory panel on patient engagement, external experts, and PCORI staff —has developed initial plans for evaluating PCORI’s efforts against its three strategic goals, which are to increase information, speed implementation, and influence research. To do so, PCORI identified primary outcome measures for each of its strategic goals. In its strategic plan, PCORI notes that these are meant to be long-term measures because research typically requires several years to complete and additional years for the results to be disseminated and implemented. Therefore, since 2013, PCORI has been using early and intermediate process and output measures as a way to monitor its progress toward its strategic goals. PCORI anticipates having some early results related to its primary outcome measures starting in 2017 after the first CER studies are completed and their findings released, although full evaluation of the results of these outcome measures will not be possible until around 2020, after a large number of CER studies have been completed and a few years have elapsed, allowing time for study results to be taken up. (See table 5.)\nOfficials stated that to collect information for monitoring PCORI’s progress and for evaluating PCORI’s impact on the dissemination and uptake of CER study results, PCORI will employ a variety of data collection methods, including surveys, focus groups, interviews, case studies, and document reviews, to collect data on how potential consumers of CER perceive PCORI’s work and CER in general. For example, PCORI is conducting a number of surveys to collect both baseline and ongoing data to gauge changes in perceptions of CER over time. (See table 6.)\nPCORI officials stated that these baseline data will be compared against future similar data collection efforts in an attempt to see whether PCORI’s work is contributing to improved understanding and increased use of CER. PCORI anticipates having preliminary baseline data by the end of 2014.\nPCORI has identified some limitations and challenges related to their evaluation methods. Specifically, PCORI’s evaluation plans rely on survey development, focus groups and interviews, data extraction from PCORI databases, and expert panels. In its plans, PCORI identifies potential response bias and self-report bias as limitations to some of those data collection methods. Further, PCORI officials stated that measuring outcomes such as reducing practice variation and changing health care delivery can be challenging, particularly within a 5- or 10-year timeframe. PCORI staff stated that disseminating research results in an effort to improve health care is a long-term challenge, as past research suggests that it takes more than 17 years for research evidence to affect clinical practice settings. PCORI staff stated that they hope the inclusion of end users in their research process—such as patients and clinicians—will expedite the uptake of PCORI’s research findings, but it is too soon to tell if this will be the case.\nFinally, officials stated that it will be difficult to know for certain whether any measured changes in health care delivery and practice are attributable to PCORI-funded research or due to other efforts. Therefore, officials stated that they will have to rely on the measures identified in PCORI’s strategic plan for a small subset of PCORI’s studies, to determine the extent to which these studies may influence reductions in practice variation or other changes in health care delivery.\nPCORI is also undertaking efforts to assess the extent to which its funded research addresses CER priority topics identified by the IOM in its 2009 PCORI issued a request report and AHRQ’s Future Research Needs.for proposal to evaluate whether the research topics they funded address the CER priority topics identified by IOM and AHRQ. Contractors were selected and began conducting this work in June 2014, and it is anticipated that the work will continue through 2015, with the possibility of it extending into 2016. PCORI plans to use the results from this evaluation to inform additional funding announcements in the future.\nPCORI officials stated that preliminary analysis has shown that about half of the research studies PCORI has funded to date directly related to a CER priority topic identified in IOM’s 2009 report.\nPCORI has conducted a preliminary effort to compare the extent to which mental health research PCORI has funded aligns with mental health topics in the IOM report, as well as some additional analyses to show the extent to which PCORI-funded research aligns with IOM’s 100 CER priorities, according to officials. For example, an analysis in September 2013 showed that of PCORI’s 55 projects at that time, 6 were closely related, 23 were somewhat related, and 26 were unrelated to the IOM’s 100 CER priorities. PCORI officials noted that the IOM’s CER priorities were developed in 2009 and that, given the amount of time that has passed, it is likely that some of the topics listed in the IOM report are no longer critical, while other CER topics have increased in importance. PCORI officials stated that, as a result, the IOM’s CER priorities alone are not a good indicator of PCORI’s progress related to CER.", "We provided a draft of this report to PCORI for review and comment. PCORI provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the Executive Director of PCORI and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-7114 or at kingk@gao.gov. Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report. Other major contributors to this report are listed in appendix I.", "", "", "In addition to the contact named above, Will Simerl, Assistant Director; Jennie Apter; LaSherri Bush; Ashley Dixon; Colbie Holderness; Andrea E. Richardson; and Jennifer Whitworth made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_full", "h0_full h3_full h4_title", "h0_full h4_full", "h0_full h4_full", "", "h3_full h1_full", "h4_full h2_full", "h4_full", "", "", "" ] }

{ "question": [ "What has the Patient-Centered Outcomes Research Institute established for funding CER?", "What are the five research priorities that PCORI established in 2012?", "What research agenda and process has PCORI developed?", "What is PCORI developing in coordination with the Agency for Healthcare Research and Quality?", "How much has PCORI awarded for research?", "How much does PCORI expect to commit for awards in total?", "How much does PCORI plan to spend on PCORnet?", "When will researchers be able to use data through PCORnet?", "What has PCORI developed to evaluate its goals?", "Why is PCORI's plan a long term measure?", "How has PCORI been measuring its strategic goals?", "When does PCORI estimate to have results from its strategic goal?", "Why did PPACA establish PCORI?", "What does PCORI do?", "How does PPACA fund PCORI?", "What does the GAO report examine?", "What documents did GAO review?", "What did PCORI provide to the GAO?" ], "summary": [ "The Patient-Centered Outcomes Research Institute (PCORI) has established priorities and processes for funding comparative clinical effectiveness research (CER)—which is research that evaluates and compares health outcomes and the clinical effectiveness, risks, and benefits of two or more medical treatments, services, or items such as health care interventions—and is developing dissemination plans, consistent with the legislative requirements of the Patient Protection and Affordable Care Act (PPACA).", "In 2012, PCORI established five broad research priorities: (1) assessment of prevention, diagnosis, and treatment options; (2) improving health care systems; (3) researching communication and dissemination strategies; (4) comparing interventions to reduce health disparities; and (5) accelerating patient-centered outcomes research and methodological research.", "PCORI also developed a research agenda to identify how each priority would be addressed. PCORI has established a multi-step research funding process designed to assess and select contract applications for funding. Funded contracts are monitored by PCORI staff.", "Per legislative requirement, PCORI is developing a peer review assessment process to review final reports submitted by contract awardees and is in the process of developing a plan for the dissemination of funded research potentially beginning in 2015, in coordination with the Agency for Healthcare Research and Quality.", "As of October 2014, PCORI has awarded 360 contracts to fund research projects, committing a total of $670.8 million to them.", "PCORI expects to commit about $2.6 billion to research contracts, out of $3.5 billion in total estimated spending.", "Approximately $106 million in commitments to date are for PCORnet, a data research network aimed at improving the capacity for and speed of conducting CER. PCORI officials stated that they expect to spend a total of $271 million on PCORnet through fiscal year 2019.", "PCORI officials stated that limited amounts of data will be available through PCORnet for researchers to use after September 2015 with the amount of available data increasing over time.", "PCORI has established an evaluation plan and is developing efforts to measure outcomes. PCORI has developed initial plans for evaluating the institute's efforts against its three strategic goals, which are to increase information, speed implementation, and influence research.", "In its strategic plan, PCORI notes that these are meant to be long-term measures because research typically requires several years to complete and additional years for the results to be disseminated and implemented.", "Therefore, since 2013, PCORI has been using early and intermediate process and output measures—such as the number of people accessing or referencing PCORI information—as a way to monitor its progress toward its strategic goals.", "PCORI anticipates having some early results related to its primary outcome measures starting in 2017 after the first CER studies are completed and their findings released, although full evaluation of the results of these outcome measures will not be possible until around 2020.", "In 2010, PPACA authorized the establishment of PCORI as a federally funded, nonprofit corporation to improve the quality and relevance of CER.", "PCORI, which began operation in 2010, is required to identify research priorities, establish a research project agenda, fund research consistent with its research agenda, and disseminate research results, among other things.", "To fund PCORI, PPACA established the Patient-Centered Outcomes Research Trust Fund, through which the institute is expected to receive an estimated $3.5 billion from fiscal years 2010 through 2019.", "This report examines (1) the extent to which PCORI established priorities and processes for funding and disseminating comparative clinical effectiveness research consistent with its legislative requirements; (2) the status of PCORI's efforts to fund comparative clinical effectiveness research; and (3) PCORI's plans, if any, to evaluate the effectiveness of its work.", "GAO reviewed relevant legislative requirements and PCORI documentation, including funding data, and interviewed PCORI officials. GAO also interviewed relevant stakeholders, including health policy experts and PCORI contractors.", "PCORI provided technical comments, which GAO incorporated as appropriate." ], "parent_pair_index": [ -1, -1, -1, -1, -1, -1, -1, 2, -1, 0, -1, -1, -1, -1, -1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "DHS Does Not Know Its Total Investment in R&D, but Has Taken Some Steps to Update Guidance", "S&T Has Taken Some Actions to Coordinate R&D across DHS, but R&D Activities are Fragmented and Overlapping", "S&T Has Taken Steps to Obtain Feedback and Evaluate the Impact of Its Border and Maritime R&D Efforts", "Costs and Types of Completed Border and Maritime R&D Projects Varied", "S&T Did Not Gather and Evaluate Feedback", "DHS Border and Maritime R&D Agencies Have Taken Action to Improve Internal and External R&D Coordination", "GAO Contact and Staff Acknowledgements" ], "paragraphs": [ "In September 2012, we found that DHS did not know how much its components invested in R&D, making it difficult to oversee R&D efforts across the department. According to DHS budget officials, S&T, DNDO, and the U.S. Coast Guard were the only components that conducted R&D and we found that they were the only components that reported budget authority, obligations, or outlays for R&D activities to OMB as part of the budget process. However, we reported that the data DHS submitted to OMB underreported DHS’s R&D obligations because DHS components obligated money for R&D contracts that were not reported to OMB as R&D. Specifically, for fiscal year 2011, we identified an additional $255 million in R&D obligations by other DHS components. These obligations included DHS components providing S&T with funding to conduct R&D on their behalf and components obligating funds through contracts directly to industry, universities, or with DOE’s national laboratories for R&D.\nFurther, we found that the data for fiscal years 2010 through 2013 DHS submitted to OMB also underreported DHS’s R&D budget authority and outlays because DNDO did not properly report at least $293 million in R&D budget authority and at least $282 million in R&D outlays. We reported that DHS budget officials agreed that DHS underreported its R&D spending and when asked, could not provide a reason why the omission was not flagged by DHS review.\nIn addition, in our 2012 report, we found that DHS’s R&D budget accounts included a mix of R&D and non-R&D spending. For fiscal year 2011, we estimated that 78 percent of S&T’s Research, Development, Acquisition, & Operations account, 51 percent of DNDO’s Research, Development, & Operations account, and 43 percent of the Coast Guard’s R&D budget account funded R&D activities. As a result, this further complicated DHS’s ability to identify its total investment in R&D.\nWe also reported in September 2012 that DHS did not have a department wide policy defining R&D or guidance directing components how to report R&D activities. As a result, we concluded that it was difficult to identify the department’s total investment in R&D, which limited DHS’s ability to oversee components’ R&D efforts and align them with agency wide R&D goals and priorities, in accordance with Standards for Internal Control in the Federal Government.OMB’s definition of R&D, but the definition was broad and its application may not be uniform across components, and thus, R&D investments may not always be identified as R&D. We found that the variation in R&D definitions may contribute to the unreliability of the reporting mechanisms DHS officials told us at the time that DHS used for R&D investments in budget development and execution, as discussed above.\nWe recommended that DHS develop and implement policies and guidance for defining and overseeing R&D at the department that include, among other things, a well-understood definition of R&D that provides reasonable assurance that reliable accounting and reporting of R&D resources and activities for internal and external use are achieved. DHS agreed with our recommendation and stated that it planned to evaluate the most effective path forward to guide uniform treatment of R&D across the department in compliance with OMB rules and was considering a management directive, multi-component steering committee, or new policy guidance to help better oversee and coordinate R&D. As of July 2014, DHS has updated its guidance to include a definition of R&D, but as discussed in more detail below efforts to develop a specific policy outlining R&D roles and responsibilities and a process for coordinating R&D with other offices remain ongoing and have not yet been completed. We will continue to monitor DHS’s efforts to implement these recommendations.", "We reported in September 2012 that the Homeland Security Act of 2002 provides S&T with the responsibility for, among other things, coordinating and integrating all research, development, demonstration, testing, and evaluation activities within DHS and establishing and administering the primary R&D activities of the department. S&T developed coordination practices that fall into four general categories: (1) S&T component liaisons, (2) R&D agreements between component heads and S&T, (3) joint R&D strategies between S&T and components, and (4) various R&D coordination teams made up of S&T and component project managers, which are discussed in detail in our 2012 report and 2013 testimony.\nDespite S&T’s efforts to coordinate R&D activities, in September 2012, we reported that R&D at DHS was inherently fragmented because several components within DHS—S&T, the Coast Guard, and DNDO—were each given R&D responsibilities in law, and other DHS components may pursue and conduct their own R&D efforts as long as those activities are coordinated through S&T. Fragmentation among R&D efforts at DHS may be advantageous if the department determines that it could gain better or faster results by having multiple components engage in R&D activities toward a similar goal; however, it can be disadvantageous if those activities are uncoordinated or unintentionally overlapping or duplicative. Specifically, we found at least six department components involved in R&D activities in our review of data on about 15,000 federal procurement contract actions coded as R&D taken by DHS components from fiscal years 2007 through 2012. We examined 47 R&D contracts awarded by these components—selected because they appeared to have similar activities to another contract—and found 35 instances among 29 contracts in which the contracts overlapped with activities conducted elsewhere in the department. Taken together, these 29 contracts were worth about $66 million. In one example of the overlap, we found that two DHS components awarded five separate contracts that each addressed detection of the same chemical.\nWhile we did not identify instances of unnecessary duplication among these contracts, in September 2012 we found that DHS had not developed a policy defining who is responsible for coordinating R&D activities at DHS that could help prevent overlap, fragmentation, or unnecessary duplication and did not have tracking mechanisms or policies to help ensure that overlap is avoided and efforts are better coordinated consistent with Standards for Internal Control in the Federal Government. S&T officials told us at the time that a process did not exist at DHS or within S&T to prevent overlap or unnecessary duplication but that relationships with components mitigate that risk. They also stated that S&T has improved interactions with components over time. We concluded that the existence of overlapping R&D activities coupled with the lack of policies and guidance defining R&D and coordination processes was an indication that not all R&D activities at DHS were coordinated to ensure that R&D is not unnecessarily duplicative. We also found in September 2012 that neither DHS nor S&T tracked all ongoing R&D projects across the department, including R&D activities contracted through the national laboratories. As part of our review, we identified 11 components that reimbursed the national laboratories for R&D from fiscal years 2010 through 2012, but S&T’s Office of National Laboratories could not provide us with any information on those activities and told us it did not track them. According to S&T, the Office of National Laboratories’ ability to provide information on activities across the department is limited by components inconsistently operating within the defined process for working with the national laboratories.\nAs a result, we recommended that DHS develop and implement policies and guidance for overseeing R&D that includes, among other things, a description of the department’s process and roles and responsibilities for overseeing and coordinating R&D investments and efforts, and a mechanism to track existing R&D projects and their associated costs across the department. DHS agreed with our recommendation and stated at the time that S&T was implementing a collaborative, end-user focused strategy to coordinate and interact with components to better ensure S&T’s efforts aligned with components’ needs and that it was considering developing new policy guidance for R&D activities across the department. As of July 2014, DHS has not developed new policy guidance but is conducting portfolio reviews across the department, as directed in committee reports accompanying the fiscal year 2013 DHS appropriation act, aimed at coordinating R&D activities.recommendation to develop a policy that defines roles and responsibilities for coordinating R&D and coordination processes, as well as a mechanism that tracks all DHS R&D projects, could better position DHS to mitigate the risk of overlapping and unnecessarily duplicative R&D projects. We will continue to monitor DHS’s efforts to develop a policy to better coordinate and track R&D activities at the department.", "", "In September 2013, we reported that DHS S&T, Coast Guard, and DNDO reported producing 97 Border and Maritime R&D deliverables at an estimated cost of $177 million from fiscal years 2010 through 2012. The type of border and maritime R&D deliverables produced by these R&D entities were wide-ranging in their cost and scale, and included knowledge products and reports, technology prototypes, and software. For example:\nKnowledge products or reports: One of the DHS Centers of Excellence developed formulas and models to assist in randomizing Coast Guard patrol routes and connecting networks together to assist in the detection of small vessels.\nTechnology prototypes: S&T BMD developed prototype radar and upgraded video systems for use by Border Patrol agents and a prototype scanner to screen interior areas of small aircraft without removing panels or the aircraft skin.\nSoftware: DNDO developed software that extracts data from radiation portal monitors and uses the data to improve algorithms used in detecting radioactive material.\nAs we reported in September 2013, R&D customers we met with had mixed views on the impact of the R&D deliverables they received. For example, we reviewed 20 S&T BMD deliverables produced from fiscal years 2010 through 2012 at a cost of $28.7 million. We found that the customers of 7 deliverables stated that the deliverables met their office’s needs, customers of 7 did not, customers of 4 did not know, and customers for 2 could not be identified.CBP’s Office of Technology Innovation and Acquisition reported that S&T’s analysis and test results on aircraft-based use of wide area surveillance technology helped CBP to make a decision on whether it should pursue acquiring such technology. In cases where customers said that the deliverables were not meeting their needs, the customers explained that budget changes, other ongoing testing efforts, or changes in mission priorities were the reasons deliverables had not met their needs, and customers pointed out that their relationship with S&T had been positive and highly collaborative. In other cases, customers pointed out that while the deliverable had not been used as intended, it informed their office’s decision making and helped to rule out certain technologies as possibilities. In this regard, the customers felt the R&D was successful, despite the fact that the deliverable had not or was not being used.\nFor example, customers within S&T BMD officials explained that some of its older projects did not have identifiable customers because its former process for selecting projects created the potential to engage in R&D without a clear commitment from the customer. In February 2012, S&T issued a new project management guide that requires project managers to specify the customer by office and name, and to describe customer support for the project, including how the customer has demonstrated commitment for and support of the project. S&T officials said they believed this new process would prevent future R&D funding from going towards projects without a clear customer.\nAdditionally, we reported that from fiscal year 2010 through fiscal year 2012, DNDO produced 42 deliverables at a cost of $115.9 million, which included 6 discontinued projects and 36 projects that were either transitioned to the next phase of R&D or were completed. DNDO R&D is different from the R&D of S&T for many reasons. For one, a DNDO project may start at a basic research level, and may end up being merged into other similar efforts in order to achieve a higher project goal. In these cases, the R&D customers are DNDO project managers rather than another DHS customer, such as CBP. We discussed 5 DNDO R&D deliverables at various R&D phases with DNDO officials—4 of which were deliverables from ongoing or completed projects and 1 of which was a discontinued project. Two of the 5 projects we discussed had moved from early-stage R&D into other projects further along in DNDO’s project management process. Two of the 5 projects were completed, with 1 project that was reported to have provided information that informed furthered DNDO decision-making and the other project resulting in a commercialized product. With regard to the 1 discontinued project, DNDO officials said that the particular project’s technology was determined to be too expensive to continue pursuing.", "We reported that although S&T project managers sought feedback from their customers during the execution of projects, S&T did not gather and evaluate feedback from its customers to determine the impact of its completed R&D efforts and deliverables, making it difficult to determine if the R&D met customer needs. Further, in some cases, the customer of S&T’s R&D was not clear or the results of the R&D were unknown. For example, a CBP customer identified by S&T was aware of two R&D deliverables that S&T said were transitioned to his office, but the official was unable to provide additional information on the project’s impact. According to S&T officials, since they deal with multiple DHS components and are not within the same agencies as its customers, it is sometimes difficult to identify who the customer of the R&D is and also difficult to determine what the impact of the R&D was. S&T officials also stated that in S&T’s 2012 update to its project management guide, in its project closeout process, S&T had included a step to collect feedback from all relevant customers and a template for collecting this feedback.\nWhile we found in September 2013 that S&T had developed a process and template to collect feedback at the end of each project and incorporated this into its project management plan, we also found that it did not plan to survey customers each time it provides a deliverable to the customer. This is relevant because S&T projects are often conducted over several years before they are concluded and these projects also often produce multiple deliverables for a customer over many years that are designed to meet a specific operational need. For example, a Ground Based Technologies project began in fiscal year 2006 and was slated to continue through fiscal year 2018. During this period, S&T provided multiple R&D deliverables to CBP—including test results comparing different ground based radar systems. The National Academy of Sciences has stated that feedback from both R&D failures and successes may be communicated to stakeholders and used to modify future investments.At the time of our report, S&T had not established timeframes and milestones for collecting and evaluating feedback from its customers on the extent to which the deliverables it provides were meeting its customer’s needs.\nAs a result, we recommended that S&T establish timeframes and milestones for collecting and evaluating feedback from its customers to determine the usefulness and impact of both its R&D projects and project deliverables, and use it to make better-informed decisions regarding future work. S&T officials concurred with the recommendation at the time of our review, and reported that it was developing R&D strategies with DHS components, which would include a strategic assessment of components’ R&D needs and updated annually on the basis of customer feedback. As of July 2014, S&T has completed strategic plans with Border Patrol, the Transportation Security Administration (TSA), and the Secret Service. Further, at the time of our review, S&T reported that it was developing a new project management guide to improve R&D management at all stages of development, and that the guide would include a template for project managers to use to gather customer feedback on a more consistent basis. In November 2013, S&T finalized its guide which includes a customer survey template to obtain feedback on the quality, timeliness, and relevance of a deliverable, as well as detailed descriptions of actions project managers should take throughout a project to ensure the R&D is aligned with customer needs. We will continue to review the implementation of these actions and to determine whether they fully address the intent of our recommendation.", "In September 2013, we also reported that S&T’s BMD, the Coast Guard, and DNDO reported taking a range of actions to coordinate with one another and their customers to ensure that R&D is addressing high priority needs. Officials from BMD identified several ways in which it coordinated R&D activities with its customers, which are primarily offices within CBP. For example, BMD officials reported having a person detailed to CBP’s Office of Technology Innovation and Acquisition and identified its integrated product teams, such as its cross border tunnel threat team, and jointly funded projects as ways in which the division worked to ensure its R&D efforts were coordinated with CBP. We also found that opportunities existed for DHS to enhance coordination with universities conducting R&D on its behalf. Specifically, we reported that the S&T Office of University Programs could help ensure that the approximately $3 million to $4 million a year dedicated to each university center is used more effectively by more carefully considering data needs, potential access issues, and potential data limitations with its federal partners before approving projects. We recommended that S&T ensure design limitations with regard to data reliability, accessibility, and availability are reviewed and understood before approving Center of Excellence R&D projects. S&T Office of University Programs officials concurred with the recommendation and discussed the variety of ways in which centers and DHS components collaborate and share information. Office of University Programs officials stated that the office’s process for soliciting research topics and evaluating proposals is good and that it keeps the centers flexible. However, officials from DHS’s primary land border security Center of Excellence reported challenges with respect to a lack of clarity regarding protocols for access to DHS information when conducting R&D. Specifically, officials from this center reported that they have been regularly unable to obtain data from CBP to complete research it was conducting on CBP’s behalf, which resulted in delays and terminated R&D projects.\nGiven the challenges raised by officials from universities leading the R&D for land border security, we recommended that S&T conduct a more rigorous review of potential data-related challenges and limitations at the start of a project in order to help R&D customers (such as CBP) identify data requirements and potential limitations up front so that money is not allocated to projects that potentially cannot be completed. In concurring with our recommendation, S&T Office of University Programs officials agreed that making sure their clients take additional steps to identify data requirements up front could help address these challenges and following our review had started taking steps to address the recommendation. For instance, in September 2013, the Office of University Programs reported that it was working to develop standard guidelines and protocols that would apply to all of its centers of excellence. These protocols were to describe how data sets must be modified to enable their use in open- source research formats. In March 2014, the Office of University Programs and the National Center for Border Security and Immigration, a DHS S&T Center of Excellence, co-hosted a workshop to identify common problems the centers have in accessing data from DHS, understand DHS constraints in sharing data, and develop best practices for requesting and sharing data between the centers of excellence and DHS. We believe this is a step in the right direction and should move S&T closer toward meeting the intention of our recommendation. We will continue to monitor DHS’s efforts in this area.\nChairman Bucshon, Chairman Broun, Ranking Member Lipinski, Ranking Member Maffei, and members of the committee, this completes my prepared statement. I would be happy to respond to any questions you may have at this time.", "If you or your staff members have any questions about this testimony, please contact me at (202) 512-9627 or Maurerd@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Key contributors to this statement include Adam Hoffman, Assistant Director; Aditi Archer, and Charlotte Gamble. Francis Cook, Michele Fejfar, Emily Gunn, Richard Hung, Gary Malavenda, and Linda Miller also made contributions to this testimony.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 1, 2, 2, 2, 1 ], "alignment": [ "h0_full h4_full", "h0_full h3_full h1_full", "h4_title h2_title h1_title h3_title", "h3_full h2_full", "h4_full h2_full h1_full", "h3_full h2_full", "h4_full" ] }

{ "question": [ "What did GAO report regarding DHS?", "What was DHS's statement on this report?", "What contradictories did GAO find", "What was GAO's recommendation and how has DHS utilized it?", "What did GAO report regarding steps to coordinate R&D?", "What is GAO's recommendation for coordinating R&D?", "What has S&T done as of July 2014?", "What is GAO's future plan on this matter?", "What did GAO report in September 2013?", "What were included in the R&D deliverables?", "What were GAO's recommendation regarding future work?", "How has DHS responded to these recommendations?", "What is the purpose of conducting R&D on technologies for detecting, preventing, and mitigating terrorist threats?", "What has DHS done to back up such R&D?", "What is S&T's role within DHS?", "What does this statement discuss?", "What is this statement based on?", "What did GAO do to conduct the updates?" ], "summary": [ "In September 2012, GAO reported that the Department of Homeland Security (DHS) did not know the total amount its components invested in research and development (R&D) and did not have policies and guidance for defining R&D and overseeing R&D resources across the department.", "According to DHS, its Science & Technology Directorate (S&T), Domestic Nuclear Detection Office (DNDO), and Coast Guard were the only components that conducted R&D, and GAO found that these were the only components that reported budget authority, obligations, or outlays for R&D activities to the Office of Management and Budget.", "However, GAO identified an additional $255 million in R&D obligations made by other DHS components. At the time of GAO's review, DHS reported it was difficult to identify all R&D investments across the department because DHS did not have a department wide policy defining R&D or guidance directing components how to report all R&D activities.", "GAO recommended that DHS develop policies to assist components in better understanding how to report R&D activities and better position DHS to determine R&D investments. DHS concurred with the recommendation and, as of July 2014, had updated its guidance to include a definition of R&D but had not yet determined the most effective path to guide R&D across the department.", "GAO also reported in September 2012 that S&T had taken some steps to coordinate R&D efforts across DHS, but the department's R&D efforts were fragmented and overlapping, which increased the risk of unnecessary duplication.", "GAO recommended that DHS develop a policy defining roles and responsibilities for coordinating R&D and establish a mechanism to track all R&D projects to help DHS mitigate existing fragmentation and overlap and reduce the risk of unnecessary duplication. DHS concurred with the recommendation.", "As of July 2014, S&T has not developed new policy guidance but is conducting portfolio reviews across the department, as directed by the fiscal year 2013 appropriations act, aimed at coordinating R&D activities.", "GAO will continue to monitor DHS's efforts to develop a policy to better coordinate and track R&D activities at the department.", "In September 2013, GAO reported that DHS border and maritime R&D components reported producing 97 R&D deliverables from fiscal year 2010 through 2012 at an estimated cost of $177 million. GAO found that the type of border and maritime R&D deliverables produced by S&T, the Coast Guard, and DNDO varied, and R&D customers GAO met with had mixed views on the impact of the deliverables.", "These deliverables included knowledge products and reports, technology prototypes, and software. For example, S&T developed prototype radar and video systems for use by Border Patrol.", "GAO recommended that S&T collect such feedback from its customers to better determine the usefulness and impact of its R&D projects and deliverables and make better-informed decisions regarding future work.", "As of July 2014, DHS had taken steps to address this recommendation, including making plans to gather customer feedback.", "Conducting R&D on technologies for detecting, preventing, and mitigating terrorist threats is vital to enhancing the security of the nation.", "Since its creation, DHS has spent billions of dollars researching and developing technologies used to support its missions including securing the border, and detecting nuclear material among others.", "Within DHS, S&T conducts and is responsible for coordinating R&D across the department. Other components also conduct R&D to support their respective missions.", "This statement discusses (1) how much DHS invests in R&D and the extent to which DHS has policies and guidance for defining and overseeing its R&D efforts across the department, (2) the extent to which R&D is coordinated across DHS, and (3) the results of DHS border and maritime security R&D efforts and the extent to which DHS has obtained feedback on these efforts.", "This statement is based on GAO's previously issued work from September 2012 to September 2013, and selected updates conducted in July 2014 on the status of GAO's prior recommendations.", "To conduct the updates, GAO reviewed agency documentation." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, -1, -1, 0, 0, -1, -1, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "European Union Enlargement", "Evolution of the European Union", "Origins", "Birth of the EU", "From 15 to 28", "Further EU Institutional Reforms and Enlargement", "Process of Enlargement", "Current EU Candidates", "Iceland", "Macedonia", "Montenegro", "Serbia", "Turkey11", "Prospects for Future Rounds of EU Enlargement", "U.S. Perspectives" ], "paragraphs": [ "", "The European Union (EU) is an economic and political partnership that represents a unique form of cooperation among 28 member states today. The EU has long viewed the enlargement process as an historic opportunity to further the integration of the continent by peaceful means. Analysts contend that the carefully managed process of enlargement is one of the EU's most powerful policy tools and has helped transform former dictatorships such as Spain and many of the former communist states of Central and Eastern Europe into stable democracies and free market economies. The EU maintains that the enlargement door remains open to any European country, including Turkey and those of the Western Balkans, able to fulfill the EU's political and economic criteria for membership. Croatia is the newest member state, joining the EU on July 1, 2013.\nAt the same time, many observers assess that EU enlargement may soon be reaching its limits, both geographically and in terms of public enthusiasm for further expansion. Some suggest that the EU's financial troubles could impede the EU's remaining enlargement agenda if EU leaders remain preoccupied with internal EU issues. Others point out that the EU's economic woes and increased uncertainty about the future direction of the EU itself might make joining the Union less attractive for some current and potential EU candidates.", "The EU is the latest stage in a process of European integration aimed at promoting political reconciliation and economic prosperity throughout the European continent. It has been built over several decades through a series of binding treaties.", "After 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 1952, six states—Belgium, the Federal Republic of Germany, France, Italy, Luxembourg, and the Netherlands—established the European Coal and Steel Community (ECSC), a single market in these two industrial sectors controlled by an independent supranational authority. In embarking on this integration project, its founders hoped that the ECSC would help control the raw materials of war and promote economic interdependence, thus making another conflict in Europe unthinkable.\nIn 1957, the six ECSC member states signed two new treaties in Rome: the first established the European Economic Community (EEC) to develop common economic policies and merge the separate national markets into a single market in which goods, people, capital, and services could move freely; the second 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).\nThe 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, introduced institutional reforms, and increased the powers of the fledgling European Parliament. At the beginning of 1993, the near completion of the single market brought about the mostly free movement of goods, people, capital, and services within the EC.", "On November 1, 1993, the Treaty on European Union (also known as the Maastricht Treaty) went into effect, establishing the modern-day European Union and encompassing the EC. The Maastricht Treaty established an EU consisting of three pillars: an expanded and strengthened EC; a common foreign and security policy; and common internal security measures. The Maastricht Treaty also contained provisions that resulted in the creation of an Economic and Monetary Union (EMU), including a common European currency (the euro). The European Union was intended as a significant step on the path toward not only greater economic integration but also closer political cooperation.\nOn January 1, 1995, Austria, Finland, and Sweden joined the EU, bringing membership to 15 member states. In June 1997, EU leaders met to review the Maastricht Treaty and consider the future course of European integration. The resulting Amsterdam Treaty, which took effect in 1999, enhanced the legislative powers of the European Parliament, sought to strengthen the EU's foreign policy, and aimed to further integrate internal security policies.\nIn December 2000, EU leaders concluded the Nice Treaty to pave the way for further EU enlargement, primarily to Europe's east. Entering into force in 2003, the Nice Treaty set out internal, institutional reforms to enable the Union to accept new members and still be able to operate effectively. In particular, it extended the majority voting system in the EU's Council of Ministers (representing the member states) to a number of additional policy areas that had previously required unanimity, and restructured the European Commission (the EU's executive).", "Since the end of the Cold War, the EU had worked with the former communist countries of Central and Eastern Europe to reform their political systems and economies in order to meet the EU's membership criteria. The EU viewed enlargement to Europe's east as fulfilling a historic pledge to further the integration of the continent by peaceful means, overcome decades of artificial division, and help make Europe \"whole and free.\" Cyprus and Malta had also expressed interest in joining the EU. In March 1998, the EU began accession negotiations with Cyprus, the Czech Republic, Estonia, Hungary, Poland, and Slovenia. In December 1999, the EU decided to open negotiations with six others: Bulgaria, Latvia, Lithuania, Malta, Romania, and Slovakia.\nIn December 2001, the EU announced that 10 of these countries—Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia—would likely be able to conclude accession talks by the end of 2002. Negotiations in 2002 with these 10 candidates on remaining issues such as agriculture and regional assistance proved challenging because they raised budgetary and burden-sharing issues. A deal was finally reached, however, and the EU concluded accession talks with all 10 at its December 2002 summit. The accession treaty was signed with the 10 countries on April 16, 2003, and they acceded to the EU on May 1, 2004.\nIn December 2004, the EU completed accession negotiations with Bulgaria and Romania, despite some continued EU concerns about the status of judicial reforms and anti-corruption efforts in both countries. Bulgaria and Romania formally joined the EU on January 1, 2007. Croatia acceded on July 1, 2013, bringing the Union to 28 member states. The Union's borders now stretch from the Baltics to the Black Sea, and the EU has a total population of over 500 million.", "Although the Nice Treaty had sought to introduce institutional reforms to allow an enlarged Union to function better and more effectively, critics asserted that the treaty established an even more complex and less efficient decision-making process. Certain provisions in the Nice Treaty also effectively (although not explicitly) limited the size of the EU to 27 member states. In light of the criticisms of the Nice Treaty and with a view to potential enlargement beyond 27 members, the EU embarked on a new institutional reform effort in 2002.\nThis process culminated on December 1, 2009, when the Lisbon Treaty came into force. The Lisbon Treaty evolved from the proposed EU constitutional treaty, which was rejected in French and Dutch national referendums in 2005, in part because of public concerns about continued EU enlargement. The Lisbon Treaty aims to further streamline the EU's governing institutions and decision-making processes, and in doing so eliminates the technical hurdle to enlarging the EU beyond 27 member states. The new treaty also seeks to give the EU a stronger and more coherent voice and identity on the world stage, and attempts to increase democracy and transparency within the EU, in part by granting more powers to the European Parliament.", "According to the Maastricht Treaty, any European country may apply for EU membership if it meets a set of core political and economic criteria, known as the \"Copenhagen criteria.\" These criteria for EU membership require candidates to achieve \"stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities; a functioning market economy, as well as the capacity to cope with competitive pressure and market forces within the Union; the ability to take on the obligations of membership, including adherence to the aims of political, economic, and monetary union.\" In addition, the EU must be able to absorb new members, so the EU can decide when it is ready to accept a new member.\nWhen a country submits an application to join the EU, it triggers a complex technical process and a sequence of evaluation procedures. At the same time, EU enlargement is very much a political process; most all steps on the path to accession require the unanimous agreement of the existing member states. As such, a prospective EU candidate's relationship or conflicts with individual member states may significantly influence a country's EU accession prospects and timeline.\nFollowing the submission of a given country's application, the European Commission first issues a formal opinion on the aspirant country, after which the Council of Ministers decides whether to accept the application. Following a positive unanimous decision by all 28 member states in the Council of Ministers to accept a given country's application, that country becomes an official EU candidate. Accession negotiations, a long and complex process in which the candidate country must adopt and implement a massive body of EU treaties, laws, and regulations, may then begin. The Commission and the Council of Ministers (acting unanimously) must also approve the actual opening of accession negotiations and a negotiating framework, which establishes the general guidelines for the enlargement talks.\nThe EU's nearly 144,000 pages of rules and regulations are known as the acquis communautaire . The acquis is divided into 35 subject-related \"chapters\" that range from free movement of goods to agriculture to competition. Accession negotiations on each chapter begin with a screening process to see to what extent the applicant meets the requirements of each chapter; detailed negotiations take place at the ministerial level to establish the terms under which applicants will adopt and implement the rules in each chapter. The European Commission proposes common negotiating positions for the EU on each chapter, and conducts the negotiations on behalf of the EU. Enlargement policy and accession negotiations are directed and led by the EU Commissioner for Enlargement and European Neighborhood Policy, currently Stefan Füle.\nIn all areas of the acquis , the candidate country must bring its institutions, management capacity, and administrative and judicial systems up to EU standards, both at national and regional levels. During negotiations, applicants may request transition periods for complying with certain EU rules. All candidate countries receive financial assistance from the EU, mainly to aid in the accession process.\nChapters of the acquis can only be opened and closed with the unanimous approval of all 28 existing EU member states acting in the Council of Ministers. Periodically, the Commission issues \"progress\" reports to the Council of Ministers and the European Parliament assessing the achievements in the candidate countries. Once the Commission concludes negotiations on all 35 chapters with an applicant state, the agreements reached are incorporated into a draft accession treaty, which must be approved by the Council of Ministers and the European Parliament. After the accession treaty is signed by the EU and the candidate country, it must then be ratified by each EU member state and the candidate country; this process can take up to two years.", "Currently, five countries are considered by the EU as official candidates for membership: Iceland, Macedonia, Montenegro, Serbia, and Turkey. All are at different stages of the accession process, and face various issues and challenges on the road to EU membership.", "Iceland has close and extensive ties with the EU. Iceland and the EU have a free trade agreement dating back to 1972, and Iceland has been a member of the European Economic Area (EEA) since 1994. Through the EEA, Iceland participates in the EU's single market, and a significant number of EU laws already apply in Iceland. Iceland also belongs to the Schengen area, which enables Icelanders to work and travel freely throughout the EU, and participates in a number of EU agencies and programs in areas such as enterprise, the environment, education, and research.\nIn July 2009, the former pro-European socialist-green coalition government submitted Iceland's application for EU membership in the wake of the 2008 financial crisis that led to the collapse of Iceland's banking system and the devaluation of its national currency. Despite divisions among Iceland's political parties and doubts among many Icelandic citizens about the benefits of EU accession, the government believed that membership would bolster Iceland's ability to recover from economic recession. The EU named Iceland as an official candidate in June 2010, and began accession negotiations with Iceland in July 2010. Given Iceland's existing integration with the EU, many observers expected accession talks to proceed quickly. As of the end of 2012, talks had been opened on 27 of the 35 negotiating chapters, and 11 had been provisionally closed.\nIceland's accession negotiations, however, have been on hold since May 2013, following the election of a new center-right coalition government largely opposed to EU membership. The EU continues to consider Iceland an official candidate country, but at present, Iceland's future EU prospects appear doubtful. Upon assuming office, the new Icelandic government announced that it would hold a public referendum on whether Iceland should resume EU accession negotiations. In February 2013, a government-commissioned report on Iceland's relations with the EU was presented to the Icelandic parliament, but no date has been set for the referendum. Opinion polls suggest a strong \"no\" camp exists in Iceland on EU membership, especially as Iceland's economy continues to improve. Even if Iceland were to resume accession negotiations at some point in the future, several challenges would remain. These include resolving differences with the EU on fisheries and whaling policies, and settling an ongoing dispute over fully repaying the British and Dutch governments for debts incurred when Iceland's online bank—Icesave—failed in 2008.", "Macedonia is one of the six countries that made up the former Yugoslavia. Within a decade of gaining independence, Macedonia concluded a Stabilization and Association Agreement (SAA) with the EU in 2001 to govern relations. It applied for EU membership in March 2004. The EU named Macedonia as an official EU candidate in December 2005.\nThe European Commission has recommended opening membership talks with Macedonia since 2009. According to the Commission, Macedonia is sufficiently fulfilling the political and economic criteria for membership, although EU officials have expressed some concerns about the country's democratic progress following its political crisis in late 2012-early 2013 and the government's treatment of journalists and the media. The EU continues to urge Macedonia to complete necessary reforms aimed at improving the rule of law, protecting freedom of expression, promoting the independence of the judiciary, and strengthening anti-corruption efforts. Some EU officials also remain concerned about inter-ethnic tensions in Macedonia, especially with respect to its Albanian minority.\nMacedonia has not yet secured a start date for accession negotiations. For years, this has been due largely to a long-running disagreement with Greece over the country's official name. Macedonia maintains the right to be recognized internationally by its constitutional name, the Republic of Macedonia, but Greece asserts that it implies territorial claims to the northernmost Greek province of the same name. Presently, the EU refers to Macedonia in official documents as the Former Yugoslav Republic of Macedonia (FYROM), a provisional name coined in 1993 to enable Macedonia to join the United Nations.\nAs a result of the name dispute, Greece continues to block the opening of EU accession talks with Macedonia. Bulgaria has also raised concerns about Macedonia's readiness for EU membership amid growing tensions between the two countries. In light of Macedonia's recent political difficulties and what some view as deteriorating democratic standards in the country, several other EU member states now appear reluctant to support opening accession negotiations as well, at least in the short term.\nGiven the ongoing stalemate in Macedonia's accession bid, the European Commission launched a High Level Accession Dialogue (HLAD) with Macedonia in March 2012 in order to help maintain momentum for political and economic reforms in the country. EU officials contend that the HLAD has contributed to progress in most priority areas, including the elimination of court backlogs and the fight against corruption. However, the Commission and a number of outside experts warn that as long as Macedonia's formal accession process remains stalled, it could put the sustainability of the country's reform efforts at risk.", "After ending its union with Serbia and gaining independence in June 2006, Montenegro and the EU began talks on a Stabilization and Association Agreement. The SAA was signed in October 2007. Macedonia applied for EU membership in December 2008 and was granted candidate status in December 2010.\nIn October 2011, the European Commission assessed that Montenegro had achieved the necessary degree of compliance with the political and economic criteria for accession talks to begin. The EU opened accession negotiations with Montenegro in June 2012. As of December 2013, seven negotiating chapters had been opened, and two of these provisionally closed. EU officials acknowledge Montenegro's solid progress toward meeting EU standards, but they also assert that more work is needed. Key challenges facing Montenegro include improving the rule of law, fighting corruption and organized crime, enhancing the independence of the judiciary, guaranteeing freedom of expression, strengthening administrative capacity, and improving the business environment.", "Until relatively recently, Serbian-EU relations were difficult and Serbia's path toward eventual EU membership faced several obstacles. Most EU member states and EU officials viewed Serbia as bearing the bulk of responsibility for the violent dissolution of the former Yugoslavia in the 1990s and for the 1999 conflict over its former province of Kosovo. Many in the EU considered Serbia as being slow to implement necessary political and economic reforms, largely uncooperative in tracking down Serbian war crimes suspects indicted by the International Criminal Tribunal for the former Yugoslavia, and resistant to normalizing relations with Kosovo (which declared independence from Serbia in 2008, but which is not recognized by Serbia).\nOver the last few years, however, Serbia has made considerable progress in modernizing its political and economic system. As part of EU efforts to boost pro-Western political forces in the country, the EU concluded a Stabilization and Association Agreement with Serbia in April 2008. In December 2009, Serbia submitted its formal application for EU membership. In the summer of 2011, Serbia's accession prospects improved significantly following the arrest and extradition of two high-profile war crimes suspects wanted by the International Criminal Tribunal for the former Yugoslavia.\nIn October 2011, the European Commission recommended EU candidate status for Serbia, provided that it continued to work on improving relations with Kosovo in EU-brokered talks. In February 2012, Serbia concluded two accords with Kosovo aimed at addressing some key EU concerns; Serbia agreed to conditions under which Kosovo may participate in Western Balkans regional institutions, and on the technical parameters for jointly managing its border with Kosovo. In light of these accords, the EU named Serbia as an official candidate in March 2012. Talks between Serbia and Kosovo continued under EU auspices.\nIn December 2012, EU leaders agreed to assess the possibility of opening negotiations with Serbia in spring 2013, following a Commission report on Serbia's progress toward meeting all EU membership criteria, and especially on whether Serbia had done enough to enhance its relations with Kosovo. In April 2013, Serbia and Kosovo reached a landmark agreement on normalizing relations, aimed in particular at resolving the situation in Northern Kosovo, which is mostly ethnic Serbian and over which Belgrade has exercised de facto control. In June 2013, the EU announced it would open accession negotiations with Serbia by January 2014 at the latest. EU governments wanted some additional time to assess progress on the implementation of the Serbia-Kosovo agreement before fixing a firm start date for launching the accession talks.\nIn December 2013, EU member states endorsed opening accession talks with Serbia, and the first negotiating session took place in late January 2014. In doing so, the EU noted that \"Serbia has achieved the necessary degree of compliance with the membership criteria, and notably the key priority of taking steps towards a visible and sustainable improvement of relations with Kososvo.\" The EU also urged Serbia to continue its efforts toward improving the rule of law, reforming the judiciary, fighting corruption and organized crime, protecting minority rights and media freedoms, and enhancing its business environment. At the same time, Serbia will not be ready to join the EU for many years (Serbian officials suggest that it would likely not be until 2020 at the earliest), and some experts assert that ultimately, the EU may not admit Serbia as a member until Kosovo's independence status is fully resolved.", "Turkey has a long-standing bid for EU membership, but the relationship between Turkey and the European project has been characterized historically by a series of ups and downs. Although EU member states have always supported a close association with Turkey, divisions continue to exist among member states over whether Turkey should be allowed to join the Union given concerns about its political system, human rights record, economy, and large Muslim population. The status of Turkey's membership application is a frequent source of tension between Turkey and the EU.\nTurkish EU aspirations date back to the 1960s. Turkey and the European Economic Community concluded an association agreement (known as the Ankara Agreement) in 1963, which was aimed at developing closer economic ties. The Ankara Agreement was supplemented by an Additional Protocol, signed in 1970, preparing the way for a customs union. Nevertheless, Turkey's 1987 application for full membership in the European Community was essentially rejected.\nIn 1995, the customs union between the EU and Turkey entered into force, allowing most goods to cross the border in both directions without customs restrictions. In 1997, the EU declared Turkey eligible to become a member of the Union. In 1999, the EU finally recognized Turkey as an official candidate country; at the same time, the EU asserted that Turkey still needed to comply fully with the political and economic criteria for membership before accession talks could begin.\nIn 2001, the EU adopted its first \"Accession Partnership\" with Turkey, setting out the political and economic priorities Turkey needed to address in order to adopt and implement EU standards and legislation. Ankara had hoped that the EU would set a firm date for starting negotiations at its December 2002 summit, but was disappointed; several EU members argued that although Turkey had undertaken significant reforms—such as abolishing the death penalty and increasing civilian control of the military—it still did not fully meet the membership criteria. Some member states also remained concerned about Turkey's stance toward Cyprus, which has been divided since 1974 between the internationally recognized Republic of Cyprus administered by the Greek Cypriot government in the island's south, and the Turkish Republic of Northern Cyprus, controlled by Turkish Cypriots. Turkish troops remain stationed in northern Cyprus, and Turkey does not recognize the Republic of Cyprus under the Greek Cypriot government.\nIn December 2004, the EU asserted that Turkey had made sufficient progress on legislative, judicial, and economic reforms to allow accession talks to begin in October 2005, provided that Turkey met two conditions by that time: bringing into force several additional pieces of reform legislation; and agreeing to extend Turkey's existing agreements with the EU and its customs union to the new EU member states, including Cyprus. Turkey met both of these requirements by July 2005. In pledging to extend its EU agreements and the customs union, however, Turkey asserted that it was not granting diplomatic recognition to the Greek Cypriot government. After some contentious debate among EU members over issues related to Turkey's lack of formal recognition of Cyprus and whether a \"privileged partnership\" short of full membership for Turkey should be retained as a future option, the EU opened accession talks with Turkey in October 2005. The EU asserted that the \"shared objective of the negotiations is accession,\" but that it will be an \"open-ended process, the outcome of which cannot be guaranteed beforehand.\" In other words, Turkey is still not ensured eventual full EU membership.\nDetailed negotiations between the EU and Turkey on the acquis began in 2006. Since then, the EU has opened talks on 14 chapters of the acquis (one of these was provisionally closed in June 2006), but progress has been slow and complicated in part by Cyprus-related issues. According to the EU, Turkey's continued refusal to open its ports and airports to ships and planes from the Greek Cypriot part of the island, as required by the 1970 Additional Protocol and the customs union, is a major stumbling block. In December 2006, the EU decided to delay the opening of eight chapters dealing with areas affecting the customs union pending Turkey's compliance with applying the Additional Protocol to Cyprus. Although negotiations on other chapters would be allowed to continue or be opened when ready, the EU asserted that no further chapters would be provisionally closed without resolution of the issues related to the Additional Protocol. Cyprus and France also maintain holds on opening several other chapters of the acquis .\nGiven the various difficulties with Turkey's membership negotiations, in May 2012, the European Commission launched a \"positive agenda\" with Turkey to reinvigorate EU-Turkish relations and to inject new momentum into Turkey's accession process. Areas covered by the \"positive agenda\" included, among others: alignment of Turkish legislation with the EU acquis ; political reforms and fundamental rights; visas; energy; and counterterrorism. The European Commission asserted that this \"positive agenda\" was intended to complement and support, not replace, Turkey's accession process. Observers note, however, that except for the negotiations establishing a road map for visa-free travel for Turks throughout the EU within three years, it is unclear whether the \"positive agenda\" has been successful or if it is still in operation in practice.\nAt the start of 2013, hopes were high that Turkey's EU accession process would be given a boost by the opening of negotiations on at least one new chapter of the acquis (no new chapters had been opened since 2010). The new French government of President François Hollande had announced that it was favorably disposed to rejuvenating Turkey's accession process and was prepared to lift its hold on opening the regional policy chapter of the acquis . In June 2013, EU leaders agreed to officially open the regional policy chapter, but delayed starting the actual talks because of what they viewed as Turkey's harsh crackdown on anti-government protests (the so-called Gezi park protests) that erupted in late May-early June. In November 2013, following the release of the Commission's annual progress report on Turkey, formal negotiations began on the regional policy chapter, although little progress has been achieved to date. A recent scandal inside the government of Turkish Prime Minister Recep Tayyip Erdogan resulted in the replacement of Turkey's Minister for EU Affairs, who was Turkey's chief accession negotiator.\nAmong most observers, there is little doubt that the EU accession process has been a major motivation behind Turkey's internal march toward reform and democratization. It has been a positive factor in helping transform Turkey's political and military institutions, its leadership, and its political culture, both at the national and, in some respects, the local government level. The accession process has also benefitted Turkey's economy. Many credit Turkey's customs union with the EU as being instrumental in Turkey's recent economic boom and its increasing economic competitiveness. As a candidate country, Turkey also receives almost $1 billion annually from the EU to help it meet EU standards and implement political and economic reforms.\nSome analysts assert that the EU accession process has also helped forge closer relations between Europe and Turkey. Economic ties between the EU and Turkey, despite the problems within the Eurozone, have expanded over the past several years with nearly half of Turkey's exports flowing to Europe. Turkey's strong and growing economy offers a large and important market for European goods and services, and is expected to do so for a long time. Turkish businesses are flourishing in parts of Europe, and Turkey has become a magnet for foreign direct investment, with much of that flowing from Europe. Turkey's role as an important energy hub and transit region for European energy supply diversification continues to grow, as was seen recently with the decision to construct the Trans-Adriatic Pipeline (TAP), which will bring natural gas from Azerbaijan across Turkey, via the Trans-Anatolian Pipeline (TANAP), into Italy and parts of Europe. Geopolitically, continuing instability in Europe's southern neighborhood of North Africa and the Middle East, including the ongoing civil war in Syria, suggests that a closer \"strategic dialogue\" with Turkey on foreign policy issues could become a more regular and important feature of the Turkey-EU relationship. These examples reinforce the belief among many that the EU and Turkey need each other for a multitude of reasons.\nNevertheless, experts contend that the slow pace of Turkey's progress toward EU membership suits some EU governments and many EU citizens who question whether Turkey should join the EU. Those of this view remain wary about the implications of Turkey's accession on the Union's institutions and finances given Turkey's size (with nearly 80 million people, Turkey would rival Germany as the largest EU country in terms of population), and the comparatively large portion of Turks considered poor in economic terms. Despite Turkey's improving economy, some in the EU still fear an influx of Turkish laborers, who would have the right to live and work in existing EU member states should Turkey accede to the Union. Many EU leaders and publics also worry that Turkey's predominantly Muslim culture would fundamentally alter the character, policies, and identity of the Union. In addition, EU concerns persist about the status of Turkish political reforms, the observance of fundamental rights such as freedom of expression and assembly, the independence of its judiciary, women's rights, the degree of media freedoms, and the extent to which religious and ethnic minorities are protected. Thus, European support for Turkey, never really that strong among the average citizenry, now seems even more ambivalent.\nAnalysts predict that at best, Turkish membership in the EU is at least another decade away. Moreover, they note that it is highly unlikely that Turkey would be able to join the EU without a political settlement on the divided island of Cyprus. A number of observers point out that some Turkish policy makers and citizens are also increasingly questioning the value of and need for Turkish accession. For many Turks, EU membership seems to have lost its appeal; one recent public opinion poll in 2013 found that only 44% of Turkish respondents believed that Turkey should join the EU (in comparison to 73% in 2004). Turkey's economy continues to expand, despite a slowdown in growth over the last two years, and Ankara has been seeking to reposition and strengthen itself in its own neighborhood between secular Europe and the Islamist emergence in the Middle East. Many Turks seem to feel \"being European\" or gaining membership in the Union is no longer needed in order to secure Turkey's status or to have an otherwise normal partnership with Europe.\nSome commentators suggest that a revitalized \"positive agenda\" may ultimately provide a way for both Turkey and the EU to back away from full EU membership for Turkey, while allowing for the development of stronger Turkish-EU ties. Turkish officials, however, continue to assert that EU membership remains a priority for Turkey. And many experts contend that neither Turkey nor the EU, at present, appears prepared to end Turkey's accession process.", "As noted previously, the EU asserts that the enlargement door remains open to any European country that is able to meet and implement the political and economic criteria for membership. The remaining Western Balkan states of Albania, Bosnia-Herzegovina, and Kosovo are all officially recognized by the EU as potential candidates, but their accession prospects and timetables vary (see the text box on the next page for more information); most analysts believe that it will likely be many more years before any of these countries are ready to join the EU. Nevertheless, the EU hopes that the possibility of membership will help accelerate reforms and promote greater stability in these and other states interested in eventual EU accession.\nSome countries of \"wider Europe,\" usually considered to include Ukraine, Moldova, and the southern Caucasus (Georgia, Armenia, and Azerbaijan), have also expressed long-term EU aspirations. In contrast to the Western Balkans, the EU has not formally recognized a membership perspective for any of the countries of \"wider Europe,\" but Georgia and Moldova, in particular, harbor hopes of joining the EU one day, and successive Ukrainian governments have supported EU membership to varying degrees. In November 2013, Georgia and Moldova initialed respective Association Agreements (AA) with the EU; an AA sets out the broad framework for cooperation between the EU and a partner country, and seeks to promote European political values and deeper economic ties. Many view the conclusion of an AA as a necessary first step on the path to eventual EU accession (however, AAs do not represent an EU membership commitment). Although the current Ukrainian government of Viktor Yanukovych has formally supported EU integration for Ukraine and had been expected to sign its AA in November 2013, Yanukovych declined to do so because of intense Russian opposition. This decision sparked massive pro-EU and anti-government protests in Ukraine, some of which have since turned violent, and led to a serious political crisis.\nOn the other hand, \"enlargement fatigue\" has become a serious issue in Europe. Despite Croatia's recent accession and the EU's membership commitment to the other Western Balkan countries, experts assert that a number of European leaders and many EU citizens remain cautious about further EU enlargement. This is especially true with respect to Turkey or the countries of \"wider Europe.\" EU officials increasingly stress that the process of enlargement must take into account the Union's \"integration capacity.\" In other words, acceding countries must be ready and able to fully assume the obligations of EU membership, and additional EU enlargement must not endanger the ability of the EU's institutions to function effectively or render EU financing arrangements unsustainable.\nApprehensions about continued EU enlargement seem to be driven by several issues. Some EU policy makers and European publics have long worried that the addition of nations with weak economies and low incomes could lead to an influx of low-cost or unwanted migrant labor. Such fears prompted the EU to allow the \"old\" member states to institute some temporary restrictions (of up to seven years) on labor migration from those countries that joined the EU in 2004 and 2007. Although EU members that chose not to impose any transitional restrictions (such as the UK and Ireland) did see an increase in workers from Central and Eastern Europe, most studies since 2004 suggest that the proportion of EU citizens moving from east to west following enlargement has been relatively small and that such migrants have not displaced local workers or significantly driven down local wages. Nevertheless, such concerns persist, especially when considering the accession of big, relatively less affluent countries such as Turkey or possibly Ukraine in the longer term. Similar to those allowed following the 2004 and 2007 enlargement rounds, EU member states may impose temporary labor migration restrictions on Croatian nationals following Croatia's 2013 accession.\nThe addition of large countries like Turkey or Ukraine could also have substantial financial consequences for the Union's budget and regional assistance programs, as well as implications for the functioning of certain EU institutions. Some key EU member states may fear that an ever-expanding Union could ultimately weaken their ability to set the tone and agenda in EU institutions and to drive EU policies. Moreover, doubts persist about the ability of some potential EU aspirants to implement EU standards, especially in areas related to the rule of law, fundamental rights, and anti-corruption measures.\nAnother broad European concern with respect to ongoing enlargement is with the overall identity of Europe, what the Union stands for, and where \"Europe\" ends. The Union's struggle with these issues has been highlighted by the possible admission of Turkey with an Islamic culture perceived by many Europeans to be vastly different and not compatible with Europe. Similarly, some in the EU question whether countries like Ukraine or those of the southern Caucasus should be considered as part of \"Europe,\" or whether their geography, history, and culture make them distinct. Many experts believe that enlargement may soon be reaching its limits and that the EU is unlikely to include the countries of \"wider Europe\" for the foreseeable future.\nMoreover, commentators suggest that the EU's recent economic problems and sovereign debt crisis—which have hit the countries of the Eurozone particularly hard—could potentially slow future rounds of EU enlargement. They note that EU leaders are grappling not only with trying to remedy the Eurozone's financial troubles, but also with uncertainty about the future direction of the EU itself. As a result, they may be less inclined to robustly push forward the enlargement agenda. Conversely, the EU's economic difficulties might make joining the Union—and ultimately the common currency—less attractive for some current and potential EU candidates. For decades, many countries aspired to join the EU largely for the economic benefits that membership would bring. Now, aspirants such as Turkey—with a dynamic economy—may not view the benefits of membership as outweighing the potential constraints on its sovereignty and national fiscal and monetary policies.", "The United States has strongly supported the European integration project since its inception in the 1950s. Successive U.S. Administrations and many Members of Congress have long backed EU enlargement, believing that it serves U.S. interests by advancing democracy and economic prosperity, and thereby creating strong European political allies and trading partners. Following the collapse of communism in 1989, U.S. and EU officials worked in close cooperation to promote democratic transitions and market-oriented reforms, with both sides of the Atlantic routinely asserting that the countries of Central and Eastern Europe would be warmly welcomed into Euro-Atlantic institutions such as the EU, as well as NATO, but only if they met the necessary political and economic criteria.\nSome analysts suggest that U.S. policy makers have also been keen to promote EU enlargement because they have viewed it as a way to decrease U.S.-EU tensions given that many of the newer members are often regarded as more pro-American. Moreover, many U.S. officials hoped that with the EU's enlargement to the east and the transformation of the continent nearly complete, the EU would turn its attention outward and be a more capable partner for the United States in tackling a range of global challenges. U.S. business and commercial interests have also generally favored EU enlargement, believing that it would provide access to a larger, more integrated European market, and that it would help further reforms of the EU's regulatory regime and common agricultural policy, frequent sources of U.S.-EU trade conflicts.\nOver the years, the only significant U.S. criticism of the EU's enlargement process has been that the Union was moving too slowly, especially with respect to Turkey. Successive U.S. Administrations and many Members of Congress have long advocated EU membership for Turkey, viewing it as a vital, strategic ally that should be anchored firmly to Europe. At times, Washington has played an active, albeit small, role in Turkey's EU accession path; in 1999, for example, the Clinton Administration reportedly lobbied Ankara to accept the EU's offer to recognize Turkey as an official EU candidate, despite Ankara's unhappiness that the EU had not set out a timetable for accession talks. Periodically, however, U.S. pressure to promote Turkey's EU accession prospects has generated tensions with the EU.\nThe United States continues to support Turkey's EU membership bid, as well as the EU aspirations of the Western Balkans. In the midst of the recent protests and violence in Ukraine, U.S. officials and some Members of Congress have stressed U.S. backing for those in Ukraine who see the country's future as being aligned with Europe. At the same time, U.S. policy makers realize that EU enlargement moves at its own pace, and that EU accession for Turkey and other countries is still many years away. Some U.S. officials remain concerned that \"enlargement fatigue,\" as well as the EU's financial crisis, could hinder additional EU expansion.\nOther commentators argue that EU enlargement could have some negative implications for U.S. interests. Even with EU institutional reforms, some assert that EU decision-making remains cumbersome and that enlargement has done little to make the EU a more coherent actor on the world stage. For example, they contend that the addition of the Central and Eastern European countries has created more divisions on certain issues, such as EU policy toward Russia, and that the EU is largely still preoccupied with its own internal problems. On the other hand, some pundits worry that despite the EU's current financial difficulties, a larger EU—with an economic output roughly equivalent to that of the United States and growing political clout—could ultimately rival U.S. power and prestige in the longer term." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 1, 2, 2, 2, 2, 2, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h0_title", "", "", "h0_full", "", "h1_full", "h2_full h3_title", "h2_full", "h2_full", "h2_full", "", "h3_full", "h3_full h2_full h1_full", "" ] }

{ "question": [ "What is the view on enlargement according to the EU?", "How has the EU grown?", "Who is the newest member of the EU?", "Why is enlargement beneficial to the EU?", "What are the requirements for membership?", "Why is the enlargement process significantly long?", "What factors can affect a candidate trying join the EU?", "Who are the current candidates for the EU?", "At which stage are Montenegro, Serbia, and Turkey to join the EU?", "Why have Macedonia's negotiations been held up?", "What have Iceland's negotiations been held up?", "What are some issues with enlargement?", "What are the worries involved with enlargement?", "What are some worries related to Turkey and the EU?" ], "summary": [ "The European Union (EU) has long viewed the enlargement process as an extraordinary opportunity to promote political stability and economic prosperity in Europe.", "Since 2004, EU membership has grown from 15 to 28 countries, bringing in most states of Central and Eastern Europe and fulfilling an historic pledge to further the integration of the continent by peaceful means.", "Croatia is the EU's newest member, acceding to the EU on July 1, 2013.", "Analysts contend that the carefully managed process of enlargement is one of the EU's most powerful policy tools, and that, over the years, it has helped transform many European states into functioning democracies and more affluent countries.", "The EU maintains that the enlargement door remains open to any European country that fulfills the EU's political and economic criteria for membership.", "At the same time, EU enlargement is also very much a political process; most all significant steps on the long path to accession require the unanimous agreement of the existing 28 member states.", "As such, a prospective EU candidate's relationship or conflicts with individual member states may also influence a country's EU accession prospects and timeline.", "Currently, five countries are recognized by the EU as official candidates for membership: Iceland, Macedonia, Montenegro, Serbia, and Turkey.", "While Montenegro and Serbia have only recently begun accession negotiations, Turkey's accession talks have been underway since 2005.", "Macedonia's accession negotiations have not yet started largely because of an ongoing dispute with Greece over the country's official name.", "And EU accession talks with Iceland, although relatively advanced, have been on hold since May 2013, when a new Icelandic government largely opposed to EU membership took office.", "Despite the EU's professed commitment to enlargement, some EU policy makers and many EU citizens are cautious about additional expansion, especially to Turkey or countries farther east, such as Georgia or Ukraine, in the longer term.", "Worries about continued EU enlargement range from fears of unwanted migrant labor to the implications of an ever-expanding Union on the EU's institutions, finances, and overall identity.", "Such qualms are particularly apparent towards Turkey, given its large size, predominantly Muslim culture, and comparatively less prosperous economy." ], "parent_pair_index": [ -1, -1, 1, -1, 0, 0, -1, -1, 0, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Types of Errors and Fraud", "Trafficking: Retailer and Recipient", "Retailer Application Fraud", "Errors and Fraud in Benefit Issuance to Households", "Recipient Errors", "Recipient Application Fraud", "Agency Errors", "Fraud Conducted by State Agencies or Their Agents", "State Agency Employee Fraud", "State Agency Fraud", "Extent of Errors and Fraud", "Extent of Retailer Trafficking", "Extent of Retailer Application Fraud", "Extent of Errors and Fraud in Benefit Issuance to Households", "National Payment Error Rate", "Context for Comparing FY2017 NPER to Prior Years", "Differentiating Between Recipient Fraud, Recipient Errors, and Agency Errors", "Recipient Fraud", "Recipient Errors", "Agency Errors", "Detection and Correction of Errors and Fraud", "Retailer Fraud", "Detection of Retailer Trafficking", "Correction of Retailer Trafficking", "Detection of Retailer Application Fraud", "Correction of Retailer Application Fraud", "Errors in Benefit Issuance to Households", "Detection of Recipient Errors—Data Matching", "Mandatory Data Matches", "Optional Data Matches", "Detection of Agency Errors", "Correction of Recipient and Agency Errors—Claims", "Recipient Fraud", "Detection of Recipient Fraud", "Correction of Recipient Fraud", "State Agency Employee Fraud Detection and Correction", "State Agency Fraud: SNAP Quality Control", "Quality Control: Incentives and Penalties Overview", "State Agency Misreporting and Falsification of Quality Control Data", "Combating Errors and Fraud: Issues and Strategies", "Retailer Trafficking", "Certain Store Owners Remain Active in SNAP Despite Permanent Disqualification for Trafficking", "Strengthening Monetary Penalties against Trafficking Retailers", "Changes in EBT Transaction Processing since 2014", "Enhancing Retailer Stocking Standards", "Suspending \"Flagrant\" Retailer Traffickers", "Increasing Requirements for High-Risk Stores", "Recipient Trafficking", "Requiring Recipient Photographs on EBT Cards", "State Agency Reporting on Recipient Fraud", "Enhancing Federal Financial Incentives for State Agencies to Fight Fraud", "Federal Oversight of State Agencies—Management Evaluations (MEs)", "Delayed State Agency Notification of Retailer Trafficking Cases", "Difference in Burden of Proof for Retailer Trafficking versus Recipient Trafficking", "Best Practices for Fighting Recipient Fraud—the SNAP Fraud Framework", "Retailer Application Fraud", "Verification and Use of Retailer Submitted Social Security Numbers (SSNs)", "Other Verification of Retailer Submitted Information", "Mandating Background Checks on High-Risk Retailer Applications", "Additional Retailer Application Vulnerabilities Identified in 2012 and 2013 USDA-FNS Proposed Rules", "Recipient Application Errors and Fraud", "Establish Federal Incentives to Conduct Pre-certification Investigations", "Difficulties in Collecting Amounts Overpaid to or Trafficked by Recipients", "Duplicate Enrollment and the National Accuracy Clearinghouse (NAC)", "Considerations for Data Matching", "State Agency Errors and Fraud", "Modifying State Involvement in the Quality Control System" ], "paragraphs": [ "", "The Supplemental Nutrition Assistance Program (SNAP) is the nation's largest domestic food assistance program, serving about 42.2 million recipients in an average month at a federal cost of over $68 billion in FY2017. It is jointly administered by the federal government and the states and provides means-tested benefits to recipients who are deemed eligible. These benefits may be used only for eligible foods at any of the approximately 260,000 authorized retailers, which range from independent corner stores to national chain supermarkets. In a program that operates with so many different stakeholders, detecting, preventing, and addressing errors and fraud is a complex undertaking. Among the complexities are the monitoring of retailer acceptance and recipient use of benefits, the accuracy of information provided by applicant households, and states' performance administering the program. Many governmental entities—federal and state agencies, including both human services and law enforcement—play a role in efforts to detect, prevent, and punish fraudulent SNAP activities and to reduce inadvertent errors.\nSNAP has typically been reauthorized in a farm bill approximately every five years; this occurred most recently in 2014 ( P.L. 113-79 ). Policymakers have long been interested in reducing fraud and improving accuracy in the program, and provisions related to these goals are frequently included in farm bills. In preparation for the next farm bill, up for reauthorization in September 2018, policymakers have again begun to discuss error and fraud in the program. The Trump Administration has also announced related policy changes. At the same time, some policymakers defend the program against criticism of its integrity.\nTo help policymakers navigate this complex set of policy issues, this report seeks to define terms related to errors and fraud; identify problems and describe what is known of their extent; summarize current policy and practice; and share recommendations, proposals, and pilots that have come up in recent years. The report answers several questions around four main types of inaccuracy and misconduct: (1) trafficking SNAP benefits (by retailers and by recipients); (2) retailer application fraud; (3) errors and fraud in SNAP household applications; and (4) errors and fraud committed by state agencies (including a discussion of states' recent Quality Control (QC) misconduct). The report then discusses challenges to combating errors and fraud—across the four areas—and potential strategies for addressing those challenges.\nCertain key ideas that are fundamental to discussion of SNAP errors and fraud are explored further in the report:\nErrors are not the same as fraud. Fraud is intentional activity that breaks federal and/or state laws, but there are also ways that program stakeholders—particularly recipients and states—may inadvertently err, which could affect benefit amounts. Certain acts, such as trafficking, are always considered fraud, but other acts, such as duplicate enrollment, may be the result of either error or fraud depending on the circumstances of the case. SNAP fraud is relatively rare, according to available data and reports. While this report discusses illegal or inaccurate activities in SNAP, they represent a relatively small fraction of SNAP activity overall. There is no single data point that reflects all the forms of fraud in SNAP. The most frequently cited measure of fraud is a national estimate of retailer trafficking, which is a significant, but not the only, type of fraud in the program. While retailer trafficking and retailer application fraud are pursued primarily by a single federal entity, recipient violations are pursued by 53 different state agencies. This leads to disparate approaches and disparate reporting. The national payment error rate (NPER) is the most-often cited measure of nationwide SNAP payment accuracy, but it has limitations. For example, it only reflects errors above an error tolerance threshold.\nPolicies to reduce fraud and increase accuracy can be in tension with other policy objectives, and may have unintended consequences. Policies that make retailer authorization more onerous, for instance, have the potential to decrease participants' access to SNAP-authorized stores. Making eligibility determinations more complex for recipients can impede recipients' access to the program and could strain states' eligibility determination operations. Implementing better data collection and accountability systems could require more staff and could incur more costs than it reduces.\nThis report provides a foundation for discussing error and fraud in SNAP and for evaluating policy proposals. It does not make independent CRS findings, but rather synthesizes the many available resources on error and fraud in SNAP. It relies, in particular, on reports and data from the United States Department of Agriculture's Food and Nutrition Service (USDA-FNS) as well as the published audits of the USDA's Office of the Inspector General (USDA-OIG) and the Government Accountability Office (GAO). For a list of abbreviations used in this report, see Appendix A .", "This section defines each of the types of intentional fraud and unintentional errors committed by recipients, retailers, and state agencies, including retailer trafficking (fraud), recipient trafficking (fraud), retailer application fraud, recipient application fraud, recipient errors, agency errors, state agency employee fraud, and state agency fraud.", "USDA-FNS is responsible for administering the retailer side of SNAP and for pursuing retailer fraud; while states are responsible for administering the recipient side of SNAP (with federal oversight) and for pursuing recipient fraud. \"Trafficking\" usually means the direct exchange of SNAP benefits (formerly known as food stamps) for cash, which is illegal, and both retailers and recipients can engage in this form of fraud. Although SNAP benefits have a dollar value, they are not the same as cash because they can only be spent on eligible food for household consumption at authorized stores equipped with Electronic Benefit Transfer (EBT) point of sale (POS) machines . Trafficking can also include the exchange of SNAP benefits for controlled substances, firearms, ammunition, or explosives. Additionally, trafficking includes indirect exchanges, such as obtaining cash refunds for products purchased with SNAP benefits or reselling products purchased with SNAP benefits. Trafficking SNAP benefits includes recipient trafficking and retailer trafficking. Retailer trafficking of SNAP benefits usually occurs when a SNAP recipient sells their benefits for cash, often at a loss, to an owner or employee of a store participating in SNAP. Recipient trafficking usually coincides with retailer trafficking, but it may take other forms (e.g., if a recipient were to sell their benefits, or food purchased with benefits, to another individual). Trafficking is one of the most serious forms of SNAP fraud, and although it does not increase costs to the federal government (as overpayments do), it does divert federal funds from their intended purpose.", "Retailers misrepresenting themselves or circumventing disqualification in the application process can be a source of fraud. To obtain SNAP authorization, applicant retailers must meet certain requirements, including stocking and business integrity standards. When a retailer initially applies to receive authorization to participate in SNAP or applies for reauthorization to continue SNAP participation, the store owner must submit personal and business information and documentation to USDA-FNS in order to verify eligibility for SNAP participation. If a retailer deliberately submits false or misleading information of a substantive nature in order to receive SNAP authorization despite their ineligibility, then they have committed falsification—retailer application fraud. Another kind of retailer application fraud involves a store owner attempting to circumvent disqualification from SNAP by engaging in a purported sale or transfer of ownership of their store to a spouse or relative; after which the new purported owner applies to participate in SNAP, claiming that the former disqualified owners are no longer associated with the store. This practice is often referred to as \"straw ownership,\" and USDA-FNS does not consider such sales or transfers of ownership to be bona fide. Such actions by the disqualified retailer are considered circumvention—retailer application fraud. Retailer application fraud does not increase costs to the federal government (as overpayments can), but it does enable retailers who may be more likely to engage in trafficking to enter the program.", "In addition to retailer trafficking and retailer application fraud, errors and fraud can arise in determining eligibility and benefit amounts for recipients.", "When a household initially applies to receive or recertifies to continue receiving SNAP benefits, the applicant household must submit personal information and documentation to their state agency for eligibility determination, and for benefit calculation if found to be eligible. During this application process, an applicant may misunderstand SNAP rules, make a miscalculation, otherwise unintentionally provide incorrect information, or accidentally omit certain information. If this error results in an overpayment to the household and there is no proof that this error was intentional , then this error is designated as an inadvertent household error (IHE).", "If an applicant is found to have intentionally submitted false or misleading information during the initial application or recertification process that leads to an incorrect eligibility or allotment determination (resulting in an overpayment), then that applicant has committed an intentional program violation (IPV)—recipient application fraud.", "SNAP overpayments or underpayments that are not the result of recipient actions (i.e., not the result of recipient errors or recipient fraud) are generally the result of agency errors (AEs). Agency errors include overpayments or underpayments caused by the action of, or failure to take action by, any representative of a state agency.", "\"State agency employee fraud\" and \"state agency fraud\" are not terms defined in statute, regulation, or agency guidance. As used in this report, \"state agency employee fraud\" and \"state agency fraud\" include forms of fraud often referred to as \"insider threats\"—a threat to SNAP integrity that comes from within entities that administer SNAP (i.e., state agencies).", "State agency employee fraud is any intentional effort by state employees to illegally generate and benefit from SNAP overpayments. State agency employee fraud usually involves eligibility workers who abuse their positions and access to the SNAP certification process in order to unlawfully generate SNAP accounts that materially benefit individuals not entitled to such benefits.", "State agency fraud is any intentional effort by state officials to mislead USDA-FNS or other federal authorities in order to illegally obtain federal funds or avoid federal monetary penalties. State agency fraud cases are very infrequent and generally center on a state's falsification of program-related data. Of interest to policymakers, the state agency fraud case examined in this report, first identified in 2017, deals with multiple states' falsification of Quality Control (QC) data in order to obtain monetary bonuses and avoid monetary penalties, with some actions dating back to 2008. (For more information, see \" State Agency Fraud: SNAP Quality Control .\")", "", "USDA-FNS publishes an annual report that summarizes their annual administrative activities pertaining to retailers participating in SNAP, including detailed retailer data on participation and redemptions, retailer applications and authorizations, investigations and sanctions, and administrative review. According to this Retailer Management Report, in FY2016 there were 260,115 retailers participating in SNAP, and USDA-FNS permanently disqualified 1,842 stores for retailer trafficking (less than 1% of all stores).\nRoughly every three years, USDA-FNS publishes a study estimating the extent of retailer trafficking in SNAP over about three years of SNAP redemption data. The retailer trafficking studies referenced in this report were issued in 2017 (covering 2012-2014), 2013 (covering 2009-2011), and 2011 (covering 2006-2008). By examining a representative sample, these studies determined two national rates that reflect the prevalence of retailer trafficking. The national retailer trafficking rate represents the proportion of SNAP redemptions at stores that were estimated to have been trafficked. The national store violation rate represents the proportion of authorized stores that were estimated to have engaged in trafficking.\nThe national retailer trafficking rate is the most-cited measure of fraud in SNAP, although it does not capture all types of fraud (i.e., it represents only retailer trafficking). According to the September 2017 USDA-FNS Retailer Trafficking Study, the national retailer trafficking rate for 2012-2014 was 1.50%, up from 1.34% in the 2009-2011 study. This means that, during this period, USDA-FNS estimates that 1.50% of all SNAP benefits redeemed were trafficked at participating stores. This constitutes about $1.1 billion in estimated benefits trafficked each year at stores during this period. Additionally, this study estimated that the national store violation rate for this period was 11.82%, up from 10.47% in the 2009-2011 study. This means that, during this period, USDA-FNS estimates that 11.82% of all SNAP-authorized retailers engaged in retailer trafficking at least once.\nThe September 2017 USDA-FNS Retailer Trafficking Study found that the increase in retailer trafficking was due to increased program participation by smaller stores, which have a higher rate of retailer trafficking. While stores enter and leave the program from year to year, the overall growth in SNAP-authorized stores over the last 10 years (FY2007-FY2016) was about 93,000, and about 63% of this growth came from convenience stores in the program (see Table D-1 in Appendix D ). As of FY2016, convenience stores constitute about 46% of all stores in the program, up from 36% in FY2007. According to the September 2017 USDA-FNS Retailer Trafficking Study, covering 2012-2014, convenience stores account for about 5% of total SNAP redemptions, but about 57% of retailer trafficking (see Table D-3 in Appendix D ). Also according to this study, about 18% of all SNAP benefits used at authorized convenience stores are trafficked by these stores (i.e., the convenience store trafficking rate), and about 19% of all authorized convenience stores are engaged in trafficking (i.e., the convenience store violation rate). These rates are significantly higher than the national rates for all stores (see Table D-2 in Appendix D ). The increase in SNAP participation by smaller stores appears to correlate to an overall increase in retailer trafficking, according to USDA-FNS. Figure 1 displays some of these data from the three most recent trafficking studies.", "There is no standard measure of retailer application fraud. However, USDA-FNS does report annually on actions taken against business integrity violations, and a retailer engaged in application fraud (including falsification and circumvention) is generally considered to be in violation of business integrity standards.\nIn FY2016, USDA-FNS sanctioned 126 stores for business integrity violations. This number includes sanctions not related to retailer application fraud and amounts to less than 1 store sanctioned for every 2,064 stores participating in the program. During the same period, USDA-FNS permanently disqualified about 15 times as many stores for retailer trafficking.", "", "The SNAP Quality Control (QC) system measures improper payments in SNAP. This system was first established by the Food Stamp Act of 1977. Under the QC system, every state agency conducts a monthly review of a sample of its households, comparing the amounts of overpayments and underpayments to total issuance. From this review, state agencies calculate their state payment error rate (SPER). USDA-FNS conducts annual reviews of a sample of each state's reviews to validate state findings and determine national rates—developing the national payment error rate (NPER).\nThe NPER is the most-often cited measure of payment accuracy in SNAP. Unlike the national retailer trafficking rate, the NPER is not a measure of fraud. The NPER reflects improper payments, but not the cause of these overpayments and underpayments. The NPER estimates all overpayments and underpayments resulting from recipient errors, recipient application fraud, and agency error. Per current federal law, only overpayments and underpayments of $38 or more (inflation-adjusted annually) in the sample month are counted when calculating the payment error rate—this is called the Quality Control threshold. Additionally, the NPER combines both the overpayment rate and the underpayment rate, so it does not reflect only excess expenditures. For example, in FY2017, the NPER was 6.30%—which included a 5.19% overpayment rate and a 1.11% underpayment rate.\nIn discussions regarding SNAP payment accuracy, the NPER is sometimes misunderstood to be a measure of the federal dollars lost to fraud and waste in the program. The NPER instead reflects the extent of inaccurate payments that exceed the Quality Control threshold in a given year. Regardless of the cause of an overpayment, SNAP agencies are required to work towards recovering excess benefits from households that were overpaid. Recovery of overpayments involves, first, the establishment (or determination) of a claim against a household, and, second, the actual collection of that claim. Applying the FY2017 NPER to total benefit issuance, in FY2017 an estimated $3.3 billion in benefits were overpaid, an estimated $710 million in benefits were underpaid. In FY2016, the most recent year available, states established over $684 million in claims to recover overpayments.", "Recent years' NPERs are listed in Table 1 , showing rates from FY2011-FY2014 and then skipping to FY2017. SNAP national payment error rates were not released by USDA-FNS in FY2015 or FY2016, due to data quality concerns.\nIn 2014, USDA found data quality issues in 42 of 53 state agencies' Quality Control data reporting. These data quality issues are not, in and of themselves, proof of wrongdoing. In some cases, states had not followed protocol, while in other cases states had been found to have deliberately covered up errors (fraudulent actions). (A more detailed discussion of Quality Control as well as these audits and investigations can be found in \" State Agency Fraud: SNAP Quality Control \"). USDA-FNS suspended error reporting for FY2015 and FY2016, and also used this time to examine and improve state quality control procedures.\nIn June 2018, USDA-FNS published FY2017 state and national error rates (NPER). USDA-FNS's accompanying materials describe that this NPER was determined \"under new controls to prevent any recurrence of statistical bias in the QC system,\" which includes \"a new management evaluation process to examine state quality control procedures on a regular basis.\" The agency also described that the FY2017 rate stems from \"a modernized review process, which includes updated guidance, revisions to [the relevant FNS handbook], extensive training for State and Federal staff, and modifications to State procedures to ensure consistency with Federal guidelines.\"\nAs displayed ( Table 1 ) and discussed earlier, the FY2017 NPER of 6.30% is a substantial increase from the FY2014 of 3.66%. USDA-FNS states the FY2017 rate \"is higher than the previous rate ... but it is more accurate.\" However, changes to data collection and related oversight since FY2014 make it difficult to reliably compare FY2017 rates to earlier years, as it is possible that earlier years include systemic under-reporting.", "The SNAP overpayment rate (component of the national payment error rate) estimates the extent of all SNAP overpayments, including overpayments resulting from recipient errors, recipient fraud, and agency errors (estimated to total about $3.3 billion overpaid in FY2017). The NPER does not , however, differentiate between the relative extents of each of these types of errors and fraud (i.e., the NPER cannot tell us what percentage of this $3.3 billion is due to, for example, agency errors). There is currently no single standard measurement that individually quantifies the extent of recipient errors, recipient fraud, or agency errors. State agencies are, however, responsible for administering the recipient side of SNAP, and every year states report data on these activities which USDA-FNS publishes in the SNAP State Activity Report (SAR). This report includes detailed data on state-level program operations including benefit issuance, participation, administrative (i.e., non-benefits) costs, recipient disqualification, and claims.\nWhen a recipient error, an act of recipient fraud, or an agency error results in an overpayment to a household (and that overpayment is detected by the state agency), the household is generally required by the state agency to repay the overpaid amount (i.e., a claim is established). Data on the establishment of claims resulting from recipient errors, recipient fraud, and agency errors is provided in the state report (subdivided by type). The extent of claims establishment, therefore, can serve as a proxy for the extent of these types of errors and fraud. In addition, when a recipient commits fraud (and that act of fraud is detected and proven by the state agency), that recipient is generally punished with disqualification from SNAP. The extent of recipient disqualifications, therefore, can serve as a proxy for the extent of recipient fraud.\nBefore examining these claims and disqualification data, however, it is important to understand the limitations of this approach. Claims are not established in all instances of overpayments resulting from recipient errors, recipient fraud, or agency errors. For example, claims may not be established when overpayment amounts fall below state agencies' claims thresholds or when overpayments are not detected by state agencies. Likewise, not all acts of recipient fraud are detected, proven, and punished with disqualification. Also, these claims establishment and disqualifications data are not based on representative samples and, therefore, these data may not fully reflect the prevalence of recipient errors, recipient fraud, or agency errors in the SNAP caseload. Despite these shortcomings, these claims and disqualification data are the only available measures which reflect, albeit imperfectly, the extent of recipient errors, recipient fraud, or agency errors in SNAP. The following calculations of the extent of these types of errors and fraud are based on SNAP State Activity Report FY2016 data including the following: total issuance of $66,539,351,219; average monthly participation of 21,777,938 households; an average monthly participation of 44,219,363 persons; total claims established of 884,301; and total claims dollars established of $684,197,891.", "Unlike retailer trafficking, which is handled by one federal entity (USDA-FNS), recipient fraud is detected and punished by 53 different SNAP agencies (50 states, DC, Guam and the U.S. Virgin Islands) and, as noted in the September 2012 USDA-OIG report, \"FNS cannot estimate a recipient fraud rate because it has not established how States should compile, track, and report fraud in a uniform manner.\" This lack of standardization is a reason why a national recipient fraud rate does not exist. Both recipient trafficking and recipient application fraud are included in these figures.\nAccording to the FY2016 SNAP State Activity Report\nfor every 10,000 households participating in SNAP, about 14 contained a recipient who was investigated and determined to have committed fraud that resulted in an overpayment that the state agency required the household to repay (30,274 claims established); for every $10,000 in benefits issued to households participating in SNAP, about $11 were determined by state agencies to have been overpaid due to recipient fraud and were required to be repaid by the overpaid household ($73,403,758 in fraud claims established); about 3% of the total number of claims established were established due to recipient fraud; about 11% of the total claims dollars established were established due to recipient fraud; for every 10,000 recipients participating in SNAP, about 13 were disqualified from the program for violating SNAP rules (e.g., committing fraud; 55,930 disqualified); about 1.5% of disqualification entries made into the USDA-FNS electronic Disqualified Recipient System (eDRS) in FY2016 were permanent disqualifications; and for every $10,000 in benefits issued to households participating in SNAP, about $21 were determined by state agencies to have been lost (overpaid due to recipient application fraud or trafficked) to recipient fraud associated with disqualified recipients ($136,475,242 in program loss associated with disqualified recipients).", "According to the FY2016 SNAP State Activity Report\nfor every 10,000 households participating in SNAP, about 181 were overpaid due to a recipient error and the state agency required the household to repay the overpaid amount (394,883 recipient error claims established); for every $10,000 in benefits issued to households participating in SNAP, about $63 were determined by state agencies to have been overpaid due to recipient errors and were required to be repaid by the overpaid household ($421,934,288 in recipient error claims established); about 45% of the total number of claims established were established due to recipient errors; about 62% of the total claims dollars established were established due to recipient errors; about 65% of FY2016 claims were established by four states; about 55% of FY2016 claims amounts were established by these four states; and these four states accounted for about 30% of SNAP participants.", "According to the FY2016 SNAP State Activity Report\nfor every 10,000 households participating in SNAP, about 47 were overpaid due to agency errors, and the state agency required the household to repay the overpaid amount (459,144 agency error claims established); for every $10,000 in benefits issued to households participating in SNAP, about $28 were determined by state agencies to have been overpaid due to agency errors and were required to be repaid by the overpaid household ($188,859,846 in agency error claims established); about 52% of the total number of claims established were established due to agency errors; about 28% of the total claims dollars established were established due to agency errors; about 80% of the total number of agency error claims established were established by California; about 64% of the total agency error claims dollars established were established by California; and California accounted for about 10% of SNAP participants.\nAlthough the total volume of claims established has increased over time, the majority of claims established have been the result of recipient errors, with agency errors being second most common, and recipient fraud claims being least common—as illustrated by Figure 2 .", "State and federal efforts to detect and correct errors, as well as efforts to detect and deter fraud, are detailed in this section.", "USDA-FNS is responsible for administering the retailer side of SNAP and for pursuing retailer fraud. USDA-OIG, in collaboration with the Federal Bureau of Investigations (FBI), U.S. Secret Service, and other federal, state, and local law enforcement entities, is responsible for pursuing criminal charges against retailers found to be engaging in retailer trafficking.", "Retailer trafficking can be detected through a variety of means, including the following:\nAnalysis of EBT Transaction Data —Whenever a SNAP EBT card is swiped, the transaction data is captured and analyzed by USDA-FNS for suspicious patterns. USDA-FNS use these data to develop a case against a retailer when the transactions indicate retailer trafficking is occurring at their store. In FY2016, USDA-FNS reviewed the transactions of nearly 9% of participating stores. Over 80% of retailer trafficking detected by USDA-FNS are found primarily through EBT transaction analysis.\nUndercover Investigations —USDA-FNS performs undercover investigation of stores suspected of violating SNAP rules (e.g., trafficking), and in FY2016, USDA-FNS investigated over 1% of participating stores.\nState Law Enforcement Bureau (SLEB) Agreements — Some state agencies enter into state law enforcement bureau (SLEB) agreements with law enforcement entities in their jurisdictions in order to further their efforts to detect trafficking. These agreements are typically focused on recipient trafficking, but they can have implications for retailer trafficking.\nTips and Referrals —USDA-FNS receives tips, complaints, and referrals, which can lead to cases of retailer trafficking. These referrals come from SNAP retailers, SNAP recipients, members of the public, state agencies, SLEBs, USDA-OIG, or other law enforcement entities. USDA-OIG operates a website and hotline for members of the public to report instances of fraud. In FY2016, USDA-OIG referred 4,320 complaints to USDA-FNS.", "If a store is found to have committed trafficking, then all of the owners of the store may be subject to penalties. Major penalties associated with retailer trafficking include the following:\nDisqualification —If USDA-FNS finds that a SNAP-authorized retailer violated any SNAP rules, then that retailer may be subject to a period of disqualification from program participation. Trafficking SNAP benefits is considered one of the most severe violations of SNAP rules, and a retailer found by USDA-FNS to have trafficked SNAP benefits (regardless of the amount) is generally subject to a permanent disqualification (PDQ) from program participation.\nReciprocal WIC Disqualification —Stores that are disqualified for violations of the rules of SNAP are disqualified for an equal (but not necessarily concurrent) period of time from participation in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC). Likewise, stores disqualified from WIC are disqualified from SNAP for an equal (but not necessarily concurrent) period of time. PDQs, such as PDQs for trafficking, are also reciprocal between the programs.\nRestitution of Benefits Trafficked (Claims) —When a retailer accepts or redeems SNAP benefits in violation of the Food and Nutrition Act of 2008 (FNA), such as engaging in retailer trafficking of SNAP benefits, that retailer may be compelled to repay the amount that they illegally redeemed. This is called a claim and is considered a federal debt. USDA-FNS has the authority to collect such claims by offsetting against a store's SNAP redemptions as well as a store's bond or letter of credit (LOC), where applicable.\nPublic Disclosure of Disqualified Retailers —USDA-FNS has the authority to publicly disclose the store and owner name for disqualified retailers. A December 2016 USDA-FNS Final Rule asserted USDA-FNS's intent to disclose this information in order to deter retailer trafficking.\nTransfer of Ownership Civil Money Penalty (TOCMP) —If a retailer under a period of disqualification sells or transfers ownership of their store, then USDA-FNS is to assess that disqualified retailer a \"transfer of ownership civil money penalty\" (TOCMP). This means that retailers permanently disqualified from SNAP for committing retailer trafficking are to be assessed this penalty whenever they sell or transfer ownership of their stores (regardless of how much time has passed since the disqualification occurred). In FY2016, USDA-FNS assessed 257 such penalties with a mean value of $29,284.\nExclusion from the General Service Administration's System for Award Management (GSA-SAM) —This GSA system tracks individuals and entities that do business with the federal government. An individual or entity excluded from this system is prohibited from doing business with the federal government for the duration of the exclusion. All of the owners of a store permanently disqualified from SNAP participation for trafficking benefits are permanently listed as exclusions in GSA-SAM. As of September 2017, 10,307 permanently disqualified retailers have been listed by USDA-FNS in GSA-SAM as exclusions due to SNAP and WIC violations. This type of exclusion can have collateral consequences for the excluded party.\nCriminal Charges and Penalties —Retailers engaged in trafficking may be criminally charged and penalized with fines up to $250,000 and imprisonment up to 20 years. In addition, other adverse monetary penalties (e.g., asset forfeitures, recoveries, collections, and restitutions) may be assessed against those convicted. USDA-OIG, in collaboration with federal, state, and local law enforcement entities, pursues charges against retailers who traffic SNAP benefits. USDA-OIG usually criminally pursues only retailers who traffic in high dollar amounts of benefits and/or retailers who also engaged in other criminal activity. In some cases, state law enforcement bureaus may pursue criminal charges against individuals engaged in retailer trafficking under state or local statutes. In FY2016, USDA-OIG opened 208 SNAP fraud investigations, and obtained 600 indictments, 510 convictions, and $95.3 million in monetary penalties.", "USDA-FNS reviews all information and materials submitted by applicant retailers in order to identify suspicious items and documentation that may indicate retailer application fraud. Where such suspicions arise, USDA-FNS may require additional supporting documentation from the applicant retailer and may contact other federal, state, or local government entities (e.g., entities that administer business licensure, taxation, or trade) to verify questionable items.", "Denial of Application —If USDA-FNS finds during the application process that a retailer fails to meet requirements such as stocking and business integrity standards, then the retailer's application is to be denied. If USDA-FNS determines that an applicant retailer has falsified the application, then that retailer's application is to be denied—the period of denial ranges from three years to permanent depending on the severity and nature of the falsification. A retailer denied authorization to participate in SNAP is not generally subject to any penalties other than denial.\nPermanent or Term Disqualification —Retailers who knowingly engage in falsification of substantive matters (e.g., falsification of ownership or eligibility information) may be subject to a permanent disqualification from program participation. Retailers who engage in falsification of a lesser nature (e.g., falsification of store information such as store name or address) are generally subject to a term disqualification of three years. Retailers that are permanently disqualified for falsification may be subject to all of the penalties associated with permanent disqualification (as discussed previously in the context of retailer trafficking penalties), including reciprocal WIC disqualification, claims, public disclosure, TOCMP, GSA-SAM exclusion, and criminal charges and penalties where appropriate.", "SNAP certification is the process of evaluating an application, determining if an applicant is eligible to receive SNAP benefits, and the appropriate size of the benefit allotment if the applicant is found to be eligible. This is one of the primary responsibilities of state agencies (with federal oversight). Errors (i.e., recipient errors and agency errors) that occur during this process can result in underissuance or overissuance of SNAP benefits.", "The primary sources for information needed to make certification determinations are generally the applicants themselves, but the eligibility worker may also utilize collateral contact with other entities when necessary. In addition, an eligibility worker may perform additional checks using federal, state, local, or private data systems in order to verify information provided by applicants. A visual overview of data matching in the certification process is presented in Figure 3 .\nIn FY2016, about 62% of overpayment dollars identified through the claims establishment process (i.e., after overpayments have already occurred) were due to inadvertent household errors made by recipients when applying for benefits. With a caseload of about 22 million households, recipient errors (sometimes stemming from simple misunderstanding of federal SNAP regulations) can add up quickly and create a serious payment accuracy problem for states. Although the upfront cost and effort required of a state agency to implement a data match as part of the SNAP certification process can be considerable, data matches using federal, state, local, or private systems can allow agencies to quickly identify recipient errors that could affect applicants' eligibility or benefit amount. Over the years, policymakers have been interested in data matching systems to reduce overpayments.", "The following six data matches have been statutorily mandated as part of the SNAP certification process:\nU.S Department of Health and Human Services, Administration for Children and Families, National Directory of New Hires (HHS-ACF-NDNH) New Hire File —This system is used to verify household employment information. The 2014 Farm Bill mandated state use of the New Hire File and this requirement was implemented in a January 2016 USDA-FNS Interim Final Rule.\nSocial Security Administration, Prisoner Verification System (SSA-PVS) —This system is used to verify if household members are incarcerated. The Balanced Budget Act of 1997 mandated that all SNAP agencies match against the SSA's Prisoner Verification System.\nSocial Security Administration, Death Master File (SSA-DMF) —This system is used to verify if household members are deceased. In 1998, P.L. 105-379 mandated that all SNAP agencies match against the SSA-DMF.\nUSDA-FNS Electronic Disqualified Recipient System (USDA-FNS-eDRS) —This system is used to verify if household members are disqualified from SNAP.\nU.S. Department of Homeland Security U.S. Citizenship and Immigration Services Systematic Alien Verification for Entitlements (DHS-USCIS-SAVE) —This system is used to verify household members immigration status. The 2014 Farm Bill mandated that SNAP agencies utilize an immigration status verification system as a part of the certification process; a December 2016 USDA-FNS notice of proposed rulemaking (NPRM) regarding the requirement to utilize this data match was published, but the rule has not yet been finalized.\nIncome and Eligibility Verification System (IEVS) —SNAP agencies are required to verify the income and eligibility of all applicants during the SNAP certification process. They generally fulfill this requirement through the use of an income and eligibility verification system (IEVS). An IEVS is not a single data match, but rather a state system that may use multiple federal, state, and local data sources to confirm the accuracy of eligibility and income information provided by the applicant and to locate pertinent information that may have been omitted by the applicant. The specific data matches used in an IEVS, however, will vary from state to state. The 2014 Farm Bill made states' use of IEVS mandatory in accordance with standards set by the Secretary of Agriculture. This policy is pending implementation, as USDA-FNS published an NPRM in December 2016, but a final rule has not yet been published.", "States also use optional data matches and incorporate these into their processes. Several key eligibility data examples, such as income and program disqualifications, are discussed below:\nIncome matches —A household's income and related SNAP deductions are basic determinants of eligibility and an applicant's benefit allotment. As a result, in addition to the mandatory matches discussed above, most states utilize several optional federal and state data matches to verify earned and unearned income. For examples of optional income matches, see Appendix C .\nSNAP disqualification matches —In addition to the mandatory USDA-FNS-eDRS match, states maintain their own internal databases of recipients disqualified within the state, and a match from such state databases indicates that a member of an applicant household is ineligible.\nOther d ata m atch es —In addition, state agencies use data sources to assess a number of other aspects of a household's application or recertification. For instance, state criminal justice or correctional agency system matches and state department of health vital information system or burial assistance program matches can ensure that a household does not include incarcerated or deceased members. Likewise, state department of children's services or foster care matches can ensure that a household does not include children that have been removed. Such state matches to verify that household size is correct are generally considered verified upon receipt. Matches against state and federal crime databases can ensure that individuals subject to crime-related restrictions are correctly excluded in eligibility determination. Data matches between SNAP and other public benefit programs can also help a state agency ensure that states are accurately implementing their comparable disqualification policies. These data matches are discussed in more detail in the October 2016 GAO report.", "State agencies are responsible for preventing, detecting, and correcting agency errors. Agency errors are generally the product of human error, so training and supervision of eligibility workers is the primary means of mitigating them (e.g., something as simple as an eligibility worker transposing two digits during data entry). Agency errors can be detected by ongoing, independent process improvements (e.g., quality control or quality assurance), supervisory case review, eligibility workers, and recipients. Agency errors may also result from state system technical glitches, so states may detect these errors through system audits and mitigate them through system improvements.", "If a household receives an overpayment, and that overpayment is detected by the state agency, then the agency generally establishes a claim against the household, requiring the adult members of the household to repay the amount that was overpaid. Claims are considered federal debt and must be repaid by the adult members of overpaid households regardless of the cause of the overpayment (i.e., recipient error, recipient fraud, or agency error) except in the case of a major systems failure. Agencies must also correct underpayments that they identify. State agencies may elect not to establish claims on low dollar overpayments when such overpayments fall below the agency's claims threshold, explained below.\nClaims are not always established in the year that the overpayment occurs and claims are not always collected in the year that they are established. State agencies are entitled to retain 35% of the amount they collect on recipient fraud claims and certain recipient error claims, 20% of the amount they collect on all other recipient error claims, and none of the amount they collect on agency error claims.", "", "State agencies are responsible for administering the recipient side of SNAP (with federal oversight) and for pursuing recipient fraud. State agencies must, furthermore, establish and operate a SNAP recipient fraud investigation unit. These units detect and punish recipient trafficking, as well as other forms of recipient fraud. USDA-FNS supports state agencies in this capacity by providing technical assistance and setting policy. USDA-OIG, in collaboration with other federal and state law enforcement entities, sometimes criminally pursues recipients who traffic SNAP benefits when such recipients traffic in high dollar amounts of benefits and/or such recipients also engage in other criminal activity. Recipient fraud, like retailer fraud, can be detected through a variety of means, including the following:\nAnalysis of EBT Transaction Data —Once USDA-FNS has completed the process of administratively penalizing a retailer for retailer trafficking, and the retailer has exhausted their appeal rights, then USDA-FNS provides the retailer trafficking case to the appropriate state agency including EBT card numbers which can be used to identify SNAP recipients who may be trafficking.\nSocial Media —State agencies use automated tools and manual monitoring to detect postings on social media and online commerce websites by individuals attempting to traffic SNAP benefits.\nUndercover Investigations —As is done with retailer trafficking cases, state agencies perform undercover investigations to detect recipient trafficking and recipient application fraud.\nMultiple Card Replacement —Recipients who frequently request replacement EBT cards are flagged for review as potentially involved in trafficking benefits, because they would request replacements after selling their cards. This recipient trafficking detection mechanism was established by an April 2014 USDA-FNS Final Rule. In December 2017 USDA-FNS granted a waiver for one state to contact recipients who request a replacement card more than two times in a 12-month period, as opposed to the current regulations' standard of four requests in a 12-month period.\nState Law Enforcement Bureau (SLEB) Agreements —Some state agencies enter into state law enforcement bureau (SLEB) agreements with law enforcement entities in their jurisdictions in order to further their efforts to detect recipient trafficking and recipient application fraud. There are advantages to such arrangements for state agencies; for example, under SLEB agreements, the agency could be notified whenever an individual is arrested in possession of multiple EBT cards, allowing the agency to flag the recipients associated with those EBT cards for potential recipient trafficking.\nTips and Referrals —As is done in detecting retailer trafficking, agencies use tips and referrals to detect recipient trafficking and recipient application fraud.\nData Matching and Other Verification —As is done in detecting recipient errors when applying for SNAP benefits, the data matching and certification process may also provide information useful in detecting recipient application fraud.", "Whenever a SNAP recipient is found to have committed fraud, that individual is subject to individual penalties, such as disqualification. The other members of the SNAP household will not automatically be subject to such penalties, but the adult members of the household will generally be obligated to repay the amount established by the state agency as a claim for overpayment or trafficking. Major penalties associated with recipient fraud include the following:\nDisqualification —Trafficking and recipient application fraud are types of intentional program violations, and a SNAP recipient found to have committed fraud is generally subject to a period of program disqualification varying from one year to permanent. Figure 4 below compares the number of FY2016 SNAP recipient disqualifications to the monthly average number of participating recipients in the state in FY2016. Performing investigations and proving that recipients have committed intentional program violations (in order to disqualify them from SNAP) can require a considerable amount of state agency resources. This chart illustrates the extent to which agencies have prioritized this aspect of SNAP administration relative to their SNAP caseload.\nRestitution of Benefits Defrauded (Claims) —A SNAP household must generally repay benefits amounts that are overpaid due to recipient application fraud or are trafficked.\nComparable Disqualification —If a SNAP recipient is disqualified from any federal, state, or local means-tested public assistance program, then the state agency may impose the same period of disqualification on the individual under SNAP. This comparable disqualification is mandatory for the Food Distribution Program on Indian Reservations (FDPIR).\nCriminal Charges and Penalties —Generally, if criminal charges are pursued against recipients who traffic benefits or commit recipient application fraud, it is the states that will pursue and prosecute. State fraud laws vary in their penalties for recipient fraud. Additionally, as stated in a GAO report from August 2014, each state exercises its discretion differently with respect to filing criminal charges in cases of recipient fraud. As with retailer trafficking, USDA-OIG sometimes pursues criminal charges in collaboration with federal and state law enforcement entities against recipients engaged in SNAP fraud.", "U.S. Department of Agriculture, Office of the Inspector General (USDA-OIG), in conjunction with local, state, and other federal law enforcement entities, investigates cases of state agency employee fraud and penalizes state agency employees engaged in it. Criminal penalties for state agency employee fraud vary from state to state, and individuals who commit state agency employee fraud may be prosecuted for other crimes (e.g., identity theft) that occurred during the commission of the state agency employee fraud. Penalties for this type of criminal fraud vary but may include imprisonment, probation, and/or monetary restitutions.", "SNAP has long had policies and procedures in place for measuring improper payments—largely, the program's Quality Control (QC) system. QC is currently the basis for levying financial penalties from low-performing states and providing financial performance incentives for the higher-performing and most improved states. In June 2018, following concerns that there had been misreporting of errors, USDA-FNS released a FY2017 NPER under new quality control procedures. This section reviews QC and these developments.", "This section discusses false claims by state agencies with regard to Quality Control (QC) data and state payment error rates (SPERs). As discussed earlier in this report, since 1977, the SNAP Quality Control system has measured improper payments in SNAP, comparing the amounts of overpayments and underpayments that exceed the error tolerance threshold ($38 adjusted annually for inflation) to total benefits issuance. The Quality Control process starts with state agency analyses that determine state payment error rates, which are then reviewed by USDA-FNS to develop the SNAP national payment error rate (NPER). After conducting this annual Quality Control review, USDA-FNS awards bonuses to high-performing state agencies and assigns penalties to low-performing state agencies.\nUSDA-FNS annually awards high-performance bonuses to up to 10 states with the lowest or most improved state payment error rates. High-performance bonuses must be used by states to improve their administration of SNAP. The total annual amount awarded for SPER high-performance bonuses is $24 million. The bonuses awarded in FY2014 are summarized in Table 2 . Awards for FY2017 have not yet been announced, as of the date of this report.\nState sanctions—known as \"liabilities\"—are used to punish states that have comparatively high payment error rates. If there is a 95% probability that a state makes payment errors 5% more frequently than the national average, then that state has \"exceeded the liability level\". If a state exceeds the liability level for two years in a row, then it is assessed a penalty—known as a \"liability amount\". Liability amounts are assessed for only that portion of the state payment error rate that is above 6% (e.g., a state that exceeds the liability level with a state payment error rate of 5.99% would be assessed a $0 liability amount). Once assessed, states have the option to pay the liability amount in full or enter into a settlement agreement with USDA-FNS.\nFrom FY2005 to FY2014, 42 of 53 state agencies have exceeded the liability level at least once, but only 9 state agencies have ever been compelled to actually repay an at-risk penalty amount to USDA-FNS. This is because most states improve their state payment error rates within one or two years and avoid being required to make a payment to USDA-FNS. Over these 10 years, these 9 states repaid about $1.5 million to USDA-FNS (see Table 3 ).", "State agencies perform Quality Control reviews to determine state payment error rates and then submit these rates to USDA-FNS for its annual review; and agencies may be awarded or sanctioned according to these rates. This combination of positive and negative reinforcement is intended to incentivize high payment accuracy among states. USDA-FNS oversees state agencies through the management evaluation process and the Quality Control system, in addition to other federal oversight mechanisms.\nUSDA-OIG performs regular audits of and investigations into state agency compliance with a range of SNAP rules. Through this oversight, USDA-OIG and USDA-FNS identified concerns in state-reported Quality Control data. In order to examine this issue, USDA-OIG began a series of audits in March 2013, which culminated in a September 2015 USDA-OIG report. USDA-OIG looked at eight states and determined that all eight state agencies had deliberately weakened the integrity of the Quality Control process with the aid of hired consultants. USDA-FNS responded in the September 2015 USDA-OIG report that USDA-OIG drew its conclusions on the basis of unconfirmed information, misunderstandings of SNAP policy, and insufficient statistical analysis. As a result, USDA-FNS contends that the concerns identified over these eight states' QC efforts were largely the result of administrative issues rather than fraud.\nAccording to 2017 U.S. Department of Justice (DOJ) findings, at least three state agencies (Virginia, Wisconsin, and Alaska) engaged in state agency fraud related to Quality Control data falsification since at least 2008. These three state agencies, with the help of their third-party consultants, were found to have mitigated errors, fraudulently improving their state payment error rates. USDA-FNS and USDA-OIG testified on this subject in two hearings, one before the Senate Committee on Agriculture, Nutrition, and Forestry in August 2017 and one before the House Committee on Agriculture in July 2016. Entities, including state agencies, found to have defrauded federal programs are required to repay funds obtained through fraud, plus interest, under the False Claims Act (31 U.S.C. §3729). As of the date of this report, these three state agencies have admitted to the DOJ that they engaged in falsifying QC data and violating the False Claims Act in their administration of SNAP. As part of their settlements with DOJ, the Virginia state agency agreed to pay $7,150,436, the Wisconsin state agency agreed to pay $6,991,905, and the Alaska state agency agreed to pay $2,489,999. These $16.6 million in payments represent the share of the high-performance bonuses awarded to these states for low state payment error rates while they were engaged in fraudulent practices, plus interest.\nFor FY2015, USDA-FNS determined that data quality issues existed for 79% of state agencies; however, such issues are not in and of themselves proof of fraud. All three states that settled with DOJ had hired the same Quality Control consultant firm. As of the date of this report, the USDA-OIG investigation into this state agency fraud is still ongoing and Mississippi is known to be under investigation for Quality Control fraud. In her comments at the August 2017 Senate Agriculture Committee Hearing, Ann M. Coffey, Assistant Inspector General of Investigations at USDA-OIG, stated that a \"significant number\" of states were still under investigation and that the scale of this state fraud was \"unique.\"", "Over time, USDA-FNS, SNAP state agencies, USDA-OIG, GAO, and other stakeholders have identified issues that may complicate or impede the detection and correction of errors and fraud in SNAP. These kinds of issues can stem from shortcomings or gaps in existing regulation and law, as well as complexities in the fundamental design of the program itself. In addition, stakeholders have proposed strategies to address these kinds of issues and further curb errors and fraud in SNAP. These include, for example, proposed rulemaking actions, proposed statutory changes, and state pilots. Changes that strengthen payment accuracy and punishments against fraud can be in tension with other policy objectives, such as preserving recipient access to the program, and may have unintended consequences such as incurring costs greater than their savings. Balancing program objectives such as these is always a consideration for policymakers in this area.", "", "According to SNAP rules, if a store is permanently disqualified from participating in SNAP and later that store's owner applies to participate in SNAP at a new store, then USDA-FNS will deny the new store's application. Due to a longstanding USDA-FNS policy, however, store owners who own multiple stores that participate in SNAP have been able to remain in the program with some of their stores despite a permanent disqualification at another of their stores. This USDA-FNS policy, identified and examined in the July 2013 USDA-OIG report, was intended to prevent the elimination of whole chains of stores from the program as a result of violations at one store. However, the policy has been applied beyond chain stores, and USDA-OIG identified it as a weakness in efforts to combat trafficking. In the July 2013 report, USDA-OIG identified 586 store owners who remained in SNAP due to this policy despite their association with a permanently disqualified store; 66 of these owners were found to have obtained SNAP authorization at new stores.\nIn the July 2013 report, USDA-OIG proposed that USDA-FNS make a change to SNAP regulations and USDA-FNS policy to allow for the permanent disqualification or denial of all current or future stores, respectively, associated with an owner of a store that is permanently disqualified for retailer trafficking unless the retailer can meet certain criteria.\nUSDA-FNS responded to USDA-OIG with an alternative policy that would impose collateral requirements for these owners. (Under current law, collateral bonds or letters of credit are required as a condition of participation in SNAP for stores that have been subjected to a term disqualification. These are held as collateral against the retailer committing future violations.) USDA-FNS suggested requiring a bond or letter of credit for all authorized stores associated with a permanently disqualified owner and for new stores when such stores have an owner associated with a store permanently disqualified for trafficking. USDA-OIG indicated that it considered this USDA-FNS alternative to its disqualification recommendations inadequate, noting \"[w]e believe that continuing to allow known traffickers to participate in SNAP will undermine program integrity.\"\nAs of the date of this report, none of these proposed policy changes have been implemented.", "An estimated $1.1 billion in SNAP benefits were trafficked annually at stores, but in FY2016, USDA-FNS fined trafficking retailers only about $7.5 million. Monetary penalties can discourage retailers from engaging in trafficking and also help recoup federal funds lost to fraud. For these reasons, changes to SNAP rules have been proposed to augment the monetary penalties assessed against trafficking retailers.\nIncreasing Transfer of Ownership Civil Money Penalties —The 2008 Farm Bill modified the FNA to increase civil monetary penalties against retailers that break SNAP rules to a maximum of $100,000 per violation. If a retailer that has been permanently disqualified for trafficking SNAP benefits subsequently sells or transfers ownership of a store, then USDA-FNS assesses that retailer a \"transfer of ownership civil money penalty\" (TOCMP). This is currently the primary financial penalty assessed by USDA-FNS against retailers found to have engaged in trafficking.\nIn August 2012, USDA-FNS published a notice of proposed rulemaking (NPRM) to implement the 2008 Farm Bill change. This notice stated that existing limits used by USDA-FNS were $11,000 per violation and $59,000 per investigation, and that this rulemaking action would increase these limits to up to $100,000 per violation per the intent of Congress expressed in the 2008 Farm Bill. As of the date of this report, this rulemaking action is inactive (see Table B-1 in Appendix B ). Because this change in the limits on TOCMPs has not been implemented, USDA-FNS continues to assess TOCMPs according to the limits in place before the passage of the 2008 Farm Bill (i.e., $11,000 per violation and $59,000 per investigation). In FY2016, the mean value of TOCMPs assessed by USDA-FNS was $29,284, about half of the limit per investigation. Implementation of these changes in the maximum limits on TOCMPs could represent a nearly tenfold increase in the penalty amounts for permanently disqualified retailers engaged in a high volume of SNAP business, potentially increasing the penalties' deterrent effect.\nCreating Additional Civil Money Penalties —Currently, USDA-FNS only fines a limited share of trafficking retailers. Firms permanently disqualified for trafficking are subject to a TOCMP when USDA-FNS becomes aware that the permanently disqualified store owner has sold a store, but USDA-FNS can only become aware of such a sale when, and if, the new store owner applies for SNAP authorization. For every retailer assessed a TOCMP in FY2016, more than seven retailers were permanently disqualified for trafficking. Ultimately this means that the overwhelming majority of store owners found by USDA-FNS to have committed and materially benefited from retailer trafficking are subject to no monetary penalty at all.\nUSDA-FNS proposed to create a new kind of monetary penalty, the trafficking civil penalty (TCP), in the August 2012 USDA-FNS NPRM. Under this proposal, a retailer permanently disqualified for trafficking would be subject to this new kind of fine, the size of which would be based on the retailer's volume of fraud, as it is for a TOCMP. Establishing this new fine would provide an immediate monetary penalty at the time of permanent disqualification to further deter retailers from engaging in trafficking activity and recoup misappropriated federal funds. As of the date of this report, this rulemaking action is inactive (see Table B-1 in Appendix B ) and USDA-FNS is not assessing this new kind of fine.", "Prior to September 2014, about half of all SNAP-authorized retailers (including many smaller independent retailers) used free EBT-only point of sale (POS) devices provided by their state's EBT host processors. Transaction data for purchases made at these free EBT-only POS devices went directly to EBT host processors and then to USDA-FNS. USDA-FNS uses this transaction data to detect retailer trafficking activity.\nThe 2014 Farm Bill modified the FNA to require that all nonexempt retailers pay for their own EBT equipment and services. Since this change, most stores now work with third-party companies that provide POS equipment and services for a fee. The introduction of these unregulated intermediary entities has complicated USDA-FNS's efforts to detect retailer trafficking, and has also facilitated new forms of fraud. For example, in 2017, an account executive for a third party processor was sentenced to prison, to be followed by supervised release, and was ordered to pay restitution for his role in illegally providing 50 unauthorized stores with active SNAP EBT point-of-sale devices which were used to redeem about $6.5 million in benefits (at least eight of these stores were found to engaged in retailer trafficking).", "Since 1994, retailers applying to participate in the program have been required to meet stocking standards which mandate a minimum of 12 food items. In an October 2006 GAO report on trafficking, these minimal stocking requirements were identified as a factor potentially contributing to retailer trafficking, as the standards may make it easier for small, fraud-prone retailers that do not primarily sell food to enter the program. In addition, the September 2017 USDA-FNS Retailer Trafficking Study identified a correlation between an increase in small stores (e.g., convenience stores) in the program and an increase in retailer trafficking (for more information, see Appendix D ). As a result, increasing stocking standards has been proposed as a strategy to curb retailer trafficking. The 2014 Farm Bill modified the FNA to enhance retailer stocking standards for participating stores. The December 2016 USDA-FNS Final Rule implemented these changes and included several other provisions that would have significantly increased stocking standards for retailers; however, Section 765 of the Consolidated Appropriations Act of 2017 (2017 Omnibus, P.L. 115-31 ) prevented full implementation of this rule. On January 17, 2018, USDA-FNS began implementing the remaining provisions of the December 2016 USDA-FNS Final Rule. Current implementation requires a modest increase to the number of items stocked (from 12 to 36 food items) but not as much as would have been required by the final rule before the 2017 Omnibus (84 food items).", "Some retailers have been found to have delayed the disqualification process for their stores, enabling them to continue trafficking. Between the USDA-FNS official notification of trafficking charges and the permanent disqualification for trafficking, there are a number of administrative steps. Until final implementation of a permanent disqualification, the retailer may continue to participate in the program, accepting and redeeming SNAP benefits. According to USDA-FNS, some charged retailers exploit the delay created by these administrative steps in order to continue (or even accelerate) their trafficking of SNAP benefits, sometimes remaining in the program for months. The 2008 Farm Bill modified the FNA to require USDA-FNS to utilize the EBT system to immediately suspend the payment of redeemed SNAP benefits to stores determined to be engaged in this \"flagrant\" retailer trafficking. A February 2013 USDA-FNS NPRM included a provision to implement this 2008 Farm Bill requirement, but, as of the date of this report, this rulemaking action is inactive (see Table B-1 in Appendix B ).", "When a store applies for authorization to participate in SNAP, USDA-FNS internally assigns that store a risk status (i.e., high, medium, or low) based on retailer trafficking data for the location and area. If a new store applies at a physical address associated with past retailer trafficking, that new store is more likely to be considered \"high risk.\" In a July 2013 report, USDA-OIG noted that certain high-risk store locations evidence a pattern of retailer trafficking that continues under new ownership. USDA-OIG recommended requiring a bond or letter of credit as a precondition of SNAP authorization at high-risk store locations, which would require statutory changes.", "", "While some have argued that placing recipient photographs on EBT cards would reduce trafficking, specifically the sale of cards between recipients and unauthorized use of cards at authorized stores, there are operational and access challenges to this strategy. Since 1996, state agencies have had the option to require photographs of one or more SNAP household members on the household's EBT card(s). This state option is known as \"photo EBT.\"\nLike SNAP benefits, EBT cards are issued to households, not to individuals. Also, households may appoint authorized representatives (outside of the household) to use their EBT cards to shop on the households' behalf. As a result, a photo EBT card might only bear the image of the head of a household despite the fact that all members of the household can use the card. Similarly, an authorized representative may use a card that does not have the representative's picture on it. Retailers therefore cannot legally deny a SNAP transaction just because the user does not match the photo on the card. Additionally, some advocates point out that photo EBT has shown some adverse effects on recipient access.\nA number of states have considered or implemented photo EBT since 1996. States' evaluations of photo EBT have generally concluded that the option has or would have little to no effect on recipient trafficking. Though evidence of reduced trafficking is lacking, two states, Maine and Massachusetts, currently implement photo EBT. Maine contended that it \"[strengthens] the integrity of our public assistance programs.\"\nThe implementation of photo EBT in a state requires both upfront and ongoing costs to the state and federal government. Upfront costs generally exceed ongoing costs, and ongoing costs generally increase over time. State estimates and actual expenditures on the cost of photo EBT vary widely. As an example, in 2000, Missouri enacted a state law mandating photo EBT, and the Office of the Missouri State Auditor evaluated the option in August 2001. This audit determined that in the first year of implementation, photo EBT effected no fraud reduction, cost $1,801,858 ($947,280 federal costs and $854,578 state costs), and should be discontinued. In 2001, Missouri discontinued its use of photo EBT.\nIn reviewing 14 states that have considered photo EBT implementation since 2001, upfront costs range from about $1.6 million in New Hampshire (2016) to about $25.1 million in North Carolina (2011). Estimates of ongoing annual costs vary across an even wider range, from approximately $65,000 in Virginia (2017) to $8.4 million in Arizona (2016).", "There is currently no single standard measurement of recipient fraud (neither recipient trafficking nor recipient application fraud). In the absence of a national recipient trafficking rate, it is difficult to observe trends and evaluate the effectiveness of enforcement strategies. Both GAO and USDA-OIG have commented on the significance of this shortcoming and recommended changes to allow for the creation of a national recipient trafficking rate akin to the national retailer trafficking rate. Based on USDA-FNS analysis, however, GAO found it is infeasible to create a uniform methodology for states to calculate a national recipient trafficking rate without statutory changes to require and enable USDA-FNS and state agencies to assign sufficient resources to this issue. USDA-FNS echoed these feasibility concerns in a May 2014 evaluation.\nAdditional authority and resources to develop a recipient trafficking rate might allow USDA-FNS to do some or all of the following:\nconduct and publish a study of recipient trafficking of SNAP benefits using currently existing data, including a national recipient trafficking rate; determine and document what changes must be made to current regulations, forms, policies, and practices to standardize state agency reporting and calculation of recipient trafficking, including at minimum the definition of relevant terms (e.g., definition of \"investigation\"), the annual timeframes, and the data sources for compilation of recipient trafficking data; and implement the identified changes necessary to reliably and accurately document the national recipient trafficking rate.", "USDA-FNS provides financial incentives to state agencies to reward high performance. These bonuses reward states with low error rates but do not reward states that effectively detect and penalize recipient trafficking. In April 2014, USDA-FNS published a Request for Information (RFI) soliciting comment on ways to modify performance bonuses for state agencies, including creating bonuses related to activities targeting recipient trafficking. The July 2016 GAO report also found that USDA-FNS does not sufficiently incentivize state agencies to pursue recipient trafficking cases. The report stated, \"to help address the increased caseloads and the resources needed to conduct investigations, we recommended that USDA explore ways that federal financial incentives could be used to better support cost-effective anti-fraud strategies. At this time, FNS has decided not to pursue bonus awards for anti-fraud and program integrity activities.\" Establishing a standard to measure performance for these bonuses would likely require the establishment of a national recipient trafficking rate as discussed earlier in this section.\nAdditionally, as stated earlier, state agencies establish and collect claims against recipients who traffic SNAP benefits. If a state agency collects on a claim resulting from fraud, such as recipient trafficking, the state agency is entitled to retain 35% of the amount collected. The August 2014 GAO report suggested that increasing this retention rate and restricting the use of retained funds to state agency anti-fraud activities could significantly enhance efforts to combat recipient trafficking, noting that the strategy \"may result in a net savings for SNAP if increased collections in payment recoveries outweigh the increased amount states receive in retentions.\" Implementation of this strategy may require statutory change.", "USDA-FNS oversees state agency administration of SNAP, and one of the primary tools used in this federal oversight is the management evaluation (ME). USDA-FNS conducts annual management evaluations on high priority areas and triennial reviews on lower priority areas. If a state agency is found to be out of compliance with SNAP rules, then a corrective action plan (CAP) will be developed and USDA-FNS will work with the state agency to improve compliance. A January 2012 USDA-OIG report noted that USDA-FNS did not utilize management evaluations to assess the effectiveness of state agencies' efforts to detect and penalize recipient trafficking. In response, USDA-FNS created a \"recipient integrity\" management evaluation in FY2012 which it currently uses to evaluate state agencies every three years.", "State agencies are responsible for investigating recipient trafficking, and USDA-FNS is responsible for investigating retailer trafficking. A large share of trafficking, however, results from collusion between recipients and retailers. If a state agency is made aware that a store in its jurisdiction is engaged in retailer trafficking, it can place the store under surveillance and build cases against recipients engaged in trafficking at that location. Usually, however, state agencies have no such opportunity. USDA-FNS provides retailer trafficking cases to state agencies only after completing the agency administrative and appeal process. By the time the state agency is made aware of a retailer trafficking case, the store has ceased accepting SNAP and has often closed. At that point, meaningful surveillance of the store cannot be performed and EBT transaction data cannot be corroborated with other forms of hard evidence. It is important to note, however, that providing state agencies with advance notification regarding ongoing USDA-FNS investigations of retailers may jeopardize these investigations.", "Retailer and recipient trafficking proceedings have different burdens of proof; therefore, governments will not necessarily prevail in both cases with the same evidence. Accepting SNAP benefits as a form of payment is not an entitlement for retailers. To disqualify a SNAP retailer for a violation of SNAP rules, USDA-FNS must only meet a lower-level burden of proof—the \"preponderance of the evidence\" standard. Receiving SNAP benefits is an entitlement for eligible individuals. To disqualify a SNAP recipient for fraud, a state agency must meet a higher-level burden of proof—the \"clear and convincing evidence\" standard. This means that evidence deemed sufficient to prove retailer trafficking may not be sufficient to prove recipient trafficking. Indeed, over 84% of the USDA-FNS retailer trafficking cases that resulted in a permanent disqualification in FY2016 relied primarily on an analysis of suspicious transaction patterns based on Anti-fraud Locator using EBT Retailer Transactions (ALERT) system data. These EBT transaction data, on their own, are not generally considered sufficient grounds for the disqualification of SNAP recipients. For this reason, state agencies often have difficulty disqualifying recipients whose EBT cards were used in transactions flagged as trafficking by ALERT transaction data analysis, absent other evidence of recipient trafficking.", "Grants to states for integrity activities, established by Section 4029 of the 2014 Farm Bill, were awarded in FY2014 and FY2015 but not in FY2016 or FY2017. USDA-FNS is currently developing a \"SNAP Fraud Framework,\" which combines best practices for fraud prevention gathered by USDA-FNS over several years from federal, state, and private partners. USDA-FNS plans to launch the SNAP Fraud Framework in FY2018 and to offer states grant opportunities using this funding to implement the framework.", "USDA-FNS is responsible for reviewing the applications submitted by retailers and ensuring that retailers authorized to participate in SNAP meet all eligibility requirements. Included in these applications are store owners' personal information, including but not limited to owners' Social Security Numbers (SSNs), but USDA-FNS is statutorily limited in how it can use these SSNs.", "During the application process, retailers provide USDA-FNS with the SSNs of all store owners. USDA-OIG compared these retailer-submitted SSNs to the Social Security Administration's Death Master File to identify store owners using SSNs that matched the SSNs of deceased individuals. In a January 2017 USDA-OIG report, 3,394 stores were found to have at least one owner using an SSA-DMF matched SSN, and 346 of these stores were found to have all owners using SSA-DMF matched SSNs. USDA-OIG recommended that USDA-FNS follow up with these 3,394 retailers and implement a new workflow process to check retailer-submitted SSNs on an ongoing basis. In the agency response to the report, USDA-FNS addressed these 3,394 identified retailers, but also identified the statutory barrier to this proposed change, stating: \"FNS recognizes the value in conducting a DMF match on an on-going basis. As such, should FNS be granted future authority to use SSN for matching purposes, FNS will match to the SSA DMF using SSN on an on-going basis.\" As of the date of this report, USDA-FNS does not verify retailer-submitted SSNs or match against the SSA-DMF due to this statutory restriction. Implementation of this change would require modification to the Social Security Act.", "In the July 2013 report, USDA-OIG recommended that USDA-FNS use other methods to verify applicant retailer information such as memoranda of understanding (MOUs) with state licensing agencies. USDA-FNS proposed instead to test the use of data brokers to complement existing techniques used to verify retailer applicant information. In 2014, USDA-FNS conducted four pilots testing the use of data brokers and determined that it had low return on investment, in part due to USDA-FNS's inability to utilize applicant retailers' SSNs in data matches.", "Store owners who have been convicted of certain crimes will be denied authorization to participate in SNAP for lack of business integrity if they declare the past conviction when applying. However, USDA-FNS is not currently able to verify the information provided by the retailer if he/she chooses to falsify the application and conceal past criminal convictions. A September 2008 USDA-OIG report suggested that USDA-FNS utilize the Interstate Identification Index (III) of the National Crime Information Center (NCIC) to perform background checks on retailers applying to participate in SNAP. The July 2013 USDA-OIG report repeated this recommendation, finding three owners who failed to disclose past criminal convictions on their application for SNAP authorization out of a sample of 212 owners (all three were later permanently disqualified for retailer trafficking). In response, USDA-FNS agreed to initiate a proposed rulemaking action to require retailer applicants and currently authorized retailers deemed \"high risk\" to provide USDA-FNS with a self-initiated background check. However, USDA-FNS does not currently have the statutory authority to compel retailer applicants to submit background checks. As of the date of this report, this rulemaking action is \"inactive\" (see Table B-1 in Appendix B).", "The August 2012 and February 2013 USDA-FNS NPRMs contained four provisions addressing shortcomings in existing retailer application regulations. These proposed rules are currently \"inactive\" (see Table B-1 in Appendix B ). Proposed changes included the following:\nRetailers failing to report changes in ownership —Currently, authorized retailers are required to report any changes in the ownership of their stores, but there is currently no penalty for noncompliance. To deter retailer noncompliance, USDA-FNS proposed to subject to a six-month disqualification any retailer that failed to report ownership changes to USDA-FNS within 10 days of the change.\nDisqualified SNAP recipients applying to become SNAP-authorized retailers —Under current SNAP rules, USDA-FNS may not deny the application of a retailer who was permanently disqualified from SNAP as a recipient for fraud on business integrity grounds. USDA-FNS proposed to add recipient fraud to the definition of business integrity standards, \"because a person, who violates program rules as a recipient, lacks the necessary business integrity and responsibility expected of a store owner who must train employees and oversee operations to ensure that SNAP EBT transactions are conducted in accordance with Department rules.\" Data matches with the USDA-FNS electronic Disqualified Recipient System (eDRS) are needed to determine whether individuals are disqualified from receiving SNAP benefits, and such matches rely on the use of individuals' SSNs; therefore, USDA-FNS would have difficulty implementing this provision due to statutory restrictions on allowable uses of applicant retailers' SSNs.\nIllegal retailer-to-retailer transfers of SNAP authorization —Authorized retailers are prohibited from transferring the SNAP authorization of their stores to a new owner in the event of a sale, and retailers are prohibited from accepting SNAP benefits without first applying for and obtaining SNAP authorization. Under current regulations, if a retailer sells the authorization and a retailer buyer uses it, USDA-FNS penalizes the buyer but not the seller. To address illegal collusion on the part of the seller and curtail unauthorized SNAP redemptions, USDA-FNS proposed to subject the seller to two penalties: permanent SNAP retailer ineligibility (for all current and future stores) and a fine equal to that of the buyer (under current regulations).\nRetailers' failure to pay fines, claims, or fiscal penalties —Current SNAP regulations allow USDA-FNS, on the basis of business integrity, to deny or withdraw the authorization of retailers who fail to pay certain fiscal claims or fines. USDA-FNS proposed to allow the agency to deny or withdraw the authorization of retailers who fail to pay any fine, claim, or fiscal penalty assessed against them under 7 C.F.R. §278 when such debts become delinquent.", "", "In the June 2016 GAO report, GAO recommended that federal financial incentives should be restructured to encourage effective pre-certification investigations \"because some investigative agencies were not rewarded for cost-effective, anti-fraud efforts that could prevent ineligible people from receiving benefits.\" As this report noted, \"when fraud by a recipient is discovered, the state may generally retain 35 percent of the recovered overpayment, but when a state detects potential fraud by an applicant and denies the application, there are no payments to recover.\" According to FY2016 State Activity Report data, about half of the state agencies dedicated minimal resources to pre-certification investigations. The five state agencies that engaged in the most extensive pre-certification investigation activity represented 96% of these investigations despite serving only 32% of all SNAP participants in FY2016. Together, the five states reported about $369 million in prevented improper federal expenditure through these efforts. With incentives, it is possible that more states would dedicate resources to conducting pre-certification investigations to find error and fraud on a regular basis.", "As one might expect, it is challenging to recover overpayments from poor and near-poor households. Establishing and collecting claims is the primary way that overpayments are recovered; and, while state agencies have improved the rate of claims establishment since FY2005, states' efforts to actually collect on these claims have not likewise improved. From FY2005 to FY2014:\nthe total annual dollar value of claims established has increased from about 20% to about 28% of the total annual dollar value of estimated overpayments; this improvement indicates increased claims establishment activity by state agencies. the total annual dollar value of claims collected has remained around 16% of the total annual dollar value of estimated overpayments; this reflects persistent difficulties in claim collection.\nFigure 5 reflects these trends.\nThis was a finding in the August 2014 GAO report and, furthermore, \"[s]tates' difficulty collecting overpayments compounds their concerns about having adequate resources for investigations because some states use recovered overpayments for this purpose.\" The GAO report did not provide strategies for how states might address this concern.", "Individuals are not allowed to apply for or receive benefits from more than one state agency at a time. It is important to note, however, that duplicate enrollment may be indicative of either an error or fraud depending on the circumstances of the case. Duplicate enrollment (or \"dual participation\") results in a 10-year disqualification from SNAP if it is due to intentional fraud.\nSome state agencies detect duplicate enrollment through exchanging enrollment data with neighboring states. As of the October 2016 GAO report, Massachusetts and New York, for example, had such an arrangement.\nThe National Accuracy Clearinghouse (NAC) is a significant effort to detect and prevent duplicate enrollment. The NAC was funded as a pilot by the U.S. Office of Management and Budget (OMB) Partnership for Program Integrity and Innovation from April 2013 until May 2015. The NAC gathers and analyzes SNAP state enrollment data from five participating states. Since the conclusion of the pilot in May 2015, these five states have continued NAC operations. In practice, the NAC is another data match performed during certification. NAC matches are not considered verified upon receipt, so additional steps are necessary to confirm matches.\nAn evaluation of NAC published in October 2015 documented several elements of NAC's performance, outcomes, and costs, including the following:\nIn May 2014, prior to implementation, 10,076 instances of duplicate enrollment across the five states were identified. One year later, in May 2015, duplicate enrollment in these five states had been reduced by almost 50% (5,464 instances identified). Using NAC is estimated to have prevented about $548,336 in monthly overpayments during the pilot year, with monthly state agency work effort costs totaling $81,913 (resulting in about $6.69 in monthly overpayments prevented for every $1.00 spent monthly). In the first year, using NAC produced an estimated annualized savings of $5,597,076 (less the $669,331 spent on one-time startup costs). Nationalizing NAC has been estimated to result in $114,072,753 in annual savings. Costs of setting up and utilizing NAC for the first year came to about $1,652,287 for all five participating states. USDA-FNS provides federal matching funds for states' program administration costs, including costs of NAC participation.\nDuring the 115 th Congress, the House passed an emergency supplemental appropriations bill, which included a provision that would have required the expansion of NAC to all states (Section 3003 of H.R. 4667 ; however, this provision was not included in the emergency supplemental appropriations which became law (Bipartisan Budget Act of 2018, P.L. 115-123 ).", "As discussed earlier, states are required to conduct certain data matches to verify household application information, and many opt to include additional data sources. There are arguments for and against expanding states' use of additional data matches. While verifying household data to high-fidelity sources seems compelling, the use of matching to less authoritative data can require additional employee hours and might introduce the errors it seeks to prevent.\nImplementing new data matches may require large upfront investments and ongoing costs to state agencies. Non-verified upon receipt data matches may necessitate additional manual follow-up, which can create even more cost and delay. As a result, state agencies prefer to use verified upon receipt data matches whenever possible. However, only one of the six federally required databases is considered verified upon receipt. In comments published in response to USDA-FNS rulemaking implementing the statutorily mandated data matches, some states pointed out that the implementation of these data matches is burdensome on state agencies while providing minimal cost avoidance due to the rarity of matches and the effort needed to verify them. A range of anecdotal evidence also points to the limited return on investment for the non-verified upon receipt of federally mandated data matches. In a 2017 series of USDA-OIG audits of five states' compliance with federal requirements for state agencies, USDA-OIG found that all five were improperly handling a mandatory SSA-PVS data match. At least one state explicitly stated that it elected not to perform the mandatory match due to perceived low return on investment.\nSome optional data matches are widely used and considered worthwhile by state agencies, while other verified upon receipt and useful non-verified upon receipt data matches are arguably underutilized. Although not federally mandated, SSA benefit program databases were utilized and considered useful by all state agencies surveyed in the October 2016 GAO report, because these data matches provide verified upon receipt data on unearned income. Matches with state systems that provide verified upon receipt data on eligibility and income were used by many, but not all, state agencies. In some cases, statutory obstacles prevent using existing federal data sources, such as the Centers for Medicare and Medicaid Services (CMS) federal data services hub (the Hub), which consolidates various sources of earned and unearned income data matching. Some state agencies were concerned that the same data match services are being paid for twice, once for SNAP and once for Medicaid, often for the same beneficiaries. In 2017, certain states have piloted data sharing agreements to utilize these federal data services hubs for SNAP.\nEarned income may be especially difficult to verify through data matching, and the costs associated with these matches may be prohibitive. Currently, state agencies contract individually with The Work Number, but USDA-FNS has proposed negotiating a single contract that would make the service available for all state agencies at a greatly reduced cost per match. According to the October 2016 GAO report, USDA-FNS has not done enough to encourage state agencies to adopt best practices in data matching. This includes explaining technical improvements such as unifying data sources into a centralized portal (data brokering) and publicizing the methods and successes of pilot projects like NAC.", "", "The September 2015 USDA-OIG report stated that the primary vulnerability of the QC system was its \"two-tier\" structure. USDA-OIG argued that because a state calculates its own SPER, it has the means to manipulate the outcome of the QC process, and because a state stands to benefit from a low SPER, it has the motive to commit this fraud. USDA-OIG recommended the adoption of a \"one-tier\" QC process conducted exclusively by USDA-FNS. USDA-FNS noted that a one-tier QC system could create additional federal cost.\nAppendix A. Glossary of Abbreviations\nAppendix B. \"Inactive\" USDA-FNS Rules\nIn the last 10 years, the U.S. Department of Agriculture Food and Nutrition Service (USDA-FNS) had started to draft new rules in response to direction in federal law and USDA Office of the Inspector General (USDA-OIG) audit findings, and at their own initiative. Currently, none of the regulatory initiatives discussed in this appendix have been completed. Before USDA-FNS's actions were suspended, they were in various stages of the regulatory process, which occurs as follows:\nIn order to codify a federal regulation in the Code of Federal Regulations (C.F.R.), the following steps must generally be completed:\na regulatory work plan must be submitted to the Office of Management and Budget (OMB) and OMB must assign the rulemaking action a Regulatory Identification Number (RIN), adding the RIN to OMB's Unified Agenda (UA); a notice of proposed rulemaking (NPRM) generally must be published by the rulemaking agency in the Federal Register (FR) with a comment period open to the public; and the rulemaking agency must consider the comments, make necessary changes to the rulemaking action, and then publish the final rule in the FR.\nAlong with other rulemaking actions, USDA rules had been in a \"pending\" status and had not been made available to the public. The Trump Administration made these rules public in July 2017 and termed them \"inactive.\"\nAppendix C. Optional Income Data Matches\nData matching is used during the SNAP certification process to help make SNAP eligibility determinations and, if appropriate, designate the benefit allotment amounts for applicant households. In addition to the mandatory data matches discussed earlier in this report, states have many additional federal, state, and local data sources that they might use to verify household income data. This appendix lists some additional data matches that are discussed in related audit reports and state-specific policy manuals. Their verified upon receipt status varies.\nOptional Federal Income Data Matches\nSocial Security Administration (SSA) Benefit Programs Databases —State agencies can match with SSA databases to verify an applicant's unearned income from these SSA programs. These are verified upon receipt data matches. They are conducted and considered moderately or extremely useful by 51 of the 51 state agencies surveyed (50 states plus D.C.) in October 2016. SSA Beneficiary Earnings Exchange Record (BEER)—State agencies can match with SSA-BEER to verify income based on Internal Revenue Service (IRS) earnings and tax data. This is a non-verified upon receipt data match. It is conducted by 24 of the 51 state agencies and considered moderately or extremely useful by only 10 of those using it. U.S. Department of Health and Human Services Administration for Children and Families (HHS-ACF) Public Assistance Reporting Information System (PARIS) —State agencies can match with HHS-ACF-PARIS to verify an applicant's earned and unearned income from public assistance and federal employment or retirement. These are non-verified upon receipt data matches. The HHS-ACF-PARIS Interstate Match File is conducted by 40 of the 51 state agencies and considered moderately or extremely useful by 31 of those using it. The HHS-ACF-PARIS Federal/VA File matches are conducted by 31 of the 51 state agencies and considered moderately or extremely useful by 20 of those using them. The Work Number—State agencies can match with this commercial verification service operated by Equifax, Inc. (for a fee) to obtain payroll information from participating retailers (covering about 35%-40% of working population) to verify an applicant's earned income. This is a non-verified upon receipt data match. It is used by 45 of the 51 state agencies and considered moderately or extremely useful by 43 of those using it. HHS-ACF National Directory of New Hires (NDNH) Unemployment Insurance and Quarterly Wage Files—These data matches are distinct from the mandatory HHS-ACF-NDNH New Hire File match. The Unemployment Insurance File compiles information from state workforce agencies regarding unearned income, and the Quarterly Wage File compiles information from state workforce agencies regarding earned income. These are non-verified upon receipt data matches. The former is used by 9 of the 51 state agencies and the latter by 4 of the 51.\nOptional State Income Data Matches\nState Unemployment Insurance Benefits (UIB) Database—State agencies can match with state workforce agencies that administer UIB to verify applicants' unearned income. This is generally a verified upon receipt data match. It is conducted by 49 of the 51 state agencies surveyed in October 2016 and considered moderately or extremely useful by 48 of those using it. Child Support Payments Database—State agencies can match with state human or social services agencies that administer and enforce child support payments to verify applicants' unearned income. This is generally a verified upon receipt data match. It is conducted by 47 of the 51 state agencies and considered moderately or extremely useful by 46 of those using it. State Wage Information Collection Agency (SWICA) Database—State agencies can match with SWICAs that gather quarterly wage and new hire data from employers to verify applicants' earned income. This is the state equivalent of the HHS-ACF-NDNH. These are non-verified upon receipt data matches. The former is conducted by 45 of the 51 state agencies and considered moderately or extremely useful by 31 of those using it; the latter is conducted by 36 of the 51 state agencies and considered moderately or extremely useful by 23 of those using it. State Day Care License Database—State agencies can match with state human or social services agencies that license day care workers and facilities to verify applicants' earned income. This is generally a verified upon receipt data match. It is conducted by 11 of the 51 state agencies. State Taxpayer Database—State agencies can match with state taxation agencies to verify applicants' unearned and earned income. This is generally a verified upon receipt data match. It is conducted by 7 of the 51 state agencies. Database of Income Verified by Other State Programs—State agencies can match with state human or social services agencies that administer other means-tested programs to verify applicants' unearned and earned income. This is generally a verified upon receipt data match. It is conducted by 42 of the 51 state agencies and considered moderately or extremely useful by 38 of those using it.\nAppendix D. Trends in Retailer Trafficking and Convenience Store Participation in SNAP\nThe following three tables include CRS calculations based on data from U.S. Department of Agriculture Food and Nutrition Service (USDA-FNS) Retailer Management Reports, the last three Retailer Trafficking Studies, and other agency sources. Table D-1 compares the growth in total stores participating in SNAP with the growth of convenience stores (\"c-stores\") participating in the program. From FY2007 to FY2016, convenience stores have grown from about 36% of all stores in the program to about 46%.\nThe national retailer trafficking rate represents the proportion of SNAP benefits redeemed that were trafficked at stores, and the national store violation rate represents the proportion of authorized stores that were estimated to have engaged in trafficking. Table D-2 compares these two rates for all stores with these rates for convenience stores. Across the nine years examined in the three studies, the convenience store retailer trafficking rates have been more than 1000% of the national retailer trafficking rates, and the convenience store violation rates have been more than 150% of the national store violation rates.\nTable D-3 displays data regarding the convenience store share of total redemptions and data regarding the estimated convenience store share of total trafficking. Across the nine years examined in these three studies, convenience stores' shares of redemptions have not exceeded 5% of total redemptions and convenience store shares of trafficking have averaged more than half of total trafficking.\nAppendix E. Payment Error Rate Information\nThis appendix provides a state-by-state summary of payment-error related data from FY2010-FY2014, including state payment error rates (SPERs), high-performance bonuses, and liabilities for low performance. Table E-1 shows the states' annual rates and whether the state received an award or a sanction, while Table E-2 displays the amounts of awards and sanctions. Using Alabama as an example, according to the first table the state received a bonus in FY2012 based on a 1.85% SPER, and according to the second table that award amount was approximately $1.9 million." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 3, 2, 3, 3, 1, 2, 2, 2, 3, 4, 3, 4, 4, 4, 1, 2, 3, 3, 3, 3, 2, 3, 4, 4, 3, 3, 2, 3, 3, 2, 1, 2, 2, 1, 2, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 2, 3 ], "alignment": [ "h7_title h5_title h0_title h2_title h4_title h3_title h1_title h6_title", "h0_full h7_full h1_full", "h0_title h6_full", "h0_full", "h0_full", "h0_title", "h0_full", "", "", "h0_title", "", "h0_full", "h5_title h4_title h3_title", "", "", "h5_title h4_title h3_title", "h4_full", "h4_full", "h5_full h3_title", "h3_full", "", "", "h5_title h2_title h3_title h7_title", "h7_title h2_full", "h7_full", "h2_full", "", "h2_full", "h5_title", "h5_full", "", "", "", "", "h3_title", "", "h3_full", "", "h4_full h6_title", "", "h6_full", "h5_title h2_title h7_full h1_full", "", "", "", "", "", "", "", "h7_title", "", "h7_full", "", "", "", "", "", "h2_title", "", "", "", "h2_full", "h5_title", "", "", "", "h5_full", "h7_title", "h7_full" ] }

{ "question": [ "What is the trafficking of SNAP?", "What is retailer-related fraud of SNAP?", "What is recipient-related fraud of SNAP?", "What is the difference between errors and fraud?", "What is error and fraud for a state?", "How can you compare error and fraud?", "What is the definition of the two acts?", "What SNAP-related actions fall into fraud and error?", "How often is SNAP fraud?", "How does this data measure SNAP fraud?", "How is retailer trafficking tracked?", "How is trafficking dealt with?", "How is fraud identified?", "How is fraud dealt with?", "How are retailer and recipient violations dealt with?", "How might recipients be punished?", "How do state agencies deal with recipient violations?", "What is the national payment error rate NPER?", "How does NPER work with USDA-FNS's Quality Control (QC) system?", "What limitations does NPER have?", "How has NPER been published?", "What were the FY2017 results of SNAP's NPER?", "How is SNAP addressing overpayments?", "What were the fiscal amounts of SNAP's payments?", "What can cause under- or overpayment?", "How are errors prevented?", "What were the 2016 reasons for under- and overpayment?", "What agents have been involved in fraud?", "What agents were accused of fraud FY2017?", "How have these cases been handled?", "What entities have addressed fraud in SNAP?", "What was proposed for retailer fraud?", "What was proposed for retailer fraud?", "How was the SNAP program addressed in recent Congress?" ], "summary": [ "Trafficking SNAP benefits is the illicit sale of SNAP benefits, which can involve both retailers and recipients.", "Retailer application fraud generally involves an illicit attempt by a store owner to participate in SNAP when the store or owner is not eligible.", "Errors and fraud by households applying for SNAP benefits can result in improper payments.", "Errors are unintentional, while fraud is the intentional violation of program rules.", "Errors and fraud by state agencies—agency errors can result in inadvertent improper payments; the discussion of agency fraud largely focuses on certain states' Quality Control (QC) misconduct.", "Errors are not the same as fraud.", "Fraud is intentional activity that breaks federal and/or state laws, while errors can be the result of unintentional mistakes.", "Certain acts, such as trafficking SNAP benefits, are always considered fraud; other acts, such as duplicate enrollment, may be the result of either error or fraud depending on the circumstances of the case.", "SNAP fraud is relatively rare, according to available data and reports.", "There is no single measure that reflects all the forms of fraud in SNAP. There are some frequently cited measures that capture some parts of the issue, and there are relevant data from federal and state agencies' enforcement efforts.", "USDA-FNS is responsible for identifying stores engaged in retailer trafficking—using transaction data analysis, undercover investigations, and other tools—and imposing penalties on store owners who commit violations.", "Retailers found to have trafficked may be subject to permanent disqualification from participation in SNAP, fines, and other penalties.", "USDA-FNS also works to identify fraud by retailers applying to accept SNAP benefits.", "Retailers found to have falsified their applications may be subject to denial, permanent disqualification, and other penalties.", "While retailer trafficking and retailer application fraud are primarily pursued by a single federal entity (USDA-FNS), recipient violations (i.e., recipient trafficking and recipient application fraud) are pursued by 53 different state agencies.", "Recipients found to have trafficked may be required to repay the amount trafficked and may be subject to disqualification from receiving SNAP benefits and other penalties.", "State agencies' efforts to reduce and punish recipient fraud vary, which is evident, for instance, in state-submitted data on recipient disqualification activities.", "The national payment error rate (NPER) is the most-cited measure of nationwide payment accuracy.", "Using USDA-FNS's Quality Control (QC) system, the NPER estimates states' accuracy in determining eligibility and benefit amounts.", "The NPER has limitations, though; for instance, it only reflects errors above a threshold amount ($38 in FY2017).", "After publishing a FY2014 NPER, USDA Office of the Inspector General (OIG ) and USDA-FNS identified data quality issues that prevented the publication of an NPER in FY2015 and FY2016, but USDA-FNS published a NPER for FY2017 in June 2018.", "For FY2017, it was estimated that 6.30% of SNAP benefit issuance was improper—including a 5.19% overpayment rate and a 1.11% underpayment rate.", "Regardless of the cause of an overpayment, SNAP agencies are required to work toward recovering excess benefits from households that were overpaid (this is referred to as \"establishing a claim against a household\").", "Applying these rates to benefits issued in FY2017 (over $63.6 billion), an estimated $3.30 billion in benefits were overpaid, and about $710 million in benefits were underpaid.", "Overpayments and underpayments to households can be the result of recipient errors, recipient fraud, or agency errors during the certification process.", "State agencies rely on household-provided information in applications, but also employ a range of data matches—some required by federal law, some optional that vary by state—to promote accuracy and double-check information.", "According to the USDA-FNS FY2016 State Activity Report, of states' established claims for overpayment, approximately 62% of overpayment claim dollars were for recipient errors, about 28% were for agency errors, and about 11% were due to recipient fraud.", "In addition to inadvertent agency errors, state agencies and their agents have been involved in isolated instances of fraud.", "Beyond cases of fraud conducted by state agency employees for personal gain, in FY2017 the Department of Justice obtained False Claim Act settlements from three state agencies accused of falsifying their Quality Control data and unlawfully obtaining federal bonuses.", "Investigations into this matter, conducted by the USDA-OIG, are ongoing.", "Across all types of fraud, oversight entities such as the Government Accountability Office and USDA-OIG have identified issues and strategies relevant to combating errors and fraud in SNAP. USDA-FNS has also proposed related regulatory changes that were not finalized.", "On the retailer side, issues identified focus on opportunities to prevent and more promptly punish trafficking.", "On the recipient side, issues identified include the nonexistence of a recipient fraud rate, states'varied levels of anti-fraud efforts (which may be better incentivized), and improvements to data matching in the application process.", "During the 115th Congress, Members voted on farm bill proposals that contained some changes to SNAP program integrity policy; these proposals are summarized in CRS Report R45275, The House and Senate 2018 Farm Bills (H.R. 2): A Side-by-Side Comparison with Current Law." ], "parent_pair_index": [ -1, 0, 0, -1, -1, -1, 0, -1, -1, 3, -1, 0, -1, 2, -1, -1, 1, -1, 0, 0, -1, -1, 4, 4, -1, 0, -1, -1, -1, 1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 4, 4, 4, 4, 4, 6, 6, 6, 6, 7, 7, 7, 8, 8, 8, 8, 8, 8, 8, 9, 9, 9, 10, 10, 10, 11, 11, 11, 11 ] }

{ "title": [ "Background", "Some Projects Have Met or Are Expected to Meet Their Performance Targets, but EM and NNSA Did Not Clearly Document Information Needed to Determine the Performance of Others", "EM and NNSA Have Met or Are Expected to Meet All Performance Targets for Some Nonmajor Projects", "Inconsistent Documentation of Scope Targets, Among Other Things, Made Assessment of the 44 Projects’ Performance Difficult", "Limited Documentation or Changing Performance Baselines Complicates Evaluation of 27 Projects’ Performance", "Several Factors Affect EM and NNSA in Managing Nonmajor Projects", "Acquisition Strategy", "Contractor Performance", "Adherence to Project Management Requirements", "EM’s Workforce Plans Do Not Consistently Identify Mission- Critical Occupations and Skills or Shortfalls in These Areas", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Scope and Methodology", "Appendix II: Summary of Office of Environmental Management Nonmajor Projects Reviewed", "Appendix III: Summary of National Nuclear Security Administration Nonmajor Projects Reviewed", "Appendix IV: Comments from the Department of Energy", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "NNSA—a separately organized agency within DOE—has primary responsibility for ensuring the safety, security, and reliability of the nation’s nuclear weapons stockpile. NNSA carries out these activities at eight government-owned, contractor-operated sites: three national laboratories, four production plants, and one test site (see fig. 1). These sites, taken together, have been a significant component of U.S. national security since the 1940s. Contractors operate these sites under management and operations (M&O) contracts.the contractor with broad discretion in carrying out the mission of the particular contract, but grant the government the option to become much more directly involved in day-to-day M&O. Currently, NNSA’s workforce is made up of about 34,000 M&O contractor employees across the eight sites, and about 2,400 federal employees directly employed by NNSA in its Washington headquarters, at offices located at each of the eight sites, and at its Albuquerque, New Mexico, complex.", "Of the 71 EM and NNSA nonmajor projects we reviewed that were completed or ongoing for fiscal years 2008 to 2012, we were able to determine performance for 44 projects. Among these 44 projects, 21 have met or are expected to meet all three of their performance targets for the scope of work delivered, cost, and completion date, while 23 have not met or are not expected to meet one or more of their three targets. The remaining 27 of the 71 projects we reviewed had insufficiently documented performance targets or had modified scope targets, among other things, which prevented us from determining whether they met or were expected to meet their performance targets, according to our analysis of DOE data. Determining whether projects fully met or partially met performance targets was difficult because EM and NNSA did not always follow DOE requirements for documenting these targets. DOE has taken steps to ensure that EM and NNSA more clearly document performance targets for their projects, but some problems persist.", "Of the 71 nonmajor projects we reviewed, 44 projects—17 EM projects and 27 NNSA projects—had documented targets for scope, cost, and completion date, enabling us to determine their performance. Table 2 shows the expected or completed performance of these 44 EM and NNSA nonmajor projects.\nAs the table shows, of the 44 projects for which we were able to determine performance, 21 projects met or are expected to meet their performance targets for scope, cost, and completion date. Specifically, 17 completed projects—5 EM and 12 NNSA projects—met all three of their performance targets. These projects included a $22 million EM project to expand an existing waste disposal facility at the Oak Ridge Reservation in Tennessee and a $469 million NNSA project to construct chemical, electrical, and other laboratories and workspaces at the Sandia National Laboratories in New Mexico. In addition, as of August 29, 2012, 4 ongoing projects—1 EM and 3 NNSA projects—were expected to meet all three of their performance targets, according to DOE estimates. These projects included a $77 million EM project to construct two disposal units for storing waste at the Savannah River Site in South Carolina and a $199 million NNSA project to equip the Radiological Laboratory/Utility/ Office Building at the Los Alamos National Laboratory in New Mexico to make it suitable for performing programmatic work.\nTable 2 also shows that 23 EM and NNSA projects did not meet or are not expected to meet one or more of their three performance targets. Of these 23 projects, 13 projects met or are expected to meet two of their three performance targets, and eight met or are expected to meet one of their three performance targets (see apps. II and III for more details). In addition, one project did not meet any of its performance targets. Specifically, EM’s project to decontaminate and decommission the Main Plant Process Building in West Valley, New York, did not complete all of its planned scope of work when it was completed in October 2011, almost 4 months after its completion date target and more than $50 million over its cost target of $46 million. EM cancelled the remaining project— Uranium-233 Disposition project, at the Oak Ridge Reservation in Tennessee—in December 2011 after spending approximately $225 million. (See apps. II and III for more details.)\nIn assessing whether projects had achieved their scope, cost, and completion date targets, we followed DOE and Office of Management and Budget performance metrics.must be completed within their original scope target. For cost targets, For the scope, DOE states that projects Office of Management and Budget guidance and DOE performance metrics regard projects completed at less than 10 percent above their original cost targets as having achieved satisfactory performance. Regarding completion date, DOE’s performance metrics do not address targets for completion. However, because Office of Management and Budget guidance includes performance standards for project schedule, we considered projects to be on time if they were or are expected to be completed at less than 10 percent past their original completion date targets.", "We encountered two major problems in assessing the performance of the 44 projects described above, which made it more difficult for us and DOE to independently assess project performance. First, EM and NNSA did not consistently follow DOE requirements for documenting scope targets and tracking these targets using DOE’s performance database. Second, EM did not always establish credible completion date targets or conduct required independent reviews when it restructured its PBSs in 2010.\nEstablishing a clearly defined target for scope is critical for an agency to accurately track and assess a project’s overall performance. In particular, a project’s scope of work directly affects estimates of the project’s cost and completion date. If the scope target is too broad or vaguely stated, it can be difficult to track whether or to what extent certain aspects of project scope were reduced or eliminated between CD-2 (when the baseline was established) and CD-4 (when the project was completed), potentially affecting cost and completion date targets. Accordingly, since 2003, DOE Order 413.3 has required that information on scope targets be documented in a project execution plan as part of CD-2. The current order also requires a project’s acquisition executive to sign a memorandum approving CD-2 that contains this information. In addition, the order requires that information on scope targets, as well as other critical performance information, be entered into DOE’s centralized database on project performance—the Project Assessment and Reporting System (PARS).OAPM, is used to track and report on project performance.\nThis database, which is administered by However, EM and NNSA did not always follow the order’s requirement on documenting scope targets, and we encountered the following problems when we attempted to identify scope targets for EM and NNSA projects:\nKey project documents associated with CD-2 and identified in Order 413.3—project execution plans and CD-2 approval memorandums— often did not contain information on scope targets. Instead, we had to obtain and review a variety of other project documents to try and locate this information. For example, we obtained information on scope targets for several EM and NNSA projects from briefing slides (i.e., a PowerPoint presentation) prepared for a DOE advisory board involved in reviewing and approving projects. We also used independent project review reports, documents describing the functional and operational requirements of the projects, and contractor documents that provided detailed descriptions of a project’s scope of work, among other documents. (See app. I for more details on our scope and methodology.)\nThe additional project documents that EM and NNSA provided to verify scope targets were often dated several months (or more) before or after the approval of CD-2. Because these documents were often not contemporaneous with the date when CD-2 was approved, we had difficulty determining whether any scope targets had changed during the interval. For example, we obtained information on scope targets for two EM projects from a project execution plan that was signed and dated almost 9 months after the CD-2 approval memorandum had been signed. (If documents were not dated within 1 year of CD-2 approval, we did not consider them sufficient and reliable for purposes of determining scope targets.)\nEM and NNSA often did not clearly or uniformly identify scope targets in their documents, instead providing this information in a variety of ways. For example, a NNSA project provided this information in briefing slides for a project advisory board under the headings “programmatic requirements summary” and “physical design summary.” In cases where we were unable to clearly identify scope targets, we relied on EM and NNSA officials to identify the information that they considered to represent scope targets.\nOAPM has encountered similar problems in trying to identify scope targets for projects at CD-2 and track how well completed projects had met these targets at CD-4. Specifically, OAPM officials told us that DOE program offices may have documented a project’s scope targets in a variety of project documents, such as a project execution plan or an acquisition strategy plan, rather than in an approval memorandum at CD- 2. As a result, OAPM officials said they occasionally must reconstruct a project’s scope targets from other contemporaneous planning documents near the time of the CD-2 approval. In a few instances, they said that no audit trail exists to compare scope targets established at CD-2 with the scope targets cited in a project’s CD-4 approval memorandum. In addition, an OAPM official told us that OAPM has not completed the process of locating and entering these data into PARS and continues to work with EM and NNSA to reconstruct project scope targets near the time of CD-2 approval.\nWe found two problems with the performance baselines of many projects that EM restructured from its portfolio of PBS activities in 2009 and 2010. First, several projects did not have a credible completion date target. For example, EM’s April 2010 memorandum approving CD-2 for the Zone 1 Remedial Actions project, located in Oak Ridge, Tennessee, gave a target completion date of fiscal year 2017, which meant that the target completion date was at the end of the fiscal year (September 30, 2017), according to EM officials. However, EM approved the formal completion of this project, via a CD-4 approval memorandum, on September 30, 2011—6 years ahead of the completion date target identified in the CD-2 approval memorandum. In explaining this difference, EM officials stated that they had linked the target completion date for this project to the end of the existing PBS near-term baseline, which had been established before the restructuring process. According to EM officials, EM used this method because it already had a contract in place to conduct work activities associated with the PBS near-term baseline. Since the end of the PBS near-term baseline was to coincide with the end of the contract period, EM officials said that they did not think it would be appropriate to change the target completion dates. In addition, EM officials told us that they were more focused on finishing the scope of work for a given project within a specific dollar amount, and that it was not worth the additional expenditure of time and dollars to modify contracts to change the completion date. EM used this same methodology in establishing target completion dates for several other projects we examined.\nWhen we found that EM’s practice of establishing target completion dates did not provide a meaningful benchmark for assessing project performance, we had to locate additional documentation to establish a more credible completion date target. For example, for the Zone 1 Remedial Actions project, we reviewed additional documentation and decided that a more credible completion date target was December 15, 2011. As a result, for this and other projects, the completion date targets we used to evaluate the performance of some projects are different than the ones that DOE uses in its PARS database.\nSecond, EM often established a new performance baseline and approved CD-2 for a project without having the baseline reviewed by an independent team of experts, as DOE Order 413.3 requires. Among other things, the review team is responsible for examining a project’s cost and completion date targets to ensure that they are credible and valid. However, EM did not conduct such reviews when it restructured some of the projects we examined. Instead, according to EM officials, EM relied on independent reviews conducted in the 2007 to 2008 time frame as part of the CD-2 approval process for PBS activities. In addition, EM officials said that it was not worth the additional expenditure of time and dollars to conduct new independent reviews for these projects.\nIf EM had conducted new reviews as part of its restructuring process, it is possible that these reviews would have uncovered problems with some of the performance targets that EM had to correct later. Specifically, we identified two projects—the decontamination and decommissioning of the Paducah Gaseous Diffusion Plant in Paducah, Kentucky, and the Main Plant Process Building in West Valley, New York—for which EM had to significantly increase the cost targets it had approved 10 and 5 months earlier, respectively. In both cases, these cost increases were due to errors that EM project officials made in calculating total project cost. For example, for the Paducah Gaseous Diffusion Plant project, the project team did not incorporate additional project costs, including funds for contingencies and the contractor’s fee, into the project’s cost estimate. This omission resulted in underestimating the project’s cost target by about $8 million, or about 21 percent. In both cases, these errors increased the projects’ cost targets and caused EM to miss the original cost targets, according to our assessment of performance.", "We were unable to determine the extent to which 27 of the 71 nonmajor projects that EM and NNSA completed or had under way from fiscal year 2008 through fiscal year 2012 had met their scope, cost, and completion date targets for four reasons. First, EM and NNSA did not establish a performance baseline for eight projects. Second, EM and NNSA did not provide documentation that fully identified one or more performance targets—including targets for scope, cost, and completion date—for eight projects. Third, NNSA did not fully document a final project cost or a current completion date for three projects. Fourth, EM and NNSA modified the scope targets of eight projects after CD-2, rendering the original performance targets unusable for purposes of assessing performance.\nEM and NNSA did not establish a performance baseline for a total of 8 of the 71 nonmajor projects we reviewed that were completed or ongoing for fiscal years 2008 to 2012. Without a performance baseline, a project’s performance cannot be assessed. Specifically, we found the following:\nEM. EM did not establish a performance baseline for 6 of the 30 EM nonmajor projects we reviewed. According to EM documentation, when the office established near-term baselines for its PBS activities in the 2007 time frame, it decided that it would not establish a baseline for a few projects that were near completion or for which physical work was essentially complete, and remaining costs were low. Because EM had essentially completed all physical work before fiscal year 2008 on the 6 projects we identified, EM never established a performance baseline for these projects, according to EM officials. However, we included these projects in our review because EM did not formally approve the completion of these projects (via a CD-4 approval memorandum) until the 2010 to 2011 time frame, which meant that these projects would have been ongoing until that time. The combined cost of these 6 projects is approximately $1.5 billion. (See app. II for more details.)\nNNSA. NNSA did not establish a performance baseline for 2 of the 41 NNSA nonmajor projects we reviewed. According to NNSA documents and project officials, after a May 2000 wildfire damaged lands and buildings at the Los Alamos National Laboratory, NNSA formally authorized two emergency recovery efforts in July 2000. Because this authorization was granted outside of the critical decision process, NNSA did not establish formal performance targets for these projects. The combined cost of these two projects is $145 million. (See app. III for more details.)\nFor 8 of the 71 nonmajor construction projects we reviewed, EM and NNSA did not fully define and document one or more performance targets for scope, cost, and completion date when they established and approved performance baselines for these projects at CD-2. Specifically, we found the following:\nFor EM, 2 of the 30 EM nonmajor projects we reviewed did not have clearly defined and documented targets for scope and completion date, 1 project did not have a clearly defined and documented scope target, and 1 project did not have a clearly defined and documented completion date target. The combined cost of these 4 projects, 2 of which are ongoing, is estimated to be at least $182 million. (See app. II for more details.)\nFor NNSA, 4 of the 41 NNSA nonmajor projects we reviewed did not have clearly defined and documented scope targets. The combined cost of these 4 projects, 2 of which are ongoing, is estimated to be $122 million. (See app. III for more details.)\nFor 2 of the 71 nonmajor projects we reviewed, NNSA did not fully document the final project cost at CD-4. The final cost has not yet been settled for these 2 projects due to pending litigation with the contractor. NNSA estimated the combined cost of these 2 projects, both of which have been completed, to be $195 million. In addition, for the Nuclear Materials Safeguards and Security Upgrades, Phase II project at the Los Alamos National Laboratory, NNSA and contractor officials have determined that the project’s remaining construction costs will exceed the existing funds for the project and have halted work on the project. As a result, NNSA has not determined what the project’s revised completion date target will be.\nEM and NNSA modified the scope targets of 8 of the 71 projects we reviewed after approving them at CD-2. EM and NNSA used procedures to control and approve these modifications but did not establish new CD-2 performance targets. As a result, the scope modifications rendered the original CD-2 performance targets unusable for assessing project performance. We consider a project’s scope target to have been modified if, among other things, EM or NNSA increased the scope of the project after approving it at CD-2 or reduced the scope for programmatic reasons and provided a sound justification for this reduction. In contrast, if EM or NNSA reduced project scope solely to meet a project’s cost target, we did not consider the scope target to have been modified; rather, we considered the scope target not to have been met. (See apps. II and III for more information.)\nProjects for which EM or NNSA had modified the scope target sometimes exceeded expectations. For example, an NNSA project to build a highway at the Nevada National Security Site had an original scope target of 19.2 miles of highway and a cost target of about $14 million, but the project team completed an additional 12 miles of highway at an incremental cost of about $4 million, ahead of the original completion date target. However, because the scope target changed, the total cost of the project also changed, which made it unfair to judge the project’s performance against its original cost target.\nTable 3 provides an example of a NNSA project for which we consider the scope target to have been modified.\nWe have previously reported on problems with the way DOE documents and tracks the scope of its projects, and DOE has taken actions to address this issue. In a 2008 report on DOE’s Office of Science, we noted concerns within DOE that projects sometimes had overly broad definitions of scope, making it difficult to determine the effects of a change in project To address this issue, we recommended that DOE consider scope.whether it could strengthen its project management guidance to help ensure that each project’s scope is clearly and sufficiently defined. DOE generally agreed with our recommendation and revised Order 413.3 in November 2010 to establish clearer requirements for identifying and documenting project scope at CDs 2 and 4. Specifically, the revised order requires a project’s acquisition executive to clearly identify the scope target in the documentation approving CD-2. In the documentation approving CD-4, when a project is declared complete, this official must clearly identify the scope accomplished and compare this scope with the target established at CD-2.\nTo determine whether NNSA and EM had improved their documentation of scope targets since DOE revised Order 413.3, we identified two nonmajor projects for which NNSA and EM established performance targets in 2011. These projects are NNSA’s Sanitary Effluent Reclamation Facility Expansion project at the Los Alamos National Laboratory and EM’s Purification Area Vault project at the Savannah River Site. In reviewing project documentation, we found that both NNSA and EM had provided information on targets for scope, cost, and completion date in their memorandums approving CD-2. In particular, NNSA’s approval memorandum identified the following scope targets: (1) expand the existing Sanitary Effluent Reclamation Facility capacity to treat 300 gallons per minute of product water in an 18-hour day; (2) provide a 400,000-gallon product water storage tank, which provides a consistent supply of water to the cooling towers in the event the facility is off-line for maintenance; and (3) provide additional evaporation capacity. These scope targets provide a quantitative measure of how the project is to perform at completion, as required by DOE’s order.\nHowever, we found problems with the way EM documented the scope target for its Purification Area Vault project. EM’s approval memorandum provided a high-level description of the project’s scope, stating that the project will modify an existing portion of the K-Area Complex at the Savannah River Site in South Carolina to accommodate a vault; implement passive and active fire protection features as identified in the project fire hazards analysis; and install a new heating, ventilation, and air conditioning system. However, the scope target cited in the approval memorandum did not provide sufficient detail for measuring scope performance at project completion and, therefore, it may be difficult for an independent reviewer to accurately assess project performance. Specifically, we found the following:\nThe first part of the scope target—construct a secure storage location for holding at least 500 containers—provides a quantitative measure of how the project is to perform at completion, as required by DOE’s order. The second part of the scope target—attain CD-4 approval for storage of containers—does not provide a quantitative measure and instead reflects a stage in DOE’s critical decision framework. Therefore, only one part of the scope target can be used to independently measure project performance regarding scope.\nThe scope target only captures some of the elements of scope contained in the high-level scope description. As a result, the effect of any changes to these other elements of scope on project performance is unclear. For example, if EM decided not to fully implement the fire protection features identified in its hazards analysis, it is not clear whether EM or an independent reviewer would consider the project to have met its scope target.\nOnly the scope target—as opposed to the other elements of scope in the high-level scope description—is currently being tracked in DOE’s centralized database for project performance. Given the other issues we identified with this scope target, an independent reviewer relying solely on information in DOE’s database may not have enough information to assess the project’s performance accurately.", "Several factors affected EM and NNSA in managing their nonmajor projects that were completed or ongoing from fiscal years 2008 to 2012. According to our interviews with project officials, these factors included the suitability of the acquisition strategy, contractor performance, and adherence to project management requirements.", "Because EM and NNSA carry out their work primarily through agreements with private contractors, a project’s acquisition strategy is a critical factor that affects the ability of these offices to properly manage their nonmajor projects. According to DOE guidance, an acquisition strategy is the high-level business management approach chosen to achieve project objectives within specified resource constraints. The acquisition strategy is the framework for planning, organizing, staffing, controlling, and leading a project. As part of this framework, agency officials have to choose the most appropriate contract alternative for a given project. Alternatives can include the use of multiple contractors to perform different tasks or the use of a prime contractor (such as the M&O contractor at a DOE site), who would be responsible for awarding subcontracts for different tasks. In addition, agency officials should identify the use of special procedures, such as the use of a “design-build” contract, whereby a single contract is awarded for both design work and construction, or the use of a “design-bid-build” contract, whereby separate contracts are awarded for the design and construction.\nSome EM and NNSA officials told us that the acquisition strategy was an important factor in the successful management of their projects. For example, EM retained a prime contractor to manage the Soil and Water Remediation–2012 project at the Idaho National Laboratory using a contract containing incentives based on cost and schedule performance. According to project officials, the fee structure under this acquisition strategy is relatively simple and gives the project team flexibility to tie incentives to different performance milestones across the multiple subprojects within the contract. These officials said that this contract structure has been a very effective tool in achieving performance goals. EM expects this project to meet its cost target of $743 million and its completion date target of September 2012, and officials said that they expect the contractor to receive its incentive fee, as called for in the contract.\nOther EM and NNSA officials cited the existence of an inadequate acquisition strategy as having a negative effect on the performance of their projects. For example, according to NNSA project officials at the Los Alamos site office, the M&O contractor at the Los Alamos National Laboratory decided to construct the Radiological Laboratory/Utility/Office Building project using a design-build acquisition strategy with a single prime subcontractor responsible for both design and construction. This approach was chosen based on the M&O contractor’s experience with constructing office buildings. However, the project also involved the construction of a radiological laboratory, which entailed the use of rigorous documentation standards to show that the project can meet nuclear quality assurance standards, among other things. Officials of the NNSA site office said that one of their key lessons learned would be to use a design-bid-build acquisition strategy if they had to manage a similar project in the future. The use of a design-bid-build contract would have offered several advantages over a design-build contract, according to these officials. First, it would have allowed NNSA staff more time to develop more robust project specifications and a more mature project design before having contractors bid on the construction of that design. Second, NNSA staff might have had more time to evaluate bids from contractors to see if they had the skills to construct the project. Third, with a more mature design, NNSA might have been able to reduce the number of federal staff and the time spent overseeing the project. This project was completed in June 2010, a few months after its completion date target. Its cost target was $164 million; however, the final cost of this project has not been determined because of ongoing litigation. According to the officials of the site office, NNSA withheld the M&O contractor’s performance incentive fee as a result of less than desirable contractor and subcontractor management during the design and construction of the facility.\nDOE has previously identified ineffective acquisition strategies as being among its top 10 management challenges. Specifically, in its 2008 root cause analysis, DOE reported that its acquisition strategies and plans were often ineffective.acquisition planning early enough in the process or devote the time and resources to do it well.", "Because contractors carry out the work associated with EM and NNSA nonmajor projects, contractor performance is a fundamental factor affecting EM’s and NNSA’s management of these projects. According to EM and NNSA project officials, poor contractor performance was a significant factor impeding their ability to successfully manage nonmajor projects. Among other things, officials cited concerns with finding qualified contractors that understood DOE’s nuclear safety requirements and maintained adequate internal control processes. Examples are as follows:\nNuclear Facility Decontamination & Decommissioning – High Flux Beam Reactor Project, Brookhaven National Laboratory, New York: This project was completed in December 2010, more than a year ahead of its completion date target, and at a cost of $16 million, which was 31 percent higher than its cost target of $12 million. EM officials stated that the major factor increasing costs was that the contractor did not properly prepare for and pass internal safety reviews, which were necessary to demonstrate the contractor’s readiness to begin removal and disposal of key reactor components. Because the contractor required more time than originally planned to prepare for and pass internal safety reviews, work on the project was delayed, and the total project cost increased. Officials did not explain why the project was completed well ahead of its completion date target despite the delays encountered. Officials stated that one of the most important lessons learned was to better ensure earlier in the process that the contractor had a rigorous process in place (e.g., procedures and training) to demonstrate that their personnel were ready to perform the decontamination and decommissioning work. Because EM’s cleanup work at Brookhaven National Laboratory is performed under the Laboratory Management and Operations Contract under the purview of DOE’s Office of Science, EM officials said that they have provided information to the Office of Science to be included in the contractor’s overall performance evaluation.\nProcess Research Unit Project, Niskayuna, New York: EM established a cost target of $79 million for this ongoing project. In September 2010, a contamination incident occurred while the contractor was performing open air demolition of a building at the site. According to DOE’s incident report, the contamination incident had two root causes: (1) the contractor failed to fully understand, characterize, and control the radiological hazard; and (2) the contractor failed to implement a work control process that ensured facility conditions supported proceeding with the work. As a result of this incident, as well as weather-related issues, the project has exceeded its cost target, and the project’s final cost and completion date depend on the outcome of negotiations between DOE and the contractor, according to project officials.\nNuclear Materials Safeguards and Security Upgrades Project, Phase II, Los Alamos National Laboratory, New Mexico: This ongoing project is expected to meet its cost target of $245 million but not its completion date target of January 2013. NNSA used a design-bid- build acquisition strategy for this project, with one contractor responsible for designing the project, and another contractor responsible for construction activities. According to project officials, during the construction phase, the building contractor had to stop work when it discovered errors with the design of the project. Specifically, officials told us the designs contained an erroneous elevation drawing that did not adequately account for the presence of a canyon and a pipeline containing radioactive liquid waste on the north side of the project site. In addition, other construction subcontractors, whose work was to be performed in sequence, had to wait to begin their work. As a result of these problems, the design contractor spent considerable time redesigning the project, according to project officials, and NNSA has had to award additional funding and schedule time to the construction contractors to compensate for the inadequate design. All told, officials told us the additional costs resulting from redesign and the delay of construction ranged from $15 million to $20 million. In addition, NNSA and contractor officials recently determined that the project’s remaining construction costs will exceed the existing funds for the project and have halted work. As a result, NNSA has not determined what the project’s revised completion date target will be.", "Effective project management also depends on having project officials consistently follow DOE’s project management requirements. Among other things, these requirements are aimed at ensuring that projects (1) have a sufficiently mature design before establishing performance targets and beginning construction activities; (2) have had their earned value management systems certified for more accurate reporting on performance; (3) undergo a review by an independent group of experts before beginning construction activities; and (4) maintain an adequate process to account for any significant changes to the project’s scope, cost, or completion date targets (known as a change control process). DOE has previously identified adherence to project management requirements as among its top 10 management challenges, stating in its 2008 root cause analysis that the agency has not ensured that these requirements are consistently followed. That is, in some instances, projects are initiated or carried out without fully complying with the processes and controls contained in DOE policy and guidance.\nWe found a similar problem with adherence to DOE project management requirements in some of the projects we reviewed, although these problems were more often associated with EM projects than with NNSA projects. Specifically, in half of the 10 EM projects we reviewed in depth, officials cited a lack of adherence to project requirements, particularly not having a sufficiently mature design when establishing performance targets and beginning work activities, as a significant factor impeding their ability to manage projects within the performance baseline.\nFor example, EM’s project to convert depleted uranium hexafluoride into a more stable chemical form at two locations—Paducah, Kentucky and Portsmouth, Ohio—was completed in November 2010, more than 2 years after its completion date target and more than $200 million over its cost target of $346 million. A lessons-learned report, completed in 2009 at the request of DOE, concluded that DOE’s critical decision process had become a “mere rubber stamp of approval.”Project had results consistent with its level of definition at the time of project commitment and execution start. Future DOE projects will likely demonstrate similar performance unless they are better defined at the start of detailed design and they follow not only the letter of DOE’s [critical decision] process, but also its spirit.” According to EM officials, EM withheld the construction contractor’s incentive fee due to its poor performance.\nIt stated: “In the end, the … In contrast, among the 10 NNSA projects we reviewed in depth, several NNSA project managers credited adherence to project management processes as contributing positively to project performance. The advantages of adhering to project management processes are illustrated by one of the projects we reviewed—the Ion Beam Laboratory project at Sandia National Laboratories, New Mexico. This project—to use ion beams to qualify electronics and other nonnuclear weapon components for use in the nuclear stockpile—was completed ahead of schedule in September 2011 at a cost of $31 million, which was 22 percent lower than its cost target of $40 million. Project officials stated that implementing a procedure to control any changes to the performance baseline and a Baseline Change Control Board served as the foundation to manage all changes to ensure that cost, schedule, and technical aspects were evaluated to meet the mission of the project. In addition, project officials made active use of earned value management data, with several officials noting that applying earned value management principles on a regular basis assisted the project team in taking management actions to keep the project on track. For example, the Sandia Project Manager provided monthly reports to Sandia senior managers and the federal project director to communicate the project’s progress, the accomplishment of milestones, financial outlays, project issues, and appropriate corrective actions. Owing to the project’s success in meeting its performance targets, NNSA did not withhold any fee from the contractor.", "EM’s eight workforce plans for its federal workforce do not consistently identify (1) mission-critical occupations and skills and (2) current and future shortfalls in these areas. As shown in table 4, of the eight EM workforce plans, one fully identifies both mission-critical occupations and mission-critical skills; another four plans identify either mission-critical occupations or mission-critical skills, but not both; and four of the eight plans identify current and future shortfalls in mission-critical occupations.\nEM’s workforce plans may not consistently identify mission-critical occupations and skills and shortfalls in these areas in part because EM’s Office of Human Capital has not established a consistent set of terms that all EM sites use to define and describe mission-critical occupations and skills, according to our analysis. Instead, the five EM workforce plans that identified or partially identified these occupations and skills (as shown in table 4) used different terms to identify them. The plans also differed in the number and type of occupations or skills identified as mission-critical. For example, two plans identified three such occupations and skills, while another identified 20 different job series associated with 40 different position titles. Table 5 shows the variations in mission-critical occupations and skills identified in these five EM workforce plans.\nWhen we brought the issue of inconsistent terminology to the attention of EM officials, they agreed that it would be useful to establish a consistent set of terms for mission-critical occupations and skills and told us that they plan to address this issue in the fiscal year 2013 planning cycle. However, we note that EM’s guidance to its site offices already instructed them to describe shortfalls and surpluses in the skills most critical to site performance; nonetheless, not all site offices did so.\nNotwithstanding the variations in terms for mission-critical occupations and skills in EM’s workforce plans, many of the plans indicate that EM’s federal workforce may soon face shortfalls in a number of important areas, including project and contract management. Examples are as follows:\nThe Portsmouth/Paducah Project Office’s plan states that the office will need more staffing, including in project management and contracting, to meet mission needs in future years. Specifically, the plan notes that 31 percent of its current federal workforce could retire by fiscal year 2017, including up to 67 percent of its contract specialists and up to 64 percent of its general engineers.\nThe workforce plan for EM headquarters, issued in July 2011, stated that 26 percent of its federal workforce was currently eligible to retire, with an additional 22 percent of the workforce projected to become eligible for retirement by fiscal year 2015. The EM headquarters plan projected that 60 percent of contracting officers would be eligible for retirement by fiscal year 2015.\nThe Idaho Operations Office workforce plan states that a significant number of federal employees in leadership and mission-critical positions were already eligible for retirement at the end of fiscal year 2011, but the plan does not specify the number or positions of these employees.\nThe Carlsbad Field Office workforce plan indicates that both of that office’s “contract/procurement specialists” will be eligible to retire by fiscal year 2017, along with 10 of its 15 general engineers.\nThe workforce plan for the Office of River Protection, which manages the storage, retrieval, treatment, and disposal of tank waste at the Hanford Site in Washington State, projects that the office will face a 61 percent shortfall in “contracting” and a 53 percent shortfall in “project management” by fiscal year 2017.\nEM officials said that they recognize the need to better identify mission- critical occupations and skills and shortfalls in these areas, and that they have taken a number of steps to address these issues. For example, officials in EM’s Office of Human Capital told us that they conducted a skills assessment in 2010 that helped EM identify key occupational series to target in its succession planning efforts. In addition, officials in this office told us that they are actively engaged in mitigating the risk of having a large number of EM federal employees retire in the near future by developing a voluntary separation incentive plan and voluntary early retirement plan. If employees eligible for retirement participate in this plan, EM could fill vacated positions with younger employees who could develop their skills in future years. Moreover, officials in EM’s Office of Acquisition and Project Management told us that to ensure that each project team has the skilled staff it needs to meet project goals, they consult with the EM officials in charge of each project team, consider the project’s execution plan, and use DOE staffing guidance as a tool to inform staffing decisions.\nEM officials also said that EM sites serve diverse functions and that, therefore, some variation in the workforce plans and their descriptions of mission-critical occupations and competencies is to be expected. Nonetheless, without a workforce plan or summary document presenting a consistent set of occupations and skills that are critical to every site office’s mission, such as project and contract management, it is difficult for DOE and us to understand EM’s most critical current and future human capital needs.", "The 71 nonmajor projects that we reviewed cost an estimated $10.1 billion and are critical to DOE’s mission to secure the nation’s nuclear weapons stockpile and manage the radioactive waste and contamination that resulted from the production of such weapons. EM and NNSA are making some progress in managing these projects. For example, we identified some NNSA and EM nonmajor projects that used sound project management practices, such as the application of effective acquisition strategies, to help ensure the successful completion of these projects. However, some contract and project management problems persist. Specifically, both EM and NNSA have approved the start of construction and cleanup activities for some nonmajor projects without clearly defining and documenting performance targets for scope, cost, or completion date in the appropriate CD-2 documentation, as required by DOE’s project management order. In addition, EM and NNSA have not consistently tracked project performance, particularly for scope, in DOE’s centralized database for tracking and reporting project performance, as required by DOE’s project management order. Moreover, EM has approved new performance targets for projects without ensuring that these targets are reviewed by an independent team of experts, as required by DOE’s project management order. Without clearly defining and documenting a project’s performance targets and tracking performance against these targets through project completion, and without ensuring that projects are independently reviewed, neither DOE nor we can determine whether the department is truly delivering on its commitments when its contractors complete work on its projects.\nProblems also persist regarding DOE’s workforce—specifically, its current and potential shortfalls in federal personnel with the skills necessary to manage its contracts and projects, an issue that has received attention in our high-risk list. EM recognizes the need to address this issue and has taken steps to do so, such as conducting succession planning based on an assessment of key skills, as well as having EM’s Office of Project Management consult with EM’s project teams to ensure that the project teams have the skilled personnel they need to execute projects successfully. However, EM does not consistently identify in its workforce plans the occupations and skills most critical to the agency’s mission, as well as current and future shortfalls in these areas. This issue is compounded by EM’s decentralized planning process, in which site offices produce their own workforce plans that do not use consistent terminology and are not aggregated centrally by EM headquarters into a single workforce plan or summary document. Some variation among site- specific workforce plans is to be expected, but EM officials have stated that it would be useful to establish a consistent set of terms for mission- critical occupations and skills and told us that they plan to address this issue in the fiscal year 2013 planning cycle. That said, previous EM guidance for workforce planning specified that the plans describe shortfalls and surpluses in the skills most critical to site performance, but not all of EM’s plans did so. Without a summary document or single workforce plan presenting a consistent set of occupations and skills that are critical to every site office’s mission, such as project and contract management, using consistent terms, it is difficult for DOE or us to understand EM’s most critical current and future human capital needs.", "To ensure that DOE better tracks information on its nonmajor projects, including the extent to which these projects meet their performance targets, and that EM consistently identifies mission-critical occupations and skills, as well as any current and future shortfalls in these areas, in its workforce plans, we recommend that the Secretary of Energy take the following five actions:\nEnsure that the department clearly defines performance targets— including targets for scope, cost, and completion date—for each of its projects and documents the targets in appropriate CD-2 documentation, as is required by DOE’s project management order.\nEnsure that the department tracks the performance of its projects using the performance targets, particularly scope, it establishes for its projects, as is required by DOE’s project management order.\nEnsure that each project is reviewed by an independent team of experts before the department approves performance targets, as is required by DOE’s project management order.\nDirect EM to develop a summary document or a single workforce plan that contains information on mission-critical occupations and skills, as well as current and potential future shortfalls in these areas, for all EM sites.\nEnsure that EM follows through on its plan to address the use of consistent terms across all EM sites for mission-critical occupations and skills.", "We provided a draft of this report to DOE for review and comment. In written comments, DOE agreed with our recommendations. DOE’s written comments are reprinted in appendix IV. DOE also provided technical clarifications, which we incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Secretary of Energy, the appropriate congressional committees, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or trimbled@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V.", "To determine the extent to which the Department of Energy’s (DOE) Office of Environmental Management (EM) and National Nuclear Security Administration (NNSA) nonmajor projects have met their scope, cost, and completion date targets, we obtained performance information on 71 nonmajor projects. These 71 nonmajor projects included 30 EM projects and 41 NNSA projects that were either: (1) completed (i.e., reached critical decision 4) from fiscal year 2008 to fiscal year 2011 or (2) ongoing from fiscal year 2008 to fiscal year 2011 and for which EM and NNSA had established performance baselines at critical decision 2. We also collected performance information for ongoing projects for fiscal year 2012. The total estimated cost of these 71 projects is approximately $10.1 billion. The names and locations of these 71 projects are provided in apps. II and III. We excluded the following types of projects from our review: (1) major projects, or those projects that each cost more than $750 million; (2) EM projects funded entirely by the American Recovery and Reinvestment Act of 2009 because of a separate GAO review looking at these projects; (3) information technology acquisitions; and (4) We identified these projects using DOE’s Project operational activities.Assessment and Reporting System (PARS). To assess the reliability of PARS data, we interviewed officials about the system and reviewed relevant documents. On the basis of this information, we determined that the system has adequate and sound controls for entering and maintaining data. We also conducted electronic testing on the specific data fields of interest, including cost, schedule, and scope targets. We determined that the cost and schedule data were complete and sufficiently reliable for our purposes; however, we found the scope data to be incomplete. Through interviews with officials, we ascertained that the scope data were not missing because of a system or data entry problem; instead, because EM and NNSA had not consistently identified and documented scope targets for the 71 projects we reviewed, these data could not be entered into PARS. Therefore, we obtained data on project scope, cost, and schedule directly from EM and NNSA officials.\nFor the 71 nonmajor projects, we reviewed selected documents providing information about the projects’ targets for scope, cost, and completion date. We relied on DOE Order 413.3 for requirements on (1) specifying the scope, cost, and schedule targets for a project’s performance baseline and (2) documenting the performance baseline.requirements, we reviewed the relevant documentation (including critical decision memoranda and project execution plans) and compared the performance targets established for scope, cost, and schedule with the actual performance of completed projects and the expected performance of ongoing projects. For completed projects, we compared the performance targets for scope, cost, and schedule—as documented in critical decision 2 (CD-2) approval memorandum and project execution plans—with the completed scope, actual costs, and approval dates as documented in critical decision 4 (CD-4) approval memorandum. For ongoing projects, we compared the performance targets for scope, cost, and schedule with DOE project performance reports; we also had officials from EM, NNSA, and DOE’s Office of Acquisition and Project Management review performance information as of August 29, 2012. In cases where key project documents—including the CD-2 and CD-4 approval memoranda and project execution plans—did not identify all three performance targets for scope, cost, and completion, we requested and reviewed alternative project documents. These included, among other things: independent project review reports; briefing slides prepared for DOE advisory boards; contractor work packages; DOE documents listing the functional and operational requirements of projects; memoranda used to request approval of changes to project baselines; final acceptance reports documenting that contractors delivered project requirements; and DOE quarterly and monthly status reports on ongoing projects. When reviewing alternative project documents, we requested documents dated as close to CD-2 and CD-4 as possible. If documents were not dated within 1 year of CD-2 approval, we did not consider them sufficient and reliable for purposes of determining scope targets.\nIn keeping with our prior work, and in recognition of Office of Management and Budget guidance and DOE’s project performance goals, we characterized nonmajor projects that met or exceeded (or are expected to meet or exceed) their cost and schedule targets by less than 10 percent as completed within budget and on time, whereas we considered projects that exceeded (or will exceed) their targets by 10 percent or more to be over cost or late.whether a project had successfully met its scope target. Projects that reduced their scope target to meet their cost targets were considered not to have met their scope targets. In a few cases, EM and NNSA increased the scope of work associated with a project after establishing performance targets at CD-2; in these cases, we noted that these projects had been modified and did not calculate whether they had met or exceeded their original cost and schedule targets.\nIn addition, we considered To evaluate factors affecting EM’s and NNSA’s management of nonmajor projects, we selected a nongeneralizable sample of 20 out of the 71 projects—including 10 EM projects and 10 NNSA projects—for more detailed review. The names of these 20 projects are provided in apps II and III. Results from nonprobability samples, including our sample of 20 projects, cannot be used to make inferences about EM’s and NNSA’s overall project performance or generalized to projects we did not include in our sample. We were interested in gathering information on the selected projects to identify material factors that may not exist across all projects but could help us understand EM’s and NNSA’s organization strengths and potential challenges. We selected these 20 projects to ensure that our sample included completed and ongoing projects, with a wide range of project costs. Together, the 20 projects represented about $4.1 billion, or approximately 41 percent, of the total value of the 71 projects.\nFor these 20 projects, we developed a structured interview template to identify the key factors that affected the management of these projects. We used three primary sources in developing this structured interview template—GAO’s cost guide, DOE’s Order 413.3, and DOE’s guidance document on conducting project reviews. The structured interview template focused on certain aspects of project management, such as the preparation of project designs, risk estimates, and cost and schedule targets, as well as the adherence to DOE project management requirements. We pretested the structured interview template during a site visit to the Y-12 National Security Complex and the Oak Ridge Reservation near Oak Ridge, Tennessee. At each site, we selected six projects and interviewed relevant EM and NNSA federal project directors and other knowledgeable staff using the structured interview template. Based on our pretesting, we revised the structured interview template and conducted 20 interviews with the relevant EM and NNSA federal project directors and other knowledgeable staff to gather their perspectives on their projects’ performance and reasons for it.\nTo evaluate the extent to which EM’s workforce plans identify mission- critical occupations and skills and any current and future shortfalls in these areas, we examined EM’s strategic workforce plans for its headquarters and site office staff, DOE’s corrective action plan for contract and project management, and the Office of Personnel Management’s Human Capital Assessment and Accountability Framework. Specifically, we obtained the eight EM workforce plans, prepared by EM headquarters, the Consolidated Business Center, the Richland Operations Office and Office of River Protection (which manage operations at the EM site in Hanford, Washington), the Portsmouth/Paducah Site Office, the Savannah River Operations Office, the Idaho Operations Office, the Carlsbad Field Office, and the Oak Ridge Office. We reviewed these plans in their entirety, and also searched for relevant terms, to determine the extent to which the plans identified mission-critical occupations and skills and any current and future shortfalls in these areas. In addition to our document review, we interviewed DOE and EM officials with knowledge of EM’s practices in workforce planning, including officials in EM’s Office of Acquisition and Project Management and Office of Human Capital and Corporate Services. We conducted these interviews to determine how EM develops its workforce plans and to obtain EM officials’ points of view regarding the state of the EM workforce.\nWe conducted this performance audit from June 2011 to December 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "We obtained and reviewed performance information on 30 EM nonmajor projects that were either completed or ongoing from fiscal year 2008 through fiscal year 2012. Table 6 summarizes this information for 17 EM projects for which we could determine performance. Table 7 summarizes this information for 6 projects for which EM did not establish performance targets. Table 8 summarizes this information for 4 EM projects with incomplete documentation of their performance targets, which meant that we could not determine performance. Table 9 summarizes this information for 3 projects for which EM modified the scope after establishing performance targets for these projects, rendering the original performance targets unusable for purposes of assessing performance.", "We obtained and reviewed performance information on 41 NNSA nonmajor projects that were either completed or ongoing from fiscal year 2008 through fiscal year 2012. Table 10 summarizes this information for 27 NNSA projects for which we could determine performance. Table 11 summarizes this information for 2 projects for which NNSA did not establish performance targets. Table 12 summarizes this information for 7 NNSA projects with incomplete documentation of their performance targets or final cost, which meant that we could not determine performance. Table 13 summarizes this information for 5 projects for which NNSA modified the scope after establishing performance targets for these projects, rendering the original performance targets unusable for purposes of assessing performance.", "", "", "", "In addition to the individual named above, Dan Feehan, Assistant Director; Sandra Davis; Robert Grace; and Jason Holliday made key contributions to this report. Also contributing to this report were John Bauckman; Jennifer Echard; Cindy Gilbert; Steven Lozano; Minette Richardson; Cheryl Peterson; and Carol Hernnstadt Shulman." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "h0_full h2_full", "h0_full", "", "", "h2_full h1_full", "", "h2_full", "", "h2_full h1_full", "", "", "", "", "", "" ] }

{ "question": [ "What affected EM and NNSA non major projects?", "What were these factors?", "What was a successful EM acquisition strategy for a project?", "How did a poor acquisition strategy affect the NNSA?", "How should have this acquisition strategy been changed?", "How would this have improved the project?", "What issues lie in EM's workforce plans?", "What additional shortfalls are cited to also occur?", "How has EM addressed these issues?", "How is the wording of EM plans a detriment?", "How does the GAO recommend resolving this issue?", "What is the EM and NNSA's status according to the GAO?", "What do these entities manage?", "How does the DOE manage these entities?", "How has the GAO recommended these entities?", "What is workforce planning?", "What did the GAO cover for this report?", "What did the GAO review for this report?" ], "summary": [ "Several factors affected EM's and NNSA's management of their nonmajor projects that were completed or ongoing from fiscal years 2008 to 2012.", "These factors included the suitability of a project's acquisition strategy, contractor performance, and adherence to project management requirements.", "For example, EM officials managing an ongoing project to remediate soil and water at the Idaho National Laboratory used an acquisition strategy that tied incentives for the contractor to different performance milestones across the multiple subprojects within the contract, which will help the project meet its performance goals, according to EM officials.", "In contrast, NNSA encountered problems meeting its performance goals for a project to build an office building and radiological laboratory at the Los Alamos National Laboratory partly due to its acquisition strategy.", "According to NNSA project officials at the Los Alamos site office, the project team should have hired one contractor to design the project and solicited bids from other contractors to build the project rather than using the same contractor for both activities.", "The former strategy might have resulted in a more mature project design and more time to evaluate various contractors' qualifications to construct the project, according to the NNSA project officials.", "EM's workforce plans do not consistently identify mission-critical occupations and skills and current and future shortfalls in these areas for its federal workforce.", "In addition, many EM workforce plans indicate that EM may soon face shortfalls in a number of important areas, including project and contract management.", "EM officials said that they recognize these issues and have taken a number of steps to address them, including conducting a skills assessment to identify key occupational series to target for succession planning.", "However, the inconsistent terms used to describe mission-critical occupations and skills in EM's workforce plans make it difficult for GAO and DOE to understand EM's most critical needs regarding its workforce.", "GAO recommends that EM and NNSA clearly define, document, and track the scope, cost, and completion date targets for each of their nonmajor projects and that EM clearly identify critical occupations and skills in its workforce plans. EM and NNSA agreed with GAO's recommendations.", "As of February 2011, EM and NNSA remained on GAO's high-risk list for contracting and project management.", "These two offices manage numerous construction and cleanup projects that each cost less than $750 million and are called nonmajor projects.", "DOE requires its program offices to establish performance targets for the expected scope, cost, and completion date of each project before starting construction or cleanup.", "GAO has encouraged federal agencies to use strategic workforce planning to help them meet present and future mission requirements.", "Two key elements of workforce planning are to identify mission-critical occupations and skills and any current and future shortfalls in these areas.", "GAO was asked to examine the (1) extent to which EM and NNSA nonmajor projects have met their scope, cost, and completion date targets, (2) factors affecting EM's and NNSA's management of nonmajor projects, and (3) extent to which EM's workforce plans identify mission-critical occupations and skills and any current and future shortfalls in these areas.", "GAO reviewed DOE documents and project data, examined EM workforce plans, toured selected DOE facilities, and interviewed DOE officials." ], "parent_pair_index": [ -1, 0, -1, -1, 3, 4, -1, 0, 0, -1, 3, -1, 0, 0, 0, -1, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "DI Overpayments", "Civil Monetary Penalties and Administrative Sanctions", "SSA Is Missing Opportunities to Improve Recovery of Disability Insurance Overpayments", "SSA Relies on Withholding Benefits to Recover Most Overpayments", "Most Withholding Plans Exceed 3 Years", "Gaps Exist in SSA’s Guidance, Oversight, and Verification of Information Related to Withholding Plans", "Policies for Determining Appropriate Expenses", "Oversight and Documentation of Repayment Plans", "Verifying Self-Reported Information", "SSA Is Taking Steps to Improve Debt Collection, but Lacks Plans for Using Additional Promising Collection Tools", "SSA Lacks Reliable Data and Oversight to Know Whether Penalties and Sanctions Are Used Effectively", "SSA Lacks Reliable Data to Track and Tools to Collect Penalties", "SSA Recently Changed Its Sanctions Procedures, but Weaknesses Persist", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Recovery of DI Overpayments", "Analysis of Overpayments and Potential Recovery Options", "Civil Monetary Penalties and Administrative Sanctions", "Appendix II: Additional Information on DI Overpayments", "Appendix III: Comments from the Social Security Administration", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "SSA’s DI program provides cash benefits to individuals with disabilities, and paid $144 billion to 10.8 million beneficiaries and their families in fiscal year 2015. Individuals are generally considered to have a disability if (1) they cannot perform work that they did before and cannot adjust to other work because of their medical condition(s); and (2) their disability has lasted or is expected to last at least 1 year, or is expected to result in death. Further, individuals must have worked and paid into the program for a minimum period of time to qualify for DI benefits.", "DI overpayments occur when beneficiaries are paid more than they should be for a given period of time. We previously found that more than half of all DI overpayments are paid to beneficiaries earning above program limits. Overpayments may also result if SSA does not cease benefit payments when notified by a beneficiary of a change in work status, when inaccurate information and administrative errors lead to incorrectly calculated benefits, or as the result of individuals knowingly misleading the agency or committing fraud. As of September 30, 2015, approximately 637,000 individuals owed about $6.3 billion to SSA in DI overpayment debt.\nSSA will seek repayment of most overpaid benefits after pursuing various procedural steps. Specifically, when SSA detects an overpayment, it requests a full immediate refund, unless the overpayment can be withheld from the beneficiary’s next monthly benefit. SSA also notifies the overpaid person that they may request reconsideration, a waiver, or both. A beneficiary requests reconsideration when he or she disputes that an overpayment occurred or the amount of the overpayment, and requests a waiver when asserting that he or she is neither responsible for the overpayment nor capable of repaying it. SSA may grant a waiver request if it finds that the beneficiary was not at fault for the overpayment and that recovering the overpayment would defeat the purpose of the program or be against good conscience and equity. A waiver permanently terminates collection of a debt.\nIf SSA denies a reconsideration, a waiver, or both, the agency will request full repayment. SSA will attempt to withhold SSA benefits from the beneficiary to immediately recoup the full amount. If the individual is not receiving SSA benefits at the time or is unable to immediately pay the full amount owed, the agency generally requests a repayment plan. This may take the form of voluntary remittances or withholding from monthly SSA benefits. These withholdings may be taken from DI or other SSA benefits being received, such as Supplemental Security Income (SSI) benefits. Withholding from other SSA benefits is known as cross-program recovery. SSA policy is to obtain repayment within 36 months, but it may approve longer repayment periods after reviewing an individual’s income, expenses, and assets. SSA regulations require a minimum monthly DI withholding of $10, an amount that has not changed since 1960 according to SSA.\nSSA’s policy is to stop its collection activities and temporarily write off a debt if it meets at least one of these criteria: the debtor cannot or will not repay the debt, the debtor cannot be located after a diligent search, the cost of collection actions is likely to exceed the amount recovered, or the debt is at least two years delinquent. (SSA may refer to such debt write-offs as terminating or conditionally writing off debts.) Temporarily writing off debts conditionally removes them from SSA’s accounts receivable balance, although SSA will refer debts to Treasury for collection through external tools. Prior to referring debts to Treasury, SSA notifies debtors and informs them of the appeal rights. SSA will re- establish these debts and its own collection efforts if it receives payment through these external collection tools or if the individual becomes re- entitled to Social Security benefits. External debt collection tools include tax refund offset, which withholds or reduces federal tax refunds to the individual; federal salary offset, which withholds or reduces wages and payments to federal employees; administrative offset, which withholds or reduces other federal payments (other than tax refunds or salary) to the individual; administrative wage garnishment, which garnishes wages and payments from private employers or state and local governments; and credit bureau referral, which reports delinquent debt to credit bureaus and may adversely affect an individual’s credit scores.\nConditionally written-off debts remain subject to collections through any available tools until the debt is paid in full or the case is otherwise resolved. As of the end of fiscal year 2015, SSA had $1.5 billion dollars of overpayments that were conditionally written off. The average amount of written-off debt was about $4,100 and more than 75 percent of these debts were written off over 5 years ago. About 30 percent of people in written-off status were under age 18 when a parent received benefits for them and most of these recipients were written off in their late teens or twenties.\nThe amount of outstanding DI overpayments increased by 70 percent between fiscal years 2006 and 2015, with the amount of debt newly detected and reestablished exceeding the amount collected, waived, or conditionally written off in 9 of the last 10 years. Moreover, while collections of prior debt have seen some increases over the past 10 years, they have not kept pace with new debt established (see fig. 1).", "SSA can take several actions against individuals who knowingly mislead SSA or make false statements to obtain benefits, and these actions serve as deterrents against potential fraud and abuse. Allegations of suspected wrongdoing are referred to SSA’s OIG by SSA staff or the public. OIG will assess each allegation received to determine whether they warrant investigation. According to SSA, those opened for investigation must be referred to the Department of Justice (DOJ) under the U.S. Attorney of jurisdiction any time OIG has grounds to believe there has been a criminal violation, as required by the Inspector General Act.\nOnce DOJ reviews a case for potential civil or criminal action, OIG decides to impose civil monetary penalties (penalties) where warranted. Section 1129 of the Social Security Act provides for penalties against individuals who make certain false statements, representations, or omissions in the context of determinations of initial or continuing eligibility. Under that section, there are certain factors that must be considered when determining the amount of a penalty, which are: the nature of the individual’s actions, the circumstances under which the actions occurred, the individual’s history of prior offenses, the individual’s degree of culpability in the current case, the financial condition of the individual, and any other factors that justice may require. OIG officials told us that they exercise discretion when deciding which cases to pursue for penalties and take into account the age of the individual and the availability of OIG resources, among other considerations. A penalty of up to $5,000 may be imposed for each false statement or material omission, and an additional assessment up to double any payment that was made as a result, may be imposed. OIG’s Office of Counsel to the Inspector General (OCIG) imposes penalties, but subsequently refers penalties imposed to SSA’s Office of Operations for collection. According to SSA, because penalties result from fraud and misconduct, SSA cannot terminate collection or write off the debt without the permission of DOJ. Additionally, individuals cannot discharge penalties through bankruptcy.\nIf OCIG declines to impose a penalty, it will consider whether administrative sanctions (sanctions) might be appropriate. If it determines that sanctions may be suitable, OCIG will return the case to SSA for further consideration. SSA is ultimately responsible for deciding whether sanctions are imposed in each case. If it imposes sanctions, the sanctioned individual will not receive benefit payments that he or she would have been entitled to for the duration of the sanction period: 6 months for a first occurrence, 12 months for a second occurrence, and 24 months for any subsequent occurrences.", "", "In fiscal year 2015, SSA identified about $1.2 billion in new DI overpayment debt and recovered about $857 million, of which 78 percent was collected by withholding some or all of beneficiaries’ monthly benefits (see fig. 2). SSA officials told us benefit withholding is their most effective tool for recovering overpayments and that collecting overpayments from individuals who no longer receive benefits can be difficult as these individuals may lack tax refunds or other federal and state payments to offset. Nonetheless, while withholding accounts for the bulk of collections, individuals repaying in this way make up less than half of people who have DI overpayment debt. Specifically, those repaying through benefit withholding represent about 311,000 of 637,000 people with DI overpayment debt.", "Benefit withholding plans, in which SSA withholds a specified amount of an individual’s benefits each month, often reflect lengthy repayment periods. We estimated the length of time needed to complete repayment for overpayments being collected in this way at the end fiscal year 2015 (see fig. 3) and found that over 50 percent of plans will take more than 3 years to complete. In addition, about 44,000, or 1 in 7 withholding plans are scheduled to be completed after the beneficiary’s 80th birthday. Given the age at which these beneficiaries are scheduled to complete repaying their debts, it is possible that many individuals will die before completing repayment. Moreover, individuals with the longest repayment periods account for a disproportionately large share of outstanding overpayment debt. For example, about 10 percent of individuals with withholding plans are scheduled to take over 30 years to repay their debts, but account for nearly a quarter of the outstanding debt to be recouped through withholding.\nWe also found that over a third of withholding amounts were less than $50 and over half were less than $100 (see fig. 4). The median amount of monthly benefits being withheld from beneficiaries’ DI benefits to repay prior overpayments was $57. In addition, many withholding amounts represented a small percentage of recipients’ monthly benefits. About two-thirds of withholding amounts were less than 10 percent of beneficiaries’ monthly benefit (see fig. 5). SSA withheld a median of less than 8 percent of individuals’ monthly benefits for repayment.\nWe also found, when we looked at data from the end of fiscal year 2015, that individuals with lower benefits had a larger share of their monthly benefits withheld for an overpayment debt (see appendix II, figures 7 and 8). For example, the median withholding level for those in the lowest quartile of monthly benefits was 10 percent, while for those in the highest quartile of monthly benefit, the median was 6.2 percent. Appendix II provides additional information on overpayments and withholding amounts and rates.", "Despite SSA’s heavy reliance on withholding benefits to recover debt, we found gaps in SSA’s guidance, oversight, and verification of information related to establishing withholding plans. The importance of determining and collecting an appropriate amount of debt from individuals is laid out in federal standards. The Federal Claims Collection Standards indicate agencies need to aggressively collect all debts arising out of activities of that agency, and that the size and frequencies of installment payments should bear a reasonable relation to the size of the debt and the debtor’s ability to pay. When pursuing debt, it is important for SSA to balance collection efforts against not placing too high a burden on an individual repaying a debt, and for SSA to have policies and procedures in place that ensure staff consistently make decisions on debt recovery that balance these opposing goals. However, as described below, SSA policy for determining reasonable beneficiary expenses is ambiguous, repayment plans are not subject to review or oversight, and beneficiaries’ self-reported financial information is not independently verified. In the absence of these elements, SSA cannot reasonably ensure that repayment amounts and time frames determined by its staff are appropriate and set in accordance with best practices and agency policy.", "SSA’s policies for how to consider beneficiaries’ expenses when determining benefit repayment amounts are ambiguous and leave much to the judgment of staff. Federal Internal Control Standards indicate that agencies’ policies and procedures should be clearly documented in administrative policies or operational manuals. According to SSA policy, staff are to obtain an SSA form 632 documenting financial information, including income and expenses, from a beneficiary to determine his or her ability to repay an overpayment when the beneficiary requests a repayment period exceeding 36 months. In these cases, SSA policy generally directs staff to withhold the amount by which an individual’s income exceeds expenses, or the rate permitted by income or assets if there are excess assets, and notes that this amount should generally not be less than $10 per month. However, a recent report prepared for SSA by an external auditor found that the agency has contradictory policies for determining what reasonable expenses are for beneficiaries. SSA’s policy states that a person’s particular circumstances and lifestyle determine whether expenses are ordinary and necessary, and that patterns of living are established over time and these patterns must be considered when evaluating the facts. At the same time, SSA policy also directs staff to not allow extraordinary and unnecessary expenses, regardless of the person’s standard of living. The report noted that these conflicting statements can lead to confusion when determining a feasible repayment rate. In contrast, the Internal Revenue Service provides detailed guidance on allowable living expenses when determining taxpayers’ ability to repay a delinquent tax liability. Its Collection Financial Standards include national guidelines for the cost of food, clothing, and other items and local standards for housing, utilities, and transportation costs. In the absence of clear guidance, SSA staff may struggle to determine what a beneficiary can reasonably afford to repay and could lead to inconsistencies across different repayment plans.", "SSA lacks effective oversight to know whether these plans are being consistently or appropriately administered. Federal Internal Control Standards indicate that key duties and responsibilities need to be divided among different individuals to reduce the risk of errors, and this should include separating responsibilities for authorizing, processing, recording, and reviewing transactions. In 2011, we reported that SSA staff are not required to obtain supervisory review of repayment plans, and recommended that SSA require supervisory review of repayment plans that extend beyond 36 months—the point at which SSA staff are directed to evaluate an individual’s ability to repay based on income, assets, and expenses. The agency disagreed with our recommendation and has not taken any action to implement it. In the course of our current review, SSA maintained that reviewing withholding plans would not increase recovery of overpayments, but the agency did not provide any analyses or studies to support its position. We continue to believe that supervisory review is an important part of ensuring that staff create appropriate repayment plans.\nIn addition to lacking supervisory review, SSA also has not performed targeted reviews of repayment plans for adherence to policy, even though the agency systematically samples cases to review other aspects of DI overpayment decision making through its Continuous Quality Area Director Reviews, such as whether waiver decisions are properly documented. Without oversight provided by either supervisory or quality assurance reviews, the consistency and appropriateness of repayment amounts cannot be known.\nWhile oversight over repayment plans is lacking, any efforts to provide oversight could be hampered by a lack of documentation. Federal Internal Control Standards state that all transactions and other significant events need to be clearly documented, and that the documentation should be readily available for examination. SSA policy directs staff to obtain information and supporting documentation of the beneficiary’s income, assets, and expenses. This information should be documented by the beneficiary on a form 632 worksheet. Although SSA policy directs staff to retain copies of all supporting documentation (including bills and bank statements) for individuals whose overpayment is $75,000 or more, SSA policy does not explicitly require that supporting documentation— including the form 632 worksheet—be retained for lesser overpayment amounts. Since the median overpayment balance was about $3,200 at the end of fiscal year 2015, an audit trail for conducting oversight may not exist for many repayment plans. Our review of a small sample of overpayment case files—with overpayment amounts ranging from about $3,000 to about $165,000—raised questions about the sufficiency of documentation. Our non-representative sample of 16 cases was of overpayments being repaid through benefit withholding and with repayment periods exceeding 36 months. In 4 cases the overpayment was over $75,000 and retention of supporting documentation, such as mortgage statements, bills, or pay stubs, is directed by SSA policy; however, only 2 had any documentation verifying income or expenses. Further, in 3 of 8 cases in which beneficiaries were directed to complete a form 632—the worksheet used by the beneficiary to request a repayment period exceeding 36 months and to document relevant financial information—we found no evidence in the file that the form was completed. Ultimately, not requiring documentation to be retained for the record for all plans precludes the agency from reviewing the accuracy of repayment amounts in any future review.", "SSA may be missing opportunities to verify self-reported financial information, and therefore individuals’ ability to repay overpayments. Federal Claims Collection Standards state that agencies should obtain financial statements from debtors who represent that they are unable to pay in one lump sum and independently verify such representations whenever possible. Further, GAO’s Framework for Managing Fraud Risks in Federal Programs states that managers should take steps to verify self-reported data to effectively prevent and detect instances of potential fraud. While SSA policy directs staff to collect evidence (such as bank statements or bills) to corroborate self-reported financial information from some beneficiaries, the agency may be able to more efficiently and effectively validate self-reported information by other means that SSA already is leveraging for other purposes. For example, SSA is already using the Department of Health and Human Services’ National Directory of New Hires (NDNH) to determine an individual’s initial and continued eligibility for DI and SSI benefits. The value of this database was further demonstrated in March 2014 when SSA initiated the Quarterly Earnings Pilot to systematically identify and contact DI beneficiaries before their earnings cause them to accumulate large overpayments. According to SSA, the project identified 278 cases for contact using these data about 10 months earlier than it presumably would have identified them using old procedures and methods, uncovering about $3 million in overpayments. Nevertheless, SSA officials told us the agency has not studied the feasibility of using NDNH to verify income information from individuals seeking to establish withholding plans. Similarly, since 2011, SSA has used an automated process, Access to Financial Institutions (AFI), to verify Supplemental Security Income (SSI) applicants’ bank balances and detect undisclosed accounts. In November 2015, legislation was enacted that requires individuals to authorize SSA to access their financial information when deciding whether to waive their overpayments under certain circumstances. Although SSA uses the same form to collect self-reported information for overpayment waiver decisions and withholding plans, according to SSA officials, the agency has not yet determined whether this recent legislation allows it to use AFI for verifying withholding plans that extend beyond 36 months. Using information sources, like AFI and NDNH, to verify financial information provided by beneficiaries can help SSA ensure that it is collecting no more or no less than an individual can afford to pay.", "SSA reports that it has or is taking several steps to improve the collection of delinquent DI overpayment debt. These include:\nModernizing the External Collection Operation (ECO) system: The ECO system identifies beneficiaries with delinquent debt and refers them to Treasury for external collection, using tools such as wage garnishment and tax refund offset. Currently, due to a system limitation, if a debtor has multiple debts, all of the debts must meet the criteria for referral to Treasury. If one debt is not eligible for referral— for instance if an individual is requesting that a debt be waived—none of the debts will be referred. According to SSA officials, as part of its Overpayment Redesign initiative, SSA plans to address this limitation by changing the way in which ECO stores debts to be able to select debts on an individual level as opposed to the aggregate beneficiary record level. This update should allow Treasury to use external collection tools against more debtors and potentially increase the amount of overpayments recovered through these tools.\nState Reciprocal Program: Under the State Reciprocal Program (SRP), managed by the Treasury as part of the Treasury Offset Program, the federal government enters into reciprocal agreements with states to collect debts by offsetting state payments due to debtors, such as state income tax refunds. This program provides SSA with an additional avenue to recover overpayments from delinquent debtors and may increase overall debt recovery. SSA published regulations in October 2011 and modified its systems to begin accepting offsets of state payments in 2013. According to SSA officials, SSA is dependent upon Treasury, who enters into reciprocal agreements with states, to expand the SRP to additional states.\nAddress Verification Project: Implemented in February 2015, SSA’s Address Verification Project is expected to improve its ability to notify individuals with delinquent debt before referring them to external collection. Prior to implementation, SSA relied on the addresses in its records when notifying debtors of their delinquent debt. If the United States Postal Service returned the notice, SSA would cease collection activity, and use a contractor to obtain a current address to re-notify the debtor. It now obtains a current address from the contractor prior to mailing the notice to ensure it has current address information.\nSSA and GAO identified several additional options that could increase its overpayment recoveries. Officials told us that one change they are considering is to make the minimum monthly withholding amount 10 percent of an individual’s monthly benefit instead of the current $10 minimum, but SSA is in the early stages of studying this option and does not yet have time frames for implementing such a change. The agency noted that this could help minimize the number of long-term repayment plans and would put DI collections more in line with its SSI program. Beyond this, we identified two additional options based on past GAO work or conversation with SSA.\nAdjusting monthly benefit withholding according to cost of living adjustments (COLA): In 1996, we recommended that SSA adjust its monthly withholding amounts so that they keep pace with any annual increases in benefits. This option would accelerate overpayment recoveries with only minimal effect on recipients’ monthly benefits.\nCharging interest on debt: SSA officials told us that they have the authority to charge interest on delinquent overpayment debt and would like to be able to do so, but that they have not done so due to resource constraints and competing priorities. With respect to debts that are in the process of being repaid, such as through benefit withholding, SSA has determined that it does not have the authority to charge interest. As we discuss below, however, charging interest on debt that is being repaid could help protect the value of overpayments against the effects of inflation, especially over longer repayment periods.\nHowever, SSA lacks concrete plans and timeframes for studying and implementing these options or any other collection tools beyond those already in place, and SSA officials told us the agency currently has more pressing priorities than expanding its DI debt recovery tools. Federal Claims Collection Standards state that federal agencies shall aggressively collect all debts arising out of activities of, or referred or transferred for collection services to, that agency. Further, collection activities shall be undertaken promptly with follow-up action taken as necessary.\nOur analysis of the options we examined show that they hold promise for increasing SSA’s recovery of DI overpayments. We reviewed overpayments as of September 30, 2015 that were being repaid through benefits withholding, and determined how existing scheduled benefit withholding amounts would be affected by: (1) making the minimum withholding amount 10 percent of monthly DI benefits, (2) adjusting withholding amounts according to annual COLAs, and (3) charging interest on debts being collected through withholding. We took outstanding debts and withholding levels and computed the repayment schedule under the status quo and each alternative option. By definition, repayment schedules do not account for future changes such as individuals who gain or lose eligibility for benefits or whose ability to repay changes. Changes such as those mean that actual collections differ from scheduled collections. Options that increase withholding will speed recovery and reduce the effects of attrition, while charging interest will delay the completion of repayment and magnify the effects of attrition. Nonetheless, these options—implemented alone or in combination—have the potential to significantly increase collections of overpayment debt.\nOf the options we examined, setting a minimum withholding amount equal to 10 percent of an individual’s monthly DI benefit has the greatest potential to increase scheduled collections and reduce the amount of time to fully recover overpayments. We estimate this option would increase scheduled collections by $276 million over 5 years and reduce the median scheduled time to fully recover all beneficiary overpayments from 3.4 years to 2.3 years. Further, those beneficiaries scheduled to take over 20 years to complete repayment would decrease from 17 percent to 4 percent. Figure 6 below provides additional information on the effect of this scenario on scheduled repayment times. The increase in collections under this scenario comes entirely from individuals currently having less than 10 percent of their benefits withheld, and as such, the changes within this portion of the population are more pronounced when examined separately. Among those beneficiaries, the median scheduled repayment time would decrease by over half, from 5.9 to 2.5 years.\nIncreasing the minimum withholding rate to 10 percent of monthly benefits could also be implemented in a way that improves collections while sparing or minimizing the effect on beneficiaries receiving the lowest monthly benefits. We estimate that only about 5 percent of the increase in collections would come from the quartile of beneficiaries receiving the lowest monthly benefits, in part because they already have a disproportionately larger amount of benefits withheld, and in part because increasing the withholding rate recovers much less dollar-wise from those receiving lower monthly benefit levels than those with higher benefits.\nWe estimate that adjusting monthly withholding amounts according to COLAs or charging interest on overpayment debt would have a smaller effect than changing the minimum withholding rate to 10 percent of monthly benefits (see table 1), but could help protect the DI trust fund from the effects of inflation. For example, if SSA overpaid a dollar in 1985 and the beneficiary repaid that dollar 30 years later in 2015, the recovered dollar would have only 45 percent of the buying power of the 1985 dollar. Similarly, if SSA overpaid a dollar in 2010 and recovered it in 2015, the repaid dollar would have only about 92 percent of the buying power of the dollar SSA overpaid. Given that many withholding plans extend for decades, the effect of inflation can be significant. Charging interest on outstanding overpayment balances at the rate of inflation would counteract the effect of inflation and give repaid dollars the same buying power they had when erroneously paid years earlier. Other agencies already charge debtors interest. For instance, the Internal Revenue Service charges individuals with delinquent tax debt interest at a rate that is adjusted quarterly and is based on the federal short-term interest rate. Similarly, adjusting monthly withholding amounts according to COLA increases could help accelerate repayments and thus help negate the effect of inflation on amounts repaid to the DI Trust Fund.\nImplementing any combinations of the options we examined could result in even higher scheduled collections. For instance, setting a minimum withholding rate of 10 percent of monthly DI benefits and charging an interest rate of 1 percent would increase scheduled collections by $287 million over the next 5 years, while these options implemented individually would be scheduled to bring in $276 million and $7 million respectively.", "", "SSA’s OIG has in recent years increased its use of penalties against individuals who knowingly mislead the agency, according to SSA’s Office of Counsel to the Inspector General (OCIG), which is responsible for imposing penalties. According to SSA officials, in fiscal year 2010, OCIG successfully resolved 89 cases and imposed penalties totaling approximately $3.9 million. That increased to 313 cases and more than $17.6 million in fiscal year 2015. OCIG officials attribute this increase to improving its evaluations process and more management focus on the use of penalties as a deterrent.\nIncreased penalties notwithstanding, officials told us SSA lacks reliable data on the status of penalties, how much of penalty amounts have been collected, and how much is delinquent. While OCIG imposes penalties on individuals, SSA’s Office of Operations is ultimately responsible for collecting these amounts. SSA officials said they could not provide us with comprehensive data on the number and amount of penalties paid because of limitations in their computer systems, and added that they would need to review each individual case to determine its repayment status. Federal Internal Control Standards indicate that program managers need appropriate data to monitor the performance of their program and help ensure accountability. Without valid data on the disposition of penalties, SSA cannot determine whether penalties are being used effectively across the agency and if individuals who mislead the agency are paying as appropriate. SSA reports that it is planning a number of steps to better track imposed penalties, and ultimately the amounts collected as part of a larger effort to improve its processing of overpayments and other debts. According to its plans, SSA hopes to: by fiscal year 2018, assign penalties a unique transaction code to be able to track them through the collection process; and by fiscal year 2020 unbundle penalties from other debts owed by an individual in its ROAR database—which is used to track debts and collections—in order to allow remittances to be directly applied to penalties as opposed to an individual’s cumulative debt. While such improvements could help address the limitations we identified, they are a number of years away. Further, SSA notes in its plans that they may be subject to delays related to resource constraints. Moreover, SSA is still in the process of analyzing and planning potential fixes. As such, it is uncertain whether SSA will meet its intended time frames or whether its currently planned efforts may change and ultimately address the shortcomings it identified.\nSSA has met with limited success collecting on imposed penalties, and is not using some tools to better ensure that individuals who knowingly mislead the agency pay their penalties. Officials said SSA currently only collects penalties by either withholding DI or other SSA benefits, or relying on individuals to voluntarily remit penalty amounts. A recent OIG audit highlighted the difficulty that SSA has in collecting delinquent penalties. In a sample of 50 penalties imposed between calendar years 2010 and 2012 totaling $1.9 million, OIG found that about $1.7 million of that amount remained uncollected as of July 2014. The majority of that amount (approximately $920,000) was associated with individuals not receiving benefits and with whom SSA had no ongoing collection actions—the same category of individuals who could be targeted with external collection tools. While officials noted the agency determined it can refer penalties for collection through some external collection tools, such as wage garnishment, tax refund offsets, and administrative offsets, the agency has not utilized them. According to officials, SSA drafted a regulation for implementing these options; however, the regulation is still undergoing internal review and SSA does not yet have time frames for implementing these options. Moreover, the agency determined it is prohibited by statute from referring delinquent penalties for collection through other tools, such as federal salary offset, credit bureau reporting, and assessing interest. Nevertheless, SSA has not explored pursuing legislative authorities to use these tools. By not collecting some delinquent penalties and not considering additional tools to do so, SSA may be undermining the deterrent value of penalties against potential fraud. GAO’s Framework for Managing Fraud Risks in Federal Programs indicates that a consistent response to fraud demonstrates that management takes this subject seriously, and that the likelihood that individuals who engage in fraud will be punished serves to deter others from engaging in fraudulent behavior.", "SSA collaborated with OIG to change its sanctions procedures in 2013 in an effort to more consistently impose sanctions across the agency. Prior to this change, officials told us, SSA field offices had broad discretion to impose sanctions. SSA officials told us that some offices were more aggressive in pursuing sanctions and that an offense that could result in sanctions in one office might not do so in another office. The new procedures direct that potential sanctions cases first be evaluated for prosecution or civil action by DOJ and then by OIG for the imposition of civil monetary penalties. Ultimately, SSA is responsible for determining whether to impose sanctions based on the circumstances of the case, such as whether evidence exists to show that the individual knowingly misled the agency. The relevant SSA field office is responsible for developing the documentation to support the sanction, which is then reviewed by a sanctions coordinator in the SSA regional office.\nDespite changes in decision-making for sanction cases, unreliable data and shortcomings in how SSA tracks sanctions prevent the agency from reasonably ensuring that sanctions are imposed as appropriate, and ultimately prevent SSA from assessing whether its recent procedural changes had their desired effect.\nSSA cannot reasonably ensure sanctions are imposed as appropriate: SSA officials told us that they could not provide us with reliable data on the disposition of sanction cases. SSA currently tracks the disposition of sanctions in a database, which includes whether sanctions were imposed and the sanction period (i.e., the period of time during which beneficiaries will not receive benefits). However, this database requires SSA staff receiving information on sanctions to manually enter information about the sanction into the database, which lacks data checks or related oversight and may lead to errors and omissions. For instance, officials in three regional offices with oversight responsibilities told us that decisions on sanctions cases are generally communicated between OIG and the relevant field office. If these officials are inadvertently not included on the communications, they cannot ensure that the sanctions database is properly updated. One regional official said this has resulted in instances in which SSA headquarters wanted to know why sanctions were not imposed in particular cases, but this official did not have the information to respond correctly. Furthermore, officials in two regions noted that SSA’s database does not generate alerts when field offices fail to take action on potential sanctions cases, thus making it incumbent on regional coordinators to manually track and follow up on the status of cases. One regional official noted that the lack of tracking resulted in several instances in which SSA was pursuing sanctions years after the alleged wrongdoing.\nSSA cannot evaluate procedural changes: Beyond the disposition of specific sanctions, officials told us that they also lacked reliable data on the number of sanctions imposed and whether this number has changed since the current procedures were instituted in 2013. This is likely a result of the limitations in how sanctions data are captured as described earlier. Moreover, SSA conducted an internal assessment to determine whether field offices followed correct procedures for implementing sanctions. Specifically, SSA selected a sample of cases that were originally referred to OIG, and were subsequently returned by OCIG to field offices. SSA determined that sanctions were not imposed in the majority of cases in which sanctions were likely warranted, often because field offices did not take action on cases in a timely manner. The study did not determine why the agency failed to act on these cases in a timely manner. SSA officials speculated that it may be due to the difficulty of imposing harsh punishment on beneficiaries and because sanctions are labor intensive for SSA staff.\nFederal Internal Control Standards indicate that managers need to compare actual performance to planned or expected results and analyze significant differences, and that operational data is needed to determine whether they are meeting their goals for accountability. Furthermore, as indicated in GAO’s Framework for Managing Fraud Risk in Federal Programs, a prompt and consistent response to fraud demonstrates that agency management takes reports seriously and serves to deter others from engaging in fraudulent behavior. As a result of SSA’s internal evaluation, the agency recognized the need to better track sanction cases, improve how it communicates decisions, and act on them in a timely manner. However, officials said the agency is in the early stages of determining how it will address these identified shortcomings, and ultimately ensure the deterrent value of sanctions.\nMore recently, OCIG officials told us that they plan additional changes in how OCIG refers cases back to SSA for possible sanctions. According to SSA, OCIG will share additional information with SSA that may be helpful in SSA’s sanctions determinations. Notwithstanding this change, complete and accurate data will still be needed to effectively manage and evaluate SSA’s sanctions program.", "While overpayments account for a relatively small portion of all DI benefit payments, it is incumbent on SSA to collect these debts as a good steward of public funds. Improvements in collecting overpayment debt, however small, could help strengthen the solvency of the DI trust fund. In short, the collection of overpayment debts warrants more attention than SSA has demonstrated to date. Absent clear policies and oversight procedures for establishing and reviewing withholding plans, which are heavily relied on by SSA to recover the bulk of overpayments, SSA cannot be sure that beneficiaries are repaying debts in appropriate amounts within appropriate time frames. Further, SSA could be collecting too little or too much money each month from beneficiaries by not leveraging available tools to verify beneficiaries’ ability to pay. By not implementing additional debt collection tools that would speed up lengthy withholding plans or ensure that the value of collections is not diminished by inflation, SSA is missing opportunities to restore debt to the DI trust fund. Increasing the minimum monthly withholding amount would promote more equity in how SSA deals with overpayments across its programs, while improvements to procedures and tools for establishing repayment plans would better protect those beneficiaries who truly lack resources to pay.\nAs part of its efforts to ensure the integrity of the DI trust fund, penalties and sanctions are key tools that the agency needs to use effectively. By not using all available tools to collect penalties and by not consistently imposing and tracking sanctions, SSA weakens its stance that fraud is unacceptable, and its ability to deter other individuals from attempting to collect benefits for which they are ineligible.", "To ensure effective and appropriate recovery of DI overpayments and administration of penalties and sanctions, we recommend the Acting Commissioner of the Social Security Administration take the following 8 actions:\nClarify its policy for assessing the reasonableness of expenses used in determining beneficiaries’ repayment amounts to help ensure that withholding plans are consistently established across the agency and accurately reflect individuals’ ability to pay.\nImprove oversight of DI benefit withholding agreements to ensure that they are completed appropriately. This could include requiring supervisory review of repayment plans or sampling plans as part of a quality control process, and requiring that supporting documentation for all withholding plans be retained to enable the agency to perform such oversight.\nExplore the feasibility of using additional methods to independently verify financial information provided by beneficiaries to ensure that complete and reliable information is used when determining repayment amounts. These additional tools could include those already being used by the agency for other purposes.\nAdjust the minimum withholding rate to 10 percent of monthly DI benefits to allow quicker recovery of debt.\nConsider adjusting monthly withholding amounts according to cost of living adjustments or charging interest on debts being collected by withholding benefits. Should SSA determine that it is necessary to do so, it could pursue legislative authority to use recovery tools that it is currently unable to use.\nPursue additional debt collection tools for collecting delinquent penalties. This includes taking steps to implement tools within its existing authority and exploring the use of those not within its authority, and seeking legislative authority if necessary.\nTake steps to collect complete, accurate, and timely data on, and thereby improve its ability to track both: civil monetary penalties and their disposition; and administrative sanctions and their disposition.", "We provided a draft of this report to the Social Security Administration for comment. In its written comments, reproduced in appendix III, SSA agreed with 7 of our 8 recommendations and disagreed with 1. SSA also raised some broader concerns about the focus of our report. SSA stated that our report confuses two distinct issues: recovering overpayments and deterring fraud through civil monetary penalties and administrative sanctions. We agree that these issues are distinct; however, both are important parts of safeguarding the integrity of the DI program, and ensuring that payments are made in the right amounts to the right individuals. SSA stated that overpayments are not necessarily the result of fraud. We agree and note in our report that overpayments occur for a number of reasons, including fraud. SSA also stated it believed it was misleading to include deterring fraud in the title of our report, noting that penalties and sanctions are not themselves findings of fraud, and are based on, among other things, findings of false or misleading statements or knowing omissions by individuals. We acknowledge this distinction, and made revisions in the title and to the report in response to SSA’s comments. However, we continue to believe that the consistent use of these tools serves as a deterrent against those who would engage in fraud or abuse of the DI program.\nSSA agreed with our recommendation to clarify its policies regarding the reasonableness of expenses when determining beneficiaries’ repayment amounts. SSA noted that it has already taken actions to clarify its policies regarding overpayments and waivers, and informed us in its comments that it delivered video training to its employees in 2015 on these topics. SSA added that it will continue to assess efforts and make other improvements to ensure consistent and accurate application of policy. To the extent that SSA’s efforts also address unclear written policies, such actions could help meet the intent of the recommendation.\nSSA agreed with our recommendation to improve the oversight of benefit withholding plans and said it will explore options to do so. However, it disagreed with requiring supervisory review of repayment plans. We present supervisory review as just one option for improving oversight, and there may be other approaches SSA could explore for improving oversight in this area. Nevertheless, we continue to believe that this option—recommended in prior GAO work—can be an effective option for ensuring that staff create appropriate repayment plans.\nSSA agreed with our recommendation to explore the feasibility of using additional methods to independently verify financial information provided by beneficiaries when determining repayment amounts.\nSSA agreed with our recommendation to adjust the minimum withholding rate to 10 percent of monthly DI benefits, and noted that the President’s fiscal year 2017 budget submission contains a legislative proposal to do so. We acknowledge that SSA recently included a paragraph in its budget submission discussing this proposal. SSA may need to work closely with Congress to ensure this change is realized.\nSSA disagreed with our recommendation to consider adjusting monthly withholding amounts according to cost of living adjustments or charging interest on debts being collected through withholding benefits. For debt subject to benefit withholding, which is not considered delinquent debt, SSA asserted that these measures would not have a significant effect on the amount of debt recovered, especially compared to the option of making the minimum withholding rate 10 percent of monthly benefits. For delinquent debt, SSA asserted charging interest on debts would require substantial changes to multiple systems that affect its overpayment businesses processes, and would require extensive training to its employees. While SSA stated it has studied the potential changes needed to charge interest on debt, without further consideration of, for example, the costs and benefits of charging interest or adjusting withholding amounts according to cost of living adjustments, SSA cannot know the extent to which these options would improve debt recovery efforts or help protect the value of debts against the effects of inflation, which can be substantial given that withholding plans can take decades to complete.\nSSA agreed with our recommendation to pursue additional tools to collect delinquent penalties, and stated that it has begun drafting regulations to use existing external debt collection tools, as noted in our report. However we state in our report that SSA lacks timeframes for completing this action. SSA reported that it is also developing a legislative proposal to allow it to use other tools it cannot currently utilize, such as reporting these debts to credit bureaus and withholding federal salary payments. Such actions, if implemented as intended, could help meet the intent of the recommendation.\nSSA agreed with our recommendations to improve its ability to track penalties and sanctions, and noted that it is developing workload tracking tools for both, which it expects to implement in fiscal year 2016, and is in the planning stages of an overpayment redesign effort said that should result in more complete, accurate, and timely data for penalties. Such actions, if implemented as intended, could help meet the intent of the recommendations.\nSSA also provided technical comments on our draft that we incorporated as appropriate. In particular, SSA noted that our draft report contained sensitive information on its sanctions process, which we agreed to exclude.\nWe are sending copies of this report to the appropriate congressional committees, the Acting Commissioner of the Social Security Administration, and other interested parties. In addition, the report will be will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7215 or bertonid@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "In conducting our review of how the Social Security Administration (SSA) recovers Disability Insurance (DI) overpayments and oversees civil monetary penalties and administrative sanctions, our objectives were to examine (1) how and to what extent SSA is recovering DI overpayments, and (2) SSA’s procedures for imposing penalties and sanctions, and how often they are used. We conducted this performance audit from November 2014 to April 2016, in accordance with generally accepted government auditing standards. These standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "To determine how SSA recovers DI overpayments, we reviewed relevant federal laws and regulations, and SSA policies and procedures. Regarding the extent to which SSA recovers overpayments, we obtained available data from SSA on the amounts of overpayments detected, waived or written-off, collected, and reestablished between fiscal years 2006 through 2015, as well as data on the cumulative DI overpayment debt balance at the start and end of each fiscal year in that period. We also obtained corresponding data on the amount of DI overpayment debt recovered through internal and external debt collection tools.\nTo examine SSA efforts to improve its recovery of overpayments, we reviewed agency plans, and publicly available documents such as its annual performance plan, and past GAO and Office of Inspector General (OIG) reports. We also interviewed SSA headquarters and regional staff responsible for overseeing the collection of overpayments. To obtain additional insight on SSA’s recovery of DI overpayments, we interviewed officials from an organization representing SSA field office managers (National Council of Social Security Management Associations) and an organization representing advocates for individuals with disabilities (National Disability Rights Network).\nTo gain perspective on how SSA sets and documents overpayment repayments plans, we reviewed a non-representative sample of 16 overpayments being repaid through benefit withholding established in fiscal year 2015. We selected a mixture of cases in terms of (1) whether the original overpayment amount was over or under $75,000, the threshold at which SSA policy requires the retention of documentation supporting income and expenses; and (2) whether more or less than 10 percent of the beneficiaries’ monthly DI benefits were withheld to repay the overpayment. We then randomly selected cases for review from each of the 4 subsets of cases that result from applying our two criteria. In reviewing these cases, we sought to determine how SSA verified beneficiaries’ ability to repay overpayment and how it documented these decisions, including reviewing whether SSA retained supporting documentation in accordance with its policies. This sample is non- representative and our results are not generalizable to all benefit withholding plans.", "To examine the extent to which SSA is recovering DI overpayments and options for improving collections, we obtained data on DI overpayments as of September 30, 2015. The data we obtained came from SSA’s Master Beneficiary Record (MBR) and Recovery of Overpayments, Accounting and Reporting (ROAR) systems. We limited our data request and analysis to those overpayments publicly reported by SSA.\nUsing these data, we calculated the effect of potential enhancements in terms of how much more SSA would be scheduled to collect in fiscal years 2016 through 2020, and how much faster SSA would be scheduled to recover these overpayments in full. Our estimates are based on withholding amounts and overpayments as of the end of fiscal year 2015 and the assumption that everyone will continue to pay based on the current schedule. This implies there will be, for example, no future changes in eligibility for benefits, no deaths among people having benefits withheld, and no changes in withholding amounts. We also did not attempt to estimate future overpayments. As such, actual total collections would differ from scheduled total collections. The enhancements we discuss below are based on information obtained from SSA or through examining past GAO work. We did not conduct an exhaustive review of options for improving debt recovery and there may be others that we did not consider.\nIn reporting scheduled repayments for all of our enhancement scenarios, we adjusted repayment amounts by four inflation rates: 0, 2.0, 2.7, and 3.4 percent. This gives the reader a sense of the extent to which each of the policy options counteracts the effects of inflation, either by inflation- adjusting repayments, or simply speeding up SSA’s recovery of overpayments, thereby reducing its exposure to inflation. For each month, we then computed the recipient’s remaining balance assuming that the recipient repaid either their normal monthly repayment amount or the remaining balance, whichever was less. We included the 0 percent inflation scenario because it isolates the effects of factors other than inflation. Social Security estimated long-range inflation scenarios of 2.0, 2.7, and 3.4 percent in its 2015 Trustee’s Report.\nWe computed total repayments in each scenario as the sum of monthly payments. We assumed that people make monthly payments until they have paid off their entire balance and then stop paying. If their balance was less than their usual monthly payment, we assumed they paid exactly the outstanding balance in their final month. We estimated scheduled repayments for the following scenarios: 1. Baseline collections (no change): We examined beneficiaries’ outstanding overpayment balances as of September 30, 2015, as well as their current monthly repayment rates. We used that information to estimate, at current withholding rates, when beneficiaries are scheduled to complete repaying their overpayment debts, age at scheduled repayment, as well as how much they are scheduled to repay over the next five fiscal years. 2. Setting the minimum withholding rate to 10 percent of monthly DI benefits: We computed the standing repayment amount as the greater of 10 percent of the recipient’s post-COLA benefits in each month or the recipient’s actual repayment amount in the ROAR system as of September 30, 2015. 3. Adjusting monthly withholding amounts by the cost of living adjustment (COLA): These scenarios increased the withholding amounts that SSA reported by 0, 2.0, 2.7, or 3.4 percent effective in January of each year. The 2.0, 2.7, and 3.4 percent estimated COLAs are based on SSA’s long-range inflation estimates in the 2015 Social Security Trustee’s report. This scenario adjusts both benefit and withholding amounts. 4. Charging interest: This scenario increases the remaining balance at the beginning of year by 1 percent in the 0 percent COLA scenario, and an interest rate equal to the rate of inflation in the other scenarios. We chose the 1 percent interest rate in the no inflation scenario because it is the rate of interest the US government is allowed to charge in calendar year 2016 on delinquent debts. 5. Combined scenarios: We report the results of a few policy options in combination. It is important to note that our combination of interest and COLA effectively undo the effects of inflation on both monthly repayment amounts and on total debt owed.\nWe assessed the reliability of the data we used by checking for extreme and implausible values and by comparing the totals in them to published sources and found them to be sufficiently reliable for our use.\nIn estimating scheduled repayments for the above scenarios, we made a number of decisions and assumptions about overpayments and withholdings in the custom file provided by SSA. The data provided by SSA listed all overpayments that SSA is either actively trying to collect or has conditionally written off, referred to Treasury, and will collect if the beneficiary becomes eligible for disability or retirement benefits. These data lists both a claimant—the person whose disability creates eligibility for DI benefits—and a beneficiary—who may be the claimant, the claimant’s spouse, or a dependent of the claimant. SSA officials told us that the agency can seek repayment from the claimant, beneficiary, or anyone else receiving benefits on the claimant’s earnings record. We aggregated this overpayment level data to the beneficiary level, taking the maximum withholding amount per beneficiary if the beneficiary’s account showed more than one overpayment, and adding together withholding in rare instances when one person benefited from overpayments to multiple claimants.\nIf a beneficiary had withholding on any one of the overpayments on his or her record, we treated all overpayments on the account as subject to recovery through withholding. This methodology can misstate repayment times in situations where, for example, a beneficiary had overpayments both on their own disability claim and their parent’s disability claim, and both parties are involved in repaying the beneficiary’s overpayments.\nWe identified and excluded from our analysis beneficiaries who appeared to be deceased by matching their Social Security Numbers (SSN) to the full SSA Death Master File. This may exclude some recoverable overpayments from our analysis because SSA officials told us that they could seek repayment from anyone receiving benefits on the claimant’s earnings record. While about 40 percent of the conditionally written off recipients matched to the full SSA Death Master File, only about 0.01 percent of people in withholding status matched to the full SSA Death Master File.\nWe computed the time to repay under the status quo condition by dividing the sum of current balances for a beneficiary by the withholding amount, calculated as described above. In general, this yields repayment schedules that end—as expected—no later than December 2049 due to limitations of SSA’s data system. In a handful of cases—where we aggregate one beneficiary across multiple claimants—we get longer repayment times.\nTo identify individual beneficiaries, we used the beneficiary’s SSN when it was available. When the beneficiary’s SSN was not available, we developed a replacement unique identifier, first under the assumption that there was only one person with a given name and date of birth, for each claimant SSN; and if the name was missing, then the assumption that each combination of a claimant SSN and the beneficiary identification code variable identifies a unique person. The beneficiary identification code indicates whether the beneficiary is, for example, the claimant’s first child, second child, or spouse. This methodology may slightly overstate the total number of beneficiaries in the data, since it will miss cases where the same person is the beneficiary of two different claimants.\nIn order to count the number of recipients in withholding, voluntary repayment, conditionally written off, and neither paying nor in written off status, we developed categorization rules to resolve ambiguities arising from the small percentage of beneficiaries who had debts in more than one status. Specifically, we considered people to be in withholding status if any of their overpayments indicated that they were in “current pay” status and had a withholding amount. We considered people to be making voluntary remittances if they had no withholding on any overpayment and had a monthly voluntary remittance amount listed on at least one account. We considered beneficiaries to be conditionally written off if all of their overpayments were flagged as conditionally written off. We categorized the remaining beneficiaries as active, but not currently repaying. Throughout this analysis, we use the monthly benefit amount— i.e., the benefits due before a variety of adjustments—to characterize benefit levels.\nWe adjusted future payments in the three scenarios with positive inflation by dividing all of the receipts in a given calendar year by (1+r)(t-2015) where r is the inflation rate of .020, .027, or .034 and t is the year. This assumes that all of the year’s inflation takes place on January 1, and will tend to overstate inflation early in the year. This stylized assumption means that our COLA plus interest scenario can precisely undo the effects of inflation when, in fact, appropriately set annual COLA and interest charges would typically overcorrect for inflation during some months and under-correct for it during others.", "To determine how SSA imposes penalties and sanctions, we reviewed applicable federal laws, regulations, and guidance. We also reviewed SSA plans for improving its administration of penalties and sanctions, internal studies of its use of sanctions, as well as past OIG reviews of penalties and sanctions. We interviewed officials in SSA headquarters who oversee their use, OIG (which investigates potential fraud), and OIG’s Office of Counsel to the Inspector General (OCIG) which has responsibility for imposing penalties and considering whether sanctions may be warranted. We requested available data from SSA on its use and the disposition of penalties and sanctions. However, after discussions with SSA officials regarding the agency’s procedures for collecting and tracking penalties and sanctions, we determined that these data were not sufficiently reliable for our use and did not include them in our report.\nTo gain further insight on how sanctions are tracked and imposed, we interviewed regional sanctions coordinators—individuals responsible for reviewing sanctions determinations—in three of SSA’s regions: Atlanta, Chicago, and San Francisco. We chose these regions based on variation in terms of sanctions workload and error rates according to past SSA internal evaluations. The views of these officials are not generalizable across all of SSA. We also spoke to officials in SSA’s New York regional office, which developed a database for tracking the disposition of sanctions.", "This appendix provides more information about individuals repaying DI overpayments by having a portion of their monthly benefits withheld— notably, the relationship between their monthly benefit payments and the amount of benefits withheld. All data presented is for outstanding overpayment balances as of September 30, 2015. Throughout this report, the benefit levels we report are SSA’s “monthly benefit amount,” which is the amount due to beneficiaries before withholding or other adjustments.\nFigures 7 and 8 below break down this population with benefit withholding into 10 equal groups (deciles) according to the amount of their monthly benefits. Figure 7 shows, for each decile, the median percentage of benefits being withheld. Figure 8 shows the median dollars withheld for each decile. When we compared individuals with lower monthly benefit amounts to those receiving larger benefits amounts, we found that those with the smallest benefits had a higher percentage of their benefits withheld to repay overpayments. The figures also show that the majority of individuals with a larger monthly benefit amount have less than 10 percent of their DI benefits withheld. Figure 8 shows that the difference between withholding 10 percent of the median DI benefit and actual median withholding is more than $86 per month in the top decile, which consists of more than 31,000 beneficiaries.\nTables 2 to 5 below provide additional information on the relationship between withholding and benefit amounts. For each table, we report not only the median (the 50th percentile) of the distribution, which offers a sense of the “typical” outcome, but also: the 25th and 75th percentiles which give a sense of the experience of beneficiaries somewhat below and above the median, respectively; the 5th and 95th percentiles to offer a sense of the experiences of people experiencing fairly extreme outcomes; the number of beneficiaries from which we computed each number; and the standard deviation.\nThe withholding and repayment time averages are often significantly above the median because these distributions are not symmetric; rather people with the largest withholding levels are much further above the median than the people with the smallest withholding levels are below the median. For example, table 3 reports that the 95th percentile withholding level for all beneficiaries ($517) is $460 higher than the median of $57, while the 5th percentile ($10) is $47 below the median. This asymmetric distribution of withholding levels at higher amounts produces an average of $133, which is more than twice the median and more than the 75th percentile of the withholding distribution ($101).", "", "", "", "In addition to the contact named above, Michele Grgich (Assistant Director), Daniel R. Concepcion (Analyst-in-Charge), Martin Scire, and Robert Letzler made key contributions to this report. Additional contributors include: Susan Aschoff, James Bennett, Kathleen Donovan, Alex Galuten, Arthur Merriam, Monica Savoy, and Almeta Spencer.", "Disability Insurance: SSA Could Do More to Prevent Overpayments or Incorrect Waivers to Beneficiaries. GAO-16-34. Washington, D.C.: October 29, 2015.\nDisability Insurance: Preliminary Observations on Overpayments and Beneficiary Work Reporting. GAO-15-673T. Washington, D.C.: June 16, 2015.\nSupplemental Security Income: SSA Has Taken Steps to Prevent and Detect Overpayments, but Additional Actions Could be Taken to Improve Oversight. GAO-13-109. Washington, D.C.: December 14, 2012.\nDisability Insurance: SSA Can Improve Efforts to Detect, Prevent, and Recover Overpayments. GAO-11-724. Washington, D.C.: July 27, 2011." ], "depth": [ 1, 2, 2, 1, 2, 2, 2, 3, 3, 3, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 2, 1, 1, 1, 2, 2, 1 ], "alignment": [ "h2_full", "h2_full", "", "h0_title h2_title", "h0_full h2_full", "h0_full", "h0_title", "h0_full", "h0_full", "", "h0_full", "h1_title", "h1_full", "h1_full", "", "h2_full", "h3_full h1_full", "h2_title", "h2_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How has the SSA handled DI overpayments?", "How does the SSA recover overpayments?", "What is the withholding method?", "What errors does this method have?", "How does the GAO think this method can be improved?", "What methods could the SSA utilize?", "How does the SSA track penalties?", "How does tracking the payments fail?", "What limits the SSA from collecting penalties?", "How does this affect collection from some individuals?", "How is the SSA attempting to expand their collection?", "How has the SSA failed to expand their collection?", "How does the SSA fail to track sanctions?", "What might this result in?", "How has the newer SSA procedure changed sanctions?", "How has the SSA evaluated their perforce with sanctions?", "What consequences does SSA penalty and sanction handling have?", "What is the SSA's DI program?", "What errors lie in the DI payments?", "How did this affect FY2015?", "How can these errors be resolved?", "What was the GAO asked to study?", "What recommendations did the GAO make to the SSA?", "How did the SSA respond to these recommendations?", "How does the GAO view their recommendations?" ], "summary": [ "In fiscal year 2015, the Social Security Administration (SSA) recovered $857 million in Disability Insurance (DI) overpayments that it erroneously made to beneficiaries; however, SSA is missing opportunities to recover more.", "More than three-fourths of the recovered overpayments in fiscal year 2015 were collected by withholding all or a portion of a beneficiary's monthly benefits.", "SSA's policy is to set withholding repayment amounts based on a beneficiary's income, expenses, and assets, but its policy regarding which expenses are reasonable is not clear.", "Moreover, SSA cannot know if repayment periods and amounts are consistently determined due to a lack of oversight, such as supervisory review or targeted quality reviews.", "Further, SSA lacks concrete plans for pursuing other debt recovery options, while GAO's analysis suggests that some options could potentially increase collections from individuals having their benefits withheld.", "For example, about half of withholding plans at the end of fiscal year 2015 extended beyond SSA's standard 36-month time frame, and could be shortened. Making the minimum monthly repayment 10 percent of a beneficiary's monthly benefit, instead of the current $10 minimum, would shorten the median length of all scheduled withholding plans by almost a third (from 3.4 years to 2.3 years) and result in an additional $276 million collected over the next 5 years.", "While SSA officials reported an increase in recent years in the amount of civil monetary penalties imposed, SSA currently lacks reliable data to effectively track the disposition of penalties and administrative sanctions.", "For example, SSA cannot readily track the amounts ultimately collected from penalties, which are fines imposed by the Office of the Inspector General (OIG) and collected by SSA.", "Further, SSA currently has only two paths for collecting on penalties—withholding benefits and voluntary payment.", "A recent OIG audit found that the majority of uncollected penalty amounts it reviewed were from individuals who were not receiving SSA benefits and with whom SSA had no ongoing collection actions.", "SSA determined it is able to use certain alternative collection tools, such as wage garnishment, but only recently began drafting regulations to use them, and the regulations are still undergoing internal review.", "SSA determined it is able to use certain alternative collection tools, such as wage garnishment, but only recently began drafting regulations to use them, and the regulations are still undergoing internal review. In addition, SSA lacks and had not explored obtaining authority to use other tools for collecting penalties that it uses for collecting overpayments—such as credit bureau reporting.", "Related to administrative sanctions, SSA could not provide reliable data on how often it imposes sanctions, a punishment in which benefit payments are temporarily stopped. SSA's process of manually entering sanctions information into a database may be subject to errors or omissions.", "Regional officials said this can result in incomplete information and staff not taking appropriate action on cases.", "SSA changed its procedure in 2013 to direct that all potential sanctions first be reviewed for potential prosecution or civil monetary penalties, but SSA's lack of reliable data prevents it from determining whether this new procedure achieved the intended effect of more consistent application of sanctions.", "In an internal evaluation of its procedures, SSA identified weaknesses with how sanctions decisions are tracked and communicated, but it is in the early stages of deciding how to address them.", "The shortcomings in SSA's use of penalties and sanctions potentially diminish the deterrent value of these actions against individuals who may fraudulently obtain benefits.", "SSA's DI program provides cash benefits to millions of Americans who can no longer work due to a disability.", "While most benefits are paid correctly, beneficiary or SSA error can result in overpayments—that is, payments made in excess of what is owed.", "In fiscal year 2015, SSA detected $1.2 billion in new overpayments, adding to growing cumulative debt.", "Further, when individuals inappropriately obtain benefits in certain situations, SSA can levy penalties or withhold benefits for a period of time.", "GAO was asked to study the use of these actions, and SSA efforts to recover overpayments.", "GAO is making eight recommendations to SSA, including: clarify its policy and improve oversight related to debt repayment plans, pursue additional recovery options for overpayments and penalties, and improve its ability to track penalties and sanctions.", "SSA agreed with seven, but disagreed with a recommendation on debt recovery options.", "GAO maintains the options merit exploration, as discussed further in the report." ], "parent_pair_index": [ -1, -1, 1, 2, 1, 4, -1, 0, -1, 2, 2, 2, -1, 6, 6, 6, -1, -1, -1, 1, 1, -1, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 3, 0, 0, 0, 0, 0, 4, 4, 4 ] }

{ "title": [ "Background", "DOD Technology Management Process", "DARPA Processes and Programs", "Overall Transition Rates Not Determinable, but Selected Programs Illustrate Factors for Transition Success", "DARPA’s Approach to Developing Technology Contributes to a Broad Definition of Transition Success", "DARPA’s Tracking of Technology Transition Concludes at Program Completion, Which Limits Data Reliability and Precludes Evaluation of Transition Rates", "Selected Programs Indicate That Several Factors Contribute to Successful Transitions", "Linkage to a Research Area Where DARPA Has Sustained Interest", "Active Collaboration with Potential Transition Partners", "Achievement of Clearly Defined Technical Goals", "DARPA Prioritizes Innovation and Deemphasizes Technology Transition in Key Processes", "DARPA Investments in People and Programs Drive a Culture of Innovation", "DARPA Leadership Forgoes Opportunities to Assess, and Thus Potentially Improve, Technology Transition Strategies", "Current Training for Managers Does Not Consistently Position Programs for Transition Success", "Shortfalls in Disseminating Program Information May Lead to Missed Transition Opportunities", "DARPA Participates in Mandated Small Business Programs, but Refrains from Other DOD-Wide Programs Intended to Facilitate Technology Transition", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the Department of Defense", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "DOD invests about $12 billion in funding to support its science and technology community, which it relies upon to identify, pursue, and develop new technologies to improve and enhance military capabilities. This community is comprised of DOD-wide research agencies, including DARPA, as well as military service research agencies and laboratories, test facilities, private industry, and academic institutions, and is overseen by the Office of the Assistant Secretary of Defense for Research and Engineering. The research and development activities these different components engage in are intended to produce mature technologies that DOD can integrate and deliver in systems that support its warfighters. This integration process, known as product development, represents the handover of breakthrough technologies from DOD’s science and technology community to its acquisition community. Although not precisely defined, technology transition generally occurs at the point when advanced technology development ends and this new product development begins. Figure 1 illustrates DOD’s technology management process.\nDOD has long noted the existence of a chasm between its science and technology community and its acquisition community that impedes technology transition from consistently occurring. This chasm, often referred to by department insiders as “the valley of death,” exists because the acquisition community often requires a higher level of technology maturity than the science and technology community is willing to fund and develop. In 2007, DOD reported that this gap can only be bridged through cooperative efforts and investments from both communities, such as early and frequent collaboration among the developer, acquirer, and user.\nWe have also reported extensively on shortfalls across DOD’s technology management enterprise in transitioning technologies from development to acquisition and fielding. In June 2005, we found that DOD technology transition programs faced challenges selecting, managing, and overseeing projects, and assessing outcomes. In September 2006, we found that DOD lacked the key planning, processes, and metrics used by leading commercial companies to successfully develop and transition technologies. More recently, in March 2013, we found that the vast majority of DOD technology transition programs provide technologies to military users, but tracking of project outcomes and other benefits derived after transition remained limited.", "DARPA’s scientific investigations run the gamut from laboratory efforts to the creation of full-scale technology demonstrations in the fields of biology, medicine, computer science, chemistry, physics, engineering, mathematics, material sciences, social sciences, neurosciences, and more. The agency solicits proposals for research work in support of its scientific endeavors through broad agency announcements. These solicitations seek thought leaders and technological pioneers that can leverage new ideas in science to advance the state of the art beyond the practical application of knowledge. Non-DARPA entities respond to broad agency announcements by submitting proposals for executing work to meet the agency’s stated needs. DARPA reviews those proposals based on technical merit, and entities receiving awards are thereafter referred to as performers.\nTo execute solicitations, awards, and program oversight, DARPA relies on approximately 220 government employees, including nearly 100 program managers. Program managers report to DARPA’s office directors and their deputies, who are responsible for charting the strategic directions of six technical offices. The technical staff is supported by experts in security, legal and contracting issues, finance, human resources, and communications. DARPA’s Director and Deputy Director approve new programs and lead scientific and technical reviews of ongoing programs, while setting agency-wide priorities and ensuring a balanced investment portfolio. Currently, DARPA has about 250 ongoing research and development programs in its portfolio.\nThe 10 recently completed programs that we reviewed for this report together spanned a broad range of research areas, including communications, navigation, and health and marine sciences. Table 1 highlights the research focuses of these 10 programs in more detail.", "Since 2010, DARPA has had success in transitioning new technologies from the research environment to military users, including DOD acquisition programs and warfighters. DARPA maintains a portfolio-level database that identifies these outcomes by program. However, the agency’s process for tracking technology transition outcomes is not designed to capture transitions that occur after a program completes and does not provide DARPA with an effective means for updating its database. We used outputs from this database to select 10 case study programs, but later identified inconsistencies affecting three programs in how transition outcomes were reported in the portfolio-level database versus how they were reported in other program documentation. We then concluded that DARPA’s portfolio-level database was unreliable for assessing transition rates and outcomes since fiscal year 2010. Our analysis of the 10 selected programs did, however, identify four factors that contributed to transition successes, the most important of which were military or commercial demand for the planned technology and linkage to a research area where DARPA has sustained interest.", "DARPA’s technological approach focuses on radical innovation that addresses future warfighting needs, rather than developing technologies that address current warfighting needs. This approach shapes how the agency defines, pursues, and tracks technology transition. DARPA considers a successful transition to be one where its program, or a portion of its program, influences or introduces new knowledge. This knowledge is often passed through program performers, which DARPA relies on to execute technology development in its programs. Typical performers include commercial enterprises; other DOD entities, such as military service laboratories and research agencies; and academic institutions. Further, DARPA generally does not develop technologies to full maturity. Instead, the agency focuses on demonstrating the feasibility of new technologies, which includes verifying that the concepts behind the technologies have potential for real life applications. As a result, most DARPA technologies require additional development before they are ready for operational or commercial use. Therefore, follow-on development is the predominant path of technology transition at DARPA. Table 2 highlights the different technology transition paths that DARPA technologies can take.\nDARPA’s definition of what constitutes technology transition reflects one of many in use within DOD. In June 2005, the Office of the Deputy Under Secretary of Defense for Advanced Systems and Concepts in collaboration with the Defense Acquisition University (DAU) published guidance defining technology transition as “the use of technology in military systems to create effective weapons and support systems—in the quantity and quality needed by the warfighter to carry out assigned missions at the ‘best value’ as measured by the warfighter.” However, DOD officials told us the 2005 guidance is outdated, does not constitute department policy, and should only be considered as a useful reference source. In the absence of current DOD policy, in a March 2013 report we identified three communities that DOD technologies typically transitioned to: acquisition programs; directly to the field for use by the warfighter; and to other users such as science and technology organizations, test and evaluation centers, or industry. The communities we identified in 2013 are similar to the transition outcomes listed in the 2005 guidance, which broadly lists commercialization, acquisition program, and follow-on development by the prime contractor as primary pathways of technology transition. In a subsequent report in December 2013, we found further differences among what the military services define as technology transition and additional confirmation that DOD itself lacks a formal definition for technology transition across the department. These variations, in tandem with the absence of a standard DOD-wide definition of technology transition, prevents the military services, DOD research agencies, and other DOD entities from consistently defining and tracking technology transition. This lack of a formal definition of technology transition means that DOD entities, such as DARPA, are free to define and categorize technology transition for themselves.", "Following a program’s completion, DARPA officials identify and record transition outcomes in accordance with the technology transition paths identified in table 2. DARPA collects this information within a portfolio- level database that spans all of its recently completed programs. The agency uses this database primarily to provide incoming program managers with training on potential transition opportunities. Figure 2 illustrates in more detail DARPA’s process for assessing technology transition outcomes in its programs.\nDARPA’s process for tracking technology transition outcomes is not designed to capture transitions that occur after a program completes and the agency’s agreements with program performers have ended. After this point, however, program performers often continue to develop their technologies using non-DARPA sources of funding. According to DARPA officials, these efforts can result in later transitions of technologies to commercial products—including ones that are sold back to DOD for military use—without the agency’s knowledge.\nThis process for tracking technology transition outcomes also does not provide DARPA with an effective means for updating its portfolio-level database. We used outputs from this database to select 10 case study programs (5 that transitioned and 5 that did not transition), but later identified inconsistencies affecting three programs in how transition outcomes were reported in the portfolio-level database versus how they were reported in other program documentation that we reviewed. This confusion about ultimate transition outcomes persisted during our interviews with DARPA officials. As a result, we concluded that DARPA’s portfolio-level database was unreliable for assessing transition rates and outcomes since fiscal year 2010. Table 3 highlights the inconsistencies we found in our reviews.\nThe inconsistencies we identified suggest that DARPA’s current approach to tracking technology transitions can limit its understanding of transition outcomes. This may undermine its ability to craft transition plans for new programs based on the lessons learned from previous programs. We have previously identified technology transition tracking as a longstanding issue at DOD. For example, in September 2006, we found that tracking technology transitions and the effect of transitions, such as cost savings or deployment of the technology in a product, provided key feedback that can inform the future management of programs. However, in March 2013, we found that DOD stopped tracking transition outcomes in many programs once a program stopped receiving funding, which consequently limited visibility into the extent of successful transitions within the DOD portfolio.", "DARPA has undertaken efforts to understand the elements that contribute to or impede successful technology transitions. According to DARPA officials, a technology’s maturity level, availability of military service funding, alignment with military service requirements, and transition planning by the program manager influence whether or not a DARPA- developed technology successfully transitions. These characteristics align with the findings of a 2001 DARPA-funded study, which reported that mission, program manager turnover, timing, funding, and regulations, among other elements, affect transition success.\nIn our review of 10 case study programs, we found different, but related, factors for transition success as compared to the ones put forward by DARPA: (1) military or commercial demand for the technology, (2) linkage to a research area where DARPA has sustained interest, (3) active collaboration with potential transition partners, and (4) achievement of clearly defined technical goals. Based on our analyses, we identified two factors—military or commercial demand for the planned technology and linkage to a research area where DARPA has sustained interest—as factors that were generally evident at program initiation and were most important to transition. The remaining two factors—active collaboration with potential transition partners and achievement of clearly defined technical goals—sequentially follow the first two factors and become observable once a program is underway. Figure 3 highlights these four factors.\nIn reviewing the 10 programs, we found that the existence of the factors identified varied from program to program. We assessed the extent to which the four factors were present within the 10 programs we reviewed, and table 4 highlights these results.\nWe found that successful transitions were often underpinned by existing military or commercial demand for the technology. DARPA officials told us that all of the agency’s programs are linked to military and joint service needs at a high level, but through our analyses, we found that this commitment was exemplified when any of the following components were present in the program files:\nAgreement between DARPA and (1) a military service, (2) a DOD research agency or laboratory, or (3) other warfighter representative that a related military capability gap or requirement exists; or\nA private company identified a commercial demand for the technology or showed an interest in commercializing it.\nFor example, the Spoken Language Communication and Translation System for Tactical Use (TRANSTAC) program addressed a known capability gap for speech translation technology within the Army. As a result, the Army developed the appropriate requirements documents that allowed the technology to successfully transition to an Army acquisition program of record. These documents identified desired performance attributes and system parameters, which served to better define and communicate the Army’s need for TRANSTAC. The Army’s decision to validate specific performance requirements provided TRANSTAC an opportunity to transition into an Army program of record.\nWithin our 10 case studies, we found that a military or commercial demand was fully present within four of the five programs that successfully transitioned. In two cases—TRANSTAC and Quint Networking Technology (QNT)—near-term military demand was a result of DOD’s ongoing involvement in warfighting operations. However, in the other two cases, an immediate military need for the technology was not as prevalent. A fifth program that transitioned, Advanced Wireless Networks for Soldier (AWNS), initially was in demand by the Army, but interest waned over time as other options for radio networking platforms emerged. In addition, several programs developed technologies that demonstrated military applicability but lacked a military or commercial demand, which precluded successful transition. For example, the Predicting Health and Disease (PHD) and Nastic Materials programs successfully demonstrated innovative research concepts that had potential military applications, but an immediate military/commercial demand simply did not exist without further maturation of technologies past the point of program completion.", "We also found that a program’s linkage to a research area in which DARPA has sustained interest often facilitated successful transition. This interest was demonstrated by evidence that in the years preceding the program’s initiation, at least two related DARPA or other related DOD science and technology programs had been completed. Sustained interest is also exemplified by a program’s reuse of existing research facilities and data from related programs, among other things. Of our 10 case studies, all 5 programs that successfully transitioned were fully linked to sustained research interests, whereas 4 of the 5 non- transitioning programs did not have any such linkage.\nDARPA’s program portfolio is currently organized around 10 research focus areas under four key research themes. DARPA officials report that the Hypersonics Capability focus area, for example, reflects an ongoing interest for the agency that dates back to the mid-1980s. The Falcon Combined-cycle Engine Technology (FaCET) is one of several recent DARPA programs within the Hypersonics Capability focus area. In addition, FaCET’s research was done in concert with other hypersonic programs within DOD. As a result of this sustained interest, FaCET technologies transitioned to other hypersonics programs, including DARPA’s Mode Transition program, the joint DARPA/Air Force Hypersonic Air-breathing Weapon Concept program, and the Air Force Research Laboratory’s Robust Scramjet and Enhanced Operability Scramjet Technology. Moreover, due to the National Aeronautics and Space Administration’s (NASA) sustained involvement in FaCET, technologies were also transitioned to NASA’s Glenn Research Center’s Combined-Cycle Engine Large Scale Inlet Mode Transition Experiment program.", "We found that in all five cases where transition occurred, active collaboration with potential transition partners was fully present. This collaboration generally consisted of early program involvement by stakeholders within the government and commercial sectors, service requirements officials, and military liaison officers, among others. DARPA program managers were responsible for facilitating this early stakeholder involvement, including identifying the potential transition partners needed to assist with their programs. According to DARPA officials, achieving active collaboration with potential transition partners is highly dependent on the nature of the program and background of the program manager, which might be in academia, private industry, or military services. For example, a program manager with a military background might be familiar with DOD’s acquisition process and have connections with service officials who can facilitate transition. On the other hand, a program manager with an academic background might lack DOD service connections, in which case DARPA’s military liaison officers can be used to facilitate collaboration.\nDARPA’s Architecture for Diode High Energy Laser Systems (ADHELS) program exemplifies how active collaboration with potential transition partners can facilitate successful technology transition. ADHELS development included several technological components, including volume bragg grating (VBG) technology. VBG is a transparent device made of refractive glass that when combined with a diode laser can control the laser output—such as by magnifying laser power, narrowing a laser beam, or controlling the beam quality of the laser diode. According to DARPA officials, the agency contracted with the foremost experts on VBG technology to develop ADHELS components, recognizing that adaptations of the VBG technology had potential applications within the commercial marketplace. As ADHELS development progressed, DARPA continued to engage its performers, who then licensed the VBG technology to an ADHELS subcontractor. This subcontractor formed the commercial entity Optigrate to further develop the VBG technology for commercial sale.\nConversely, the programs that lacked active collaboration with potential transition partners encountered challenges such as funding shortfalls, requirements uncertainties, and underperforming technologies. For example, early technical challenges prompted DARPA to restructure the Self-Regenerative Systems (SRS) program to focus exclusively on technology maturation, canceling initial plans to demonstrate and evaluate SRS technologies on a transition partner’s system. This decision constrained opportunities to identify potential transition partners and actively collaborate with them during the program.", "We found that defining and, ultimately, achieving clear technical goals helped facilitate technology transition. Of the five programs that successfully transitioned, this factor was fully present in three programs and partially present in the remaining two. Clearly defined technical goals often existed in the form of documented agreements among stakeholders that outlined technical specifications and desired capabilities, funding requirements, development schedule, and organizational responsibilities for technology development. These agreements allowed DARPA to share development, management, and funding responsibilities with its service partners, which facilitated shared understanding of technical goals and mutual commitments to the program’s success and transition. Equally important to this factor though was the degree to which a program achieved its stated technical goals. Most of the programs we reviewed identified clear technical goals, but fewer than half actually achieved the technical goals that were originally set.\nDARPA’s QNT program represents one example where clearly defined technical goals were set and achieved. QNT was initiated with support from the Air Force and Navy, which helped DARPA craft clear technical goals including size, weight, robustness, transmission rates, and other performance attributes of the technology. Defining technical goals during the early stages of the program also secured each organization’s commitment to playing a role in managing, developing, funding, demonstrating, and testing QNT. As a result, stakeholders then worked together to test QNT technical performance at several military exercises and in theater, where the system performed to expectations and gained added exposure within DOD. Ultimately, QNT transitioned to the Army’s Intelligence, Surveillance, and Reconnaissance Network program, which fielded the system in Afghanistan in September 2011. QNT also transitioned to two Navy weapons programs and was also selected by the Air Force for use in its Battlefield Airborne Communications Node program, which hosts a data link communications system between aircraft and ground units.\nIn other cases, such as AWNS, ADHELS, and Nastic Materials, technical goals were clearly defined, but only partially met. These partial successes, nonetheless, produced substantive technological gains. In the cases of AWNS and ADHELS, these gains—coupled with the presence of other key factors—proved sufficient to promote technology transition. On the other hand, three programs lacked clearly defined goals—or did not substantively achieve those goals—which led to significant restructuring or development of technologies that did not align with the needs of a planned transition partner. For example, Marine Corps’ officials stated that the Tactical Underwater Navigation System relied on divers swimming at unsustainable speeds to calibrate its positioning, which was not responsive to their interests.", "DARPA’s investment of program funds and staff are primarily focused on the highest priority of its agency mission, which is creating radically innovative technologies that support DOD’s warfighting mission. Technology transition is a secondary priority at the agency. DARPA leadership conducts periodic reviews of agency programs, but these reviews are focused on scientific and technical aspects of the programs and do not assess technology transition strategies. Instead, the Director, DARPA, delegates responsibility for oversight and assessment of technology transition strategies to a subordinate office. DARPA also provides limited training to program managers related to technology transition, instead relying on others within the agency to assist program managers with this activity, as needed. In addition, although DARPA disseminates information on its past programs, it does not take full advantage of available, government-sponsored resources for sharing technical data. DARPA has also elected not to participate in most DOD programs intended to facilitate technology transition, with the exception of mandated small business programs, citing the challenges it perceives in meeting the process and reporting requirements of these DOD programs within DARPA’s typical timeframes for executing its research initiatives.", "At DARPA, the desire for innovation drives investment, both in terms of recruitment and programs. DARPA hires world-class scientists and engineers from private industry, universities, government laboratories, and research centers to serve as program managers. According to DARPA officials, program managers are given great flexibility in leading their programs, building their teams, and allocating funds to achieve their programs’ objectives, including technology transition. DARPA officials stated that these expectations are outlined to program managers during new hire orientations, but are not codified in any agency-wide policy or guidance. To ensure that new ideas for advanced technologies are continuously coming into DARPA, the agency usually limits the tenure of its program managers, as well as the duration of its programs, to 3 to 5 years. In this environment, program managers prioritize achieving programs’ technical objectives, which can require the overwhelming majority of their available time.\nThis focus on innovation, which corresponds with undertaking bold, ambitious programs, makes the pursuit of technology transition a secondary priority for the agency. Consequently, programs generally seek to prove the art of “what is possible” rather than refining, producing, and delivering tactical equipment to warfighters. According to DARPA officials, the agency views these latter processes as the responsibility of military service research agencies, laboratories, and acquisition programs of record. However, DARPA officials report that potential transition partners in the acquisition community are often unwilling to commit to incorporating new technology into their programs of record without additional maturation, and service research agencies and laboratories both have their own programs and priorities to pursue. Consequently, the additional maturation work needed to position DARPA programs for effective transitions can go unfunded. According to DARPA officials, this dynamic has proven to be a major impediment for the agency in transitioning technology.\nIn addition, the introduction of DARPA’s radically innovative technologies can disrupt the status quo for military programs, budgets, and warfighting doctrine, which can drive cultural opposition within the military services. DARPA officials stated that the agency’s research sometimes leads to the identification of technologies and capabilities that military service officials do not initially want or think their services will need, although these technologies can eventually provide important military capabilities. For example, DARPA officials said that the Air Force was initially highly resistant to investments in stealth technologies for aircraft. Despite this resistance, DARPA proceeded with the development of stealth technologies, and today they are in use on multiple DOD weapon systems, including the F-22 Raptor and F-35 Lightning II fighter aircraft.\nDARPA’s secondary emphasis on transition is a long-standing characteristic of the agency’s culture, as evidenced in studies commissioned by DARPA in 1985 and 2001, which found that the agency does not place enough emphasis on technology transition. The 1985 report recommended that DARPA designate full-time technology transition facilitators, due to problems that were identified in the transition of technologies to the military services. The 2001 report recommended matching program manager tenure to the expected length of the programs to which they are assigned—rather than setting arbitrary dates of departure—and defining additional training and incentives for technology transition.\nAccording to DARPA officials, the Director, DARPA, has undertaken several initiatives to improve the agency’s emphasis on technology transition, including transition-focused quarterly meetings with each of the military service chiefs or their deputies and establishment of the Adaptive Execution Office in 2013, which was chartered to accelerate the transition of game-changing DARPA technologies into DOD capabilities. In addition, DARPA officials stated that the Director has shifted the role of the agency’s military service liaisons to focus exclusively on assisting program managers with military service engagement and transition of DARPA technologies. DARPA officials report that these actions have elevated the priority of and resources devoted to technology transition within the agency.", "The Director, DARPA, conducts oversight of programs through periodic milestone reviews. These reviews assess a program’s scientific and technical merit, and, according to DARPA officials, provide the Director with information on the transition status of the program. According to DARPA officials, the scope of these reviews is reflective of and consistent with the agency’s top priority of creating innovative technologies. However, these reviews do not assess a program’s strategy for achieving technology transition. DARPA leadership delegates oversight and review of technology transition strategies to the agency’s Adaptive Execution Office, which coordinates with program managers to review and provide input on technology transition strategies, particularly in the latter stages of programs.\nDOD policy, however, assigns to the Director, DARPA, the responsibility to pursue “strategies” that “increase the impact of DARPA’s research and development programs” and “speed the transition of successful research and development programs to the military departments and defense agencies,” among other scientific and technical functions. Consequently, by not assessing technology transition strategies at the program milestone reviews it chairs, the Director, DARPA, is forgoing key opportunities to perform this function. This approach undermines transition planning and introduces risk that DARPA programs will not achieve their full transition potential.\nApart from the policy cited above, the Office of the Secretary of Defense does not maintain other instructions or directives related to technology transition at DARPA. In previous years, different components within the Office of the Secretary of Defense have issued nonmandatory guidance on technology transition, which has, at times, applied to DARPA programs. However, the guidance is now outmoded in that it does not address changes in key science, technology, and acquisition processes that have occurred during the last 10 years. The Office of the Assistant Secretary of Defense for Research and Engineering, which has primary oversight of DARPA and other DOD research agencies, provides a great deal of latitude to these agencies to define their own technology transition policies and procedures. Most notably, officials from this office stated to us that technology transition is no longer an explicit function of the office and that the DOD division formerly responsible for technology transition no longer exists. Instead, the office now limits its technology policy responsibilities to minimizing unnecessary duplication of research efforts within DOD, disseminating research knowledge throughout DOD, and sharing that information with the general public.", "DARPA’s program managers receive limited training on how to effect technology transition in their programs. This training consists primarily of overviews on DARPA’s technology transition paths and considerations to make at program milestones with respect to technology transition. DARPA program managers are not subject to the formal training and certification requirements applicable to permanently hired science and technology managers at military service laboratories. DOD requires managers in these laboratories to complete Defense Acquisition University (DAU) training courses in science and technology, including how they apply to technology transition. These courses lead to progressively higher knowledge and certifications over their careers. DARPA officials countered that the training necessary to complete these courses and achieve science and technology manager certifications would require DARPA program managers to devote an inordinate amount of time to training, particularly if DAU requires DARPA staff to complete all the typical prerequisite courses that other managers are required to complete. Further, given the agency’s unique mission, DARPA officials stated that they do not consider the DAU training courses to be as relevant to their program managers given the agency’s broad discretion to pursue breakthrough technologies versus specific management of acquisition programs.\nIn lieu of more robust training, DARPA officials stated that the agency supports its program managers’ transition efforts by providing them with access to various transition planning and outreach resources. For example, DARPA program managers are also supported by the agency’s Adaptive Execution Office, which provides them with assistance in developing their transition plans and in communicating with the military’s transition stakeholders at DOD’s combatant commands. Program managers are further supported by DARPA’s military liaison officers from the Air Force, Army, Navy, and Marine Corps, who help program managers identify and reach out to potential transition partners or other stakeholders in the military services. These liaisons also arrange for DARPA leadership to meet with the military’s senior leaders, which is done in part to advocate for the transition of DARPA programs to the military services. As we found in September 2006, these liaisons can also provide operational advice for planning and strategy development and provide an understanding of service perspectives, issues, and needs so that potential customers can be identified and effective agreements can be written. Program managers also are authorized to use program funds to hire experienced contractors and government staff from other agencies to aid technology transition activities in their programs.\nPrevious guidance and studies, including one commissioned by DARPA in 2001, have recommended that DARPA improve its technology transition training for program managers through additional training and mentoring programs related to technology transition. Further, in 2005, DOD issued guidance on technology transition stating that developing and executing a training plan for the members of the team supporting technology transition is essential to their success. Similarly, Standards for Internal Control in the Federal Government indicates that effective management of an organization’s workforce, which includes providing necessary training to the organization’s staff, is essential to achieving results. DARPA’s limited training for program managers on technology transition is inadequate to consistently position programs for transition success. Without sufficient training, program managers may not develop the skills and knowledge that they need to identify and engage potential transition partners and facilitate transition successes.\nWhile DARPA does not currently rely on other DOD entities for technology transition training, individual DARPA program managers may voluntarily elect to take training related to technology transition in DOD or other federal organizations. For example, the Federal Laboratory Consortium for Technology Transfer was established by law in the Federal Technology Transfer Act of 1986 to, among other things, (1) develop training for federal lab employees engaged in technology transfer and (2) facilitate communication and cooperation between federal laboratories. The Consortium offers both in-person and online training regarding commercialization of technologies, as well as guidance regarding best practices. In response to our inquiries on this subject, DARPA officials indicated they were in discussions with the DAU staff regarding potential future training options.", "Disseminating information regarding developed technologies is a way for agencies to promote technology transition after the conclusion of a program, particularly once program managers and staff are no longer actively advocating for the transition of their program’s technologies. For many years, DOD has maintained website-accessible databases that disseminate information within the department, and to a lesser extent, to the public and to private companies. These websites allow their users to search for related technologies while considering new programs or products that could possibly use them.\nWhile DARPA disseminates information on past programs through the use of public government websites, its selective approach to posting this information does not maximize the chances of DARPA technologies being identified and selected by potential transition partners. Currently, DARPA disseminates information on past programs through both internal and external means, but does not share information with key data repositories that the federal government sponsors, which may obscure visibility into its programs and lead to missed transition opportunities. Since the 1960s, DARPA has provided substantial amounts of information regarding its technologies to the official DOD dissemination website managed by the Defense Technical Information Center (DTIC). Although the majority of DARPA-related information in this database is restricted to DOD staff, it is by far the largest repository that private companies and the general public can access for information on DARPA technologies. For instance, we found that while non-DOD users can access approximately 3,600 DARPA technical records through DTIC’s public website, DOD users can access over 30,000 of these records. DARPA also maintains an “Open Catalog” public website for disseminating information on its programs, although it currently only has technical information on about a few dozen active and completed programs. In comparison, DARPA’s public website also provides brief, non-technical descriptions of 194 active DARPA programs. Two other government-sponsored websites, operated by the DOD TechLink public-private partnership and the Federal Laboratory Consortium for Technology Transfer, also exist to help science and technology agencies disseminate technology information. DARPA officials indicated they do not share information with either of these entities and instead exclusively rely on DTIC, which DARPA officials stated represented DOD’s official repository.\nIn recent years, the White House has provided direction to broaden access to non-sensitive information on government-developed technologies, in recognition of government research’s potential for catalyzing innovative breakthroughs that drive the U.S. economy, and helping to drive progress in areas such as health, energy, the environment, agriculture, and national security. In February 2013, the White House’s Office of Science and Technology Policy instructed the federal government’s science and technology community to begin planning how to disseminate information on technologies they have developed. According to DARPA officials, the lead DOD agency for implementing this system is DTIC, and they do not expect DOD to have a dissemination system in place that fully addresses the requirements of the memorandum until 2017.", "The Office of the Secretary of Defense manages several DOD programs intended to accelerate development, testing, and delivery of mature technologies that provide new solutions for military needs. The general purpose of these programs is to facilitate the transition of technologies, but vary in terms of what types of technology developers and operational needs they target. For example, in partnership with the military services, the Joint Capability Technology Demonstration program addresses joint warfighting needs of the combatant commands by demonstrating mature technology prototypes that may transition to acquisition programs or directly to the warfighter in the field. Other programs such as the Small Business Innovation Research (SBIR) program fund small business research and development with the goal that innovations produced will be commercialized and eventually sold back to DOD. Table 5 lists these programs.\nAccording to DARPA officials, the only programs that DARPA participates in are the SBIR and Small Business Technology Transfer (STTR) programs because it is legally required to do so. However, the agency’s knowledge of transition outcomes associated with SBIR and STTR expenditures is limited. DARPA officials said they do not maintain a comprehensive list of agency programs using SBIR or STTR funds—or the transition paths of technologies developed with these funds—because these data are not always reported or accessible. According to DOD small business program management officials, who oversee the use of these funds throughout the department, transition outcome data is not required from any military service or agency, including DARPA. These officials further stated that once a small business contract ends, DOD’s means for compelling contractors to identify and report on successful transitions expires. In December 2013, we recommended that DOD improve its tracking of technology transition outcomes in SBIR-funded programs by establishing a common definition of technology transition for all SBIR projects and improving the completeness, quality, and reliability of SBIR transition data that it reports. These tracking shortfalls precluded us from assessing the extent to which DARPA’s SBIR and STTR funds contribute to successful technology transitions. In lieu of comprehensive transition data, DARPA officials have worked with some of their prior program contractors—who successfully developed and transitioned technologies—to identify small business program success stories. In addition, DARPA officials stated that they are developing contract language for future SBIR awards that would require firms to identify their transition and commercialization outcomes as an addendum to their final report.\nApart from the legally required small business programs, DARPA officials said that the processes and reporting requirements associated with participating in DOD’s other technology transition programs are generally cumbersome and do not align with DARPA’s time frames for executing programs or mission of creating disruptive technologies over relatively long periods of time. Conversely, DOD transition programs are mainly intended for mature technologies, or short-term efforts that can be fielded quickly. DARPA officials explained that technologies their programs develop usually require additional maturation in subsequent technology development efforts, either within DARPA or at military service laboratories, before transitioning to acquisition programs or warfighters. DARPA officials also said that agency leadership generally views the use of these funds as unnecessary given that DARPA’s budget currently provides adequate funding to support its research endeavors.\nDARPA officials also indicated that they are exploring stronger relationships with the Joint Capability Technology Demonstration (JCTD) program, particularly in the area of prototyping. In previous decades, DARPA used funds from the predecessor to the JCTD program—then known as the Advanced Concept Technology Demonstration program—to develop and demonstrate technologies. These efforts include currently fielded systems such as the Air Force’s Global Hawk and Predator unmanned aircraft and Miniature Air-Launched Decoy systems. DARPA officials also stated that Manufacturing Technology program funds have been applied after DARPA program completions to improve the affordability of and manufacturing base for semiconductors developed by DARPA.", "Technology transition does not have to occur at the expense of innovation, but should instead be viewed as a natural extension of innovation. When DARPA places technology in the hands of a user, operational knowledge is gained that can be used to improve the technology and further scientific innovation. However, DARPA leadership does not fully subscribe to this viewpoint; instead, it is satisfied with maturing technology to the point where feasibility, but not functionality, is proven. Today, programs progress through DARPA without the agency head fully assessing whether transition strategies make sense. Such assessments, if measured against key transition factors, could improve a program’s potential for transition success. Transition responsibilities then fall almost exclusively on individual program managers, who are often not sufficiently trained to achieve the favorable transition outcomes they seek. Further, when the program manager’s tenure expires, the primary advocate for transitioning the program’s technology is also lost. This turnover increases the need for technical gains to be appropriately documented and disseminated so that user communities have visibility into potential solutions available to meet their emerging needs. An important part of this process is the tracking of transition outcomes, as we recommended DOD undertake for its technology transition programs in March 2013, and which we have also found lacking at DARPA.", "To improve technology transition planning and outcomes at DARPA, we recommend the Secretary of Defense direct the Director, DARPA, to take the following three actions:\nOversee assessments of technology transition strategies for new and existing DARPA programs as part of existing milestone reviews used to assess scientific and technical progress to inform transition planning and program changes, as necessary. Our analysis identified four factors that could underpin these assessments, but the uniqueness of individual DARPA programs suggests that other considerations may also be warranted.\nIncrease technology transition training requirements and offerings for DARPA program managers, leveraging existing DOD science and technology training curricula, as appropriate.\nIncrease the dissemination of technical data on completed DARPA programs through Open Catalog and other government-sponsored information repositories aimed at facilitating commercialization of technologies.", "We provided a draft of this report to DOD for review and comment. In its written comments, which are included in appendix II, DOD partially agreed with our recommendations to oversee assessments of technology transition strategies for DARPA programs and to increase technology transition training requirements and offerings for DARPA program managers. In doing so, DOD agreed with most of the principles contained in our recommendations, but disagreed with the actions we recommended. DOD did not agree with our recommendation to increase the dissemination of technical data on completed DARPA programs. DOD also separately provided technical comments, which we incorporated, as appropriate.\nDOD agreed that assessments of technology transition strategies, which consider the four factors we identified for transition success, would help inform program decisions by DARPA leadership. However, DOD did not agree that such assessments be required at milestone reviews for DARPA programs, citing active participation by the Director, DARPA, in technology transition discussions throughout the life of a program. We agree that leadership is focused on technology transition and holds discussions often; however, we found it difficult to be able to identify transitions—or changes to transition strategies—that arise from these discussions. We believe that these discussions are an inadequate substitute for assessing technology transition strategies as part of the comprehensive program reviews that DARPA already undertakes. Assessing transition strategies at these reviews, as we recommended, would provide the opportunity to coordinate and prioritize transition goals, objectives, and planned actions in the context of scientific and technical developments in the program. By overseeing technology transition strategies separate from these reviews, the Director, DARPA, risks making decisions related to a program’s transition that are not appropriately informed by other important program considerations. Although DARPA asserted that our recommendation runs counter to its current efforts to improve processes and procedures, we found no evidence that processes and procedures were improving.\nDOD also agreed that technology transition training improves transition planning and outcomes, citing DOD science and technology training curricula as a “rich repository of transition insight.” Yet, despite the value it sees in its own training resources, DOD stated that DARPA program managers’ relatively short tenure leaves few opportunities to expose them to such “generic” training opportunities. Consequently, DOD did not agree that technology transition training requirements should be increased for DARPA program managers and stated that DARPA’s current approach of “tailored curricula focused on a program’s unique transition needs” remained appropriate. However, we did not find evidence of such tailored curricula in our review. Instead, we found that DARPA program managers all received the same limited training upon hiring, which was inadequate to consistently position programs for transition success. DOD also stated that DARPA continues to explore opportunities to offer tailored, concise, and streamlined training to its program managers. Therefore, we stand by our recommendation and continue to believe that expanded training opportunities are necessary for achieving better transition outcomes in DARPA programs, and we encourage DOD to capitalize on its existing investments in this area, to the extent possible.\nFurther, DOD did not agree that increased dissemination of technical data on completed DARPA programs was warranted. DOD stated that using multiple information repositories “thins the DOD technology market by spreading it across several venues,” in turn reducing the likelihood that technology providers and potential transition partners will find a match. DOD also stated that it intends to make DTIC the central data storage for all DOD technical activities, including DARPA technologies, and views the use of multiple information repositories as unconducive to improving technology transition outcomes. In our review, we found DARPA’s existing reliance on DTIC limited the chances of the agency’s technologies being identified and selected by potential transition partners, particularly those outside of DOD. We fail to see how increased dissemination of technical data would actually “thin” the DOD technology market. To the contrary, it would allow more portals with which to gain access. Similarly, in 2013, the White House identified a government-wide need to broaden access to non-sensitive information on government- developed technologies, but improvements remain incomplete. Consequently, we continue to believe that DARPA should pursue dissemination of non-sensitive technical data through as many existing government-sponsored outlets as possible, including its own Open Catalog website and DOD TechLink, to improve the likelihood of transition successes in the agency’s programs.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, and the Director, DARPA. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-4841 or sullivanm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "This report covers the Defense Advanced Research Projects Agency’s (DARPA) (1) effectiveness at transitioning technologies since fiscal year 2010, including identifying the factors that contributed to successful technology transitions, and (2) implementation of Department of Defense (DOD) policies and programs intended to facilitate the transition of technologies.\nTo assess DARPA’s effectiveness at transitioning technologies since fiscal year 2010, including identifying factors that contributed to successful transitions, we requested and reviewed portfolio-level data identifying the names, funding amounts, and technology transition of those DARPA programs successfully completing technology development during fiscal years 2010 through 2014. We confined our analysis to this time frame owing to availability of data from DARPA. These data included 150 programs funded under DOD’s budget activities for (1) applied research and (2) advanced technology development that DARPA identified as having completed as planned and producing a substantive technological gain or innovation, regardless of whether that technology or innovation transitioned to an end user. We used these data as the basis for selecting a simple random sample of 10 case study programs—5 that transitioned and 5 that did not transition. In conducting our case study analyses, we reviewed relevant program documentation to identify factors that facilitate transition success. While reviewing these case study programs, we identified inconsistencies between agency portfolio-level transition outcome data and program-level information. DARPA officials stated to us that this was due to the transition status of these programs changing after they had collected the portfolio-level data. As a result, we concluded that DARPA’s portfolio-level data were not sufficiently reliable for the purposes of assessing agency-wide transition rates and outcomes since fiscal year 2010. However, these inconsistencies did not significantly affect our program selections; therefore, these data were sufficiently reliable for the purposes of selecting the 10 case study programs.\nTo identify factors that facilitated technology transition within the 10 selected programs, we analyzed DARPA provided documentation— including program briefings, memorandums of agreement, broad area announcements, budget documents, and program completion reports— for selected programs to identify factors that facilitated or precluded their individual transitions. We then conducted a content analysis of these individual factors to identify common themes among the programs, which led to us determining that four significant factors underpinned technology transition outcomes in the programs we reviewed. Once we identified these four factors, we developed a rating system to assess the extent to which each factor was present in each of our 10 programs, as supported through our analysis of program documentation. Our measures for each of the four factors were as follows: Military or commercial demand for the planned technology\nFully present: Demand for the technology from a potential transition partner existed throughout the program, which would include (1) agreement between DARPA and a military service, DOD laboratory or other warfighter representatives that a related military capability gap or requirement exists; or (2) a private company identified a commercial demand for the technology or showed an interest in commercializing it.\nPartially present: Potential transition partners indicated to DARPA that they believed a demand existed for the technology, as is described above, although their interest was not consistent through the end of the program.\nNot present: The factor did not exist at all, and DARPA appears to have initiated the program without a potential transition partner agreeing that a capability gap or potential commercial use existed at any point during the program.\nLinkage to a research area where DARPA has sustained interest\nFully present: In the years preceding the program’s initiation, at least two related DARPA or other DOD science and technology program had been completed.\nPartially present: In the years preceding the program’s initiation, at least one related DARPA or other science and technology program had been completed (this was the second DOD science and technology program of its kind).\nNot present: The factor did not exist at all, and this program appears to not have any roots in previous similar DARPA or other DOD science and technology programs.\nActive collaboration with potential transition partners\nFully present: Potential transition partners consistently participated in, advised, or otherwise supported the program.\nPartially present: Potential transition partners participated in, advised, or otherwise supported the program, although their involvement was not consistent through the end of the program or was not present until after the prototype demonstration (relatively late in the program).\nNot present: The factor did not exist at all. The program appears to have lacked assistance from any potential transition partners, or their assistance was very infrequent or insignificant.\nAchievement of clearly defined technical goals\nFully present: Measurable technical goals were set in the program and fully achieved to the satisfaction of DARPA and any transition partner involved in the program, to the extent that one or more had been identified for the technology.\nPartially present: Measurable technical goals were set in the program, but met with varying levels of success. The technical successes achieved, however, were sufficient to produce a technology responsive to the interests of a transition partner, to the extent that one or more had been identified for the technology.\nNot present: Measurable technical goals were either not set or sufficiently met in the program. The level of technical success was not sufficient to produce a technology responsive to the interests of a transition partner, to the extent that one or more had been identified for the technology.\nUsing this rating system, two GAO analysts analyzed and coded whether each of the four factors was fully present, partially present, or not present in each of the 10 programs we reviewed. Each GAO analyst coded all the constituent items independently, and the two analysts then met to discuss and reconcile the differences between their codings. Following this initial round of coding, another GAO analyst independently verified the accuracy of the coding by reviewing the supporting program documentation. The final assessment reflected the analysts’ consensus based on the individual assessments.\nTo assess DARPA’s implementation of DOD policies and programs intended to facilitate the transition of technologies, we identified and analyzed information sources including policy instructions, guidance, training materials, and technical data repositories intended to promote technology transition within DARPA, DOD and the federal government. We also reviewed previous federal directives issued by the Executive Office of the President that were related to technology transition at DARPA. We reviewed previous DARPA-sponsored reports on technology transition produced in previous years. We reviewed our prior related reports and program information regarding DOD’s technology transition programs and relevant DOD funding information. We reviewed available training, resources, and tools used by DARPA officials to help bring about technology transition. We reviewed the contents of DOD computer systems used to disseminate information on DARPA programs to potential transition partners. We reviewed our prior reports and DOD documentation on DOD transition programs, including the Small Business Innovation Research, Small Business Technology Transfer, and Joint Capability Technology Demonstration programs, among others, to understand the extent to which DARPA participates in these programs. We reviewed the extent to which DARPA uses DOD transition funds, and requested data regarding DARPA’s use of small business funds and its technology transition outcomes, although these data were unavailable for our analysis, as is discussed elsewhere in this report. We also reviewed historical information on DARPA’s use of DOD transition funds available from public sources, including DOD budget documentation.\nTo gather additional information in support of our review for both objectives, we conducted interviews with current and former officials responsible for executing, managing, and overseeing transition of DARPA-developed technologies, including representatives of DARPA’s senior leadership and Adaptive Execution Office, program management offices and selected program managers, military services liaisons, and small business program officials. We also interviewed officials from the Office of the Assistant Secretary of Defense for Research and Engineering and DOD’s Office of Small Business Programs. Further, we interviewed officials from selected military requirements and acquisition offices, including the Joint Staff’s Force Structure, Resource, and Assessment directorate; Office of the Deputy Chief of Staff of the Army for Operation, Plans and Training; Office of the Deputy Chief of Staff of the Army for Logistics; Office of the Assistant Secretary of the Army for Acquisition, Logistics, and Technology; Army Program Executive Offices for Intelligence Electronic Warfare and Sensors and Command, Control, Communications—Tactical; and Marine Corps Systems Command. We also met with staff from selected DOD research centers, including the Air Force Research Laboratory and the Office of Naval Research, and with the Director of Science and Technology curriculum at the Defense Acquisition University.\nWe conducted this performance audit from January 2015 to November 2015 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "In addition to the contact named above, Diana Moldafsky, Assistant Director; Christopher R. Durbin, Analyst in Charge; Emily Bond; Nathan Foster; Aaron M. Greenberg; John Krump; Jean L. McSween; Sean Seales; and Roxanna T. Sun made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 2, 2, 2, 3, 3, 3, 1, 2, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title h3_title", "h3_full h2_full", "", "h0_title h2_title", "", "h0_full h2_full", "h0_full", "", "", "", "h2_title h1_full", "", "h1_full", "h1_full", "h2_full h1_full", "", "", "", "h1_full", "h0_full h3_full h2_full", "", "", "", "" ] }

{ "question": [ "How has the Defense Advanced Research Projects Agency (DARPA) performed technology transition?", "Why can't the GAO asses early DARPA programs?", "What did the GAO determine as reasons for transition success?", "How were these factors discovered?", "How has DARPA implementation of DOD programs been lacking?", "How have DARPA limitations extended to the transition of DOD programs?", "What does DARPA focus on instead?", "What does DARPA provide to technology transition?", "How does DARPA oversight of program managers lack?", "How does the GAO regard DARPA actions?", "How was the US affected by Soviet launching of their 1957 satellite?", "How has the US maintained this commitment?", "How was US technology superiority threatened?", "What did the GAO find regarding DOD ability to uphold the US promise?", "What was the GAO asked to review?", "What does this report cover?", "What did the GAO review for to cover these points?" ], "summary": [ "Since 2010, the Defense Advanced Research Projects Agency (DARPA) has had success in technology transition—the process of migrating new technologies from the research environment to military users, including Department of Defense (DOD) acquisition programs and warfighters.", "However, inconsistencies in how the agency defines and assesses its transition outcomes preclude GAO from reliably reporting on transition performance across DARPA's portfolio of 150 programs that were successfully completed between fiscal years 2010 and 2014. These inconsistencies are due in part to shortfalls in agency processes for tracking technology transition.", "Nevertheless, GAO's analysis of 10 selected programs identified four factors that contributed to transition success, the most important being military or commercial demand for the planned technology and linkage to a research area where DARPA has sustained interest.", "Both of these factors were generally evident at the time a program started, while the other two factors were observed later, once the program was underway. The figure below highlights the four factors.", "DARPA's implementation of DOD programs intended to foster technology transition has been limited and neither DOD nor DARPA have defined policies for managing transition activities.", "DARPA has also largely elected not to participate in DOD technology transition programs, with the exception of federally mandated small business programs, citing challenges in meeting program requirements within DARPA's typical three- to five-year timeframe for executing its research initiatives.", "Instead, DARPA primarily focuses its time and resources on creating radically innovative technologies that support DOD's warfighting mission and relegates technology transition to a secondary priority.", "DARPA leadership defers to its program managers to foster technology transition, but provides limited related training.", "Moreover, while its leadership conducts oversight of program managers' activities through periodic program reviews, these reviews do not regularly assess technology transition strategies.", "GAO has found that this approach does not consistently position programs for transition success. Further, while DARPA disseminates information on its past programs within DOD, to the public, and among private companies, it does not take full advantage of government-sponsored resources for sharing technical data, which may obscure visibility into its programs and lead to missed transition opportunities.", "After the Soviet Union launched the first satellite into orbit in 1957, the U.S. government made a commitment to initiate, rather than react to, strategic technological surprises.", "DOD relies on DARPA's disruptive innovations to maintain this promise, backed by congressional appropriations of over $2.9 billion in fiscal year 2015 alone.", "In April 2015, DOD reported that U.S. technological superiority is again being challenged by potential adversaries and renewed efforts to improve its products.", "Meanwhile, GAO found deficiencies in DOD's technology transition processes that may hinder these efforts and DARPA's goals.", "Senate Report 113-176 included a provision for GAO to review DOD's technology transition processes, practices, and results.", "This report focuses on DARPA and assesses its (1) effectiveness at transitioning technologies since fiscal year 2010, including identifying factors that contribute to successful transitions, and (2) implementation of DOD policies and programs intended to facilitate technology transition.", "GAO reviewed DARPA programs completed since 2010; identified transition factors by analyzing program documentation for a random sample of 10 cases; reviewed DOD policies; and interviewed DOD officials." ], "parent_pair_index": [ -1, -1, -1, 2, -1, -1, 1, 1, 3, -1, -1, 0, -1, -1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "Mexico's Motivations for Entering NAFTA3", "Economic Conditions in Mexico Before and After NAFTA", "GDP Growth", "Poverty", "Effects of NAFTA on Mexico", "Economic Effects", "Mexican Wages and Per Capita GDP", "U.S.-Mexico Trade", "Regional Effects of NAFTA", "Mexico's Agricultural Sector and NAFTA", "Mexican Productivity, Exports and Prices", "Employment", "Rural-Urban Migration", "Mexican Programs for Farmers", "Views of NAFTA in Mexico", "Policy Issues", "Appendix. Map of Mexico" ], "paragraphs": [ "", "The North American Free Trade Agreement (NAFTA), in effect since January 1994, plays a key role in the bilateral economic relationship between Mexico and the United States. The two countries are closely tied in bilateral trade and investment, and in areas of mutual interest such as migration, security, environmental, and health issues. NAFTA's effect on Mexico and the state of the Mexican economy have implications for the overall relationship between the United States and Mexico and for U.S. economic and political interests. On May 19, 2010, Mexican President Felipe Calderón met with President Barack Obama during an official state visit of the Mexican president to the United States. The two leaders discussed a wide range of bilateral, hemispheric, and global issues that affect the two countries and reaffirmed their shared values regarding the safety, social and economic well-being, and security of citizens in both countries. The two presidents expressed a commitment to increase cooperation in enhancing economic competitiveness and noted progress in the building of a Twenty-First Century border, which includes three new border crossings that are opening in 2010, initiation of three additional binational bridge projects, and significant modernization projects at existing border facilities.\nThe 111 th Congress will likely maintain an active interest in Mexico on issues related to counternarcotics, economic conditions, migration, trade, and border issues. Comprehensive immigration reform was debated early in the 110 th Congress and immigration reform efforts could be considered once again in the 111 th Congress. This report provides an overview of Mexico's motivations for entering NAFTA, the Mexican economy, the economic effects and views of NAFTA in Mexico, and possible policy options for Members of Congress. It also provides information on NAFTA's effect on Mexico's agricultural sector, one of the more controversial issues regarding the effects of NAFTA in Mexico. This report will be updated as events warrant.", "In 1990, the President of Mexico at the time, Carlos Salinas de Gortari, approached then U.S. President George H.W. Bush with the idea of forming a free trade agreement (FTA). President Salinas de Gortari's motivations in pursuing an FTA with the United States were to increase economic growth by attracting foreign direct investment (FDI); boosting exports; creating industrial jobs; and giving the Mexican economy a growth stimulus. The Mexican economy had experienced many difficulties throughout most of the 1980s with a significant deepening of poverty. Mexico's intention in entering NAFTA was to increase export diversification by attracting FDI, which would help create jobs, increase wage rates, and reduce poverty. At the time NAFTA went into effect, many studies predicted that the agreement would cause an overall positive impact on the Mexican economy.\nFrom the 1930s through part of the 1980s, Mexico maintained a strong protectionist trade policy in an effort to be independent of any foreign power and as a means to industrialization. Mexico established a policy of import substitution in the 1930s, consisting of a broad, general protection of the entire industrial sector. Mexico placed high restrictions on foreign investment and controlled the exchange rate to encourage domestic industrial growth. Mexico also nationalized the oil industry during this time. These protectionist economic policies remained in effect until the country began to experience a series of economic challenges caused by a number of factors.\nThe 1980s in Mexico were marked by inflation and a declining standard of living. The 1982 debt crisis in which the Mexican government was unable to meet its foreign debt obligations was a primary cause of the economic challenges the country faced in the early to mid-1980's. Much of the government's efforts in addressing the challenges were placed on privatizing state industries and moving toward trade liberalization. In the late 1980s and early into the 1990s, the Mexican government implemented a series of measures to restructure the economy that included steps toward unilateral trade liberalization.\nMexican began to reverse its protectionist stance in the mid-1980s when the government was forced to declare that it was unable to repay its debts and to default on its loans. Then President Miguel de la Madrid took steps to open and liberalize the Mexican economy and initiated procedures to replace import substitution policies with policies aimed at attracting foreign investment, lowering trade barriers and making the country competitive in non-oil exports. In 1986, Mexico acceded to the General Agreement on Tariffs and Trade (GATT), assuring further trade liberalization measures and closer ties with the United States.\nIn November 1987, the United States and Mexico entered into a bilateral understanding on trade and investment called the Framework of Principles and Procedures for Consultation Regarding Trade and Investment Relations. Prior to this agreement, there had been no legal framework to govern commercial relations between the two countries. There were two parts to the agreement, one served as a mechanism to address trade issues, and the other established an agenda for the removal or reduction of trade barriers. Seven topics were listed in the agenda for possible future discussions: textiles, agriculture, steel, investment, technology transfer and intellectual property, electronics, and information on the service sector. Under this framework understanding, two sectoral agreements were reached which liberalized trade in steel, textiles, and alcoholic beverages. In addition, working groups started meeting on agriculture, industry, services, tariffs, and intellectual property rights.\nIn October 1989, the two countries entered into a second trade and investment understanding called The Understanding Regarding Trade and Investment Facilitation Talks . This agreement built on the work of the 1987 agreement, establishing a negotiating process for expanding trade and investment opportunities. These two agreements significantly improved trade relations between Mexico and the United States and other improvements in trade relations followed. Marking the advances in trade relations between the two countries, Mexico proposed negotiations for a free trade agreement with the United States. In June 1990, then President Carlos Salinas de Gortari of Mexico and then President George H.W. Bush issued a joint statement in support of negotiating a free trade agreement.", "The Mexican economy is strongly tied to economic conditions in the United States, making it very sensitive to economic developments in the United States. Mexico is highly reliant on exports and most of Mexico's exports go to the United States. In 2008, Mexico's exports as a percent of GDP equaled 31%, up from 10% twenty years ago, and over 80% of Mexico's exports went to the United States. The state of the Mexican economy is important to the United States because of the close trade and investment ties between the two countries, and because of other social and political issues that could be affected by economic conditions, particularly poverty and how it relates to migration issues.\nNot all changes in economic growth or trade and investment patterns in Mexico since 1994 can be attributed to NAFTA. The economy has also been affected by other factors such as Mexico's previous market-opening measures in Mexico, financial crises, exchange rates, oil prices, and business cycles. Trade-related job gains and losses since NAFTA probably accelerated trends that were ongoing prior to NAFTA and are not totally attributable to the trade agreement. Isolating the economic effects of NAFTA from other economic or political factors is difficult. Mexico has experienced at least two major events outside of NAFTA that had significant economic consequences. Unilateral trade liberalization measures prior to NAFTA and the currency crisis of 1995 both affected economic growth, per capita GDP, and real wages in Mexico.\nIn the mid-1990s, Mexico experienced a financial crisis caused by a number of complex financial, economic, and political factors. The early 1990s in Mexico were marked by a large increase in foreign investment as investor confidence in the Mexican economy grew due to the prospect of NAFTA. However, signs that Mexico's economy was not as fundamentally strong as it appeared began to surface after the assassination of Mexican presidential candidate Luis Donaldo Colosio in March 1994. The shock of the assassination resulted in a subsequent outflow of foreign exchange reserves and growing concerns about a currency devaluation. In response to these concerns, the Mexican government issued short-term dollar-indexed notes to finance the growing current account deficit.\nThe Mexican government expected investor confidence to be restored after the August 1994 presidential election. Foreign investment flows, however, did not recover to the level of expectation. In the months following the election, the current account deficit widened as imports surged due to an overvalued peso. The government began to experience a short-term liquidity crisis. By December 1994, the continued decrease in the inflows of foreign direct investment and foreign exchange reserves put pressure on the government to abandon its previous fixed exchange rate policy and adopt a floating exchange rate regime. As a result, Mexico's currency plunged by around 50% within six months, sending the country into a deep recession.\nIn the aftermath of the 1994 devaluation, the Mexican government took several steps to restructure the economy and lessen the impact of the currency crisis among the more disadvantaged sectors of the economy. The United States and the International Monetary Fund (IMF) assisted the Mexican government by putting together an emergency financial support package of up to $50 billion. Mexico adopted tight monetary and fiscal policies to reduce inflation and absorb some of the costs of the banking sector crisis. The austerity plan also included an increase in the value-added tax, budget cuts, and increases in electricity and gasoline prices.\nThe peso steadily depreciated through the end of the 1990s, which led to greater exports and helped the country's exporting industries. However, the peso devaluation also resulted in a decline in real income, hurting mostly the poorest segments of the population, but also the newly emerging middle class. Yet, NAFTA and the change in the Mexican economy to an export-based economy may have helped to soften the impact of the currency devaluation.", "Between 1960 and 1980, the Mexican economy grew at an average annual rate of over 6.5%, resulting in significant improvements in per capita GDP and living standards during that time period. In the years that followed, however, average real GDP growth dropped due to the 1982 debt crisis, which resulted in productivity growth falling to negative numbers. The government's economic reforms in the latter part of the 1980s helped stimulate economic growth and GDP growth averaged 3.8% between 1990 and 1994 (see Figure 1 ). After the 1995 financial crisis, GDP growth declined by 6.2%, and then increased in the following three years by 5%-6% annually. Real GDP growth dropped from 6.2% in 2000 to -0.2% in 2001. After 2001, economic conditions in the United States improved, which helped economic growth in the Mexican economy. Real GDP growth in 2004 was 4.0%, up from 0.8% in 2003 and 2002. In 2006, GDP grew by 4.9% but decreased to 3.3% in 2007. Real GDP grew by only 1.5% in 2008. The 2009 global financial crisis had a strong adverse effect on the Mexican economy, and the GDP growth rate contracted by 6.6%. Estimates for 2010 show a possible growth rate of 4.2%.", "Poverty is one of the more serious and pressing economic problems facing Mexico. Addressing poverty issues and creating jobs have been a priority for the Calderon Administration. Former President Fox also considered poverty as one of Mexico's principal challenges and made it a top priority during his administration. The Mexican government had made progress in its poverty reduction efforts, but poverty continues to be a basic challenge for the country's development. Poverty is often associated with social exclusion, especially of indigenous groups of people who comprise 20% of those who live in extreme poverty. The 1995 currency crisis was a major setback to Mexico's efforts in alleviating poverty levels, and though there was some improvement after the crisis, the poverty levels did not decline to their pre-crisis levels until 2002 (see Figure 2 ).\nThe percentage of people living in extreme poverty, fell from 24% of the population in 2000, to 17% in 2004, and 14% in 2006 as shown in Figure 2 . In 2008, however, the extreme poverty rate went up again to 18%. Those living in moderate poverty fell from 54% of the population in 2000 to 50% in 2002 and 43% in 2006, though the percentage of those living in moderate poverty also increased in 2008 to 47%. Mexico's continuing problem of poverty is especially widespread in rural areas and remains at the Latin American average. The government has made significant efforts to combat poverty, but it remains widespread and is closely linked to high levels of inequality in terms of unequal access to healthcare, education, and available work opportunities. In rural areas the percentage of those living in moderate poverty 61% in 2008, while that of those living in extreme poverty was 32%. The rates for urban areas were 40% and 11%, respectively.\nMexico's main program to reduce poverty is the Oportunidades program. The program seeks to not only alleviate the immediate effects of poverty through cash and in-kind transfers, but also by improving nutrition and health standards among poor families and increasing educational attainment. This program provides cash transfers to families in poverty who demonstrate that they regularly attend medical appointments and can certify that children are attending school. Monthly benefits are a minimum of $15 with a cap of about $150. The majority of households receiving Oportunidades benefits are in Mexico's six poorest states: Chiapas, Mexico State, Puebla, Veracruz, Oaxaca, and Guerrero. Oportunidades covers five million households, almost a quarter of all Mexican families.", "NAFTA is a free trade agreement that eliminated trade and investment barriers among NAFTA trading partners. Upon implementation, almost 70% of U.S. imports from Mexico and 50% of U.S. exports to Mexico received duty-free treatment. The remainder of duties were eliminated over a period of 15 years after the agreement was in effect. The agreement also contained provisions for market access to U.S. firms in most services sectors; protection of U.S. foreign direct investment in Mexico; and intellectual property rights protection for U.S. companies. At the time that NAFTA went into effect, a number of economic studies predicted that the trade agreement would have a positive overall effect on the Mexican economy, narrowing the U.S.-Mexico gap in prices of goods and services and the differential in real wages.", "A number of studies have found that NAFTA has brought economic and social benefits to the Mexican economy as a whole, but the benefits have not been evenly distributed throughout the country. Most studies after NAFTA have found that the effects on the Mexican economy tended to be modest at most. While there have been periods of positive growth and negative growth after the agreement was implemented, much of the increases in trade began in the late 1980s when the country began trade liberalization measures. Though its net economic effects may have been positive, NAFTA itself has not been enough to lower income disparities within Mexico, or between Mexico and the United States or Canada.\nA 2005 World Bank study assessing some of the economic impacts from NAFTA on Mexico concluded that NAFTA helped Mexico get closer to the levels of development in the United States and Canada. The study states that NAFTA helped Mexican manufacturers to adopt to U.S. technological innovations more quickly and likely had positive impacts on the number and quality of jobs. Another finding was that since NAFTA went into effect, the overall macroeconomic volatility, or wide variations in the GDP growth rate, has declined in Mexico. Business cycles in Mexico, the United States, and Canada have had higher levels of synchronicity since NAFTA, and NAFTA has reinforced the high sensitivity of Mexican economic sectors to economic developments in the United States.\nSeveral economists have noted that it is likely that NAFTA contributed to Mexico's economic recovery directly and indirectly after the 1995 currency crisis. Mexico responded to the crisis by implementing a strong economic adjustment program but also by fully adhering to its NAFTA obligations to liberalize trade with the United States and Canada. NAFTA may have supported the resolve of the Mexican government to continue with the course of market-based economic reforms, resulting in increasing investor confidence in Mexico. The World Bank study estimates that FDI in Mexico would have been approximately 40% lower without NAFTA.\nOne of the main arguments in favor of NAFTA at the time it was being proposed by policymakers was that the agreement would improve economic conditions in Mexico and narrow the income gap between Mexico and the United States. Studies that have addressed the issue of economic convergence have noted that economic convergence in North America might not materialize under free trade as long as \"fundamental differences\" in initial conditions persist over time. Most studies have found that there are a number of domestic factors that explain the lack of convergence and that a free trade agreement alone is not sufficient to narrow the disparities in economic conditions between the two countries. In general, most studies suggest that for Mexico to narrow these income disparities, the government needs to invest more in education; innovation and infrastructure, as well as improve the quality of national institutions. This is not a unique situation to Mexico since other countries in Latin America are experiencing similar issues. According to one study, income convergence between a Latin American country and the United States is limited by the wide differences in the quality of domestic institutions, in the innovation dynamics of domestic firms, and in the skills of the labor force. Another study notes that the ability of Mexico to improve economic conditions depends on its capacity to improve its national institutions, adding that Mexican institutions did not improve significantly more than those of other Latin American countries during the post-NAFTA period.\nA number of domestic factors could explain why Mexico is not converging to U.S. levels in terms of per capita income, income per worker, or average wages. A recent study concluded that the U.S.-Mexico income gap has not narrowed due to a number of reasons, some of which are related to poorly implemented economic reforms and a lack of important reforms that are needed in other areas. First, Mexico has done poorly in implementing the economic reforms of the late 1980s and early 1990s, which has actually reduced economic growth instead of the having the intended goal of promoting growth. The study states that the government did not have the proper institutional and regulatory framework to properly implement privatization and trade liberalization efforts, which exacerbated the effects of the 1995 economic crisis and only resulted in private monopolies taking over public ones. Second, Mexico failed to take into consideration implementation of other important economic reforms. Since the mid-1990s, according to the study, the government has failed to make other much needed reforms such as fiscal policy or labor law reform, partially because of the political sensitivity of these issues but also because of the special interest groups that have been successful in blocking these reforms. Third, the authors conclude that Mexico is lacking a \"domestic engine\" to spur internal demand, which is increasing the country's vulnerability to economic conditions in the United States. Finally, according to the study, the government's restrictions on macroeconomic policies limit the ability of Mexican policymakers to respond to external shocks in a countercyclical manner.", "Any changes in Mexican wages since NAFTA implementation cannot be solely attributable to trade integration. Wages are reflective of a number of economic variables including GDP, productivity, exchange rates, and international trade. Mexican wages have generally followed the cycles of the Mexican economy for many years. Wages increased from the early 1980s until the mid-1990s, when the currency crisis hit when real wages fell by 15.5% (see Table 1 ). Wages increased after 1996 until 2000 when the percent increase was 10.8% and then stagnated for several years. Wages fell by 3.2% in 2008 and by 5.0% in 2009.\nMexico's trade liberalization measures may have affected the ratio between skilled and non-skilled workers in Mexico. In 1988, the real average wage of skilled workers in Mexico's manufacturing industry was 2.25 times larger than that of non-skilled workers. This ratio increased until 1996, when it was about 2.9, but then remained stable until 2000. The World Bank study found that NAFTA brought economic and social benefits to the Mexican economy, but that the agreement in itself was not sufficient to ensure a narrowing of the wage gap between Mexico and the United States. The study states that NAFTA had a positive effect on wages and employment in some Mexican states, but that the wage differential within the country increased as a result of trade liberalization.\nAccording to a report published in the Journal of Development Economics that examines wage inequality in Mexico before and after NAFTA, studies on NAFTA have not always agreed on the effect of trade on wages or the reasons for the increasing wage differential between skilled and unskilled Mexican workers. Some studies conclude that the reason for the rise in wages for more highly skilled workers is the technological change brought about by trade. Others link the rise in wage differentials to trade and the changes in prices of skill-intensive goods that result from trade liberalization. As prices for skill-intensive goods decline after trade liberalization, the demand for skilled workers rises and wages rise. The authors of the report conclude that the sharp increase in wage inequality in Mexico was caused by technological change. They argue that trade liberalization alone had almost no effect on the wage gap, but that the technological change that came about after NAFTA caused the wage gap to widen.", "Mexico's trade with the United States has grown considerably since 1994. Mexico had a trade deficit of $1.3 billion with the United States in 1994, the year of NAFTA implementation (see Table 2 ). In subsequent years, the trade balance shifted to a surplus as exports to the United States increased. While imports from the United States also increased after NAFTA, the rate of growth was not as high. In 2008, Mexico had a trade surplus of $84.8 billion with the United States. U.S. imports from Mexico totaled $216.3 billion in 2008 while exports to Mexico totaled $131.5 billion. In 2009, however, U.S.-Mexico trade declined due to the economic slowdown resulting from the global financial crisis. U.S. imports from Mexico decreased 19% and U.S. exports to Mexico decreased 20% in 2009. The top 2009 U.S. imports from Mexico were oil and gas; motor vehicles; audio and video equipment; and communications equipment. The exports to Mexico were motor vehicle parts; petroleum and coal products; basic chemicals, resin and related products; and oilseeds and grains.\nMuch of the increase in U.S.-Mexico trade since 1994 could be attributable to NAFTA, but, as stated previously, exchange rates and economic conditions have also been a factor. The devaluation of the Mexican peso against the U.S. dollar in 1995 limited the purchasing power of the Mexican people and also made products from Mexico less expensive for the U.S. market. U.S. imports from Mexico increased from $49.5 billion in 1994 to $74.2 billion in 1996, while U.S. exports to Mexico also increased but at a slower rate. As economic conditions in Mexico improved in the late 1990s, trade with the United States rose steadily until 2001 when the downturn in the U.S. economy caused trade to slow down. In the years after 2001, Mexico's economy continued to follow U.S. economic trends and trade increased in the following years, though at a slower rate.", "While the overall effects of NAFTA on the Mexican economy might have been positive, the effects have been unequal across regions and sectors. Wages and employment tend to be higher in states experiencing higher levels of foreign direct investment and trade. The effects of trade liberalization have varied widely among regions, and while trade liberalization may narrow income disparities over the long run with other countries, it may indirectly lead to larger disparities in income levels within a country.\nStudies have found that initial conditions in Mexico determined which Mexican states experienced stronger economic growth as a result of NAFTA. States with less developed infrastructure (transportation and communications) did not receive the benefits from NAFTA as other states. Telecommunications infrastructure and human capital were especially important in determining the economic performance of individuals states. The states with more telephone service and a higher skilled labor force experienced more positive impacts. Northern and central states grew faster throughout the 1990s, modestly reducing the income differentials with those of the Mexico City area. Poorer southern states grew slower during the same time period due to low levels of education, infrastructure, and quality of local institutions, making them less prepared to gain from trade liberalization.", "One of the more controversial aspects of NAFTA has been its effect on the agricultural sector in Mexico and the perception that NAFTA has caused a higher amount of worker displacement in the agricultural sector than in other sectors of the economy. While some of the changes in the agricultural sector are a direct result of NAFTA, as Mexico faced increasing import competition from the United States, many of the changes are also attributable to Mexico's unilateral agricultural reform measures. Mexico began to reform its agricultural sector in the 1980s; most domestic agricultural and trade policy reform measures included privatization and resulted in increased competition. Mexico's unilateral reform measures included eliminating state enterprises related to agriculture and removing staple price supports and subsidies. With the reform of Mexico's Agrarian Law, lands that had been distributed to ejidos or community rural groups following the 1910 revolution gained the right to privatize. Another major reform was the abolishment of CONASUPO , Mexico's primary agency for government intervention in agriculture. The agency bought staples from farmers at guaranteed prices and processed the products or sold them at low prices to processors and consumers. By 1999, the company was abolished. Many of Mexico's domestic reforms in agriculture coincided with NAFTA negotiations, beginning in 1991, and continued beyond the implementation of NAFTA in 1994. The unilateral reforms in the agricultural sector make it difficult to separate those effects from the effects of NAFTA.", "With Mexico's entry into NAFTA, the expectation was that relative prices for certain Mexican crops would decrease while prices for other crops would likely remain the same. This was based on the economic expectation that, by removing Mexico's price and trade interventions in basic crops such as grains and oilseeds, prices for the same goods in Mexico and the United States would equalize. Prices for crops that were exported such as fruits and vegetables were expected to stay the same because these had not been subject to major government intervention before or since NAFTA. NAFTA and Mexico's internal reforms were expected to lead to the \"law of one price\" for all agricultural goods produced in North America. This meant that prices for basic crops such as grains and oilseeds produced in Mexico, which previously had fixed prices by the government, would decline as these goods faced competition from U.S. goods. NAFTA and agriculture reform measures were also expected to increase efficiency in Mexico's agricultural production as farmers adjusted to competition from lower cost imports. Production in agricultural sectors that had prior price and trade interventions was expected to decrease as lower-priced imports from the United States entered the market, while production in export-oriented sectors, mainly fruits and vegetables, was expected to increase. As a result of these shifts, employment was expected to increase in some areas, but, according to one study, the increase was not expected to be large enough to absorb all the workers who would be displaced by reduced production in other sectors.\nAfter NAFTA, Mexican prices of basic crops such as maize dropped and, subsequently, Mexican imports of those crops increased. Mexican agricultural production, however, did not decrease after NAFTA. The Mexican government's unilateral liberalization of corn and NAFTA were both factors in declining prices of corn in Mexico. In 1993, the price of corn in Mexico was $4.84 per bushel; the price fell to $3.65 per bushel in 1997 and has remained at about the same level ever since. Mexican corn production, however, increased despite the decline in prices (see Figure 3 ). Total production of maize increased from an annual average of 12.5 million metric tons during the 1983-1990 period to an annual average of 17.7 million metric tons, representing an increase of 41%, during the post-NAFTA period of 1994-2001. Mexican corn production yields were a fraction of U.S. corn production yields in 2003, but in spite of the low yields, Mexican corn production increased after NAFTA. Between 1990 and 2003, Mexican corn production increased 44%, a faster rate of growth than U.S. corn production which increased by 27% during the same time period.\nMost of the effects from NAFTA likely took place within the first ten years of implementation. From 1993 to 2003, Mexican exports to the United States in agricultural products increased from $2.7 billion in 1993 to $6.3 billion in 2003, while Mexican exports to Canada increased from $136 million to $409 million over the same time period. Mexican imports from the United States also increased during this time period, from $3.6 billion in 1993 to $7.9 billion in 2003. Mexican exports to the United States sharply increased in the following categories: sugar and related products (595%), beverages excluding fruit juices (584%), and grains and feeds (328%). U.S. foreign direct investment in the Mexican food processing industry more than doubled from $2.3 billion in 1993 to $5.7 billion in 2000.", "Changes in agricultural employment in Mexico since NAFTA implementation cannot be attributed entirely to trade liberalization, not only because of Mexico's unilateral reform measures which coincided with NAFTA, but also because these changes may result from the industrialization process. Some economists argue that as countries become more industrialized, agriculture plays a smaller role in the economy and employs a smaller share of the workforce. One study covering 76 countries shows that a 1% increase in per capita GDP is associated with a reduction in agriculture value-added as a share of GDP by about 0.6 percentage points. In South Korea, for example, the agricultural share of GDP declined from about 25% in 1970 to 5% in 2000 due to rapid industrialization.\nA report by the Institute for International Economics (IIE) on the achievements and challenges of NAFTA discusses the effect of NAFTA on the agricultural sector. The report uses international comparisons that suggest that the Mexican agricultural labor force as a proportion of total labor was very high at the time of NAFTA and that many farmers were likely to lose their jobs as the country became more efficient in agricultural production. The study cites an estimate that, once all Mexican tariffs were eliminated, total farm employment in Mexico would decline by an estimated 800,000 workers. Agricultural production in Mexico has been increasingly centered on large-scale farms, factory-type livestock lots, and capital-intensive food processing, which puts pressure on small-scale farms and household farmers in Mexico. Another study states that the number of Mexicans employed in rural agriculture declined from 8.1 million to 6.8 million and that the value added by Mexican agriculture dropped from about $32 billion in 1993 to about $25 billion in 2003.", "Several studies found that the composition of Mexico's agricultural supply did not change significantly after NAFTA, although there were shifts in production as the agricultural sector adjusted to trade liberalization. One study found that some commercial farmers shifted production from staple crops to crops for export purposes and that yields of basic crops increased after NAFTA, but only for those crops grown under irrigated conditions. The study states that Mexico's productivity of irrigated lands increased after NAFTA, but non-export, non-irrigated agriculture did not increase. The study also cited a disparity in agricultural productivity between the northern and southern states due to the poor transportation and irrigation networks in the central and southern states of Mexico, making transportation costs very expensive. Another reason is access to credit. Those with small farms in the rural areas have difficulties finding access to credit. Without government guarantees, Mexican commercial banks often hesitate to provide loans because of the historically high default rate on agricultural loans. To help address this problem, the Mexican government created Financiera Rural in 2002, which helps provide access to microcredits for farmers to buy machinery, equipment, and technology.\nThe effect of NAFTA on rural-urban migration within Mexico or on migration from Mexico to the United States is difficult to quantify because of the various factors affecting migration. Mexican migration after NAFTA was affected by a combination of higher efficiency in Mexican agricultural productivity, sectoral adjustments to trade as some sectors experienced higher growth than others, urban growth in Mexico, and demands for unskilled labor in the United States. A study by the Carnegie Endowment for International Peace discusses the experience of Mexico since the enactment of NAFTA. The study's analysis focuses on people, the communities they live in, and the choices they make in response to their social and economic environment. The study states that NAFTA accelerated the transition of Mexico to a liberalized economy but did not create the necessary conditions for the public and private sectors to respond to the economic, social, and environmental effects of increased trade with its NAFTA partners. One of the study's conclusion is that NAFTA's agricultural policies did not benefit subsistence farmers, while providing larger commercial farmers with substantial support.\nOn the issue of Mexico's demographic patterns, one study found that NAFTA has had a minor role in Mexico's rural-urban migration. The study argues that the observed trend of migration from rural areas of Mexico to urban centers is directly the result of agricultural liberalization. However, the study also notes that these migration patterns have been in place since 1960. Therefore, it is not clear how much of a role NAFTA has had in Mexico's rural-urban migration. While some observers believe that the trend of migration from rural areas of Mexico to urban centers is directly a result of NAFTA, many economists argue that rural-urban migration trends are common in the industrialization process of most countries. For this reason, some argue that the high concentration of poverty in rural areas makes it very important for Mexican policymakers to understand the nature of Mexico's farming structure when proposing development policies.", "Anticipating the possible effects of NAFTA on farmers, the Mexican government established the Program of Direct Support for the Countryside, Programa de Apoyos Directos Para el Campo ( PROCAMPO), in 1993. PROCAMPO provided income support to farmers over a 15-year transitional period through hectare-based direct payments to producers. However, budget austerity caused by Mexico's 1995 peso crisis resulted in budget cuts for the program. Another Mexican program, Alianza para el Campo, or Alianza, was created in 1995 to improve agricultural productivity with modern equipment and technology. A third program, Produce Capitaliza , provides infrastructure and extension-type assistance and support to livestock producers for upgrading pastures. While these three programs have provided support for Mexican farmers, there continues to be a huge disparity in subsidy levels between the United States and Mexico. Some analysts have suggested that if the United States continued to subsidize corn production in the United States, Mexico should be permitted to impose some form of safeguard measures to protect farmers.", "Views of NAFTA within Mexico are mixed. Media reports tend to highlight the anti-NAFTA sentiment in the Mexican agricultural sector, but according to an extensive non-partisan opinion survey conducted by two independent groups in Mexico, the majority of the Mexican population views NAFTA favorably. A public opinion survey conducted in 2006 showed that the majority of the Mexican population favors trade liberalization with the United States and Canada. The survey, conducted by the Centro de Investigación y Docencia Económicas (CIDE) and the Consejo Mexicano de Asuntos Internacionales (Mexican Council on Foreign Relations, COMEXI) , also showed that Mexicans have a very positive view of globalization, though there is some division on whether NAFTA should be renegotiated and whether Mexico should continue forming new trade agreements with other countries.\nThe survey examined the views of the general public and another group of individuals, labeled as \"leaders\" in the study, which comprises 259 representatives from five sectors (government, politics, business, media and academic, and non-government organizations) with an interest in international affairs or professional ties with other countries. Both groups ranked export promotion among Mexico's two most important foreign-policy objectives and hold a largely favorable opinion of international trade. The poll showed that both the general public and the \"leaders\" considered international trade to be beneficial for the country's economy, job creation, Mexican businesses, poverty reduction, and their own living conditions. Ninety-six percent of the \"leaders\" and 79% of the general public favored increasing international trade (see Figure 4 ).\nThe most vocal opponents of NAFTA in Mexico have criticized the agreement because of its negative effect on Mexico's agricultural sector. Labor and farmers' coalitions joined forces in early 2008 to protest the final tariff eliminations under NAFTA on corn. Tens of thousands marched on the streets of Mexico City in February 2008 to protest the agreement. Many of these were farmers or peasants with farm plots of less than 12 acres and criticized the Mexican government for not doing enough to help them adjust to increased competition from the United States. They stated that most of the government aid to help farmers has gone to large agricultural businesses in northern states. Groups representing the small farmers argue that, in the long run, small farmers in Mexico will not be able to compete with the \"Americans' heavily subsidized and mechanized farms.\"", "Mexico's economic relationship with the United States is of mutual importance to both Mexico and the United States. Economic studies on the effects on Mexico and Mexican views of NAFTA could provide a valuable perspective when evaluating the possibility of reopening parts of the agreement or alternative policy options. Some observers have suggested that one of the lessons from NAFTA for developing countries is that they negotiate trade agreements in a way that would be more beneficial to them. This could take place by including provisions such as financial assistance from trading partners or new minimum wage requirements. Possible areas of consideration for U.S. and Mexican policymakers may include furthering economic integration between Mexico and the United States; enhancing or strengthening institutions created under NAFTA side agreements; or taking other measures to help resolve the issues related to income disparity between Mexico and the United States.\nSome proponents of economic integration in North America have maintained that the emergence of China and India in the global marketplace may be putting North America at a competitive disadvantage with other countries and that NAFTA should go beyond a free trade agreement. Some observers have proposed that the U.S. government consider the possibility of forming a customs union or common market. However, critics of this level of economic integration believe that NAFTA has already gone too far and that it has harmed the U.S. and Mexican economies and undermined democratic control of domestic policy-making. If the United States were to potentially consider the further economic integration in North America, it would require cooperation by the governments of Mexico and Canada, and approval by the U.S. Congress. Expanding NAFTA to a customs union or common market is not likely to happen within the foreseeable future.\nA possible option to address Mexico's income disparities with the United States is to consider expanding the mandate of the North American Development Bank (NADBank). NADBank and its sister institution, the Border Environment Cooperation Commission (BECC), were created under a bilateral side agreement to NAFTA called the Border Environmental Cooperation Agreement. The objective of NADBank and BECC is to help U.S.-Mexico border communities plan and finance environmental infrastructure projects. Some Members of Congress and elected officials from Mexico have informally discussed the possibility of expanding the mission of the NADBank to go beyond environmental and border issues. One possibility would be to expand NADBank projects to include transportation and other types of infrastructure projects. Another option would be to expand eligible projects to the entire region of Mexico instead of just the border area. Some policymakers have suggested the possibility of creating an infrastructure fund that would be managed by NADBank to provide investment in infrastructure, communications, or education.\nU.S. policymakers may also consider increased cooperation with Mexico in its efforts to address the continuing problem of poverty and the difficulties being faced by farmers in the southern Mexican states. The Mexican government has taken a number of measures to lessen the impact of NAFTA on farmers and to address on-going poverty issues but the results of these programs has been mixed. Although the programs are not NAFTA-related, they do benefit segments of the population and regions of Mexico that have benefitted little from trade liberalization.\nAnother policy option that has been mentioned is withdrawal from NAFTA. Legislation was introduced in the 111 th Congress for the United States to withdraw from NAFTA ( H.R. 4759 ). The bill would require the president to give written notice to Mexico and Canada of the U.S. withdrawal, which would occur six months after the bill's enactment. The bill had 27 co-sponsors and was referred to the House Ways and Means Committee. Supporters of the bill believe that NAFTA did not live up to its promises and that it has resulted in large job losses in the United States and Mexico. Opponents of the bill believe that NAFTA has had 'incredible' successes in all three countries of North America and that withdrawing from NAFTA would cause job losses in the United States to increase and that U.S. exports to Mexico would be sharply impacted. They point to the losses in exports that have occurred already from Mexico's retaliatory tariffs due to the trucking dispute and those exports represent only a small percentage of total U.S. exports to Mexico.", "" ], "depth": [ 0, 1, 1, 1, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full", "h3_full h1_full", "h2_full", "", "", "h2_title h1_title", "h2_full h1_full", "", "", "h2_full", "h2_full", "", "", "", "", "", "h0_full h3_full", "" ] }

{ "question": [ "How does NAFTA affect Mexico and US relationships?", "How does this relationship extend past NAFTA?", "How has NAFTA been regarded by policymakers?", "What are important factors in NAFTA renegotiation?", "What are some of these major issues?", "How did Mexico initiate the trade agreement?", "What was Mexico's motive?", "Why was Mexico's economy doing poorly?", "How was a trade agreement expected to assist Mexican economy?", "How was NAFTA expected to affect Mexico, the US, and Canada?", "Why is it difficult to determine NAFTA effects on Mexico?", "What outside factors may have affected Mexican economy?", "How has NAFTA effects been distributed in Mexico?", "How was agriculture impacted?", "How were different regions affected differently?", "How is trade liberalization viewed?", "How have the US and Mexico collaborated in the last decade?", "How did the US and Mexican President meet in 2010?", "What did they discuss?", "What is a core component of the desired cooperation?" ], "summary": [ "The North American Free Trade Agreement (NAFTA), in effect since January 1994, plays a very strong role in the bilateral economic relationship between Mexico and the United States. The effects of NAFTA on Mexico and the Mexican economic situation have impacts on U.S. economic and political interests.", "The two countries are also closely tied in areas not directly related to trade and investment such as security, environmental, migration, and health issues.", "A number of policymakers have raised the issue of revisiting NAFTA and renegotiating parts of the agreement.", "Some important factors in evaluating NAFTA include the effects of the agreement on Mexico and how these relate to U.S.-Mexico economic relations.", "In the 111th Congress, major issues of concern are related to U.S.-Mexico trade issues, economic conditions in Mexico, the effect of NAFTA on the United States and Mexico, and Mexican migrant workers in the United States.", "In 1990, Mexico approached the United States with the idea of forming a free trade agreement (FTA).", "Mexico's main motivation in pursuing an FTA with the United States was to stabilize the Mexican economy and promote economic development by attracting foreign direct investment, increasing exports, and creating jobs.", "The Mexican economy had experienced many difficulties throughout most of the 1980s with a significant deepening of poverty.", "The expectation among supporters at the time was that NAFTA would improve investor confidence in Mexico, increase export diversification, create higher-skilled jobs, increase wage rates, and reduce poverty.", "It was expected that, over time, NAFTA would narrow the income differentials between Mexico and the United States and Canada.", "The effects of NAFTA on the Mexican economy are difficult to isolate from other factors that affect the economy, such as economic cycles in the United States (Mexico's largest trading partner) and currency fluctuations.", "In addition, Mexico's unilateral trade liberalization measures of the 1980s and the currency crisis of 1995 both affected economic growth, per capita gross domestic product (GDP), and real wages.", "While NAFTA may have brought economic and social benefits to the Mexican economy as a whole, the benefits have not been evenly distributed throughout the country.", "The agricultural sector experienced a higher amount of worker displacement after NAFTA, in part because of increased competition from the United States but also because of Mexican domestic agricultural reforms.", "In terms of regional effects, initial conditions in Mexico appear to have determined which Mexican states experienced stronger economic growth as a result of NAFTA.", "Some economists argue that while trade liberalization may narrow income disparities over the long run with other countries, it may indirectly lead to larger disparities in income levels within a country.", "Over the last decade, the economic relationship between the United States and Mexico has strengthened significantly and the two countries continue to cooperate on issues of mutual concern.", "President Barack Obama met with Mexican President Calderón in May 2010 during the Mexican president's official state visit to the United States.", "The two leaders reaffirmed their commitment to increasing cooperation in a wide range of issues, including enhancing mutual economic growth.", "A key component for their global competitiveness initiative is to create a border the for the Twenty-First Century that will expand and modernize border facilities for a secure and more efficient border." ], "parent_pair_index": [ -1, 0, -1, 2, 3, -1, 0, -1, 2, -1, -1, -1, -1, 2, 2, -1, -1, -1, 1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Overview of the Current Child Support Enforcement (CSE) Program3", "Domestic Enforcement of Child Support", "International Enforcement of Child Support", "The 2007 Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance", "Summary of the Convention", "Reciprocity", "Settlement of Jurisdiction Issue", "Coordinated Expedited Enforcement", "No Cost or Low Cost Access to CSE Services in Other Countries", "No Change to States' Authority over Child Support Law Issues", "Current Status of the Convention", "H.R. 1896, the International Child Support Recovery Improvement Act of 2013", "Section 1. Short Title; References", "Section 2. Amendments to Ensure Access to Child Support Services For International Child Support Cases", "(a) Authority of the Secretary of HHS to Ensure Compliance with Multilateral Child Support Conventions", "(b) Access to the Federal Parent Locator Service", "(c) State Option to Require Individuals in Foreign Countries to Apply Through Their Country's Appropriate Central Authority", "(d) Amendments to International Support Enforcement Provisions", "(e) Collection of Past-Due Support from Federal Tax Refunds", "(f) State Law Requirement Concerning the Uniform Interstate Family Support Act (UIFSA)—(1) In General", "(f) State Law Requirement Concerning the Uniform Interstate Family Support Act (UIFSA)—(2) Conforming Amendment to the Full Faith and Credit Child Support Orders Act", "(f) State Law Requirement Concerning the Uniform Interstate Family Support Act (UIFSA)—(3) Effective Date; Grace Period for State Law Changes", "Section 3. Data Exchange Standardization for Improved Interoperability", "(a) In General", "(b) Effective Dates", "Section 4. Efficient Use of the National Directory of New Hires Database for Federally Sponsored Research Assessing the Effectiveness of Federal Programs in Achieving Positive Labor Market Outcomes", "Section 5. Budgetary Effects" ], "paragraphs": [ "", "It is often difficult, if not impossible, to enforce child support obligations in cases where the custodial parent and child live in one country and the noncustodial parent lives in another. International cases are often challenging and very time consuming for CSE workers because there are no agreed upon standards of proof, uniform procedures or methods of communication. The United States has not ratified a multilateral child support enforcement treaty dealing with this issue.\nThis report provides an overview of the current Child Support Enforcement (CSE) system, including a discussion of how international CSE cases are handled. It provides a summary of the 2007 Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance and contains current status information on the Convention/Treaty. It also provides a section-by-section summary of H.R. 1896 , a bill in the 113 th Congress that includes provisions to implement the Hague Convention on International Recovery of Child Support and several other unrelated child support provisions. H.R. 1896 was introduced by Representative David Reichert and nine co-sponsors on May 8, 2012. Nearly identical legislation ( H.R. 4282 ) passed the House by voice vote in the 112 th Congress on June 5, 2012.\nProponents of ratification of the Hague Convention provisions related to child support and family maintenance note that many Americans who live abroad may owe child support and that, in addition, there are thousands of foreigners with children who live in the United States for whom child support should be provided. They contend that a noncustodial parent's residence in a foreign country should not negate his or her children from receiving the child support to which they are entitled.", "The CSE program was enacted in 1975 ( P.L. 93-647 ) as a federal-state program (Title IV-D of the Social Security Act). Its purpose is 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 remain self-sufficient and off public assistance. The CSE program has evolved over time from a \"welfare cost-recovery\" program into a \"family-first\" program that seeks to enhance the well-being of families by making child support a more reliable source of income. Child support orders require noncustodial parents to fulfill their financial responsibility to their children by contributing to the payment of childrearing costs. 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. All 50 states, the District of Columbia, and three U.S. territories (Guam, Puerto Rico, and the U.S. Virgin Islands) operate CSE programs and are entitled to federal matching funds. The federal government reimburses each state (and the jurisdictions listed above) 66% of the cost of operating its CSE program. In addition, the federal government pays states (and jurisdictions) an incentive payment to encourage them to operate effective programs.\nState CSE programs are usually operated at the county-level of government in the human services department, department of revenue, or the State Attorney General's office. States must comply with a comprehensive set of requirements as a condition for receiving federal funds for operating state CSE programs. The CSE program is administered at the federal level by the Office of Child Support Enforcement (OCSE) in the Department of Health and Human Services (HHS).", "State CSE programs have authority to use a vast array of methods/tools to collect/enforce the payment of child support. Collection methods used by CSE agencies include income withholding, intercept of federal and state income tax refunds, intercept of unemployment compensation, liens against property, security bonds, and reporting of child support obligations to credit bureaus. All states, the District of Columbia, Guam, Puerto Rico, and the U.S. Virgin Islands also have civil or criminal contempt-of-court procedures and criminal nonsupport laws. Moreover, the 1996 welfare reform law ( P.L. 104-193 ), officially known as the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), required states to implement expedited procedures to allow them to secure assets to satisfy an arrearage by intercepting or seizing unemployment and workers' compensation; lottery winnings; awards, judgments, or settlements; and assets of the debtor parent held in public or private retirement funds and financial institutions. It required states to implement procedures to withhold, suspend, or restrict use of driver's licenses, professional and occupational licenses, and recreational and sporting licenses of persons who owe past-due support or who fail to comply with subpoenas or warrants relating to paternity or child support proceedings. In addition, the 1996 law authorized the Secretary of State to deny, revoke, or restrict passports of debtor parents.\nMany CSE administrators contend that the most difficult child support orders to enforce are interstate cases. Family law traditionally has been under the jurisdiction of state and local governments, and citizens fall under the jurisdiction of the courts where they live. Thus, although federal CSE law requires states to cooperate in interstate child support enforcement, problems often arise because of the autonomy of local courts.\nP.L. 104-193 required states to enact and implement the Uniform Interstate Family Support Act (UIFSA). UIFSA was drafted by the National Conference of Commissioners on Uniform State Laws (NCCUSL) and approved by the Commissioners in August 1992. The NCCUSL revised the act in 1996, 2001, and again in 2008.\nUIFSA limits the jurisdiction that can properly establish and modify child support orders and addresses the enforcement of child support obligations within the United States. When multiple states are involved in establishing, enforcing, or modifying a child or spousal support order, UIFSA is used to resolve jurisdictional issues of the courts in the different states. UIFSA also establishes which state's law will be applied in proceedings under UIFSA, an important factor as support laws vary greatly among the states. UIFSA is designed to deal with desertion and nonsupport by instituting uniform laws in all 50 states and the District of Columbia. The core of UIFSA is limiting control of a child support case to a single state, thereby ensuring that only one child support order from one court or child support agency is in effect at any given time. It follows that the controlling state will be able to effectively pursue interstate cases, primarily through the use of long arm statutes, because its jurisdiction is undisputed.\nUIFSA provides procedural and jurisdictional rules for three types of interstate child support proceedings to (1) establish a child support order; (2) enforce a child support order; and (3) modify a child support order. UIFSA implements the \"one-order system.\" This means that only one state's order governs, at any given time, an obligor's support obligation to any child. Further, only one state has continuing jurisdiction to modify a child support order. This requires all other states to recognize the order and to refrain from modifying it unless the first state has lost jurisdiction.\nP.L. 104-193 required that the 1996 version of UIFSA be adopted. It has been adopted in every state, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. As mentioned above, the NCCUSL approved additional amendments to UIFSA in August 2001. However, there is no federal mandate for states to enact the 2001 amendments. To date (almost 12 years later), only 21 states and the District of Columbia have adopted the 2001 amendments to UIFSA. In July 2008, the NCCUSL approved amendments to the 2001 UIFSA (referred to as UIFSA 2008), to integrate the appropriate provisions of the Convention, which were adopted at the Hague Conference on Private International Law on November 23, 2007. Similarly, there is no federal mandate for states to enact UIFSA 2008. To date, 11 states have adopted the 2008 amendments to UIFSA. States that have adopted UIFSA 2008 now stand ready to immediately implement the Convention if it is ratified.", "Before 1996, there was no mandate, direct or indirect, for the states or the federal government to become involved in international arrangements for child support. Prior to P.L. 104-193 , states used the system that they had developed for interstate child support cases to collect child support on behalf of children whose noncustodial parent lived abroad. According to various CSE documents, the arrangements developed between the individual states and various foreign countries to enforce child support obligations were based on the principles of comity—the voluntary recognition and respect given to the acts of another nation's government—as well as formal statements of reciprocity.\nP.L. 104-193 established procedures for international enforcement of child support. Pursuant to 42 U.S.C. 659A(a), the Secretary of State, with the concurrence of the Secretary of HHS, is authorized to\ndeclare any foreign country (or political subdivision thereof) to be a foreign reciprocating country if the foreign country has established, or undertakes to establish, procedures for the establishment and enforcement of child support owed to persons who are residents of the United States, and such procedures are substantially in conformity with the standard ...\nReciprocating countries must have procedures for (1) establishing paternity; (2) establishing support orders; (3) enforcement of support orders; (4) collection and distribution of payment under support orders; (5) providing administrative and legal assistance where necessary without cost to the U.S. resident; and (6) establishing a \"Central Authority\" to facilitate implementation of support enforcement in cases involving U.S. residents. Currently, the CSE program has reciprocal agreements regarding child support enforcement with 15 countries, including Australia, Canada (12 provinces/territories), Czech Republic, El Salvador, Finland, Hungary, Ireland, Israel, Netherlands, Norway, Poland, Portugal, Slovak Republic, Switzerland, and the United Kingdom of Great Britain and Northern Ireland. According to the U.S. State Department, the United States has held discussions with over 30 countries since 1997, and negotiations are continuing with many of those countries at this time.\nMoreover, in the absence of a federal-level international agreement for child support enforcement, there may be a state-level arrangement with a country. These state-level arrangements were formerly authorized by the Uniform Reciprocal Enforcement of Support Act (URESA), and are now authorized pursuant to UIFSA. However, such state-level arrangements may not be as comprehensive as the federal-level agreements. Further, not all states have similar arrangements with all countries; most states have arrangements with only a few countries.\nBased on information from the federal Office of Child Support Enforcement and the Census Bureau, about 1%-3% of CSE cases are international cases in that a noncustodial parent lives outside of the United States.", "The United States has not ratified any of the long-standing multinational treaties or conventions related to the recognition and enforcement of child support obligations, such as the Hague conventions on maintenance obligations. According to some commentators, the United States has not joined these treaties primarily because of fundamental differences in how jurisdiction is obtained over the involved parties. In most foreign countries, jurisdiction in child support cases is based on the habitual residence of the custodial parent. In contrast, in the United States although the child support order is established in the home state of the custodial parent, child support enforcement relies on the ability of the court to obtain personal jurisdiction over the noncustodial parent.", "The Convention contains procedures for processing international child support cases that are intended to be uniform, simple, efficient, accessible, and cost-free to U.S. citizens seeking child support in other countries. It is founded on the agreement of countries that ratify the Convention to recognize and enforce each other's child support orders. As discussed earlier in this report, similar procedures (via UIFSA) are already in place in the United States for processing interstate child support cases.\nThe Convention offers the United States the opportunity to join a multilateral treaty, saving the time and expense that would otherwise be required to negotiate bilateral agreements with individual countries around the world. Many provisions of the Convention were drawn from the U.S. experience with UIFSA. In fact, most cases under the Convention would be handled in the United States in accordance with UIFSA, which, pursuant to the 2008 amendments includes procedures for handling interstate cases as well as international cases. Below are some of the main provisions of the Convention.", "Pursuant to the Convention, the United States will be able to obtain the same or corresponding treatment (reciprocity) from other signatory countries. For many international cases, U.S. courts and state CSE agencies already recognize and enforce child support obligations, whether or not the United States has a reciprocal agreement with the other country. However, many foreign countries will not enforce U.S. child support orders in the absence of a treaty obligation.", "The Convention addresses jurisdictional barriers that have prohibited the United States from joining other child support conventions. Existing maintenance conventions base jurisdiction to order support on the habitual residence of the creditor (custodial parent or child) rather than on minimum contacts with the debtor (noncustodial parent), as required by U.S. constitutional standards of due process. The Convention provides flexibility for a U.S. court having jurisdiction over the noncustodial parent to establish a new order in circumstances where U.S. jurisdictional requirements were not met in the country issuing the initial order that is sought to be enforced.", "Pursuant to the Convention, countries will have the ability to effectively coordinate the enforcement of international child support cases with contracting countries through central authorities. Central authorities will be required to receive and transmit applications for services. Through administrative cooperation, the authorities will facilitate the transfer of documents and case information—using electronic technology where feasible—so that the necessary information is available for expeditious resolution of international child support matters.", "The Convention provides for access to cost-free services for U.S. citizens needing assistance with child support enforcement in a contracting country. However, a few countries are required by their own internal procedures to assess fees for these CSE services. In such cases, the involved country must use a means test based on the income of the child, not the parents. This will generally result in relatively minimal fees as compared to current practice where custodial parents must often retain local private counsel in order to establish or enforce a child support order.", "The Convention and the 2008 conforming amendments to UIFSA will not affect intrastate or interstate CSE cases in the United States. They will apply only to cases where the custodial parent and child live in one contracting country and the noncustodial parent lives in another contracting country. Similarly, the Convention will not affect substantive child support law, which is generally left to the individual states. The primary focus of the Convention and the 2008 conforming amendments is on uniform procedures for enforcement of CSE decisions and for cooperation among countries. While HHS will be the central authority for the United States under the Convention, it is expected that HHS will designate state CSE agencies as the public bodies responsible for carrying out, under its supervision, many of its central authority functions, such as transmitting and receiving applications for services, and initiating and facilitating proceedings.", "On November 23, 2007, after four years of deliberation, the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance was adopted at the conclusion of the Twenty-First Diplomatic Session of The Hague Conference on Private International Law at The Hague, The Netherlands. The United States delegation was the first country to sign the Convention. The other signatories are Albania, Bosnia and Herzegovina, the European Union, Norway, and Ukraine.\nAs noted earlier, in July 2008, the National Conference of Commissioners on Uniform State Laws (NCCUSL) approved amendments to the 2001 Uniform Interstate Family Support Act, referred to as UIFSA 2008, to integrate the appropriate provisions of the Convention with federal U.S. law.\nIn the United States, a treaty must be consented to by the Senate. The Senate does not ratify a treaty, but it provides its opinion on the treaty in question and then votes whether or not to consent to the treaty's provisions. A two-thirds majority is required for the Senate to give its consent. On September 29, 2010, the U.S. Senate approved the Resolution of Advice and Consent regarding the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance.\nAccording to the Office of Child Support Enforcement, the following additional steps must occur before the Convention/Treaty can enter into force for the United States.\n(1) Congress must adopt, and there must be enacted, implementing legislation for the Treaty.\n(2) Pursuant to the implementing legislation, all states must enact UIFSA 2008 by the effective date noted in the legislation. In addition, the implementing legislation would require states to make minor revisions to their CSE state plan.\n(3) The President must sign the instrument of ratification for the Treaty.\n(4) Finally, after all these activities are completed, the United States will be able to deposit its instrument of ratification with the Ministry of Foreign Affairs of the Kingdom of the Netherlands, which is the depository for the Treaty.\n(5) If at least one other country has deposited its instrument of ratification, acceptance or approval, the Treaty will enter into force for the United States on the first day of the first month that is not less than three months after the date of the U.S. deposit. If the United States is the first country to deposit its instrument, the Treaty will enter into force on the first day of the first month that is not less than three months after a second country deposits its instrument.\nOnce the Treaty is in force, it will apply to cases being worked between countries that are party to the Treaty.\nIn the 112 th Congress, H.R. 4282 was introduced in the House on March 28, 2012. H.R. 4282 contained implementing language for the Convention. The House passed H.R. 4282 , by voice vote, on June 5, 2012, but the Senate took no action on the bill. In the 113 th Congress, H.R. 1896 , almost identical to H.R. 4282 , was introduced in the House on May 8, 2013. H.R. 1896 contains implementing language for the Convention.", "H.R. 1896 was introduced in the House on May 8, 2013, by Representative Dave Reichert and nine co-sponsors. H.R. 1896 was passed by the House on June 18, 2013, by a vote of 394-27. Although H.R. 1896 includes provisions that would implement the Convention, it includes many other provisions as well. Section 1 of the bill provides a title (name) for the bill; Section 2 provides the amendments needed for the Convention/Treaty; Section 3 provides for the development of a standard format for exchange of CSE data; Section 4 allows certain researchers under certain circumstances to use the National Directory of New Hires Database with personal identifiers; and Section 5 provides information related to the budgetary effects of the bill.\nThe stated purpose of the bill is to ensure that the United States has the legal authority to comply fully with the obligations of the Convention, and for other purposes.", "H.R. 1896 is called the International Child Support Recovery Improvement Act of 2013. The references in H.R. 1896 generally refer to amendments made to the Social Security Act, or to a section or provision in the Social Security Act.", "", "H.R. 1896 would require the Secretary of HHS to use federal and, if necessary, state child support enforcement methods to ensure compliance with any United States treaty obligations associated with any multilateral child support convention to which the United States is a party.\nThe Treaty will not affect intrastate or interstate child support cases in the United States. It will only apply to cases where the custodial parent and child live in one country and the noncustodial parent lives in another country.", "H.R. 1896 would expand the definition of an \"authorized person\" to include an entity designated as a Central Authority for child support enforcement in a \"foreign reciprocating country\" or in a \"foreign treaty country\" in cases involving international enforcement of child support.\nUnder current federal law, the Federal Parent Locator Service (FPLS) is only allowed to transmit information in its databases to \"authorized persons,\" which include (1) child support enforcement agencies (and their attorneys and agents); (2) courts; (3) the resident parent, legal guardian, attorney, or agent of a child owed child support; and (4) foster care and adoption agencies.\nThe FPLS is an assembly of systems operated by the Office of Child Support Enforcement (OCSE), to assist states in locating noncustodial parents, putative fathers, and custodial parties for the establishment of paternity and child support obligations, as well as the enforcement and modification of orders for child support, custody, and visitation. The FPLS assists federal and state agencies to identify overpayments and fraud, and assists with assessing benefits. Developed in cooperation with the states, employers, federal agencies, and the judiciary, the FPLS was expanded by the PRWORA to include the following:\nThe National Directory of New Hires (NDNH): a central repository of employment, unemployment insurance, and wage data from State Directories of New Hires, State Workforce Agencies, and federal agencies. The Federal Case Registry (FCR): a national database that contains information on individuals in child support cases and child support orders. The Federal Offset Program (FOP): a program that collects past-due child support payments from the tax refunds of parents who have been ordered to pay child support. The Federal Administrative Offset Program (FAOP): a program that intercepts certain federal payments in order to collect past-due child support. The Passport Denial Program (PDP): a program that works with the Secretary of State in denying passports of any person that has been certified as owing a child support debt greater than $2,500. The Multistate Financial Institution Data Match (MSFIDM): a program that allows child support agencies a means of locating financial assets of individuals owing child support.\nIn addition, the FPLS also has access to external sources for locating information such as the Internal Revenue Service (IRS), the Social Security Administration (SSA), Veterans Affairs (VA), the Department of Defense (DOD), National Security Agency (NSA), and the Federal Bureau of Investigation (FBI).\nThe expansion of access to and use of personal information contained in the FPLS, especially in the National Directory of New Hires, could potentially lead to privacy and confidentiality breaches, financial fraud, identity theft, or other crimes. There is also concern that a broader array of legitimate users of the NDNH may conceal the unauthorized use of the personal and financial data in the NDNH. Moreover, concerns about data security and the privacy rights of employees have been a point of contention in many of the debates regarding expanded access to the NDNH.", "H.R. 1896 would give states the option to require individuals in foreign countries to apply for CSE services through their country's appropriate central authority for child support enforcement. If the individual resides in a foreign country that is not a \"reciprocating\" or \"treaty\" country, the state may choose to accept or reject the application for CSE services.\nH.R. 1896 would amend Section 454(32)(A) of the Social Security Act (SSA) to include requests for CSE services by a \"foreign treaty country\" that has a reciprocal arrangement with a state as though it is a request by a state. It would also amend Section 454(32)(C) of the SSA to include a \"foreign treaty country\" and a \"foreign individual\" as entities that do not have to provide applications, and against whom no costs will be assessed, for CSE services.", "H.R. 1896 would establish a definition for three terms: (1) \"foreign reciprocating country,\" (2) \"foreign treaty country,\" and (3) \"2007 Family Maintenance Convention.\"\nThe bill would define a \"foreign reciprocating country\" as a foreign country (or political subdivision thereof) with respect to which the HHS Secretary has declared as having or implementing procedures to establish and enforce duties of support for residents of the United States at no cost or at low cost.\nThe bill would define a \"foreign treaty country\" as a foreign country for which the 2007 Family Maintenance Convention is in force.\nThe bill would define the term \"2007 Family Maintenance Convention\" to mean the Hague Convention of 23 November 2007 on the International Recovery of Child Support and Other Forms of Family Maintenance.\nThe bill would amend Section 459A(c) of the SSA by using the new terms \"foreign reciprocating countries\" and \"foreign treaty countries\" in describing cases for which the HHS Secretary is responsible. In other words, it would be the responsibility of the HHS Secretary to facilitate support enforcement in cases involving residents of the United States and residents of \"foreign reciprocating countries\" or \"foreign treaty countries.\" H.R. 1896 would amend Section 459A(c)(2) of the Social Security Act to include \"foreign treaty countries\" as entities which can receive notification as to the state of residence of the person being sought for child support enforcement purposes. H.R. 1896 would also amend Section 459A(d) of the Social Security Act to include \"foreign reciprocating countries\" and \"foreign treaty countries\" as entities that states may enter into reciprocal arrangements with for the establishment and enforcement of child support obligations.", "H.R. 1896 would amend federal law so that the federal income tax refund offset program is available for use by a state to handle CSE requests from foreign reciprocating countries and foreign treaty countries.\nThe Federal Income Tax Refund Offset program collects past-due child support payments from the income tax refunds of noncustodial parents who have been ordered to pay child support. The program is a cooperative effort between the federal Office of Child Support Enforcement (OCSE), the Internal Revenue Service (IRS), and state CSE agencies. Under the Federal Income Tax Refund Offset program, the IRS, operating on request from a state filed through the Secretary of HHS, intercepts tax returns and deducts the amount of certified child support arrearages. The money is then sent to the state CSE agency for distribution.", "H.R. 1896 would amend Section 466(f) of the Social Security Act to read as follows: \"In order to satisfy Section 454(2)(A), each State must have in effect the Uniform Interstate Family Support Act, as approved by the American Bar Association on February 9, 1993, including any amendments officially adopted as of September 30, 2008 by the National Conference of Commissioners on Uniform State Laws.\"\nThis means that for a state to receive federal CSE funding, each state's UIFSA must include verbatim any amendments officially adopted as of September 30, 2008, by the NCCUSL. States would be required to adopt the 2008 amendments verbatim to ensure uniformity of procedures, requirements, and reporting forms.\nIn the past, collecting child support across state lines was difficult. Laws varied from state to state, often causing complications that delayed the establishment and/or enforcement of child support orders. The U.S. Congress recognized this problem and mandated (pursuant to PRWORA) that all states adopt UIFSA to facilitate collecting child support across state lines.\nOne of the most important aspects of UIFSA is its provisions related to continuing, exclusive jurisdiction. Consistent with UIFSA's policy of \"one order, one time, one place,\" only one court is authorized to establish or modify a child support order at a time. UIFSA provides that the court or administrative agency that issues a valid child support order retains \"continuing, exclusive jurisdiction\" to modify an existing order, as long as the custodial parent, the noncustodial parent, or the child remains in the issuing state. This provision limits the number of duplicate and conflicting orders, and reduces \"forum\" shopping by parents seeking to increase or decrease the amount of child support payments.\nGiven that roughly 33% of all CSE cases involve more than one state, it is generally considered important that states have the same basic laws for handling interstate cases. One could contend or assert that the CSE program would be more effective if all states were required to adopt the most current version of UIFSA. Such a policy would increase the likelihood that all interstate cases are handled under a similar statutory framework, thus moving closer to the \"one-order\" world in which a child would not be seriously disadvantaged in obtaining child support just because his or her parents do not live in the same state.", "H.R. 1896 would clarify current law by stipulating that a state court that has established a child support order has continuing, exclusive jurisdiction to modify its order if the order is the controlling order and (1) the state is the child's state of residence or that of any individual contestant or (2) the contestants consent in a record or in open court that the court may continue to exercise jurisdiction to modify its order. The bill would also clarify that a state no longer has continuing, exclusive jurisdiction of a child support order if the state is not the residence of the child or an individual contestant, and the contestants have not consented in a record or in open court that the court of the other state may continue to exercise jurisdiction to modify its order.\nFederal law requires states to treat past-due child support obligations as final judgments that are entitled to full faith and credit in every state. This means that a person who has a child support order in one state does not have to obtain a second order in another state to obtain child support due should the noncustodial parent move from the issuing court's jurisdiction. Congress passed P.L. 103-383 , the Full Faith and Credit for Child Support Orders Act (FFCCSOA; 28 U.S.C. §1738B) in 1994 because of concerns about the growing number of child support cases involving disputes between parents who lived in different states and the ease with which noncustodial parents could reduce the amount of the obligation or evade enforcement by moving across state lines. P.L. 103-383 required courts of all United States territories, states, and tribes to accord full faith and credit to a child support order issued by another state or tribe that properly exercised jurisdiction over the parties and the subject matter. P.L. 103-383 addressed the need to determine, in cases with more than one child support order issued for the same obligor and child, which order to recognize for purposes of continuing, exclusive jurisdiction and enforcement. P.L. 103-383 restricted a state court's ability to modify a child support order issued by another state unless the child and the custodial parent have moved to the state where the modification is sought or have agreed to the modification. The 1996 welfare reform law ( P.L. 104-193 ) clarified the definition of a child's home state and made several revisions to ensure that the full faith and credit laws could be applied consistently with UIFSA. The bill would provide further clarification (as noted above) of under what conditions a state could modify a child support order.", "As mentioned earlier, H.R. 1896 would stipulate that each state's UIFSA must include any amendments officially adopted as of September 30, 2008, by the NCCUSL. Given that this provision must be approved by state legislatures, the bill contains a grace period tied to the meeting schedule of state legislatures. In any given state/jurisdiction, the bill would become effective no later than the effective date of laws enacted by state legislatures implementing the UIFSA amendments, but in no event later than the first day of the first calendar quarter beginning after the close of the first regular session of the state legislature that begins after the date of enactment. In the case of a state that has a two-year legislative session, each year of such session shall be deemed to be a separate regular session of the state legislature.", "", "H.R. 1896 would require the Secretary of HHS to issue a rule designating standard data exchange elements for any category of information required to be reported under the CSE program. The rule would be developed by HHS in consultation with an interagency workgroup established by the Office of Management and Budget (OMB) and with consideration of state and tribal perspectives. To the extent practicable, the standard data exchange elements required by the rule would be non-proprietary, permit data to be exchanged, and incorporate the interoperable standards developed and maintained by recognized international bodies, intergovernmental partnerships, and federal entities with authority over contracting and financial assistance. To the extent practicable, the data reporting standards required by the rule would incorporate a widely accepted, non-proprietary, searchable, computer-readable format; be consistent with and implement applicable accounting principles; be capable of being continually upgraded as necessary; and, to the extent practicable, incorporate existing nonproprietary standards, such as the \"eXtensible Business Reporting Language.\"\nAccording to testimony related to data standards and electronic information exchange in the CSE program:\nSound standards establish a technological vocabulary that allows parties with various perspectives to speak the same language when discussing electronic information and data exchanges. Further, the existence of quality standards provides a level playing field for the vendors that provide software and services to the governmental entities using them.... As the quantity and complexity of the systems we operate increases, standards can help to insure that a common vocabulary exists for all of us to use in facilitating good and efficient government.\nBecause CSE data and information are often stored in disconnected systems across a multitude of data centers and because data elements are defined differently by various organizations and entities, it is often hard to exchange data and correctly understand its meaning. The purpose of this provision is to develop a standard format so as to improve the ability of two or more systems or entities to exchange information and to correctly use the information that has been exchanged. According to the Commissioner of the Office of Child Support Enforcement (OCSE), data exchange standardization requirements \"will eventually establish a common set of data elements and definitions in a format easily exchanged between different human services systems, and in fact with any system.\" The Commissioner further states: \"With interoperable systems, we may do a better job of serving the whole person and the whole family; we may more effectively share services, streamline information and business systems, and minimize duplicative costs to build, maintain and update redundant computer systems.\"", "H.R. 1896 would require the HHS Secretary to issue a proposed rule on the data exchange elements within 24 months after enactment. The rule would be required to identify federally required data exchanges, include specification and timing of exchanges to be standardized, and address the factors used in determining whether and when to standardize data exchanges. In addition, the rule would be expected to include state implementation options and likely future milestones.", "H.R. 1896 would allow the HHS Secretary to provide access to data in each component of the Federal Parent Locator Service (FPLS) as well as information reported by employers via the National Directory of New Hires for (1) research undertaken by a state or federal agency (including through grant or contract) for purposes found by the Secretary to be likely to contribute to achieving the goals of Title IV-A of the Social Security Act (which includes the TANF block grant program and the Healthy Marriage and Responsible Fatherhood programs) or the CSE program (Title IV-D of the Social Security Act) and (2) an evaluation or statistical analysis undertaken to assess the effectiveness of a federal program in achieving positive labor market outcomes (including through grant or contract), by a specified federal department or agency.\nH.R. 1896 would stipulate that applicable data or information may include a personal identifier only if the state and federal agency conducting the relevant research or the federal department or agency undertaking the evaluation or statistical analysis enters into an agreement with the HHS Secretary regarding the security and use of the data or information. H.R. 1896 would require the agreement to include such restrictions or conditions with respect to the use, safeguarding, disclosure, or re-disclosure of the data or information (including by contractors or grantees) as the Secretary deems appropriate. H.R. 1896 would also require that the data or information be used exclusively for the purposes described in the agreement. In addition, H.R. 1896 would require the Secretary to determine that the provision of data or information is the minimum amount needed to conduct the research, evaluation, or statistical analysis and that it will not interfere with the effective operation of the CSE program. (Note that these provisions are in addition to the current law provisions concerning disclosure and use of research information as well as information integrity and security.)\nAccording to testimony on behalf of MDRC:\nResearch firms that are funded by federal agencies to evaluate programs often rely on data collected by states from employers on employment and earnings, data that the states already report to the federal government for certain child support enforcement and other purposes. These data are housed in accessible form at the federal level within the National Directory of New Hires (NDNH) database. However, research contractors are generally unable to access this essential database for assessing whether federally supported programs actually work. Instead, they are forced to get the very same data directly from the states, at great cost to the federal government and at considerable burden in duplicative reporting for the states. If the NDNH database were made available to evaluators (with appropriate privacy safeguards), it would enable Congress and the federal agencies to assess the impact that social programs have on jobs and earnings at much less cost and burden to the federal government and the states.\nH.R. 1896 would also stipulate that any individual who willfully discloses a personal identifier (such as a name or social security number) in any manner to an entity not entitled to receive the data or information, shall be fined under title 18, United States Code, imprisoned not more than five years, or both.\nIn addition, H.R. 1896 would require that new hire reports be deleted from the National Directory of New Hires 48 months after the date of entry. Under current law new hire reports must be deleted from the National Directory of New Hires 24 months after the date of entry. The reporting and deletion requirements result in a constant cycling of wage and employment data into and out of the National Directory of New Hires. H.R. 1896 would not change the existing provision of federal law that allows the HHS Secretary to keep samples of data entered into the National Directory of New Hires for research purposes.", "The final section of H.R. 1896 includes instructions related to the budgetary effects of the bill." ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 3, 3, 3, 3, 3, 2, 1, 2, 2, 3, 3, 3, 3, 3, 3, 3, 3, 2, 3, 3, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_title h2_title", "h2_full", "h0_full", "h1_full", "h1_full", "h1_full", "", "", "", "", "h1_full", "h2_full", "h2_full", "h2_title", "h2_full", "", "", "", "h2_full", "", "", "", "", "", "", "h2_full", "" ] }

{ "question": [ "How is child support pursed for parents in different countries?", "How does the US address this issue?", "What enforces child support internationally?", "What countries are currently involved in such child support agreements?", "How was the Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance (referred to hereinafter as the Convention or Treaty) adopted?", "What is the Convention?", "How does USE enforce any international child support?", "How do other countries then regard US child support claims?", "What countries signed the Convention?", "How was H.R. 1896 (the International Child Support Recovery Improvement Act of 2013) passed?", "What is H.R. 1896?", "How does H.R. 1896 impact state handling of international child support?", "How would H.R. 1896 impact data exchange?", "What authority would H.R. 1896 provide TANF and CSE programs?" ], "summary": [ "It is often difficult, if not impossible, to enforce child support obligations in cases where the custodial parent and child live in one country and the noncustodial parent lives in another.", "The United States has not ratified a multilateral child support enforcement treaty dealing with this issue.", "P.L. 104-193 (enacted in 1996) established procedures for international enforcement of child support.", "Currently, the federal Office of Child Support Enforcement (OCSE, within the Department of Health and Human Services (HHS)) has reciprocal agreements regarding child support enforcement with 15 countries, including Australia, Canada (separate agreements with 9 of the 10 Canadian provinces and with all 3 Canadian territories), Czech Republic, El Salvador, Finland, Hungary, Ireland, Israel, Netherlands, Norway, Poland, Portugal, Slovak Republic, Switzerland, and the United Kingdom of Great Britain and Northern Ireland.", "The Hague Convention on the International Recovery of Child Support and Other Forms of Family Maintenance (referred to hereinafter as the Convention or Treaty) was adopted at the Hague Conference on Private International Law on November 23, 2007.", "The Convention contains procedures for processing international child support cases that are intended to be uniform, simple, efficient, accessible, and cost-free to U.S. citizens seeking child support in other countries.", "For many international cases, U.S. courts and state Child Support Enforcement (CSE) agencies already recognize and enforce child support obligations, whether or not the United States has a reciprocal agreement with the other country.", "However, many foreign countries will not enforce U.S. child support orders in the absence of a treaty obligation.", "The United States was the first country to sign the Convention. The other signatories are Albania, Bosnia and Herzegovina, the European Union, Norway, and Ukraine. However, the United States has not yet ratified the treaty.", "H.R. 1896 (the International Child Support Recovery Improvement Act of 2013) was passed by the House on June 18, 2013, by a vote of 394-27. It would implement the Convention.", "H.R. 1896 would require the Secretary of HHS to use federal and, if necessary, state CSE methods to ensure compliance with any U.S. treaty obligations associated with any multilateral child support convention to which the United States is a party.", "H.R. 1896 would amend federal law so that the federal income tax refund offset program is available for use by a state to handle CSE requests from foreign reciprocating countries and foreign treaty countries. It would require states to adopt the 2008 amendments to the Uniform Interstate Family Support Act (UIFSA) verbatim to ensure uniformity of procedures, requirements, and reporting forms.", "In addition, H.R. 1896 would provide for the development of a standard format for data exchange of CSE data.", "It would also allow certain researchers to use the National Directory of New Hires database with personal identifiers for the purposes of the Temporary Assistance for Needy Families (TANF) or CSE programs or of evaluating whether federal reemployment programs are working as intended." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, 2, -1, -1, 0, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 5, 5, 5, 5, 5 ] }

{ "title": [ "Background", "Basics of the Federal Rulemaking Process", "Legal Framework and Staffing for OSHA’s Standard-Setting Process", "OSHA’S Standard- Setting Time Frames Vary Widely and Are Influenced by the Many Procedural Requirements and Other Factors", "OSHA’s Time Frames for Developing and Issuing Standards Vary", "OSHA has Authority to Address Urgent Hazards through Emergency Temporary Standards, Enforcement, and Education", "Although It Has the Authority, OSHA Has Found it Difficult to Issue Emergency Temporary Standards", "OSHA Addresses Urgent Hazards through Enforcement and Education", "Other Regulatory Agencies’ Experiences Offer Limited Insight into OSHA’s Challenges", "Experts Suggested Many Ideas to Improve OSHA’s Standard-Setting Process, Including More Interagency Coordination and Statutory Deadlines", "Improve Coordination with Other Federal Agencies to Leverage Expertise", "Expand OSHA’s Ability to Use Industry Voluntary Consensus Standards", "Impose Statutory Deadlines and Provide Relief from Procedural Requirements for Setting Standards", "Change the Standard of Judicial Review for OSHA Standards", "Improve Strategies for Supporting Economic and Technological Feasibility Analyses", "Adopt a Priority-Setting Process for Addressing Hazards", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Selected Procedural Requirements for Federal Rulemaking", "Appendix III: Comments from the Department of Labor", "Appendix IV: Comments from the Department of Health and Human Services", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "The basic process by which all federal agencies typically develop and issue regulations is set forth in the Administrative Procedure Act (APA) and is generally known as the rulemaking process. Rulemaking at most regulatory agencies follows the APA’s informal rulemaking process, also known as “notice and comment” rulemaking, which generally requires agencies to publish a notice of proposed rulemaking in the Federal Register, provide interested persons an opportunity to comment on the proposed regulation, and publish the final regulation, among other things. Agencies may also take other actions to gather information during the rulemaking process; for example, agencies may hold a public meeting to allow stakeholders to discuss specific aspects of the proposed regulation. Under the APA, a person adversely affected by an agency’s rulemaking is generally entitled to judicial review of that new rule. For regulations developed and issued using the APA’s notice and comment rulemaking process, the court may invalidate a regulation if it finds it to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” sometimes referred to as the arbitrary and capricious test.\nIn addition to the APA requirements, federal agencies typically must comply with requirements imposed by certain other statutes and executive orders. Some of the relevant laws include the Paperwork Reduction Act and the Regulatory Flexibility Act, which were both enacted in 1980; the Congressional Review Act, enacted in 1996;and the Information Quality Act, enacted in 2000. (See app. II for an overview of requirements that commonly apply to OSHA standard setting.) In accordance with various presidential executive orders, agencies work closely with staff from OMB’s Office of Information and Regulatory Affairs, who review draft regulations and other significant regulatory actions prior to publication.standard setting were established in 1980 or later.\nMost of the additional requirements that affect OSHA Agencies can supplement the notice and comment procedure for developing regulations through a process called “negotiated rulemaking.” Through this process, the agency convenes a negotiated rulemaking committee, generally composed of representatives of the agency and the various interest groups to be affected by a potential regulation, before developing and issuing the proposed rule. If the committee comes to an agreement on the content of a potential regulation, the agency may use it as the proposed rule. However, any agreement by the negotiated rulemaking committee is not binding on the agency or interest groups represented on the committee. Negotiated rulemaking does not replace any procedures required by the APA; rather, it can be used to help reach agreement among the members of the committee on the content of a proposed regulation, and according to proponents, it may help decrease the likelihood of subsequent litigation over the regulation.", "OSHA administers the OSH Act, which was enacted to help assure, so far as possible, safe and healthful working conditions for the nation’s workers. Section 6(b) of the act authorizes the Secretary of Labor to “promulgate, modify, or revoke any occupational safety or health standard” when he or she determines that doing so would serve the objectives of the OSH Act. Occupational safety and health standards are a type of regulation and are defined as standards that require “conditions, or the adoption or use of one or more practices, means, methods, operations, or processes, reasonably necessary or appropriate to provide safe or healthful employment and places of employment.” Section 6(b) of the act also specifies the procedures by which OSHA must promulgate, modify, or revoke its standards. These procedures include publishing the proposed rule in the Federal Register, providing interested persons an opportunity to comment, and holding a public hearing upon request.\nSection 6(a) of the OSH Act directed the Secretary of Labor (through OSHA) to adopt any national consensus standards or established federal standards as safety and health standards within 2 years of the date the OSH Act went into effect. In general, national consensus standards are safety and health standards that a nationally recognized standards- producing organization, such as the National Fire Protection Association, adopts after reaching substantial agreement among those who will be affected, including businesses, industries, and workers. Unlike OSHA’s standards, which are mandatory, employers may choose whether to voluntarily follow national consensus standards. The OSH Act specified that OSHA set standards under section 6(a) without following OSHA’s typical standard-setting procedures or the APA, including provisions for public comment. Indeed, according to an OSHA publication, hundreds of requirements in current OSHA standards make reference to or are based on about 200 consensus standards, but the OSH Act does not explicitly The require OSHA to ensure that these standards are kept up to date.vast majority of these standards have not changed since originally adopted, despite significant advances in technology, equipment, and machinery over the past several decades. When a federal agency decides to develop a rule, it is generally required by the National Technology Transfer and Advancement Act of 1995 to use technical standards developed or adopted by voluntary consensus standards bodies, where appropriate, except when doing so is inconsistent with applicable law or otherwise impractical. Under the OSH Act, if OSHA issues a rule that differs substantially from an existing national consensus standard, the agency must publish in the Federal Register an explanation of why its rule will better effectuate the purposes of the OSH Act than the national consensus standard.\nOSHA’s Directorate of Standards and Guidance, working with staff from other Labor offices, leads the agency’s standard-setting process. These staff explore the appropriateness and feasibility of developing standards to address workplace hazards that are not covered by existing standards. Once OSHA initiates such an effort, an interdisciplinary team typically composed of at least five staff focus on that issue.", "", "We analyzed the 58 significant health and safety standards that OSHA issued between 1981 and 2010 and found that the time frames for developing and issuing them ranged from 15 months to about 19 years (see table 1). At any given point during this period, OSHA staff worked to develop standards that eventually became final, represented in the table below. On average, OSHA took a total of about 93 months (7 years, 9 months) to develop and issue these standards. After the agency published the proposed standard, it took an average of about 39 months (3 years, 3 months) to finalize the standard. The majority of these standards—47 of the 58—were finalized between 1981 and 1999. In addition to these final standards, OSHA staff have also worked to develop standards that have not yet been finalized. For example, according to agency officials, OSHA staff have been working on developing a silica standard since 1997, a beryllium standard since 2000, and a standard on walking and working surfaces since 2003.\nWe found that the time it takes OSHA to develop and issue standards varied over the 30-year period and by the type of standard. First, as shown in table 1, it took OSHA about 70 percent longer, on average, to finalize standards in the 1990s than it took during the 1980s, and about 30 percent longer than during the 2000s. While we were not able to determine the reason for this through our analysis, it demonstrates that there is no clear trend of OSHA developing and issuing standards more or less quickly over time. Second, we found that it took OSHA longer to develop and issue safety standards than health standards—an average of about 8 years, 6 months for safety standards compared with about 6 years, 4 months for health standards—even though several experts to whom we spoke stated that health standards are more difficult for OSHA to issue than safety standards (see figs. 1 and 2 for a depiction of the timelines for safety and health standards issued between 1981 and 2010). Part of this difference may be explained by the fact that a larger portion of the health standards (6 of 23, compared with only 3 of 35 safety standards) were standards for which Congress or the courts articulated time frames for their issuance or development.\nExperts and agency officials frequently cited the increased number of procedural requirements established since 1980, shifting priorities, and the relatively high standard of judicial review required for OSHA standards as factors that lengthen OSHA’s time frames for developing and issuing standards. In addition to these primary factors, several of the experts and agency officials also noted two secondary factors affecting the standard-setting process: significant data challenges and an institutional apprehension about setting standards in the wake of adverse court decisions. We have characterized these as secondary factors because they are both related to the three primary factors.\nExperts and agency officials indicated that the increased number of procedural requirements affects standard-setting time frames because of the complex requirements for OSHA to demonstrate the need for standards. Experts and agency officials named a variety of statutes and executive orders that have imposed an increasing number of procedural requirements on OSHA since 1980.\nThe process for developing and issuing standards is complex and directed by multiple procedural requirements. According to Labor staff, agency consideration of a new standard can be the result of information OSHA receives from stakeholder petitions; occupational safety and health entities, such as the National Institute for Occupational Safety and Health (NIOSH) and the U.S. Chemical Safety and Hazard Investigation Board; OSHA’s enforcement efforts; or staff research (see fig. 3). To publicly signal OSHA’s intent to pursue development of a new safety or health standard, OSHA typically publishes a Request for Information or an Advance Notice of Proposed Rulemaking on the topic in the Federal Register. In this report, we refer to these events as “initiation.” OSHA also signals the beginning of standard-setting efforts by placing the issue on its regulatory agenda. However, OSHA can stop the standard-setting process either informally—by ceasing to actively work on the standard— or through a public announcement.\nThe process for developing OSHA standards varies, but the typical process involves multiple steps. After OSHA initiates a standard-setting effort, staff typically schedule meetings with stakeholders—employer groups, worker groups, and other interested parties—to solicit feedback and discuss issues related to the potential standard, including its potential cost to employers.\nAm. Textile Mfrs. Inst. v. Donovan, 452 U.S. 490, 513 n.31 (1981). standards on butadiene, methylene chloride, hexavalent chromium, silica, and diacetyl. When OSHA performs the economic feasibility analysis, it concludes that a standard is economically feasible if the affected industry or industries will maintain long-term profitability and competitiveness. To do this, staff and contractors, by analyzing information they collect when visiting worksites, must assess the extent to which employers in the affected industries can afford to implement the required controls. In addition to the site visits, OSHA staff sometimes conducts industry-wide surveys to determine baseline practices and collect other relevant information needed for the technological and economic feasibility analyses. According to OSHA officials, the process of developing a survey and having it approved by OMB takes a minimum of 1 year.\nIn addition to the feasibility analyses, OSHA staff generally must also conduct economic analyses. First, OSHA must assess the costs and benefits of significant standards as required by Executive Order 12866. Second, under the Small Business Regulatory Enforcement Fairness Act of 1996, if OSHA determines that a potential standard would have a significant economic impact on a substantial number of small entities, such as businesses, it is one of three federal agencies that must initiate a panel process that seeks and considers input from representatives of the affected small businesses.several months of work that many other federal regulatory agencies do not have to complete in order to issue regulations. Agency officials told us they want to consult with small businesses, but that the provisions laid out The small business panel process takes in the requirement make it too formal a process and are duplicative of the public hearings they hold after publishing the proposed rule. Finally, according to OMB guidelines, if a potential standard is projected to have an economic impact of more than $500 million, OSHA must initiate a peer review of the underlying scientific analyses.\nAfter completing the above steps, OSHA submits the preamble and text of the potential standard to OMB for review. Notice of Proposed Rulemaking in the Federal Register to alert the public that OSHA intends to issue a new final standard and to invite interested parties to comment on the proposed standard. Although OSHA is only required under the OSH Act hold public hearings upon request, as a general practice, officials told us that OSHA holds such hearings and has issued regulations governing its hearing procedures.administrative law judge presides over the hearings, and stakeholders have the opportunity to submit evidence to support their views on specific provisions of the proposed standards. The administrative law judge may also permit cross-examination by stakeholders or OSHA attorneys to bolster or challenge testimony presented during the hearing. Finally, stakeholders can submit data and other written documents subsequent to the hearing that OSHA must consider when crafting the final standard.\nExecutive Order 12866 requires that OMB review all significant regulatory actions prior to their publication in the Federal Register. The executive order generally limits this review period to a maximum of 90 days; however, this period may be extended on a one-time basis for up to 30 days upon written approval of the OMB Director, or indefinitely at the request of the head of the rulemaking agency. business panels, which agency officials estimated adds about 8 months to the standard-setting process.\nAccording to agency officials and experts, OSHA’s priorities may change as a result of changes within OSHA, Labor, Congress, or the presidential administration. During the 30-year period covered by our review, administrations have alternately favored and resisted the development of new federal regulations or revisions of existing regulations. For example, officials told us that Assistant Secretaries typically serve for about 3 years, and that new appointees tend to change the agency’s priorities. Some agency officials and experts told us that, regardless of the agency leadership’s motivation for changes in priority, these changes often cause delays in the process of setting standards. Further, officials told us that, ultimately, political appointees make decisions about what standards, if any, to pursue based on their goals and the agency’s resources.\nOther experts described instances in which changes in the agency’s standard-setting priorities affected the process. One example some cited was OSHA’s efforts to develop the ergonomics standard. OSHA worked for several years in the 1990s to develop a proposed rule on ergonomics to address workers’ exposure to risk factors leading to musculoskeletal disorders. After being in the preproposal stage through much of the 1990s, there was interest in the late 1990s for OSHA to publish a proposed rule, and OSHA issued a final standard just 1 year after publishing the proposed rule. Several experts and agency officials noted that, in order to develop the rule so quickly, the vast majority of OSHA’s standard-setting resources were focused on this rulemaking effort, taking attention away from several standards that previously had been a priority. Agency officials told us, for example, that work on this standard used nearly 50 full-time staff in OSHA’s standards office, half the staff economists, and 7 or 8 attorneys, compared with the more typical 5 total staff assigned to develop a new standard.\nThe standard of judicial review that applies to OSHA standards if they are challenged in court also affects OSHA’s time frames because it requires more robust research and analysis, according to some experts and agency officials. OSHA standards are subject to a different standard of judicial review than most other federal regulatory agencies’ regulations. Instead of the arbitrary and capricious test provided for under the APA, the OSH Act directs courts to review OSHA’s standards using a more stringent legal standard: it provides that a standard shall be upheld if supported by “substantial evidence in the record considered as a whole.” stringent standard requires a higher level of scrutiny by the courts and, therefore, requires OSHA staff to perform more extensive research and analysis to support a new standard. For example, OSHA officials explained that the substantial evidence standard requires that OSHA staff conduct a large volume of detailed research in order to understand all industrial processes that involve the hazard being regulated and to ensure that a given hazard control would be feasible for each process.\nOSHA officials and experts discussed two additional factors that cause OSHA officials to perform an extensive amount of work in developing standards, which are related to the factors described above.\n29 U.S.C. § 655(f). need for or feasibility of a standard contribute to substantial challenges to attaining information required for setting standards. They cited court decisions interpreting the OSH Act’s requirements as one of the reasons they must rigorously support the need for and feasibility of standards. For example, in 1980, the Supreme Court held that before it can issue a standard, OSHA must determine that the standard is necessary to remedy a “significant risk” of material health impairment among workers. As a result of this decision, OSHA generally conducts quantitative risk assessments for each health standard, which it must ensure are supported by substantial evidence.decision essentially established a standard of medical and scientific certainty and has resulted in OSHA staff having to spend an inordinate amount of effort gathering data to support the need for a standard.\nOSHA’s standard-setting process has been significantly influenced by court decisions interpreting statutory requirements. A key example is the 1980 “benzene decision,” in which the Supreme Court invalidated an OSHA standard that set a new exposure limit for benzene because OSHA failed to make a determination that benzene posed a “significant risk” of material health impairment under workplace conditions permitted by the current standard. Another example is a 1992 decision in which the U.S. Court of Appeals for the Eleventh Circuit struck down an OSHA health standard that would have set or updated the permissible exposure limit In that case, the court found that (PEL) for over 400 air contaminants.OSHA had not adequately demonstrated that current exposure to each hazard posed significant risk, or that each standard reduced that risk to the extent feasible. Labor officials told us that the court’s decision discouraged them from trying to expedite the standard-setting process by combining many standards into one rulemaking effort. Several experts with whom we spoke observed that such adverse court decisions have contributed to an institutional culture of trying to make OSHA standards impervious to future adverse decisions. These experts cited the threat of litigation as a disincentive to issuing standards. In contrast, agency officials commented that while OSHA tries to avoid lawsuits that might ultimately invalidate a standard, in general OSHA does not try to make a standard “bulletproof.” Agency officials noted the agency is frequently sued.", "", "OSHA has not issued any emergency temporary standards in nearly 30 years, citing, among other reasons, legal and logistical challenges. Section 6(c) of the OSH Act authorizes OSHA to issue these standards without following the typical standard-setting process if two legal requirements are met. The Secretary of Labor must determine that: (1) workers are exposed to grave danger from exposure to substances or agents determined to be toxic or physically harmful, or from new hazards, and (2) an emergency temporary standard is necessary to protect workers from that danger.effective immediately upon publication in the Federal Register and must An emergency temporary standard becomes be replaced within 6 months by a permanent standard issued using the process specified in section 6(b). OSHA officials told us that meeting the statutory requirements and issuing a permanent standard within the 6- month time frame has proven difficult. Furthermore, OSHA’s emergency temporary standards have received close scrutiny by federal courts, whose decisions have characterized OSHA’s emergency temporary standard authority as an extraordinary power to be used only in limited situations.\nOSHA officials noted that the emergency temporary standard authority remains available, but the legal requirements to issue such a standard are difficult to meet. OSHA issued nine emergency temporary standards between 1971, when the agency was established, and 1983, and none since that year. Five of those nine emergency temporary standards were either stayed or invalidated, at least in part, by federal courts.\nFor OSHA to satisfy the first of the OSH Act’s two requirements for issuing an emergency temporary standard, the agency must determine that workers will be exposed to grave danger during the time an emergency temporary standard is in effect. Establishing sufficient evidence of grave danger to withstand a court challenge can be difficult, even for substances whose hazards are well-known, such as asbestos. In 1983, OSHA issued an emergency temporary standard lowering the PEL for asbestos, which was subsequently challenged in federal court by representatives of the asbestos industry. The court held that OSHA failed to show sufficient evidence that workers faced grave danger from exposure under current limits for the 6 months the emergency temporary standard would be in effect. OSHA had estimated, based on mathematical projections from long-term epidemiological studies, that during the 6 months the emergency temporary standard would be in effect, it could prevent at least 80 eventual asbestos-related deaths. However, the court found these projections too uncertain to establish a grave risk over a 6-month period and noted that the type of analysis OSHA used merited the public scrutiny of the notice and comment standard-setting process.\nOSHA has also found it challenging to meet the second OSH Act requirement: establishing that an emergency temporary standard is necessary to protect workers from the grave danger. In the asbestos case, the court found that OSHA was on its way to issuing a permanent standard within a year, already had the authority to conduct the education activities the emergency temporary standard contained, and could achieve many of the same benefits by increasing enforcement of the existing standard. The court, therefore, invalidated the emergency temporary asbestos standard because OSHA failed to meet both of the OSH Act’s requirements. OSHA officials cited diacetyl, a food flavoring ingredient, as a recent example of a hazardous substance for which the OSH Act’s second requirement might have been difficult to meet if the agency had chosen to pursue an emergency temporary standard. In 2006, the agency was urged to issue an emergency temporary standard for diacetyl after investigations showed its association with severe, irreversible lung disease among workers in microwave popcorn factories. OSHA officials told us they could likely have established that diacetyl exposure under then-current workplace conditions presented grave danger to workers in the near term. These officials noted, however, that because manufacturers responded quickly after diacetyl’s danger became clear, OSHA had less evidence that an emergency temporary standard was necessary. For example, they noted that manufacturers responded with a combination of measures including improved ventilation and housekeeping, reducing the concentration of diacetyl used, and substituting other ingredients.\nIn addition to the legal requirements, OSHA has found that issuing an emergency temporary standard presents a logistical challenge. OSHA’s emergency temporary standards are effective on the date of publication in the Federal Register, but they must be replaced within 6 months by a permanent standard.evidence required for the typical standard-setting process—which, as noted above, involves engaging with stakeholders and can take many years—in this abbreviated time frame. OSHA officials noted that the Congress intended this emergency temporary standard-setting authority to be used under very limited circumstances.\nThis means OSHA must compile the same OSHA has not issued an emergency temporary standard since 1983, despite many requests that it do so. Labor unions and public health and other advocacy organizations continue to petition OSHA to issue emergency temporary standards to address a variety of workplace hazards. According to OSHA records, it has received 23 petitions to issue emergency temporary standards on hazardous chemicals, such as formaldehyde, and also for safety hazards such as shock or injury from unsecured equipment. One petition, submitted in September 2011, urges OSHA to issue an emergency temporary standard to protect workers from potentially fatal exposure to heat. Although OSHA has generally denied these petitions, officials told us the agency considers whether to issue an emergency temporary standard and takes the information into account when setting its priorities for permanent standards.", "OSHA uses enforcement and education as alternatives to issuing emergency temporary standards to respond relatively quickly to urgent workplace hazards. OSHA officials consider their enforcement and education activities complementary: a high-profile citation or enforcement initiative on an urgent hazard generates attention that can improve worker safety industry-wide.\nOSHA may cite employers for failing to adequately protect workers from a specific workplace hazard even if it has not set a standard on that hazard. Under section 5(a)(1) of the OSH Act, known as the general duty clause, OSHA has the authority to issue citations to employers even in the absence of a specific standard under certain circumstances. The general duty clause requires employers to provide a workplace free from recognized hazards that are causing, or are likely to cause, death or serious physical harm to their employees. OSHA relied on the general duty clause when it cited Walmart for inadequate crowd management in the 2008 trampling death of a worker. OSHA’s investigation found that the company failed to protect its employees from the known risks of being crushed or suffocated by a large unmanaged crowd—in this case, about 2,000 shoppers surging into the store for a holiday sale. To cite an employer under the general duty clause, OSHA officials told us they must, among other things, have evidence that the hazard is “recognized” in the industry and that the employer failed to take reasonable protective measures. According to OSHA officials, using the general duty clause requires significant agency resources so is not always a viable option, for example when OSHA cannot prove an employer knows the hazard exists or when a hazard is just emerging.\nSome of OSHA’s standards require general protective measures that are sufficiently broad to cover a variety of hazardous substances or practices. Such standards may be the basis for enforcement actions regarding urgent hazards that are not the subject of a specific standard. OSHA officials explained that not every conceivable workplace hazard can be the subject of its own standard. The agency has issued specific exposure limits for some hazardous substances, such as formaldehyde, but indicated it would be impossible to test and establish specific exposure limits for all chemicals present in the modern workplace. OSHA’s general standards include, among others, requirements for employers to follow protective housekeeping practices, provide respiratory protection under certain conditions, and inform workers about hazardous chemicals they are exposed to on the job.\nOSHA uses education to promote voluntary protective measures against urgent hazards along with its enforcement and standard-setting activities. Standards and enforcement are critical parts of OSHA’s education activities: standards inform employers about their responsibilities, and enforcement initiatives raise awareness of urgent hazards. OSHA officials believe high-profile citations serve to focus attention throughout the relevant industry and can create a ripple effect of improved worker protection. In addition to setting standards, OSHA offers on-site consultations and publishes health and safety information to inform employers and workers about urgent hazards. If its inspectors discover a particular hazard, OSHA may send letters to all employers where the hazard is likely to be present to inform them about the hazard and their responsibility to protect their employees.\nOSHA officials also use education to improve safety in the near term while the agency compiles the information necessary to develop a standard. For example, OSHA decided not to issue an emergency temporary standard on diacetyl in part because, as it gathered evidence to support the standard, employers implemented changes to improve worker safety. As evidence mounts that other ingredients in food flavorings may be hazardous, OSHA is gathering information but has not yet published a proposed standard on diacetyl. OSHA has, in the meantime, published educational documents such as alerts and information bulletins for employers on diacetyl and flavorings in general, describing protective measures, compliance assistance programs, and employer responsibilities under the OSH Act and existing OSHA The agency has also developed material for workers, giving standards.them the information they need to determine when they may be exposed to diacetyl or similar substances and the types of protection they need.\nOSHA’s education efforts also address other hazards for which it has received petitions to issue emergency temporary standards. For example, OSHA officials told us they are addressing the risks of exposure to heat primarily through education, along with targeted enforcement in cases where workers are known to be most at risk. OSHA’s education efforts on this hazard include an initiative intended to reach and educate agricultural workers through training materials designed to be culturally appropriate and accessible, including a train-the-trainer approach for wide distribution. These training materials were supplemented by public service radio announcements intended to reach workers at risk of heat-related illness.", "Although the rulemaking experiences of two other federal agencies shed some light on OSHA’s challenges, their statutory framework and resources differ too markedly for them to be models for OSHA’s standard–setting process. Other regulatory agencies may also face challenges similar to OSHA’s. For example, as GAO has previously reported, EPA has faced difficulties regulating under the Toxic Substances Control Act of 1976. Some of these differences in statutory frameworks and resources may facilitate rulemaking efforts at other agencies. For example, EPA is directed to regulate specified air pollutants and review its existing regulations within specific time frames under section 112 of the Clean Air Act, and MSHA benefits from a narrower scope of authority than OSHA and has more specialized expertise as a result of its more limited jurisdiction.\nSimilar to OSHA, EPA’s Office of Air and Radiation regulates a wide range of hazards across diverse industries to protect the public health. This office implements the Clean Air Act, including section 112, which requires EPA to regulate certain sources of air pollution and specifies the substances to be controlled. For example, under section 112, EPA must establish standards for sources of 187 specific hazardous air pollutants.\nEPA officials told us that this provision gave the agency clear requirements and statutory deadlines for regulating hazardous air pollutants, which it previously lacked. In contrast, some experts and agency officials we spoke with identified OSHA’s relatively broad discretion to set and change its regulatory agenda as a contributing factor to the length of time it takes OSHA to issue standards. Even with this relatively specific statutory mandate, EPA has faced challenges implementing its section 112 mandate, such as insufficient funding and court-imposed deadlines that make it difficult for the agency itself to implement its own agenda.\nEPA also has a statutory mandate to periodically review the standards issued under section 112. For example, section 112 requires that EPA set technology-based standards for stationary sources of hazardous air pollutants, and further requires that EPA review these standards at least every 8 years and revise them, as necessary, taking into account developments in practices, processes, and control technologies. contrast, the OSH Act does not specify when OSHA is to revise its standards. OSHA’s attempt to update its standards efficiently—by lowering the PELs for 212 air contaminants in one rulemaking—was The court held that OSHA failed to show struck down by a federal court.adequate evidence that each individual substance presented a significant risk at the existing exposure limit, or that the lower limit would reduce the risk to workers to the extent feasible. OSHA and Labor officials noted that, because the agency lacks an efficient update process, many of its standards lag behind advances in technology.\n42 U.S.C. § 7412(d)(6). risks to human health or the environment. In contrast, OSHA must determine that significant risks to workers are present under current conditions before it can establish or change existing standards. OSHA has had to perform a specific risk assessment for every new toxic agent for which it intends to set a PEL.\nMSHA’s mission is more focused than OSHA’s because its authority is limited to one industry and it can target its regulatory resources more easily. In addition, the Federal Mine Safety and Health Act of 1977 requires that MSHA inspect each mine in the United States at least two times a year, which facilitates its regulatory work. Officials at MSHA noted that both this frequent on-site presence and relatively homogenous industry helps agency staff maintain a current knowledge base.officials contrasted this with the vast array of workplaces and types of industries OSHA oversees. Officials with OSHA and Labor noted that OSHA’s scope of authority is so large that it cannot inspect more than a fraction of workplaces in any given year. As a result, OSHA and Labor officials told us they can call upon inspectors when researching a standard but must often supplement the agency’s inside knowledge by conducting site visits using OSHA staff or contractors.\nMSHA’s legal framework may also present fewer challenges to standard setting than OSHA’s. First, MSHA standards are subject to the arbitrary and capricious standard of review, unlike OSHA standards, which are reviewed under the generally more stringent substantial evidence standard. Second, according to MSHA officials, the agency has met the statutory requirements for the five emergency temporary standards it has issued since 1987, and no legal challenges to these standards were filed. Similar to OSHA’s authority to issue emergency temporary standards, MSHA has statutory authority to issue “an emergency temporary mandatory health or safety standard” without following the APA’s notice and comment rulemaking procedures if the Secretary of Labor determines that (1) miners are exposed to grave danger from exposure to substances or agents determined to be toxic or physically harmful, or to other hazards, and (2) such a standard is necessary to protect miners from such danger. MSHA’s most recent emergency temporary standard required underground bituminous coal mine operators to increase the incombustible content of rock, coal, and other dust, in order to address the risk of explosion posed by such dust.\nBoth OSHA and MSHA supplement their employees’ knowledge by calling upon the expertise at NIOSH, with MSHA benefiting from a specialized research group within NIOSH focused on the mining industry. According to officials with both NIOSH and OSHA, coordination between the two has varied over time and has improved significantly in recent years. For example, in 2011, NIOSH and OSHA adopted a Memorandum of Understanding that provides OSHA with access to specified NIOSH data on the health hazards of diacetyl and allows OSHA to coordinate with NIOSH in preparing a risk assessment to support the development of a new diacetyl standard.", "", "To fully leverage expertise at other federal agencies, experts and agency officials suggest improving interagency coordination. Specifically, they indicated that OSHA has not fully leveraged available expertise at other federal agencies, especially NIOSH, when developing and issuing its standards. As mentioned previously, NIOSH conducts research and makes recommendations on occupational safety and health, and it was created at the same time as OSHA by the OSH Act. OSHA has a number of staff with subject matter expertise relevant to standard setting, including industrial hygienists and scientists, but the agency does not always take advantage of the expertise and data at NIOSH on occupational hazards. One expert noted that NIOSH is uniquely positioned as a primary research institution to help OSHA develop standards using EPA-produced data and analysis on chemical hazards. OSHA officials said their agency’s staff consider NIOSH’s input on an ad hoc basis, but do not routinely work closely with NIOSH staff to analyze risks of occupational hazards. An OSHA official cited one case in which OSHA staff worked closely with NIOSH staff to prepare the technological feasibility analysis for a proposed silica standard, drawing on an extensive body of work on dust control technology by NIOSH engineers. In addition, officials described other cases of collaboration between the two agencies during OSHA’s process of visiting worksites. However, NIOSH officials told us that this type of coordination has been more common recently than it was in the past, when the two agencies performed separate risk assessments for hazards, such as hexavalent chromium.\nOSHA officials stated that collaborating with NIOSH on risk assessments could reduce the time it takes to develop a standard by several months. OSHA and NIOSH have coordinated on a number of OSHA standards projects; currently, the two agencies have a Memorandum of Understanding stipulating that NIOSH will perform the risk assessment for the OSHA standard on diacetyl. However, some experts and officials at both agencies noted that collaborating in a more systematic way could facilitate OSHA’s standard-setting process.", "To ensure that OSHA’s standards keep pace with changes in technology and best practices, experts suggested the agency be allowed to more easily adopt industry voluntary consensus standards. According to OSHA officials, many OSHA standards incorporate or reference outdated consensus standards, which results in challenges for employers in complying with the standards and OSHA in enforcing them. Officials also said that the majority of OSHA’s health standards were adopted from existing federal standards—originally adopted under the Walsh-Healy Act—during the agency’s first 2 years using section 6(a) of the OSH Act, which directed OSHA to set standards without following the typical section 6(b) standard-setting procedures or the APA. Although current at the time, many industry consensus standards have since been updated to reflect advancements in technology and science. However, according to OSHA, most of OSHA’s standards have not been similarly updated, so employers following current industry consensus standards may be out of compliance with OSHA’s standards. As a result, some employers may be discouraged from updating processes or technology at their worksites in order to avoid OSHA citations. One expert said, and OSHA reported, that this could leave workers at these worksites exposed to hazards that are insufficiently addressed by OSHA standards that are based on out-of-date technology or processes. OSHA has reported that these types of standards are challenging because their inspectors must spend time addressing them during worksite inspections. Additionally, officials told us that issuing citations to employers that are following the most up-to-date industry consensus standards reflects poorly on the agency. OSHA has attempted to update some of its standards to incorporate advances in technology and science, but the lengthy standard-setting process presents significant challenges for updating them. In accordance with the requirements in the OSH Act and the National Technology Transfer and Advancement Act, when updating its standards, OSHA considers using voluntary consensus standards. However, OSHA officials told us that, since standards developing organizations typically do not have to meet scientific requirements in developing voluntary standards, OSHA’s ability to base its standards on voluntary consensus standards is limited because staff must still perform a full quantitative risk assessment for new standards. Since 2004, OSHA has been engaged in an effort to update several of its standards using industry consensus standards, which officials told us started by first identifying standards that would be well- suited to more streamlined rulemaking approaches, such as issuing a direct final rule. For example, they said they chose to update the standard on personal protective equipment first because they expected employers would be amenable to the update, as changes would be consistent with the current industry consensus standard.\nTo address the problem of standards based on outdated consensus standards, experts suggested that Congress pass new legislation that would allow OSHA, through a single rulemaking effort, to revise standards for a group of health hazards based on current industry voluntary consensus standards or the Threshold Limit Values developed by the American Conference of Governmental Industrial Hygienists. In 1989, OSHA attempted to revise the PELs for over 200 air contaminants by combining them into a single rulemaking effort, but the rule was invalidated by the court for failing to follow the OSH Act requirements for each hazard. To save OSHA time, experts specified that any new law to this effect should contain a provision similar to the one in the OSH Act that excused the agency during its first 2 years from following the standard-setting provisions of section 6(b) of the OSH Act or the APA. One potential disadvantage of this proposal is that OSHA may need to do a substantial amount of independent scientific research to ensure that consensus standards are based on sufficient scientific evidence. While such a law, if enacted, could exempt OSHA from conducting this research, an abbreviated regulatory process could also result in standards that fail to reflect relevant stakeholder concerns, such as an imposition of unnecessarily burdensome requirements on employers. For example, one expert stated that, while following the APA process takes time for regulatory agencies, it leads to higher quality standards and ensures that the basis for agency action is clear and defensible. Also, while this change could help ensure that existing OSHA standards are kept up to date, it could divert resources away from efforts to set new standards.", "To minimize the time it takes OSHA to develop and issue safety or health standards, experts and agency officials suggested that statutory deadlines for issuing occupational safety and health standards be imposed by Congress and enforced by the courts. OSHA officials indicated that it can be difficult to prioritize standards due to the agency’s numerous and sometimes competing goals. In the past, having a statutory deadline, combined with relief from procedural requirements, resulted in OSHA issuing standards more quickly. For example, the Needlestick Safety and Prevention Act directed OSHA to make specified revisions to its bloodborne pathogens standard within 6 months and exempted the agency from the typical procedural requirements under section 6(b) of the OSH Act or the APA. OSHA had already spent some time developing the standard before the law was passed, so it was able to complete the revised standard within the required time frame. Including the time spent on developing the standard before passage of the Act, OSHA completed the revised standard in less than 3 years. Another alternative to the full rulemaking process is for an agency to issue an interim final rule, which is immediately effective as a final rule but still allows for subsequent public comment. However, similar to one of the disadvantages described above, some legal scholars have noted that curtailing the current rulemaking process required by the APA may result in fewer opportunities for public input and possibly decrease the quality of the standard. Also, officials from MSHA told us that statutory deadlines make its priorities clear, but this is sometimes to the detriment of other issues that must be set aside in the meantime. Although a more streamlined approach could reduce opportunities for stakeholder comments and minimize agency flexibility, OSHA has used alternative rulemaking procedures in the past to issue standards for which officials perceive broad industry support.", "Experts and agency officials suggested OSHA’s substantial evidence standard of judicial review be replaced with the arbitrary and capricious standard, which would be more consistent with other federal regulatory agencies. As the court stated in the case involving PELs for 428 air contaminants, under the substantial evidence test, “ must take a ‘harder look’ at OSHA’s action than we would if we were reviewing the action under the more deferential arbitrary and capricious standard applicable to agencies governed by the Administrative Procedure Act.” As a result, OSHA officials said they spend a significant amount of time collecting evidence to ensure that its standards can withstand challenge under the substantial evidence standard of judicial review and to satisfy procedural requirements for setting standards. One expert said he understood that OSHA’s more stringent standard of judicial review was paired with informal rulemaking procedures as a congressional compromise.\nAccording to the author of a 1999 law review article, one justification for judicial review of agency rulemaking is when there is a genuine concern about the power many agencies have in the regulatory process. Congress has similar concerns about OSHA, it may be preferable to keep the current standard of review. However, the Administrative Conference of the United States has recommended that Congress amend laws that mandate use of the substantial evidence standard because it can be unnecessarily burdensome for the agency or confusing because it has been inconsistently applied by the courts. As a result, changing the designation for the standard of judicial review to “arbitrary and capricious” could reduce the agency’s evidentiary burden.\nMark Seidenfeld, “Bending the Rules: Flexible Regulation and Constraints on Agency Discretion,” Administrative Law Review (spring, 1999).", "Experts suggested that OSHA minimize on-site visits by using surveys or basing its analyses on industry best practices, which could reduce the time, expense, and need for industry cooperation in conducting economic and technological feasibility studies. Primarily because OSHA has broad authority to regulate occupational hazards in nearly all private industries, the technological and economic feasibility analyses required by the OSH Act entail an extensive amount of time and resources. OSHA must conduct its feasibility analyses on an industry-by-industry basis, which requires numerous site visits—an activity that is time-consuming and largely dependent on industry cooperation. According to agency officials, in many cases, OSHA hires contractors to gather information from worksites that will support standards’ feasibility analyses.\nTwo experts suggested OSHA could streamline its economic and technological feasibility analyses by surveying worksites rather than visiting them. However, one limitation to this method is that, according to OSHA officials, in-person site visits are imperative for gathering sufficient data in support of most health standards. Specifically, officials told us that to fully understand the industrial processes and application of a chemical to be regulated, OSHA staff or contractors must be able to observe the work being performed and ask questions of workers at the site. In addition, the only way for OSHA to know about ambient chemical levels is to collect on-site air samples all day long. In light of this limitation, this method may be more appropriate for safety hazards. The other method experts suggested is allowing OSHA to base economic and technological feasibility assessments on industry best practices, which one expert noted would require a statutory change. For example, OSHA could base these analyses on the fact that a minimum percentage of workplaces in a particular industry use technology or methods that decrease exposure to hazards. However, the broad scope of OSHA’s authority would still result in this being a substantial amount of work at the outset, as OSHA would still be required to determine feasibility on an industry-by-industry basis.", "Experts suggested that OSHA develop a priority-setting process for addressing hazards. GAO has reported that, by developing strategies such as aligning agencywide objectives, federal agencies can demonstrate a commitment to a course of action. Similarly, having a priority-setting process could lead to improved program results. Currently, however, OSHA has no process or guidance to use in setting priorities, as officials told us they do not have a document that explains how priorities are or should be set. OSHA officials also said that ideas for which hazards to regulate come from a number of sources, including petitions from stakeholders, information from NIOSH, OSHA’s enforcement efforts, recommendations from the Chemical Safety Board, and staff research. While staff in OSHA’s standards office use this information to make recommendations to Labor’s Assistant Secretary for OSHA and the Deputy Secretary on which hazards to regulate, not all of their recommendations make it to the agency’s regulatory agenda, which is developed according to agency goals and resources. In addition, according to OSHA officials, decisions about which hazards to regulate guide OSHA standards activity for 6 months, the duration of the biannual regulatory agenda. As a result, the ability of the managers of OSHA’s standards office to plan with certainty work beyond this 6-month time frame may be limited.\nOne expert suggested that OSHA develop a priority-setting process that more directly involves stakeholders with expertise in occupational safety and health in recommending new standards. OSHA attempted such a process in 1994 when it initiated a formal priority planning process. However, the expert said that, after an established committee of experts identified a list of priority hazards, the political climate changed with a new Congress that was generally more critical of the role of executive agencies in developing new standards, and OSHA shifted its focus away from this initiative. Nevertheless, this process allowed OSHA to articulate its highest priorities for addressing occupational hazards. Reestablishing a similar priority-setting process could have several benefits for OSHA, such as improving a sense of transparency among stakeholders and facilitating OSHA management’s ability to plan its staffing and budgetary needs. However, adopting such a process may not immediately address OSHA’s challenges in expeditiously setting standards because a process like this could take time and would require commitment from agency management.", "Setting occupational safety and health standards is one of OSHA’s primary methods for ensuring that workers are protected from occupational hazards, but OSHA faces a number of challenges in setting these standards promptly and efficiently. The additional procedural requirements established since 1980 by Congress and various executive orders have increased opportunities for stakeholder input in the regulatory process and required agencies to evaluate and explain the need for regulations, but they have also resulted in a more protracted rulemaking process for OSHA and other regulatory agencies. The process for developing new standards for previously unregulated occupational hazards and new hazards that emerge is a lengthy one and can result in periods when there are insufficient protections for workers. Nevertheless, any streamlining of the current process must guarantee sufficient stakeholder input to ensure that the quality of standards does not suffer. In addition, ideas for changes to the regulatory process must weigh the benefits of addressing hazards more quickly against a potential increase in the regulatory burden to be imposed on the regulated community. Most methods for streamlining that have been suggested by experts and agency officials are largely outside of OSHA’s authority because many procedural requirements are established by federal statute or executive order. However, OSHA can coordinate more routinely with NIOSH on risk assessments and other analyses required to support the need for standards, saving OSHA time and expense. NIOSH’s and OSHA’s current efforts to coordinate on the development of a new standard, which officials and staff from both agencies support, provides a useful template for increased and regular coordination on similar efforts.", "To enhance collaboration and streamline the development of OSHA’s occupational safety and health standards, we recommend that the Secretary of Labor and the Secretary of the Department of Health and Human Services instruct the Assistant Secretary of Labor for Occupational Safety and Health and the Director of the National Institute for Occupational Safety and Health to develop a more formal means of collaboration between the two agencies. Specifically, the two agencies should establish a more consistent and sustained relationship through a formal agreement, such as a Memorandum of Understanding, allowing OSHA to better leverage NIOSH’s capacity as a primary research institution when building the scientific record required for standard setting.", "We provided a draft of this report to the six agencies that assisted us in gathering information: Labor (OSHA and MSHA), Department of Health and Human Services (NIOSH), EPA, U.S. Chemical Safety and Hazard Investigation Board, OMB, and the Department of Commerce (National Institute of Standards and Technology). We received written comments from Labor and the Department of Health and Human Services; both sets of comments are reproduced in appendices III and IV, respectively. Both Labor’s Assistant Secretary for OSHA and the Department of Health and Human Services’ Assistant Secretary for Legislation agreed with GAO’s recommendation. They also both described the ways in which OSHA and NIOSH currently collaborate, each noting the expected benefits of maintaining collaboration through a formalized agreement. Labor’s OSHA and MSHA, EPA, and the Department of Commerce also provided technical comments, which we incorporated in the report as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees and other interested parties. In addition, this report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-7215 or moranr@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix V.", "To determine how long it takes the Occupational Safety and Health Administration (OSHA) to develop and issue safety and health standards, we reviewed occupational safety and health standards and substantive updates to those standards. We selected standards that met two criteria: (1) they were published as a final rule between calendar years 1981 and 2010 and (2) OSHA identified each standard as significant. To identify our universe of standards for this analysis, we first conducted an electronic legal database search for final rules published by OSHA in the Federal Register between 1981 and 2010. We chose this time frame because it spans multiple executive administrations and changes in congressional leadership. Also, several statutes, executive orders, and key court decisions affecting OSHA’s standard-setting process became effective in or after 1980. We excluded from our review any rules that were not occupational safety or health standards, such as recordkeeping requirements or general administrative regulations, and any rules that were minor or technical amendments to existing standards. For this list, we included only standards for which OSHA’s semiannual regulatory agenda or other evidence indicated that OSHA considered the standard to be important or a priority, including but not limited to standards that met the definition of “significant” under Executive Order 12866. For each standard, we identified the dates of three regulatory benchmarks— initiation, proposed rule, and final rulebetween each benchmark to analyze trends. We confirmed with OSHA staff the accuracy of our selected benchmark dates and that the list of standards met our criteria. —and calculated the time elapsed There are some limitations to this approach because the development of a standard may not have a clear beginning or end point. For example, OSHA may have begun work on a standard prior to its appearance on the regulatory agenda or the publication of a Request for Information or Advance Notice of Proposed Rulemaking in the Federal Register.\nConversely, it is possible that although a standard appeared on the regulatory agenda, work did not begin on the standard until sometime later. According to OSHA officials, once development of a particular standard has begun, work may stop and start again due to various factors such as changing priorities. Furthermore, the date a final rule was published does not necessarily coincide with the date the rule took effect, which may be some time later. While our analysis will not reflect these distinctions, we selected these benchmarks to ensure consistency and maximize comparability across different standards.\nTo identify the key factors affecting OSHA’s time frames for issuing standards and ideas for improving OSHA’s standard-setting process, we conducted semistructured interviews with current and former Labor staff, as well as occupational safety and health experts, and analyzed their responses. We identified these experts, who represented both workers and employers, through our own research and through recommendations from other experts. The experts had direct experience with setting standards at OSHA, testified at past congressional hearings on occupational safety and health issues, or published written material on federal rulemaking. Finally, we reviewed relevant federal laws, regulations, executive orders, and other guidance and interviewed officials from the Office of Management and Budget to determine the required steps in the standard-setting process and how those requirements affect the time it takes OSHA to develop and issue standards.\nTo identify alternatives to the typical standard-setting process available for OSHA to address urgent hazards, we reviewed relevant federal laws and interviewed current OSHA staff and attorneys from the Department of Labor’s Office of the Solicitor. We also interviewed experts identified as described above. We assessed the extent to which OSHA has used its authority to issue emergency temporary standards by analyzing a history of petitions for these standards provided to us by Labor staff.\nTo determine whether rulemaking at other regulatory agencies offers insight into OSHA’s challenges with setting standards, we explored the regulatory process at three other federal regulatory agencies and offices. For these comparisons, we selected agencies with authority to issue regulations relating to public health or safety. We also included some agencies whose statutory frameworks were similar to OSHA’s and some whose statutory frameworks were different than OSHA’s. We based our selection of comparison agencies and offices on our interviews with experts, as well as a review of the literature, previous GAO work, and relevant federal laws. Using these criteria, we initially selected Labor’s Mine Safety and Health Administration (MSHA) and two offices of the Environmental Protection Agency (EPA): the Office of Pollution Prevention and Toxics and the Office of Air and Radiation. For the EPA offices, we specifically focused on their rulemaking experiences under section 6 of the Toxic Substances Control Act and section 112 of the Clean Air Act. However, after further review, we concluded that the Office of Pollution Prevention and Toxics did not offer insights for OSHA because of the office’s limited recent standard-setting experience and, as a result, we excluded the Toxic Substances Control Act from our review. Through a review of relevant federal laws and semistructured interviews with staff in EPA’s Office of Air and Radiation and at MSHA, we learned about challenges each agency faces when developing and issuing regulations and the factors that affect their time frames. Although states may also issue standards in the absence of an applicable federal standard or under an OSHA-approved plan, we did not look to these states to gain insight into OSHA’s challenges with setting standards. Based on our interviews with experts, and because rulemaking at the state level is governed by state law and is not subject to federal rulemaking procedural requirements, we determined that any comparisons between OSHA and states with respect to time frames for issuing standards would be inapt.\nWe compiled the ideas for improving OSHA’s standard-setting process by analyzing statements from interviews with current and former agency officials and experts representing both workers and employers. The six ideas discussed in the report represent those most frequently mentioned that are not otherwise addressed by other parts of our report.\nWe conducted this performance audit from February 2011 to April 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusion based on our audit objectives.", "Table 2 presents a summary of federal rulemaking requirements that apply to OSHA standard setting. This table is not intended to be a complete list of all procedural requirements that govern rulemaking at OSHA or at other federal regulatory agencies. In addition, this table presents only a selected summary of the requirements; for the complete requirements contained in each source, refer directly to the cited source.", "", "", "", "", "In addition to the individual named above, Gretta L. Goodwin, Assistant Director; Sara Pelton, Analyst-in-Charge; and Anna Bonelli, Analyst-in- Charge; managed all aspects of this assignment; Suzanne Rubins and Sarah Newman made significant contributions to all phases of the work; Sarah Cornetto made substantial contributions by providing legal advice and assistance; Jean McSween provided assistance in designing the study; Ashley McCall provided assistance with occupational safety and health literature; Kate van Gelder and Susan Aschoff assisted in message and report development; James Bennett created the report’s graphics; and Ashanta Williams, Lise Levie, and Daniel S. Meyer reviewed the report to check the facts presented." ], "depth": [ 1, 2, 2, 1, 2, 1, 2, 2, 1, 1, 2, 2, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "h0_title h2_title h4_title", "h0_full h4_full h2_full", "h1_title", "h1_full", "h1_full", "h3_full h2_full", "h2_title h3_title", "", "h3_full", "", "", "", "h2_full", "h4_full", "", "", "h3_full h4_full h1_full", "", "", "", "", "", "" ] }

{ "question": [ "What is the average time it took for the OSHA to develop and issue safety and health standards?", "What factors contribute to these large timeframes?", "How can new standards affect priorities?", "How does OSHA address urgent hazards?", "Why hasn't OSHA issued an emergency temporary standard since 1983?", "How does OSHA focus its efforts instead?", "How does OSHA focus on enforcement and education for workers?", "What methods does OSHA use to educate employers and workers?", "Why was insight into OSHA's challenges limited?", "How do regulations from other agencies affect OSHA?", "How is the standard-setting process for the Mine Safety and Health Commission formulated?", "What is the relationship between OSHA and NIOSH?", "How did experts and agency officials react to the challenges facing OSHA?", "What types of changes were suggested?", "How could using industry standards as support benefit OSHA?", "Why do occupational safety and health standards exist?", "What questions exist regarding OSHA's standards?", "Why was this report created?", "How did GAO gather information for this report?" ], "summary": [ "Between 1981 and 2010, the time it took the Department of Labor’s Occupational Safety and Health Administration (OSHA) to develop and issue safety and health standards ranged widely, from 15 months to 19 years, and averaged more than 7 years.", "Experts and agency officials cited increased procedural requirements, shifting priorities, and a rigorous standard of judicial review as contributing to lengthy time frames for developing and issuing standards.", "For example, they said that a shift in OSHA’s priorities toward one standard took attention away from several other standards that previously had been a priority.", "In addition to using the typical standard-setting process, OSHA can address urgent hazards by issuing emergency temporary standards, directing additional attention to enforcing relevant existing standards, and educating employers and workers about hazards.", "However, OSHA has not issued an emergency temporary standard since 1983 because it has found it difficult to compile the evidence necessary to meet the statutory requirements.", "Instead, OSHA focuses on enforcement and education when workers face urgent hazards.", "For example, OSHA can enforce the general requirement of the Occupational Safety and Health Act of 1970 (OSH Act) that employers provide a workplace free from recognized hazards, as it did in 2009 when it cited a major retail employer after one of its workers was crushed to death by uncontrolled holiday crowds.", "To educate employers and workers, OSHA coordinates and funds on-site consultations and publishes information on matters as diverse as safe lifting techniques for nursing home workers and exposure to diacetyl, a flavoring ingredient used in microwave popcorn linked to lung disease among factory workers.", "Experiences of other federal agencies that regulate public or worker health hazards offer limited insight into the challenges OSHA faces in setting standards.", "For example, officials with the Environmental Protection Agency noted that certain Clean Air Act requirements to set and regularly review standards for specified air pollutants have facilitated that agency’s standard-setting efforts. In contrast, the OSH Act does not require OSHA to periodically review and update its standards.", "Officials with the Mine Safety and Health Administration noted that their standard-setting process benefits from both the in-house knowledge of its inspectors, who inspect every mine at least twice yearly, and a dedicated mine safety research group within the National Institute for Occupational Safety and Health (NIOSH), a federal research agency that makes recommendations on occupational safety and health.", "OSHA must rely on time-consuming site visits for hazards information and has not consistently coordinated with NIOSH to engage that agency’s expertise on occupational hazards.", "Experts and agency officials identified several ideas that could improve OSHA’s standard-setting process.", "While some of the changes, such as improving coordination with other agencies to leverage expertise, are within OSHA’s authority, others call for significant procedural changes that would require amending existing laws.", "For example, some experts recommended a statutory change that would allow OSHA to revise a group of outdated health standards at the same time, using industry consensus standards as support rather than having to analyze each hazard individually.", "Occupational safety and health standards are designed to help protect about 130 million public and private sector workers from hazards at more than 8 million U.S. worksites.", "Questions exist concerning how long it takes OSHA to issue its standards.", "GAO was asked to examine: (1) the time OSHA takes to develop and issue safety and health standards and the key factors that affect these time frames, (2) alternatives to the typical standard-setting process available for OSHA to address urgent hazards (3) whether other regulatory agencies’ rulemaking offers insight into OSHA’s challenges with setting standards, and (4) ideas from occupational safety and health experts and agency officials for improving OSHA’s process.", "GAO analyzed standards issued by OSHA between 1981 and 2010, interviewed subject matter experts and agency officials at OSHA and two similar federal regulatory agencies and offices, and reviewed the standard-setting process at OSHA and the comparison agencies and offices." ], "parent_pair_index": [ -1, 0, 1, -1, 0, 1, -1, 3, -1, 0, -1, -1, -1, 0, 1, -1, 0, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "", "Background", "Measurement of Radioactivity and Hazards of Radiation", "Comparative Range of Radioactivity", "Spent Nuclear Fuel", "High-Level Radioactive Waste", "Waste Incidental to Reprocessing", "Transuranic Waste", "Surplus Weapons-Usable Plutonium", "Low-Level Radioactive Waste", "Provisions for State Disposal Compacts", "Low-Level Waste Classification Tables", "Mixed Low-Level Radioactive and Hazardous Waste", "Depleted Uranium", "Technologically Enhanced Naturally Occurring Radioactive Material", "Energy Policy Act Provisions for NORM", "Uranium Mill Tailings", "Waste Disposal Policy Issues", "Glossary", "Appendix." ], "paragraphs": [ "", "Radioactive waste is a byproduct of nuclear weapons production, commercial nuclear power generation, and the naval reactor program. Waste byproducts also result from radioisotopes used for scientific, medical, and industrial purposes. Waste classification policies have tended to link the processes that generate the waste to uniquely tailored disposal solutions. Consequently, the origin of the waste, rather than its radiologic characteristics, often determines its fate.\nCongress recently renewed its interest in radioactive waste classification when a Department of Energy (DOE) order regarding the disposition of high-level waste storage tank residue was legally challenged. As a result, Congress amended the statutory definition of high-level waste to exclude such residue. The classification of other radioactive wastes continues to remain an aspect of disposal policy.\nThe Atomic Energy Act of 1946 (P.L. 79-585) defined fissionable materials to include plutonium, uranium-235, and other materials that the Atomic Energy Commission (AEC) determined to be capable of releasing substantial quantities of energy through nuclear fission. Source material included any uranium, thorium, or beryllium containing ore essential to producing fissionable material, and byproduct material remaining after the fissionable material's production. In the amended Atomic Energy Act of 1954 (P.L. 83-703), the term special nuclear material superseded fissionable material and included uranium enriched in isotope 233, material the AEC determined to be special nuclear material, or any artificially enriched material.\nAs the exclusive producer, the AEC originally retained title to all fissionable material for national security reasons. In the 1954 amended Act, Congress authorized the AEC to license commercial reactors, and ease restrictions on private companies using special nuclear material. Section 183 (Terms of Licenses) of the Act, however, kept government title to all special nuclear material utilized or produced by the licensed facilities in the United States. In 1964, the AEC was authorized to issue commercial licenses to possess special nuclear material subject to specific licensing conditions (P.L. 88-489).\nAlthough the Atomic Energy Act referred to transuranic waste (material contaminated with elements in atomic number greater than uranium), radioactive waste was not defined by statute until the 1980s. High-level waste and spent nuclear fuel were defined by the Nuclear Waste Policy Act (NWPA) of 1982 (42 U.S.C. 10101). Spent nuclear fuel is the highly radioactive fuel rods withdrawn from nuclear reactors. High-level waste refers to the byproduct of reprocessing irradiated fuel to remove plutonium and uranium. Low-level radioactive waste was defined by the Low-Level Radioactive Waste Policy Act of 1980 ( P.L. 95-573 ) as radioactive material that is not high-level radioactive waste, spent nuclear fuel, or byproduct material, and radioactive material that the Nuclear Regulatory Commission (NRC) classifies as low-level radioactive waste consistent with existing law.", "The measurement of radioactivity and the hazards of radiation are, in themselves, complex subjects. A discussion of radioactive waste would be incomplete without reference to some basic terms and concepts.\nRadioactive elements decay over time. The process of radioactive decay transforms an atom to more a stable element through the release of radiation— alpha particles (two protons and two neutrons), charged beta particles (positive or negative electrons), or gamma rays (electromagnetic radiation).\nRadioactivity is expressed in units of curies —the equivalent of 37 billion (37 x 10 9 ) atoms disintegrating per second. The rate of radioactive decay is expressed as half-life —the time it takes for half the atoms in a given amount of radioactive material to disintegrate. Radioactive elements with shorter half-lives therefore decay more quickly.\nThe term for the absorption of radiation by living organisms is dose . The United States uses the Roentgen Equivalent Man (rem) as the unit of equivalent dose in humans. Rem relates the absorbed dose in human tissue to the effective biological damage of the radiation. Not all radiation has the same biological effect, even for the same amount of absorbed dose, as some forms of radiation are more efficient than others in transferring their energy to living cells.\nIn 1977, the International Commission on Radiation Protection (ICRP) concluded that an individual's mortality risk factor from radiation-induced cancers was about 1 x10 -4 from an exposure of one rem dose (one lifetime chance out of 10,000 for developing fatal cancer per rem), and recommended that members of the public should not receive annual exposures exceeding 500 millirem. The exposure limit is made up of all sources of ionizing radiation that an individual might be exposed to annually, which includes natural background and artificial radiation. An individual in the United States receives an average annual effective dose equivalent to 360 millirem, as shown in Table 1 .\nThe ICRP revised its conclusion on risk factors in 1990, and recommended that the annual limit for effective dose be reduced to 100 millirem. This limit is equivalent to natural background radiation exclusive of radon. ICRP qualified the recommendation with data showing that even at a continued exposure of 500 millirem, the change in age-specific mortality rate is very small—less than 4.5% for females, less than 2.5% for males older than 50 years, and even less for males under age 50.\nThe radiation protection standards for NRC activities licensed under 10 C.F.R. Part 20 are based on a radiation dose limit of 100 millirem, excluding contributions from background radiation and medical procedures. Unlike the NRC's dose-based approach to acceptable hazard level, the Environmental Protection Agency (EPA) uses a risk-based approach that relies on the \"linear, no-threshold\" model of low-level radiation effects. In the EPA model, risk is extrapolated as a straight line from the high-dose exposure for Hiroshima and Nagasaki atomic bomb survivors down to zero radiation exposure. Thus, the EPA model attributes risk to natural background levels of radiation. For illustrative purposes, EPA considers a 1-in-10,000 risk that an individual will develop cancer to be excessive, and has set a goal of 1-in-a- million risk in cleanup of chemically contaminated sites. The Government Accountability Office (GAO) has concluded that the low-level radiation protection standards administered by EPA and NRC do not have a conclusive scientific basis, as evidence of the effects of low-level radiation is lacking.", "The comparative range in radioactivity of various wastes and materials is presented in Figure 1 . Radioactivity is typically expressed in terms of \"curies/ gram\" for soil-like materials as well as radioactive materials that are homogeneous in nature. However, because the inventories of some radioactive wastes are tracked in terms of \"curies/cubic-meter,\" that unit of measure has been used here.\nThe lowest end of the scale (at the bottom of the figure) is represented by soils of the United States—the source of natural background radiation. Radioactivity ranging from 3 to 40 microcuries/cubic-meter may be attributed to potassium, thorium and uranium in soils. Phosphogypsum mining waste is the byproduct of ore processing that \"technologically enhanced naturally occurring radioactive material\" (uranium) at higher levels than natural background (thus the term—TENORM), and may range from 6.5 to 45 microcuries/cubic-meter. Uranium mill tailings (referred to as 11e.(2) byproduct material) range from 97 to 750 microcuries/cubic-meter at various sites (Appendix, Table A-1 ). On average, low-level waste ranges from 6.7 to 20 curies/cubic-meter based on the inventory of disposal facilities (Appendix , Table A-2 ); a lower limit is left undefined by regulation, but an upper limit is set at 7,000 curies/cubic-meter based on specific constituents. Transuranic waste ranges between from 47 to 147 curies/cubic-meter based on the Waste Isolation Pilot Plant inventory. The vitrified high-level waste processed by the Savannah River Site ranges from 6,700 to 250,000 curies/cubic-meter. Finally, spent fuel aged 10 to 100 years would range from 105,000 to 2.7 million curies/cubic-meter (Appendix , Table A-3 ). These comparisons are for illustrative purposes only, as the radioactive constituents among the examples are different.\nDefinitions of various radioactive wastes are summarized in Table 2 along with applicable legislative provisions. More detailed descriptions of the wastes and the processes that generate the wastes are provided further below.", "Currently, 104 commercial nuclear power reactors are licensed by the NRC to operate in 31 states. These reactors are refueled on a frequency of 12 to 24 months. A generic Westinghouse-designed 1,000-megawatt pressurized-water reactor (PWR) operates with 100 metric tons of nuclear fuel. During refueling, approximately one-third of the fuel (spent nuclear fuel) is replaced. The spent fuel is moved to a storage pool adjacent to the reactor for thermal cooling and decay of short-lived radionuclides.\nDue to the limited storage pool capacity at some commercial reactors, some cooled spent fuel has been moved to dry storage casks. The NRC has licensed 30 independent spent fuel storage installations (ISFSI)for dry casks in 23 states. Fuel debris from the 1979 Three Mile Island reactor accident has been moved to interim storage at the Idaho National Laboratory (INL). General Electric Company (GE) operates an independent spent fuel storage installation (Morris Operation) in Morris Illinois. A group of eight electric utility companies has partnered as Private Fuel Storage, LLC with the Skull Valley Band of Goshute Indians, and applied for an NRC license to build and operate a temporary facility to store commercial spent nuclear fuel on the Indian reservation in Skull Valley, Utah.\nDOE spent fuel originated from nuclear weapons production, the naval reactor program, and both domestic and foreign research reactor programs. DOE spent fuel remains in interim storage at federal sites in Savannah River, South Carolina; Hanford, Washington; INL; and Fort St. Vrain, Colorado.\nIn contrast to commercial reactors, naval reactors can operate without refueling for up to 20 years. As of 2003, 103 naval reactors were in operation, and nearly as many have been decommissioned from service. Approximately 65 metric tons heavy metal (MTHM) of spent-fuel have been removed from the naval reactors. Until 1992, naval spent fuel had been reprocessed for weapons production, and since then has been transferred to INL for interim storage.\nThe planned Yucca Mountain repository is scheduled to receive 63,000 MTHM commercial spent nuclear fuel, and 2,333 MTHM of DOE spent-fuel. The NWPA prohibits disposing of more than the equivalent of 70,000 MTHM in the first repository until a second is constructed.\nThe Energy Information Administration reported an aggregate total 47,023.4 MTHM discharged from commercial rectors over the period of 1968 to 2002. Of the total, 46,268 MTHM is stored at reactor sites, and the balance of 755.4 MTHM is in stored away from reactor sites.\nCRS obtained and compiled raw data from EIA on spent fuel discharged by commercial reactor operators to the end of 2002, and data on spent fuel stored at the DOE national laboratory and defense sites (as of 2003 year-end). A combined total of 49,333 MTHM had been discharged by commercial- and defense-related activities at the end of 2002. Commercial reactor storage pools accounted for 41,564 MTHM, and ISFSIs accounted for 5,294 MTHM. The balance was made up by 2,475 MTHM of federal spent fuel stored at national laboratories, defense sites, and university research reactors. CRS's figures differ from EIA's in several respects: EIA compiles only commercial spent fuel data, combines data on reactor storage pool and dry storage at the reactor facility site, and identifies non-reactor site spent fuel as \"away from reactor site\" storage. The data are geographically presented in Figure 2 and summarized in Table 3 .\nAt the end of 1998, EIA reported 38,418 MTHM of spent fuel discharged. Based on 47,023 MTHM discharged at the end of 2002, CRS estimates that commercial reactor facilities discharge an average 2152 MTHM of spent fuel annually. On that basis, CRS estimates 53,637 MTHM of spent fuel had been discharged at the end of 2004.", "NWPA defines high-level waste as \"liquid waste produced directly in reprocessing and any solid material derived from such liquid waste that contains fission products in sufficient concentrations,\" and \"other highly radioactive material\" that NRC determines requires permanent isolation. Most of the United States' high-level waste inventory was generated by DOE (and former AEC) nuclear weapons programs at the Hanford, INL, and Savannah River Sites. A limited quantity of high-level waste was generated by commercial spent fuel reprocessing at the West Valley Demonstration Project in New York. Over concern that reprocessing contributed to the proliferation of nuclear weapons, President Carter terminated federal support for commercial reprocessing in 1977. For further information on reprocessing policy, refer to CRS Report RS22542, Nuclear Fuel Reprocessing: U.S. Policy Development , by [author name scrubbed].\nWeapons-production reactor fuel, and naval reactor spent fuel were processed to remove special nuclear material (plutonium and enriched uranium). Reprocessing generated highly radioactive, acidic liquid wastes that generated heat. Weapons-related spent fuel reprocessing stopped in 1992, ending high-level waste generation in the United States. The wastes that were previously generated continue to be stored at Hanford, INL, and Savannah River, where they will eventually be processed into a more stable form for disposal in a deep geologic repository.\nThe Hanford Site generated approximately 53 million gallons of high-level radioactive and chemical waste now stored in 177 underground carbon-steel tanks. Some strontium and cesium had been separated out and encapsulated as radioactive source material, then commercially leased for various uses. The Savannah River Site generated about 36 million gallons of high-level waste that it stored in 53 underground carbon-steel tanks. Both the Hanford and Savannah River Sites had to neutralize the liquid's acidity with caustic soda or sodium nitrate to condition it for storage in the carbon-steel tanks. (The neutralization reaction formed a precipitate which collected as a sludge on the tank bottom; see the discussion of waste-incidental-to-reprocessing below.) Savannah River has constructed and begun operating a defense-waste processing facility that converts high-level waste to a vitrified (glass) waste-form. The vitrified waste is poured into canisters and stored on site until eventual disposal in a deep geologic repository. A salt-stone byproduct will be permanently disposed of on site. Hanford has plans for a similar processing facility.\nINL generated approximately 300,000 gallons of high-level waste through 1992 by reprocessing naval reactor spent fuel, and sodium-bearing waste from cleaning contaminated facilities and equipment. The liquid waste had originally been stored in 11 stainless steel underground tanks. All of the liquid high-level waste has been removed from five of the 11 tanks and thermally converted to granular (calcine) solids. Further treatment is planned, and INL is also planning a waste processing facility similar to Savannah River's vitrification plant.\nWest Valley's high-level waste has been vitrified and removed from the site. The vitrification process thermally converts waste materials into a borosilicate glass-like substance that chemically bonds the radionuclides. The vitrification plant is being decommissioned. The Hanford Site and INL are planning similar vitrification plants.\nHigh-level waste is also considered a mixed waste because of the chemically hazardous substances it contains, which makes it subject to the environmental regulations under the Resource Conservation and Recovery Act (RCRA).", "DOE policy in Order 435.1 refers to waste incidental to reprocessing in reclassifying a waste stream that would otherwise be considered high-level due to its source or concentration. DOE's Implementation Guide to the Order states that \"DOE Manual 435.1-1 is not intended to create, or support the creation of, a new waste type entitled incidental waste.\" The waste stream typically results from reprocessing spent fuel. DOE has determined that under its regulatory authority the incidental-to-processing waste stream can be managed according to DOE requirements for transuranic or low-level waste, if specific criteria are met.\nThe DOE evaluation process for managing spent-fuel reprocessing wastes considers whether (1) the \"wastes are the result of reprocessing plant operations such as contaminated job wastes including laboratory items such as clothing, tools and equipment,\" and (2) key radionuclides have been removed in order to permit downgrading the classification to either low-level waste or transuranic waste. Evaluation process wastes include large volumes of low-activity liquid wastes (separated from high-level waste streams), a grout or salt-stone solid form, and high-level waste residues remaining in storage tanks. DOE's evaluation process at the Savannah River Site resulted in capping the residue left in high-level waste storage tanks with cement grout.\nPublic comments on the draft of Order 435.1 expressed the concern that potentially applicable laws do not define or recognize the principle of \"incidental waste,\" or exempt high-level waste that is \"incidental\" to DOE waste management activities from potential NRC licensing authority. In 2003, the Natural Resources Defense Council (NRDC) challenged DOE's evaluation process for Savannah River as scientifically indefensible, since no mixing occurred to dilute the residue's activity when capping it with grout. DOE countered that through the waste-incidental-to-reprocessing requirements of Order 435.1, key radionuclides have been removed from the tanks, and the stabilized residual waste does not exceed Class C low-level radioactive waste restrictions for shallow land burial. Removing the residual waste would be costly and expose workers to radiologic risks, according to DOE.\nIn NRDC v. Abraham , the Federal District Court in Idaho ruled in 2003 that DOE violated the NWPA by managing wastes through the evaluation process in Order 435.1. The Energy Secretary later asked the Congress for legislation clarifying DOE authority in determinations on waste-incidental-to-reprocessing at Hanford, Savannah River, and INL. On November 5, 2004, the U.S. Court of Appeals for the Ninth Circuit vacated the district court's judgment and remanded the case with a direction to dismiss the action.\nSection 3116 (Defense Site Acceleration Completion) in the Ronald W. Reagan Defense Authorization Act of FY2005 ( P.L. 108-375 ) specified that the definition of the term \"high-level radioactive waste\" excludes radioactive waste from reprocessed spent fuel if (1) the Energy Secretary in consultation with the NRC determines the waste has had highly radioactive radionuclides removed to the maximum extent practical, and (2) the waste does not exceed concentration limits for Class C low-level waste. As a result of the Act, NRC expects to review an increased number of waste determinations. As guidance to its staff, NRC developed a draft Standard Review Plan (NUREG-1854). Section 3117 of the Act (Treatment of Waste Material) authorizes $350 million for DOE's High Level Waste Proposal to accelerate the cleanup schedule for the Hanford, Savannah River, and INL. For further information on this subject, refer to CRS Report RS21988, Radioactive Tank Waste from the Past Production of Nuclear Weapons: Background and Issues for Congress , by [author name scrubbed] and [author name scrubbed].", "The Atomic Energy Act (42 U.S.C. 2014) defines transuranic (TRU) waste as material contaminated with elements having atomic numbers greater than uranium (92 protons) in concentrations greater than 10 nanocuries/gram. The DOE (with other federal agencies) revised the minimum radioactivity defining transuranic waste from 10 nanocuries/gram to greater than 100 nanocuries/gram in 1984.\nTransuranic elements are artificially created in a reactor by irradiating uranium. These elements include neptunium, plutonium, americium, and curium. Many emit alpha particles and have long half-lives. Americium has commercial use in smoke detectors, and plutonium produces fission energy in commercial power reactors.\nTransuranic waste is generated almost entirely by DOE (and former AEC) defense-related weapons programs. The waste stream results from reprocessing irradiated fuel to remove plutonium-239 or other transuranic elements, and from fabricating nuclear weapons and plutonium-bearing reactor fuel. The waste may consist of plutonium-contaminated debris (such as worker clothing, tools, and equipment), sludge or liquid from reprocessing, or cuttings and scraps from machining plutonium.\nIn 1970, the former AEC determined that the long half-life and alpha emissions associated with transuranic waste posed special disposal problems. This prompted the decision to stop the practice of burying TRU waste in shallow landfills as a low-level waste.\nDOE distinguishes \"retrievably stored\" transuranic waste from \"newly generated\" waste. Waste buried prior to 1970 is considered irretrievable and will remain buried in place. Since 1970, transuranic waste has been packaged (e.g., metal drums, wood or metal boxes) and retrievably stored in above-ground facilities such as earth-mounded berms, concrete culverts, buildings, and outdoor storage pads. Waste that has been retrieved or will be retrieved, and then repackaged for transportation and disposal, is classed as newly generated waste.\nThe Department of Energy National Security and Military Applications of Nuclear Energy Authorization Act of 1980 ( P.L. 96-164 ) directed the Energy Secretary to consult and cooperate with New Mexico in demonstrating the safe disposal of defense radioactive wastes. The Waste Isolation Pilot Plant Land Withdrawal Act ( P.L. 102-579 as amended by P.L. 104-211 ) limited disposal acceptance to transuranic waste with a half-life greater than 20 years and radioactivity greater than 100 nanocuries/gram. The WIPP Act further defined transuranic waste in terms of \"contact-handled transuranic waste\" having a surface dose less than 200 millirem per hour, and \"remote-handled transuranic waste\" having a surface dose rate greater than 200 millirem/hour. The WIPP facility (near Carlsbad, New Mexico) began accepting transuranic waste in 1999 but was restricted by the New Mexico Environment Department to accepting contact-handled waste only. In October 2006, New Mexico revised WIPP's permit to allow remote-handled waste.\nThe Resource Conservation and Recovery Act of 1976 (42 U.S.C. 6901) imposed additional disposal requirements on transuranic waste mixed with hazardous constituents. Mixed radioactive and hazardous waste is a separate classification discussed further below.\nThe Energy and Water Development Appropriations Act for 2005 ( P.L. 108-447 ) and appropriation acts for some prior years precluded the WIPP facility from disposing of transuranic waste containing plutonium in excess of 20%, as determined by weight.", "The Atomic Energy defined \"special nuclear material\" as plutonium, uranium enriched in isotopes 233 or 235, and any other material the NRC determined as special nuclear material. Special nuclear material is important in weapons programs and as such has strict licensing and handling controls. Under President Clinton's 1993 Nonproliferation and Export Control Policy, 55 tons of weapons-usable plutonium was declared surplus to national security needs. DOE plans to use surplus plutonium in mixed oxide fuel for commercial power reactors. Plutonium not suitable for mixed oxide fuel fabrication is destined for repository disposal. The special facility constructed to reprocess the surplus would generate transuranic waste and low-level radioactive waste streams. Spent mixed oxide fuel would be disposed of in the same manner as conventional commercial spent fuel in an NRC-licensed deep geologic repository.", "The Low-Level Radioactive Waste Policy of 1980 ( P.L. 96-573 ) defined \"low-level radioactive waste\" as radioactive material that is not high-level radioactive waste, spent nuclear fuel, or byproduct material, and radioactive material that the Nuclear Regulatory Commission (NRC) classifies as low-level radioactive waste consistent with existing law. Low-level waste is classified as A, B, C, or Greater than Class C in 10 C.F.R. 61.55—Waste Classification. These classes are described further below. Commercial low-level waste is disposed of in facilities licensed under NRC regulation, or NRC-compatible regulations of \"agreement states.\"\nLow-level radioactive waste is generated by nuclear power plants, manufacturing and other industries, medical institutions, universities, and government activities. Much of the nuclear power plant waste comes from processes that control radio-contaminants in reactor cooling water. These processes produce wet wastes such as filter sludge, ion-exchange resins, evaporator bottoms, and dry wastes. Institutions such as hospitals, medical schools, research facilities, and universities generate wastes of significantly differing characteristics. Industrial generators produce and distribute radionuclides, and use radioisotopes for instruments and manufacturing processes. The General Accounting Office (now Government Accountability Office) reported that of the 12 million cubic feet of low-level waste disposed of in 2003, 99% constituted Class A.\nThe NRC classifies low-level waste using two tables: one for long-lived radionuclides, and one for short-lived. Long-lived and short-lived refer to the length of time for radioactive decay. For regulatory purposes, the dividing line between short-lived and long-lived is a half-life of 100 years. The radionuclides included as long-lived are: carbon-14, nickel-59, niobium-94, technetium-99, iodine-129, plutonium-241, and curium-242. The group \"alpha emitting transuranic nuclides with half-lives greater than 5 years\" is included in the long-lived table, as various isotopes of the group may have half-lives in the range of hundreds-of-thousand of years. The short-lived radionuclide table includes tritium (hydrogen-3), cobalt-60, nickel-63, strontium-90, and cesium-137. A group of unspecified \"nuclides with half-lives less than 5 years\" is included as short-lived.\nLow-level waste generated by nuclear power plants results from the fission of uranium fuel, or the activation of the reactor components from neutrons released during fission. Trace amounts of uranium left on fuel rod surfaces during manufacturing are partly responsible for the fission products in the reactor cooling water. Tritium (H-3) occasionally results from uranium fission, and from reactor cooling water using boron as a soluble control absorber. The radionuclides carbon-14, nickel-53, nickel-59, and niobium-94 are created when stainless steel reactor components absorb neutrons. The radionuclides strontium-90, technetium-99, and cesium-137 are fission products of irradiated uranium fuel. The transuranic radionuclides are neutron-activation products of irradiated uranium fuel. Iodine-129 is found in radioactive wastes from defense-related government facilities and nuclear fuel cycle facilities; if released into the environment, its water solubility allows its uptake by humans, where it concentrates in the thyroid gland.\nSome of the short-lived radionuclides have specific industrial or institutional applications. These include cobalt-60, strontium-90, and cesium-137. Cobalt-60 is used in sealed sources for cancer radiotherapy and sterilization of medical products; its intense emission of high-energy gamma radiation makes it an external hazard, as well as an internal hazard when ingested. Strontium-90 is used in sealed sources for cancer radiotherapy, in luminous signs, in nuclear batteries, and in industrial gauging. Due to strontium's chemical similarity to calcium, it can readily be taken up by plants and animals, and is introduced into the human food supply through milk. Cesium-137 also is used in sealed sources for cancer radiotherapy, and due to its similarity to potassium can be taken up by living organisms.\nLow-level waste classification ultimately determines whether waste is acceptable for shallow land burial in an NRC- or state-licensed facility. The four waste classes identified by 10 C.F.R. Section 61.55 on the basis of radionuclide concentration limits are:\nClass A: waste containing the lowest concentration of short-lived and long-lived radionuclides. Examples include personal protective clothing, instruments, tools, and some medical wastes. Also, waste containing any other radionuclides left unspecified by 10 C.F.R. 61.55 is classified as A. Class B: an intermediate waste classification that primarily applies to waste containing either short-lived radionuclides exclusively, or a mixture of short-lived and long-lived radionuclides in which the long-lived concentration is less than 10% of the Class C concentration limit for long-lived radionuclides. Class C: wastes containing long-lived or short-lived radionuclides (or mixtures of both) at the highest concentration limit suitable for shallow land burial. Examples include ion exchange resins and filter materials used to treat reactor cooling water, and activated metals (metal exposed to a neutron flux—irradiation—that creates a radioactive isotope from the original metal). Greater than Class C (GTCC): waste generally not acceptable for near-surface disposal. Greater than Class C wastes from nuclear power plants include irradiated metal components from reactors such as core shrouds, support plates, and core barrels, as well as filters and resins from reactor operations and decommissioning.\nThe physical form, characteristics, and waste stability requirements are summarized in Table 4 .\nClass A, B, and C wastes are candidates for near-surface disposal. The concept for near-surface disposal is: a system composed of the waste form, a trenched excavation, engineered barriers, and natural site characteristics. Through complex computer models, the licensee must demonstrate that the site and engineered features comply with the performance objectives in 10 C.F.R. Part 61. Generally Class A and B wastes are buried no greater than 30 meters (~100 feet). Class C waste must be buried at a greater depth to prevent an intruder from disturbing the waste after institutional controls have lapsed. The operation of a disposal facility was originally foreseen to last 20 to 40 years, after which it would be closed for stabilization period of 1 to 2 years, observed and maintained for 5 to 15 years, then transferred to active institutional control for 100 years. At the time of licensing, funds had to be guaranteed by the state or licensee for the facility's long term care after closure. At present, no disposal facility exists for Greater than Class C Waste, though the DOE is in the initial phase of a process to identify disposal options.\nThe Senate Committee on Energy and Natural Resources conducted a hearing in September 2004 to consider the potential shortage of low-level waste disposal sites. The GAO had concluded in a 2004 report that no shortfall in disposal capacity appeared imminent, although the national low-level waste database that would be used to estimate the adequacy of future capacity was inaccurate. The GAO recommended that the DOE stop reporting the database information, and added that Congress may wish to consider directing the Nuclear Regulatory Commission to report when the disposal capacity situation changes enough to warrant congressional evaluation.", "In enacting the Low-Level Radioactive Waste Policy Act of 1980, Congress also established the policy that each state take responsibility for disposing of low-level radioactive waste generated within its borders. To accomplish this, states may enter into compacts. Section 102 of the 1986 amendments to the Act provided that each state, either by itself or in cooperation with other states, be responsible for disposing of low-level radioactive wastes generated within the state.", "The NRC created two tables in 10 C.F.R 61.55 for classifying low-level waste on the basis of radionuclide concentration limits. Table 1 of the regulation applies to long-lived radionuclides, and Table 2 applies to short-lived (included as Figures A-1 and A-2 in the Appendix of this report). The concentration limits are expressed in units of \"curies/cubic meter\" or \"nanocuries/gram\" (the latter unit applying exclusively to the alpha-emitting transuranic radionuclides). Figures 3 through 6 represent an illustrative guide to interpreting Tables 1 and 2; they are not intended, however, for actual waste classification purposes. The figures break down Tables 1 and 2 by long-lived, transuranic, short-lived and mixed long- and short-lived radionuclides. In the case of mixed radionuclides, the \"sum-of-the-fractions\" rule must be applied.\nSum-of-the-Fractions Rule. Waste containing a mixture of radionuclides must be classified by applying the sum-of-the fractions rule. In the case of short-lived radionuclides—for each radionuclide in the mixture, calculate the fraction:\nradionuclide-concentration lowest-concentration - limit\nthen calculate the fractions' sum. If the sum-of-the-fractions is less than 1, the waste class is Class A. If the sum of the fractions is greater than 1, recompute each fraction using the upper concentration limits. If the fraction sum is less than 1, the waste is Class C; if greater than 1 then it is Greater than Class C. In the case of long-lived radionuclides, sum the fractions of each radionuclide concentration divided by the Column 1 concentration limits. If the resulting fraction sum is less than 1, the waste is Class A. If the fraction sum is greater than 1, recompute the fractions by applying the Column 2 concentration limits. If the sum is less than 1, the waste is Class B. If the sum is greater than 1, recompute again using the Column 3 limits. For example, consider a waste containing concentrations of long-lived radionuclides Sr-90 at 50 Ci/m 3 and Cs-137 at 22 Ci/m 3 . Since the concentrations each exceed the values in Column 1 (0.04 and 1.0 respectively) of Chart 3 (Table 2 of Section 61.55), they must be compared to the concentration limits of Column 2. For Sr-90, the fraction 50/150 equals 0.33, for Cs-137 the fraction 22/44 equals 0.5. The resulting sum of the fractions (0.33 + 0.5) equals 0.83. Since the sum is less than 1.0, the waste is Class B.", "Mixed waste contains both concentrations of radioactive materials that satisfy the definition of low-level radioactive waste in the Low-Level Radioactive Waste Policy Act, and hazardous chemicals regulated under the Resource Conservation and Recovery Act (RCRA, 42 U.S.C. 6901). In general, facilities that manage mixed waste are subject to RCRA Subtitle C (Hazardous Waste) requirements for hazardous waste implemented by EPA (40 C.F.R. 124 and 260-270) or to comparable regulations implemented by states or territories that are authorized to implement RCRA mixed waste authority. The RCRA Subtitle C program was primarily developed for the states' implementation with oversight by EPA.", "Naturally occurring source material uranium contains uranium isotopes in the approximate proportions of: U-238 (99.3%), U-235 (0.7%), and U-234 (trace amount) by weight. Source material uranium is radioactive, U-235 contributing 2.2% of the activity, U-238 48.6%, and U-234 49.2% . Depleted uranium is defined in 10 CFR 40.4 (Domestic Licensing of Source Material) as \"the source material uranium in which the isotope U-235 is less than 0.711 % of the total uranium present.\" It is a mixture of isotopes U-234, U-235, and U-238 having an activity less than that of natural uranium. Most of the DOE depleted uranium hexafluoride inventory has between 0.2% and 0.4% U-235 by weight.\nThe former AEC began operating uranium enrichment plants in 1945 to produce U-235 enriched fuel for national defense and civilian nuclear reactors. Most commercial light-water reactors use uranium enriched 2%-5% with U-235. As part of that enrichment process, uranium ore was converted to uranium hexafluoride (UF6) gas to facilitate U-235's separation, depleting the source material uranium of its U-235 isotope. DOE's inventory of depleted uranium hexafluoride (DUF6) is approximately 700,000 metric tons. The DUF6 is stored in metal cylinders at the three enrichment plant sites: Paducah, KY; Portsmouth, OH; and Oak Ridge, TN.\nAs part of DOE's DUF6 Management Program, Oak Ridge National Laboratory (ORNL) conducted an assessment of converting the DUF6 to one of four stable forms: metallic (DU), tetrafluoride (DUF4), dioxide (DUO2) and triuranium octaoxide (DU3O8). ORNL considers the characteristics of the four forms suitable for disposal as low-level radioactive waste. The DU metal form has commercial and military uses (aircraft counterweights, shielding, armor, and munitions).\nDOE has considered the environmental impacts, benefits, costs, and institutional and programmatic needs associated with managing its DUF6 inventory. In the 1999 Record of Decision for Long Term Management and Use of Depleted Uranium Hexafluoride, DOE decided to convert the DUF6 to depleted uranium oxide, depleted uranium metal, or a combination of both. The depleted uranium oxide would be stored for potential future uses or disposal as necessary. Conversion to depleted uranium metal would be performed only when uses for the converted material were identified. DOE stated that it did not believe that long-term storage as depleted uranium metal and disposal as depleted uranium metal were reasonable alternatives. DOE has selected Uranium Disposition Services to design, build and operate facilities in Paducah and Portsmouth to convert the DUF6. DOE has effectively declared DUF6 a resource in the record of decision, anticipating its conversion to non-reactive depleted uranium oxide. Making the material nonreactive is intended to eliminate the RCRA criteria that otherwise would place it in a Mixed Waste class.", "Technologically Enhanced Naturally Occurring Radioactive Material (TENORM) is a byproduct of processing mineral ores containing naturally occurring radionuclides. These include uranium, phosphate, aluminum, copper, gold, silver, titanium, zircon and rare earth ores. The ore beneficiation process concentrates the radionuclides above their naturally occurring concentrations. Some TENORM may be found in certain consumer products, as well as fly ash from coal-fired power plants. Activities such as treating drinking water also produce TENORM. Surface and groundwater reservoirs may contain small amounts of naturally occurring radionuclides (uranium, radium, thorium, and potassium; i.e., NORM). In areas where concentrations of radium are high in underlying bedrock, groundwater typically has relatively high radium content. Water treatment/filtration plants may remove and concentrate NORM in a plant's filters, tanks, and pipes. The result is technologically concentrated NORM (thus TENORM) in the form of filtrate and tank/pipe scale. Radium-226, a decay product of uranium and thorium soluble in water, is a particular concern because of the radiologic threat it poses. Public exposure to TENORM is subject to federal regulatory control.\nAt Congress's request in 1997, the EPA arranged for the National Academy of Sciences (NAS) to study the basis for EPA's regulatory guidance on naturally occurring radioactive material. The NAS study defined technologically enhanced radioactive material (TENORM) as \"any naturally occurring material not subject to regulation under the Atomic Energy Act whose radionuclide concentrations or potential for human exposure have been increased above levels encountered in the natural state by human activities.\" The NAS completed its study in 1999. The most important radionuclides identified by the study include the long-lived naturally occurring isotopes of radium, thorium, uranium, and their radiologically important decay products. Radium is of particular concern because it decays to form radioactive radon gas, a carcinogen contributing to lung cancer. NAS noted that federal regulation of TENORM is fragmentary. Neither the EPA nor any other federal agency with responsibility for regulating radiation exposure has developed standards applicable to all exposure situations that involve naturally occurring radioactive material.\nThe EPA submitted its own report on implementing the NAS recommendations to Congress the following year, along with plans to revise its TENORM guidance documents. According to its website, the EPA has used its authority under a number of existing environmental laws to regulate some sources of TENORM, including the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).", "The Energy Policy Act of 2005 contains a provision in Section 651 that amends the Atomic Energy Act's section 11(e) definition of \"byproduct material\" to exclude \"any discrete source of naturally occurring radioactive material [NORM], other than source material\" that the NRC, in consultation with the EPA, Department of Energy, and Department of Homeland Security, determines would pose a threat similar to the threat posed by a discrete source of radium-226. The Energy Policy Act also made clear that byproduct material as defined in paragraphs (3) and (4) of section 11(e) is not to be considered low-level radioactive waste for the purpose of disposal under the Low-Level Radioactive Waste Policy Act and \"carrying out a compact\" under the authorization of 42 U.S.C. sections 2021(b) et seq. (permitting NRC agreements with states to discontinue its regulatory authority over byproduct, source, and special nuclear materials.)\nThe Nuclear Regulatory Commission (NRC) proposes to amend its regulations to include jurisdiction over certain radium sources, accelerator-produced radioactive materials (referred to as NARM). The proposed rule does not suggest any discrete source of NARM nor criteria for making such a determination. It does note that EPAct gives the NRC authority over discrete sources of radium-226 but not over diffuse sources of radium-226 as it occurs in nature or over other processes where radium-226 may be unintentionally concentrated. The specific example of \"residuals from treatment of water to meet drinking water standards\" is given as a diffuse source.\nRecently, the Rocky Mountain Low-Level Radioactive Waste Compact's authority to dispose of NORM and TENORM has been called into question over the assertion that its jurisdiction violates the Commerce Clause of the U.S. Constitution. Congress gave its consent to the Rocky Mountain Low-Level Radioactive Waste Compact, consisting originally of the states of Arizona, Colorado, Nevada, New Mexico, Utah, and Wyoming. Arizona, Utah, and Wyoming later withdrew from the Compact, leaving Colorado, Nevada, and New Mexico as remaining Compact members. The Rocky Mountain Compact defines low-level waste as specifically excluding radioactive waste generated by defense activities, high-level waste (from spent nuclear fuel reprocessing), transuranic waste (produced from nuclear weapons fabrication), 11e(2) byproduct material, and mining process-related wastes. However, under Article VII(d) of the Compact, both the Compact's board and the host state may authorize management of any radioactive waste other than low-level wastes upon consideration of various factors, such as the existence of transuranic elements.\nA review of the legislative history of the Rocky Mountain Compact did not appear to reveal the intent of Congress with respect to the specific responsibility of the states concerning NRC-defined A, B, and C class wastes. A statement in the legislative history of the Southeast Interstate Compact, however, may provide an indication of Congress's intent:\nThe definition of low-level waste in the compact may vary, but the compact provides for adjustments and flexibility under its own procedures adequate to allow the compact to handle waste for which the states are responsible.\nOn the basis of the Compact's Article VII and the language of H.Rept. 99-317, quoted above, that accompanied H.R. 1267, it might be argued that the Compact's jurisdiction extends to TENORM when for disposal purposes TENORM meets the criteria of Class A, B, or C low-level radioactive waste. Thus, the Compact's authority to dispose of low-level radioactive waste would appear restricted by the Energy Policy Act of 2005. TENORM that poses a threat similar to the threat posed by a discrete source of radium-226 would arguably be outside the jurisdiction of the Compact. A diffuse source of radium-226 (i.e., TENORM ) that does not pose a similar threat, however, would appear to remain within the jurisdiction of the Compact's Article VII(d) provision.", "Uranium and thorium mill tailings are the waste byproducts of ore processed primarily for its source material (i.e., uranium or thorium) content (10 C.F.R. 40.4). The tailings contain radioactive uranium decay products and heavy metals. Mined ores are defined as source material when containing 0.05 % or more by weight of uranium or thorium (10 C.F.R. 20.1003). Byproduct material does not include underground ore bodies depleted by solution extraction. Tailings or waste produced by the extraction or concentration of uranium or thorium is defined under Section 11e.(2) of the Atomic Energy Act as amended by Title II of the Uranium Mill Tailings Radiation Control Act of 1978 (UMTRCA , 42 U.S.C. 7901), and is simply referred to as 11e.(2) byproduct material. UMTRCA provided for stabilization and disposal of tailings to mitigate the hazard of radon diffusion into the environment, and other hazards. Radon is a daughter-product of uranium/thorium radioactive decay.\nThe NRC regulates the siting and design of tailings impoundments, disposal of tailings or wastes, decommissioning of land and structures, groundwater protection standards, testing of the radon emission rate from the impoundment cover, monitoring programs, airborne effluent and offsite exposure limits, inspection of retention systems, financial surety requirements for decommissioning and long-term surveillance and control of the tailings impoundment, and eventual government ownership of pre-1978 tailings sites under an NRC general license.", "The AEC first acknowledged the problem of waste disposal in 1955. Concerned over the hazard of radioactive waste, the AEC awarded a contract to the National Academy of Sciences to conduct research on methods to dispose of radioactive waste in geologic media and recommend disposal options within the continental limits of the United States. The Academy's suggestion, at that time, was that disposal in cavities mined out in salt beds or salt domes offered the most practical and immediate solution.\nIn the mid-1960s, the AEC conducted engineering tests on disposing spent fuel in a salt mine near Lyons, Kansas. After developing conceptual repository designs for the mine, AEC abandoned the Lyons project in 1972 due to technical difficulties. The AEC went on to identify another site in a salt deposit and announced plans for a retrievable surface storage program as an interim measure until a repository could be developed, but the plan was later abandoned.\nIn the 1970s, the Energy Research and Development Administration (ERDA), and later the Department of Energy (DOE), began a program of screening various geologic media for a repository (including salt deposits), and the federal sites of the Hanford Reservation and Nevada Test Site. The national problem created by accumulating spent nuclear fuel and radioactive waste prompted Congress to pass the Nuclear Waste Policy Act of 1982 (NWPA). The potential risks to public health and safety required environmentally acceptable waste disposal solutions, and the Act provided for developing repositories to dispose of high-level radioactive waste and spent nuclear fuel. Under the Act, the Department of Energy will assume title to any high-level radioactive waste or spent nuclear fuel accepted for a disposal in a repository constructed under the Act (42 U.S.C. 10131).\nIn 2002, the President recommended approval of the Yucca Mountain repository site in Nevada. In a recent district court ruling, however, EPA's 10,000-year safety standard on radiation containment at the site was found to be inconsistent with the congressionally mandated recommendations of the National Academy of Sciences. Depending upon successful resolution of the matter and the NRC's granting a license, the repository could begin to accept high-level waste and spent nuclear fuel in the next decade. The Energy Department intends to submit a license application for Yucca Mountain in mid-2008.\nThe controversy over DOE waste incidental to reprocessing appears to have been resolved by redefining high-level radioactive wastes as excluding the residue in high-level waste storage-tanks. However, Congress has requested the National Research Council to study DOE's plans to manage the residual tank waste and report on the adequacy of the plans ( P.L. 108-375 ). The DOE also operates the Waste Isolation Pilot Plant in New Mexico to dispose of the transuranic waste generated by the weapons program. New Mexico's Governor, concerned that waste incidental to reprocessing could end up at WIPP, ordered the state's Department of Environmental Management to amend WIPP's hazardous waste permit so that only waste listed on DOE's Transuranic Waste Baseline Report is explicitly permitted for disposal at WIPP.\nWhen Congress passed the Low-Level Radioactive Waste Policy Act in 1980, three states—Nevada, South Carolina, and Washington—hosted disposal sites for commercially generated low-level waste. The Act encouraged the formation of multi-state compacts in which one state would host a disposal facility for the member states. The new facilities were to begin operation in by the end of 1985. When it became clear that the deadline would not be met, Congress extended the deadline to the end of 1992 in the amended Act of 1986 ( P.L. 99-240 ). Since then, a new commercial site has been licensed in Utah, and the Nevada site has closed.\nMuch of the low-level waste disposed of as Class A consists of debris, rubble, and contaminated soil from decommissioning DOE and commercial nuclear facilities that contain relatively little radioactivity. These decommissioning wastes make up much larger volumes than low-level waste generated by operating nuclear facilities. The term \"low-activity\" has been used in describing the waste, although it lacks regulatory or statutory meaning. The National Research Council, in its interim report Improving the Regulation and Management of Low-Level Radioactive Wastes found that the current system of regulating low-activity waste lacked overall consistency. As a consequence, waste streams having similar physical, chemical, and radiological characteristics may be regulated by different authorities and managed in disparate ways.\nIn an Advance Notice of Proposed Rulemaking (ANPR), the EPA proposed analyzing the feasibility of disposing of certain low-activity radioactive wastes in the RCRA Subtitle C (hazardous waste) landfills, provided that legal and regulatory issues can be resolved. The NRC, in collaboration with the state of Michigan, recently permitted certain very low-activity wastes from decommissioning of the Big Rock Point nuclear power plant to be sent to a RCRA Subtitle D (solid waste) landfill, and other states have also determined that solid waste landfills offer sufficient protection for low-activity waste. In a recent decision, however, the NRC rejected a staff proposal to permanently allow disposal of low-activity waste in solid waste landfills. If found to be acceptable, disposing of low-activity waste at RCRA C and D landfills could alleviate the future capacity constraints at the three operating low-level waste facilities.\nRadioactive waste classification continues to raises issues for policymakers. Radioactive waste generation, storage, transportation, and disposal leave little of the national geography unaffected. The weapons facilities that processed and stored radioactive waste have left a lasting and expensive environmental legacy that the DOE is attempting to remedy by accelerating the cleanup of those contaminated sites. The standards for public exposure to low-level radiation from the repository or cleanup of the weapons facilities have not been reconciled by EPA and NRC. The lower limit on what may be classified as radioactive waste is undefined, and both EPA and NRC jurisdiction overlap on disposal of this waste stream.", "", "" ], "depth": [ 0, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 1, 1, 1, 2, 1, 1, 1, 2 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "", "h0_full", "h0_full", "h0_full", "h1_full", "h0_full", "", "h0_full", "", "", "", "h0_full", "", "", "", "h1_full", "", "" ] }

{ "question": [ "How did plutonium and uranium-235 come about?", "How were these materials defined?", "How do these materials generate radioactive byproducts?", "How did the Nuclear Waste Policy Act define irradiated fuel?", "How is high-level waste created?", "Why has high-level waste generation ceased in the U.S.?", "How is low-level waste created?", "How does radioactive waste classification affect policymakers?", "How is the disposition of waste with undefined characteristics decided?", "How does the classification of high-level waste compare to that of low-level waste?", "How will this report remain up-to-date?" ], "summary": [ "Plutonium and enriched uranium-235 were first produced by the Manhattan Project during World War II.", "These materials were later defined by the Atomic Energy Act of 1954 as special nuclear materials, along with other materials that the former Atomic Energy Commission (AEC) determined were capable of releasing energy through nuclear fission.", "Reprocessing of irradiated nuclear fuel to extract special nuclear material generated highly radioactive liquid and solid byproducts.", "The Nuclear Waste Policy Act of 1982 (NWPA) defined irradiated fuel as spent nuclear fuel, and the byproducts as high-level waste.", "Uranium ore processing technologically enhanced naturally occurring radioactive material and left behind uranium mill tailings. The fabrication of nuclear weapons generated transuranic waste. Both commercial and naval reactors continue to generate spent fuel.", "High-level waste generation has ceased in the United States, as irradiated fuel is no longer reprocessed.", "The routine operation and maintenance of nuclear reactors, however, continues to generate low-level radioactive waste, as do medical procedures using radioactive isotopes.", "Radioactive waste classification continues to raise issues for policymakers. Most recently, DOE policy on managing the residue in high-level waste storage tanks proved controversial enough that Congress amended the definition of high-level waste.", "The disposition of waste with characteristics left undefined by statute can be decided by an NRC administrative ruling.", "The case for low-activity waste promises to provoke similar controversy.", "This report will be updated as new radioactive waste classification issues arise." ], "parent_pair_index": [ -1, 0, 0, -1, 3, -1, 5, -1, 0, 0, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 1, 1, 1, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Federal, State, and Utility Roles in Water and Wastewater Infrastructure", "Water and Wastewater Rates and Affordability Policies", "Midsize and Large Cities with Declining Populations Are More Distressed Compared with Growing Cities, but Little Is Known about Their Water Infrastructure Needs", "Midsize and Large Cities with Declining Populations Generally Have Higher Rates of Economic Distress Than Growing Cities", "The Water and Wastewater Needs of Selected Midsize and Large Cities Resemble Those of Cities Nationally, although Little Research Has Been Done on Those Needs", "Drinking Water Infrastructure Needs", "Wastewater Infrastructure Needs", "Utilities in Selected Cities Have Been Raising Rates to Help Address Infrastructure Needs and Using Customer Assistance and Cost Control Strategies for Rate Affordability", "Utilities in Selected Cities Have Raised Rates to Increase Revenues for Water and Wastewater Infrastructure Needs but Have Concerns about Keeping Rates Affordable", "All of the Utilities in the Selected Cities Developed Customer Assistance Programs as a Strategy for Addressing Concerns about Affordability of Water and Wastewater Rates", "Most Utilities Were Using Cost Control and Efficiency Strategies to Address Their Water and Wastewater Infrastructure Needs", "Six Federal Programs and One Policy Could Assist Midsize and Large Cities with Declining Populations in Addressing Their Water Infrastructure Needs", "None of the Six Federal Programs We Reviewed Were Specifically Designed to Assist Cities with Declining Populations in Funding Water and Wastewater Infrastructure Needs", "EPA’s Combined Sewer Overflow Policy May Help Cities with Declining Populations", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Economic and Demographic Characteristics of 10 Selected Cities", "Appendix III: Drinking Water Needs of Utilities Serving 10 Selected Cities", "Appendix IV: Wastewater Needs of Utilities Serving 10 Selected Cities", "Appendix V: Operating Revenues, Operating Expenses, and Rate Increases", "Appendix VI: Financial Indicators of Utilities Serving Selected Cities", "Appendix VII: Rates and Billing Collection Information", "Appendix VIII: Cost Control Strategies Used by Water Utilities Serving 10 Selected Cities", "Rightsizing Infrastructure to Meet Current Demands", "Major Reorganization", "Expanding the Utility’s Customer Base", "Public-Private Partnerships", "Asset Management", "Appendix IX: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Older industrial U.S. cities that have experienced steady, long-term population declines and job losses, called legacy cities, also have diminished revenues and ability to provide services, such as drinking water and wastewater services, according to recent studies. These cities are largely scattered across the Midwest and Northeast regions. Two studies identified a number of factors that have contributed to the cities’ decline, including the loss of major industries, suburban flight, and reduced housing market demand. These factors have contributed to such effects as decayed buildings and neighborhoods, or blight; increased vacant land; and increased rates of poverty. The two studies also noted that fiscal and other challenges for cities with declining populations were created by a combination of decreased revenues and increased costs of city services. With most legacy cities having experienced peak population levels in the 1950s and 1960s, they have experienced such declines for a long and sustained period and may have greater fiscal challenges than other cities.\nMany older U.S. cities, including legacy cities, also face water and wastewater infrastructure problems, including lead pipes in drinking water service lines that connect the main pipeline in the street to an individual home or apartment building. In the late 19th and early 20th centuries in the United States, lead was often used in the construction of drinking water service lines because of its malleability and ease of use, among other factors, as described in a National Bureau of Economic Research study. According to the results of a 2016 American Water Works Association survey, about 7 percent of the total population served by U.S. drinking water utilities has either full or partial lead service lines serving their homes. The survey results also indicate that the highest percentages of systems with lead service lines are located in the Midwest and Northeast. Ingesting lead may cause irreversible neurological damage as well as renal disease, cardiovascular effects, and reproductive toxicity.\nIn addition, older U.S. cities, primarily in the Midwest and Northeast, have wastewater systems constructed as combined sewer systems and face challenges controlling overflows from these systems, called combined sewer overflows, during storms. Combined sewer systems collect stormwater runoff, domestic sewage, and industrial wastewater into one pipe, unlike sanitary sewer systems that collect domestic sewage and industrial wastewater in sewer lines that are separated from stormwater pipelines. Both types of systems may overflow during storm events. Under normal conditions, the wastewater collected in combined sewer pipes is transported to a wastewater treatment plant for treatment and then discharged into a nearby stream, river, lake, or other water body. However, during heavy rain or snow storms, when the volume of the wastewater can exceed a treatment plant’s capacity, combined sewer systems release excess untreated wastewater directly into nearby water bodies. According to EPA documents, as of September 2015, 859 communities across the country, primarily in the Northeast and Midwest, have combined sewer systems. According to the results of EPA’s 2012 survey of clean water infrastructure needs, projects to prevent or control combined sewer overflows, which involve building large holding tanks or tunnels, will cost about $48 billion over the next 20 years.", "The federal government works in partnership with states to help ensure drinking water is safe and to protect the quality of the nation’s rivers, streams, lakes, and other waters. As required by the Safe Drinking Water Act, EPA sets standards for public drinking water utilities that generally limit the levels of specific contaminants in drinking water that can adversely affect the public’s health. Under the Clean Water Act, EPA regulates point source pollution—that is, pollution such as wastewater coming from a discrete point, for example, an industrial facility or a wastewater treatment plant. Most states have primary responsibility for enforcing the applicable requirements of the Safe Drinking Water Act and administering the applicable requirements under the Clean Water Act, and EPA also has oversight and enforcement authority. Generally speaking, states and EPA may take administrative action, such as issuing administrative orders, or judicial action, such as suing an alleged violator in court, to enforce environmental laws such as the Safe Drinking Water Act and Clean Water Act. An administrative action may be issued as a consent order, which is an enforceable agreement among all parties involved, and a judicial action may result in a consent decree, which is also an enforceable agreement signed by all parties to the action.\nThe federal government and states also provide financial assistance for water and wastewater infrastructure, either through grants to states or grants and loans to cities. EPA’s Drinking Water SRF and Clean Water SRF programs provide annual grants to states, which states use, among other things, to make low- or no-interest loans to local communities and utilities for various water and wastewater infrastructure projects. States are required to match the federal grants by providing an amount equal to at least 20 percent of the federal grants. EPA has provided about $18.3 billion to states for the Drinking Water SRF from 1997 through 2015 and about $39.5 billion for the Clean Water SRF from 1988 through 2015. In those same periods, states provided about $3.3 billion to the states’ Drinking Water SRF programs and about $7.4 billion to the states’ Clean Water SRF programs. In addition to the SRF programs, the federal government can provide financial assistance for water and wastewater infrastructure projects through two programs that primarily serve a range of purposes, including assistance with public works projects and providing housing assistance or economic development assistance. The first program is HUD’s Community Development Block Grant Program, which provides federal funding to cities, counties, other communities, and states for housing, economic development, neighborhood revitalization, and other community development activities, including water and wastewater infrastructure. The second program is the Department of Commerce’s Economic Development Administration’s Public Works Program, which awards grants to economically distressed areas, including cities that meet the statutory and regulatory eligibility criteria, to help rehabilitate, expand, and improve their public works facilities, among other things. In addition, FEMA’s Public Assistance Grant Program and Hazard Mitigation Grant Program may provide funding for water and wastewater infrastructure projects in certain circumstances when the President has declared a major disaster.\nIn addition to the funds they use to match federal grants, if required, states can also provide assistance to help water and wastewater utilities address infrastructure needs. More specifically, some states have special programs or funds to pay for water and wastewater projects, and others use their state bonding authority to provide funds to utilities for projects. For example, Georgia has the Georgia Fund, which provides low-interest loans to water and wastewater utilities for water, wastewater, and solid waste infrastructure projects. Ohio and West Virginia sell bonds to support utility projects.\nWater and wastewater utilities are generally subject to requirements under the Safe Drinking Water Act and Clean Water Act, respectively, and are responsible for managing and funding the infrastructure needed to meet requirements under these acts. To pay for general operations, maintenance, repair, and replacement of water and wastewater infrastructure, utilities generally follow a strategy of raising revenues by charging rates to their customers, according to an American Water Works Association document. More specifically, utilities charge users a rate for the water or wastewater service provided, raising these rates as needed. Utilities generally develop long-term capital improvement plans—from 5 to 20 years—to identify the infrastructure they will need to repair and replace pipes, plants, and other facilities. To pay for large capital projects, utilities generally issue or sell tax-exempt municipal bonds in the bond market or get loans from banks, their state governments, or federal lenders. According to a 2016 Congressional Research Service report, in 2014, at least 70 percent of water and wastewater utilities relied on municipal bonds or other debt to finance their infrastructure needs and sold bonds totaling about $34 billion, to pay for their infrastructure projects. Utility bonds are rated by the three major ratings agencies, Moody’s, Fitch, and Standard and Poor’s.", "As water and wastewater utilities increase rates to pay for maintaining old and building new infrastructure, according to government and industry groups, rate affordability is a concern, particularly for low-income customers. According to a 2010 Water Research Foundation study, one-third of customers in the lowest 20th percentile income level have had months where they could not pay all their utility bills on time and are three times more likely to have their service disconnected. The study also found, when household budgets near poverty thresholds as defined by the Census Bureau, competing needs may determine whether a household can pay its utility bills. Furthermore, according to a 2016 Water Research Foundation study, utility revenues are affected by a reduction in the average per household indoor water use, which has declined nationally by 22 percent since 1999 with the increased use of water conservation appliances like low-flow toilets and clothes washers.\nEPA addresses the affordability of water and wastewater utility rates in several different ways, including the following.\nThe Safe Drinking Water Act authorizes states to provide additional subsidization to disadvantaged communities, which are service areas that meet state-established affordability criteria.\nUnder the Safe Drinking Water Act, EPA must under some circumstances identify variance technology that is available and affordable for public water systems serving a population of 10,000 or fewer to meet new drinking water standards. As established in EPA’s 1998 variance technology findings, its most recent policy regarding drinking water affordability, EPA continues to use drinking water bills above a national-level 2.5 percent of median household income as affordability criteria to identify affordable compliance technologies.\nThe Clean Water Act authorizes states to provide additional subsidization to benefit certain municipalities, including those that meet state affordability criteria, in certain circumstances. We refer to municipalities that meet the affordability criteria as disadvantaged communities in this report.\nIn 1994, EPA issued its Combined Sewer Overflow Control Policy, which remains in effect, to provide guidance for permitting and enforcement authorities to ensure that controls for combined sewer overflows are cost-effective and meet the objectives of the Clean Water Act. Under the policy, implementation of combined sewer overflow controls may be phased in over time depending on several factors, including the financial capability of the wastewater utility. EPA issued guidance in 1997 on how to assess a city’s financial capability as a part of negotiating schedules for implementing Clean Water Act requirements. The guidance considers wastewater costs per household that are below 2.0 percent of median household income to have a low or midrange effect on households.\nIn 2016, EPA’s Water Infrastructure and Resiliency Finance Center, which was created in 2015 to provide expertise and guidance on water infrastructure financing, published a report on customer assistance programs that utilities across the United States have developed to help their low-income customers pay their bills.\nEPA’s Environmental Financial Advisory Board (a group created to provide expert advice on funding environmental programs and projects), the U.S. Conference of Mayors, industry groups, and others have critiqued EPA’s definition of affordability and have suggested that EPA use other measures to assess the effect of water and wastewater bills on low-income households and a community’s overall financial capability. For example, in 2007 and again in 2014, EPA’s Environmental Financial Advisory Board recommended that EPA use the lowest 20th percentile of income—as opposed to 2.5 percent of median household income—as a measure of a household’s ability to afford a rate increase, when assessing the affordability of infrastructure to control combined sewer overflows on low-income customers. In 2013, the U.S. Conference of Mayors issued a tool for assessing affordability that using EPA policies considers a cost increase of less than 4.5 percent for water and wastewater bill as affordable. Based on discussions with local governments and in response to these critiques, EPA has taken steps to clarify its guidance with memorandums issued in 2012 and 2014, which describe flexibilities in applying affordability indicators.\nLegislation has been introduced to address the affordability of increases in utility rates. One bill, the Water Resources and Development Act of 2016, introduced in the Senate in April 2016, would provide a definition of affordability that differs from current EPA definitions and would require EPA to update its financial capability guidance after a National Academy of Public Administration study on affordability. Another bill would provide federal assistance to help low-income households maintain access to sanitation services, including wastewater services. According to industry reports about the proposed legislation, the proposed program is similar to the Department of Health and Human Services’ Low Income Home Energy Assistance Program that provides assistance to low-income households to help pay their heating bills.", "Midsize and large cities with declining populations are generally more economically distressed, with higher poverty and unemployment rates and lower per capita income than growing cities. Little research has been done on the water and wastewater infrastructure needs of cities with declining populations, but the needs of 10 selected midsize and large cities we reviewed generally reflected the needs of cities nationally.", "Of the 674 midsize and large cities across the nation that had a 2010 population greater than 50,000, 99 (15 percent) experienced some level of population decline from 1980 to 2010. As shown in figure 1, about half of these 99 midsize and large cities (50) are in the Midwest; 28 percent (28) are located in the Northeast; and 21 percent (21) are located in the South. None of these midsize and large cities with declining populations was located in the western states. Michigan and Ohio have the largest numbers of midsize and large cities with declining populations—each with 14 cities.\nBased on our analysis of the Census Bureau’s American Community Survey data (5-year estimates for 2010 through 2014), cities with declining populations have had significantly higher rates of poverty and unemployment and lower household income—characteristics of economic distress—compared with growing cities of the same size. Compared with midsize and large cities that had growing populations over the same time, cities with declining populations had higher estimated poverty rates (23.6 percent compared with 16.5 percent), higher estimated levels of unemployment (12.5 percent compared with 9.2 percent), and lower estimated median household income ($40,993 compared with $57,729),as shown in table 1. These differences become more stark when cities with the greatest rates of population loss are compared with cities with the greatest rates of growth. Specifically, the 19 cities that lost 20 percent or more of their population had an average poverty rate of 31.4 percent compared with an average of 16.3 percent for cities with 20 percent or more growth. Moreover, unemployment in cities with the greatest estimated population loss was 16.5 percent compared with 9.1 percent in highest growth cities, and median household income was $32,242 compared with $58,140.\nAnother distinguishing factor for cities with declining populations is high levels of vacant housing and low median home values. On average, cities with declining populations had 13.5 percent of their housing stock vacant, and growing cities had vacancy rates of 8.6 percent. Cities with the greatest population loss had nearly 20 percent vacant housing stock (19.7 percent), compared with 8.5 percent in cities with the most population growth. Cities with declining populations also had much older housing stock (average house being built in 1954 compared with 1976) and lower median home values ($137,263 compared with $253,522).\nCities with declining populations also had some significantly different demographic characteristics than cities with growing populations. The 99 cities with declining populations had a higher estimated share of African American residents than cities with growing populations (28.5 percent compared with 11.1 percent) and a lower estimated share of the population with bachelor degrees (24.4 percent compared with 32.5 percent). (See table 2 for details on characteristics.)", "Academic research on U.S. cities with declining populations has been conducted for over a decade but has not focused on the water and wastewater infrastructure needs of these cities. The few studies and EPA reports we identified on water and wastewater infrastructure needs in cities with declining populations focused on the feasibility and challenges of rightsizing infrastructure, that is, downsizing or eliminating underutilized infrastructure to meet reduced demands. Among other challenges to rightsizing infrastructure, the studies described significant capital costs in decommissioning existing infrastructure and physical difficulty in removing components in depopulated areas without affecting the entire water or wastewater system. These studies also provided information on other strategies for maintaining underutilized water infrastructure in cities with declining populations. These strategies include using asset management to establish maintenance priorities and repair schedules; coordinating projects for water, wastewater, road, and other infrastructure to gain cost efficiencies; and using vacant lands for stormwater management generally and to help control sewer overflows as part of rightsizing. In addition, the studies highlighted the financial challenges of utilities managing water and wastewater infrastructure in cities with declining populations, resulting from decreasing revenues from fewer ratepayers, and personnel challenges of these utilities because of reductions in personnel to achieve cost savings.", "EPA’s 2011 drinking water needs survey found that nationally, the largest infrastructure needs identified, by estimated costs, addressed two areas: distribution and transmission systems and drinking water treatment infrastructure. Distribution and transmission systems include pipelines that carry drinking water from a water source to the treatment plant or from the treatment plant to the customer. Drinking water treatment infrastructure includes equipment that treats water or removes contaminants. Consistent with EPA’s national estimates, representatives we interviewed from seven of nine drinking water utilities for the 10 cities identified pipeline repair and replacement as a major need. For example, representatives from one utility told us that its distribution pipelines were approximately 80 years old and that within the next 15 to 20 years almost all of them will need to be updated. Representatives from another utility said that almost all 740 miles of the utility’s pipelines need to be replaced. At roughly $100 per foot, replacing all pipelines will cost more than $390 million. Representatives from seven of the nine drinking water utilities said that their utilities had high leakage rates (sometimes reflected in estimates of nonrevenue water), ranging from about 18 to 60 percent, above the 10 to 15 percent maximum water loss considered acceptable in most states according to an EPA document and indicating the need for pipeline repair or replacement. (See app. III for details of utilities’ drinking water infrastructure needs for the 10 cities.)\nOf the 10 utilities we reviewed that were responsible for drinking water infrastructure, representatives from 6 noted that they were aware that some portions of their or their customer-owned portions of service lines connecting individual houses or apartment buildings to the main water lines contain or may contain lead, although most of these utilities did not express concern about the risk of lead in their water. In addition, representatives we interviewed from 5 drinking water utilities out of the 10 we reviewed named treatment plant repair and replacement as one of their greatest needs. Representatives from one utility told us that the utility’s water treatment plant is over 100 years old and is in need of replacement or backup, which they said would cost an estimated $68.6 million. The clear well in the plant, that is, the storage tank used to disinfect filtered water, was built in 1908. If the tank fails, the main source of potable water for customers would be interrupted, leaving the community without water.", "EPA’s 2012 wastewater needs survey found that the largest infrastructure needs for wastewater systems fell into three categories: combined sewer overflow correction (i.e., control of overflows in combined sewer systems); wastewater treatment, or infrastructure needed to meet treatment under EPA standards; and conveyance system repair, or the infrastructure needed to repair or replace sewer pipelines and connected components to maintain structural integrity of the system or to address inflow of groundwater into the sewer system. Consistent with EPA’s national estimates, utilities serving 7 of the 10 cities we reviewed face high costs to control combined sewer overflows. (See app. IV for details of utilities’ wastewater infrastructure needs for the 10 cities.) According to EPA’s wastewater needs survey, estimated costs for infrastructure improvements to control combined sewer overflows for wastewater utilities serving 7 of the 10 cities we reviewed ranged from $7.1 million to $1.98 billion. In addition, representatives we interviewed from wastewater utilities that serve 5 of the 10 cities we reviewed said that they needed to repair or replace their treatment plants. For example, representatives from one utility said that 90 percent of the utility’s original wastewater treatment plant, which was built in 1938, was still in place and required constant attention to keep it running. Finally, representatives we interviewed from wastewater utilities providing services to 9 of the 10 cities we reviewed discussed collection system repair as a major need. For example, representatives from one utility said that the city sewer lines date back to the mid-1800s. They recently replaced two blocks of the oldest section of sewer lines for $3 million.", "Our sample of 14 utilities in the 10 cities we reviewed used the traditional strategy of raising rates to increase revenues to address their infrastructure needs, although representatives from half of them said that they had concerns about rate affordability and their future ability to raise rates. All utilities we reviewed also had developed one or more types of customer assistance programs, a strategy to help low-income customers pay their bills. In addition, most utilities were using or had plans to use one or more cost control strategies to address their infrastructure needs, such as asset management (i.e., identifying and prioritizing assets for routine repair or replacement versus emergency repair) or rightsizing to physically change infrastructure to meet current demands (e.g., reducing treatment capacity or decommissioning water lines and sewer lines in vacant areas).", "Our sample of 14 utilities in the 10 cities we reviewed used the traditional strategy of increasing revenue—raising rates as needed and selling bonds to pay for their infrastructure needs. Of the 14 utilities we reviewed, most raised rates annually, and all but 2 utilities had raised rates at least once since 2012. (See app. V for utilities’ operating revenues, operating expenses, and rate changes.) In addition, according to our review of the utilities’ financial statements, 11 of 14 experienced a decline in revenues in 1 of the years from 2012 through 2014, and over these years raised utility rates, which helped make up for lost revenues or cover increasing operation and maintenance costs. In contrast, the remaining 3 utilities for which we reviewed available financial statements had increasing revenues over the same period. Of the 3 utilities, 2 also raised rates by more than 9 percent or greater in 2 or more consecutive years from 2012 through 2014; the other utility was privately owned and operated and maintained steady revenues with an overall increase of less than 1 percent.\nMost of the 14 utilities we reviewed used a common rate structure through which customers were charged a modest base rate plus a larger variable rate by volume of water used, according to studies conducted on utility rates. Such a rate structure produces reduced revenues as the amount of water used and sold decreases. In addition to the decline in water use and revenues that many utilities are experiencing nationally, utilities with declining populations are further affected by reduced water sales to fewer ratepayers and face additional declines in revenues. Furthermore, according to representatives we interviewed from some of the utilities, declining populations resulted in operational changes that increased operating costs for their utilities. For example, utility representatives told us that when water sits for extended periods, such as in storage, it may lose its chlorine residual, which allows bacteria and viruses to grow and multiply. For wastewater systems, reduced water flow during dry weather has resulted in stronger sewage sludge and solid deposits that require an adjustment of wastewater treatment processes, according to utility representatives.\nEven with increased rates, many of the utilities we reviewed deferred planned repair and replacement projects and consequently expended resources on addressing emergencies, such as repairing water pipeline breaks. One water utility management professional estimated that emergency repairs can cost three to four times more than regular repairs. Specifically, representatives we interviewed from half of the utilities willing to speak with us (6 of 12) described themselves as being more reactive in repair and replacement of drinking water and wastewater infrastructure. Representatives from these utilities also told us that they do not have sufficient funding to meet their repair and replacement needs, and some noted large backlogs of planned repair and replacement projects. For example, representatives from one of the utilities we reviewed told us that the utility’s current level of investment would result in the replacement of its water and wastewater infrastructure in 400 years, versus replacement within the industry standard of up to a100 years (or a replacement schedule at 1 percent of infrastructure per year). The 5-year capital plan for another utility we reviewed deferred nearly two-thirds of the listed capital improvement projects because of lack of funding. Representatives from another utility described plans to spend about $8 million to replace water pipelines, but learned that they should be investing about twice as much to maintain their existing service levels, based on recent modeling of the system.\nWith increased rates, representatives we interviewed from more than half of the utilities willing to speak with us identified concerns with keeping customer rates affordable. Specifically, representatives we interviewed from 7 of 12 utilities expressed concern about the affordability of future rate increases for low-income households (i.e., those that have incomes in the lowest 20th percentile income level). Affordability of water and wastewater bills is commonly measured by the average residential bill as a percentage of median-income households. Our analysis of the water and wastewater rates charged in fiscal year 2015 by the 14 utilities we reviewed showed that rates for both water and wastewater bills were considered affordable for customers at or above median-income households. However, these rates were higher than the amount considered to be affordable for low-income customers in 9 of 10 cities we reviewed (see fig. 2). The U.S. Conference of Mayors estimated combined annual water and wastewater bills of more than 4.5 percent of income as unaffordable based on EPA policies. In 4 of the 10 cities we reviewed, the average water and wastewater bill was more than 8 percent of income for low-income households.\nWhile they are generally concerned about affordability of rates, representatives from few of the utilities we interviewed said that they planned to change their rate structures, although changes can generate a more reliable and predictable revenue stream to cover costs, according to a 2014 utility study. Of the representatives we interviewed from 12 of the 14 utilities, representatives for 2 utilities said that they were interested in making rate structure changes that would increase cost recovery and that they planned to make incremental changes over time. In addition, 1 utility—Jefferson County, which provides wastewater services to Birmingham—had already made significant changes to its rate structure to stabilize revenues and to meet requirements for exiting bankruptcy. This utility replaced the minimum charge with a monthly base charge scaled by meter size for all customers. The utility also altered its rate structure for the volume of water used for residential customers from a flat fee per volume of water used to an increasing block rate structure where higher fees are charged for incremental blocks of increased water usage. A 2014 Water Resource Foundation study stated that utility representatives hesitate to make rate structure changes because of the potential to significantly alter customers’ monthly bills, and highlighted the need for stakeholders and utility board members to undertake an education and communication strategy when making such changes.\nIn addition to their concerns about the affordability of rates, a few representatives we interviewed said that they expect to have future challenges using bond funding because of the rate increases needed to pay for them. Specifically, representatives we interviewed from 2 of the 12 utilities willing to speak with us—Gary Sanitary District and the city of Youngstown—said that they expected the increased rates would be difficult to afford for residents of the two cities where the median household income is about half the national average and the poverty rate is above 37 percent. All 12 of the utilities whose representatives we interviewed have used bond funding to help finance their water and wastewater infrastructure needs. Of the 14 utilities we reviewed, 10 had strong to very strong ability to pay long-term debt as indicated by fiscal year 2014 debt service coverage ratios we calculated, 2 had moderate ability, and 2 had poor or weak ability. In addition, for 8 of the 14 utilities, their bonds as of June 2016 were ranked within an A level range by the ratings agencies, indicating that they were expected to be able to cover the annual payments for these bonds (see app. VI for the utilities’ financial indicators).", "All 14 of the utilities we reviewed had developed one or more types of customer assistance programs as a strategy to make rates more affordable for customers who had financial difficulty paying their bills. For 5 of the 14 utilities we reviewed, more than 25 percent of their customers were late in paying their bills. Two of the utilities—Detroit Water and Sewerage Department and Gary Sanitary District—had particularly large numbers of customers who were unable to pay their bills, which was reflected in the lower estimated revenue collection rates of about 86 percent of in-city customers in Detroit and 69 percent of Gary Sanitary District customers, respectively, compared with collection rates averaging 98 percent by the other 8 utilities we reviewed where data were available. For both of these utilities, collecting payments from customers was a challenge, and shut off of water and wastewater services was not uncommon. For example, Detroit Water and Sewerage Department representatives told us that they were still struggling with collections and had lost from $40 million to $50 million in forgone revenues annually for the past few years because of the low collection rate, and had budgeted an additional $1.6 million in fiscal year 2016 to cover expenses related to collecting on delinquent accounts. Similarly, a Gary Sanitary District representative told us that even with rate increases of 30 percent in 2011, revenues had not increased correspondingly and water service shutoffs had increased because customers were unable to pay their bills. According to collections information provided by Gary Sanitary District, in fiscal year 2015, approximately 21 percent of accounts were shut off because of nonpayment. (See app. VII for details on rates and billing collections information for the 14 utilities we reviewed.)\nAt a minimum, nearly all of the utilities we reviewed (13 of 14) entered into payment plans or agreements with customers with unpaid bills (see table 3). In some cases, payment plan assistance was described as more informal or ad hoc, with flexibility to develop a plan that is agreeable to the customer and the utility, depending on the customer’s ability to pay. Other utilities had formalized payment plan programs or policies, requiring a customer to make an initial minimum payment on the outstanding bills, and then accepting payment of the remaining amount in monthly installments over a period of time. In addition, overall, half of the utilities we reviewed (7 of 14) offered direct assistance to low-income, elderly, or disabled customers through bill discounts or assistance to eligible customers in good standing, short-term assistance with unpaid bills (e.g., credit for payment of outstanding water and wastewater bills) and with minor plumbing repairs (e.g., for leaks that can increase water use and monthly bills), or some combination of these three types of assistance.\nDifferent rate structures, such as a lifeline rate or reducing fixed charges, can assist low-income or financially constrained customers, according to a 2010 Water Research Foundation Study and EPA’s 2016 report on customer assistance programs, but few of the 14 utilities we reviewed use such structures. For example, through a lifeline rate, a utility can provide its customers with a minimum amount of water to cover basic needs at a fixed base charge. When a customer uses more water than the minimum allotment, the utility increases the rate charged, which in turn increases the customer’s bill. Lifeline or other alternative rates may be targeted to low-income customers, but none of the utilities we reviewed provided special rates based on income. Representatives we interviewed from one utility said that they consciously revised the utility’s rate structure to include lifeline rates to address the needs of customers who could not afford higher rates. An additional 3 of the 14 utilities we reviewed had rate structures that included some volume of water usage with their fixed base charge. Representatives we interviewed from a few utilities (3 of 12) told us that charging special rates for low-income customers is not an option because of local or state laws that do not allow the utilities to differentiate rates among customers. For example, Detroit’s Blue Ribbon Panel on Affordability’s February 2016 report noted potential legal constraints in the state of Michigan in implementing an income-based rate structure, where customers pay a percentage of their income toward their water bills.", "Most of the utilities (13 of 14) we reviewed were using or had plans to use one or more strategies to address their water and wastewater infrastructure needs by controlling costs or increasing the efficiency of the physical infrastructure or overall management of the utility. For example, asset management can help utilities more efficiently identify, prioritize, and plan for routine repair or replacement of its assets, versus facing costly emergency repairs. Table 4 shows the strategies used by the 14 utilities we reviewed, including asset management, major reorganization, and rightsizing physical infrastructure to meet current demands.\nOverall, the most common cost control and efficiency strategy used by the 14 water and wastewater utilities we reviewed was asset management. Some of the utilities (4 of 14) had asset management programs in place, and most of the remaining utilities had plans for or were in initial stages of implementing the strategy. In contrast, we found that the other strategies—rightsizing, major reorganization, expanding the utility’s customer base, and public-private partnerships—were used to a limited extent by the utilities we reviewed. In particular, rightsizing was among the least-used strategies. Many of the utility representatives we interviewed told us that rightsizing was not practical or feasible. For example, even with vacant housing averaging 21 percent in these cities, according to American Community Survey data (5-year estimates, 2010 through 2014), representatives of some utilities reviewed (6 of 14) told us that decommissioning water and sewer lines was not practical or feasible because they did not have entirely vacant blocks or needed to maintain lines to reach houses that were farther away. However, as part of rightsizing, representatives we interviewed for five wastewater utilities said that they have incorporated in their plans, or were considering using, vacant lands for green infrastructure to help control stormwater runoff that can lead to sewer overflows. Green infrastructure uses a range of controls, such as vegetated areas, stormwater collection, or permeable pavement, to enhance storage, infiltration, evapotranspiration, or reuse of stormwater on the site where it is generated. (See app. VIII for information on utilities’ use of cost control strategies).", "While not specifically designed to address the water infrastructure needs of midsize and large cities with declining populations, six federal programs and one policy we reviewed could provide these cities with some assistance. As of June 2016, none of the six federal programs we reviewed administered by the four agencies that fund water and wastewater infrastructure needs were specifically designed to assist such cities in addressing their water infrastructure needs. Yet most of the 14 utilities we reviewed received funding from one or more of these programs for their water and wastewater infrastructure projects. In addition to these programs, under EPA’s 1994 Combined Sewer Overflow Policy, cities or utilities meeting eligibility criteria can take a phased approach over an extended period to build the needed infrastructure to correct combined sewer overflows and comply with the Clean Water Act.", "None of the six federal programs we reviewed that can fund water and wastewater infrastructure needs were specifically designed to provide funds to cities with declining populations for water and wastewater infrastructure projects. The programs are as follows:\nDrinking Water and Clean Water SRF programs. Under the Safe Drinking Water Act and Clean Water Act, EPA provides annual grants to states to capitalize their state-level Drinking Water and Clean Water SRF programs, and states can use the grants to provide funding assistance to utilities, including low- or no-interest loans, among other things. Overall, the state Drinking Water SRF and Clean Water SRF programs help reduce utilities’ infrastructure costs, increase access to low-cost financing, and help keep customer rates affordable. The federal laws establishing the SRF programs do not specifically address cities with declining populations, although states are generally authorized to use a percentage of their capitalization grants to provide additional subsidies to disadvantaged communities. States provide additional subsidies in the form of principal forgiveness or negative interest rates, which reduce loan repayment amounts. The amounts that states set aside for additional subsidies vary from year to year based on requirements in annual appropriations acts and state funding decisions. Most of the 10 states in which the 10 cities in our review were located used median household income as one indicator for disadvantaged communities for both Drinking Water and Clean Water SRF programs.\nHUD Community Development Block Grants. HUD provides federal funding, through the Community Development Block Grant program, for housing, economic development, neighborhood revitalization, and other community development activities, including water and wastewater infrastructure. The department provides block grant funding to metropolitan cities and urban counties across the country, known as entitlement communities, and to states for distribution to non-entitlement communities. Federal law requires that not less than 70 percent of the total Community Development Block Grant funding will be used for activities that benefit low- and moderate-income persons. In 2015, HUD provided $2.3 billion in block grant funding to entitlement communities, including midsize and large cities. However, according to department officials we interviewed, entitlement communities choose to use only a small portion of the grant funding to support water and wastewater infrastructure projects. In fiscal year 2015, according to HUD data, about $43.8 million, or 1.9 percent of block grant funding provided to entitlement communities, including midsize and large cities, was used for water and wastewater infrastructure projects.\nEconomic Development Administration Public Works program.\nThe administration’s Public Works program awards grants competitively to economically distressed areas, including cities that meet the eligibility criteria, to help rehabilitate, expand, and improve their public works facilities, among other things. A Public Works grant is awarded if, among other things, a project will improve opportunities for the successful establishment or expansion of industrial or commercial facilities, assist in the creation of additional long-term employment opportunities, or primarily benefit the long-term unemployed and members of low-income families in the region. In fiscal year 2015, according to Economic Development Administration data, the agency provided $101 million as Public Works grants, of which about $14.9 million or 14.7 percent was used for water or wastewater infrastructure projects. Agency officials told us that the program’s main priority is enabling distressed communities to attract new industry, encourage business expansion, diversify local economies, and generate or retain long-term jobs in the private sector. As a result, projects funded with Public Works grants may include a water infrastructure project, but that water infrastructure project would be a secondary effect of an economic development project. Agency officials said that a common water and wastewater infrastructure project funded by Public Works program grants involves installing a main drinking water pipeline or sewer line to a new or renovated industrial park.\nFEMA Public Assistance and Hazard Mitigation grant programs.\nFEMA’s Public Assistance and Hazard Mitigation grant programs may provide funding for water and wastewater infrastructure projects when the President has declared a major disaster, but these programs are not specifically designed to assist cities with declining populations. The agency’s Public Assistance program provides grants to states and others for the repair, restoration, reconstruction, or replacement of public facilities, including water and wastewater infrastructure damaged or destroyed by such a disaster. In fiscal year 2015, FEMA awarded about $6.5 billion for public assistance projects; however, the agency was unable to determine the portion of public assistance funding that was used for water and wastewater infrastructure projects. The agency’s Hazard Mitigation grant program provides grants for certain hazard mitigation projects to substantially reduce the risk of future damage, hardship, loss, or suffering in any area affected by a major disaster. In fiscal year 2015, FEMA awarded about $1.2 billion in grants to states and communities for mitigation projects. Of that amount, about $8.1 million, or 0.7 percent, was awarded for water and wastewater mitigation projects, according to Hazard Mitigation grant program data. Hazard Mitigation grants do not need to be used for a project within the designated disaster area as long as the project has a beneficial effect on that area. The grants are competitively awarded to states, which identify in their applications the mitigation projects that would be funded with the grants. Cities, including those with declining populations, can submit applications to the state for Hazard Mitigation projects for their water and wastewater facilities, which the state may choose to include its Hazard Mitigation grant application to FEMA.\nWhile these six programs were not specifically designed to provide funding to cities with declining populations, such cities or their related utilities can receive funding from these programs for water and wastewater infrastructure projects. Table 5 shows the funding that each of the utilities in our 10 selected cities received from the programs from fiscal years 2010 through 2015. In total, cities received almost $984 million from the federal agencies.\nAs shown in table 5, 11 of the 14 utilities we reviewed received Drinking Water or Clean Water SRF funding from fiscal years 2010 through 2015, and 1 utility was awarded additional subsidies. Specifically, the Birmingham Water Works Board received $1.7 million (out of $11.6 million) from the Drinking Water SRF program as an additional subsidy in the form of principal forgiveness for green projects, or water infrastructure projects that include energy and water efficiency improvements, green infrastructure, or other environmentally innovative activities. According to most of the representatives we interviewed from 12 utilities, SRF funding is the most common federal funding they receive for water and wastewater infrastructure projects. Overall, in fiscal year 2015, 41 states provided about $416 million, or 23 percent, of their Drinking Water SRF program funds for water and wastewater infrastructure projects in disadvantaged communities, and 31 states provided about $648 million, or 12 percent, of their Clean Water SRF program funds for such projects (see fig. 3).\nRepresentatives we interviewed from some utilities said that it is difficult to use SRF funding because the total amount of funding available statewide is limited; states restrict the amount of funding available to individual projects; and states prioritize projects that address Safe Drinking Water Act and Clean Water Act compliance issues, such as acute violations of drinking water standards or health advisory levels.\nAlso shown in table 5, 1 of the 14 utilities we reviewed, the Sewerage and Water Board of New Orleans, received Community Development Block Grant funds for water and wastewater infrastructure projects from fiscal years 2010 through 2015. Officials in Youngstown, Ohio, also told us that some block grant funding was awarded to faith-based organizations to provide low-income residents with various types of housing and other assistance, which may include assistance with paying utility bills. None of the 14 utilities we reviewed received the Economic Development Administration’s Public Works funding for water or wastewater infrastructure projects from fiscal years 2010 through 2015. The FEMA programs—Public Assistance and Hazard Mitigation—provided nearly 50 percent of total federal funding for water and wastewater infrastructure received by cities we reviewed in fiscal years 2010 through 2015. Specifically, 2 of the 14 utilities we reviewed—the Sewerage and Water Board of New Orleans and the Charleston Sanitary Board—received Public Assistance grants from FEMA after flood events in fiscal years 2010 through 2015. In addition, 2 of the 14 utilities we reviewed—the Birmingham Water Works Board and the Sewerage and Water Board of New Orleans—received Hazard Mitigation grants.", "In addition to providing assistance through SRF funding, EPA has a policy—the Combined Sewer Overflow Policy—that could help cities with declining populations. The policy, adopted in 1994, allows a city or utility to extend its implementation schedule—the period of time it has to build the necessary infrastructure to control combined or sanitary sewer overflows—under consent decrees entered into with EPA or the state, or administrative orders issued by EPA or state permitting authorities. An extended implementation schedule spreads the costs of planned infrastructure projects over time and helps make wastewater rate increases required to pay for the infrastructure projects more affordable for a utility and its customers. EPA’s financial capability assessment guidance, issued in 1997, uses a two-phase approach to assess a city or utility’s financial capability based on: (1) the combined impact of wastewater and combined sewer overflow control costs on individual households (residential indicator) and (2) the socioeconomic and financial conditions of a city or utility (financial capability indicator). Each city or utility is ranked as low, medium, or high for the residential indictor and weak, midrange, or strong for the financial capability indicator. The combined indicators show the overall financial burden—low, medium, or high—resulting from the estimated costs for the planned infrastructure projects. Cities or utilities with a high financial burden—those with a high residential indicator and low-to-midrange financial capability indicators— are generally expected to implement combined sewer overflow control projects within 15 years to 20 years of the consent decree. EPA and states can also apply this two-phase approach to determine appropriate implementation schedules for cities or wastewater utilities to address other Clean Water Act requirements, including control of sanitary sewer overflows.\nAccording to EPA officials, implementation schedules can be negotiated past 20 years if infrastructure projects are large and complex, or if the necessary user rate increases put too great a burden on customers with incomes below median household income. EPA issued a memorandum in 2012 that provided guidance on developing and implementing effective integrated planning for cities and utilities building wastewater and stormwater management programs. According to the 2012 memorandum, under integrated planning, cities and utilities prioritize the wastewater and stormwater infrastructure projects that should be completed first. According to EPA documents, cities and utilities may use integrated planning to prioritize required wastewater and stormwater projects over a potentially longer time frame, helping to keep customer rates more affordable. Building on its 2012 memorandum, EPA issued a memorandum in 2014 to provide greater clarity on the flexibilities built into the existing financial capability guidance. The 2014 memorandum identifies key elements EPA uses in working with cities and utilities to evaluate how their financial capability should influence implementation schedules in both permits and enforcement actions. It also includes examples of additional information that may be submitted to provide a more accurate and complete picture of a city’s or utility’s financial capability.\nOverall, 9 of the 14 utilities providing wastewater services to the 10 cities we reviewed are under consent decrees entered into with EPA or administrative orders from a state agency to address combined sewer overflows or sanitary sewer overflows, according to EPA, state, and utility officials. Specifically, according to these officials, 7 utilities are under consent decrees or administrative orders to address combined sewer overflows; some of these decrees or orders are also required to address sanitary sewer overflows. The remaining 2 utilities are under consent decrees to address sanitary sewer overflows, according to these officials. According to utility representatives we interviewed and documents we reviewed, these 9 utilities or the cities they serve expect to spend an estimated $10.5 billion to comply with consent decrees and administrative orders to enforce Clean Water Act requirements. According to EPA officials, 4 utilities we reviewed had consent decrees with EPA that fell within the high financial burden category and had implementation schedules extending more than 15 years: Pittsburgh’s implementation schedule was for 19 years; Youngstown’s schedule was for 31 years, St. Louis’s schedule was for 23 years, and New Orleans’ schedule was for 27 years. One of the 10 cities we reviewed, New Orleans, had a consent decree with integrated planning, and officials from 2 additional cities said that they were discussing the use of integrated planning with EPA.", "We provided a draft of this report to the Environmental Protection Agency, the Economic Development Administration, and the Department of Housing and Urban Development for review and comment. None of the agencies provided written comments or stated whether they agreed with the findings in the report, but all three agencies provided technical comments that we incorporated, as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the appropriate congressional committees, the Administrator of the Environmental Protection Agency, the Administrator of the Economic Development Administration, the Secretary of Housing and Urban Development, and other interested parties. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or gomezj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff members who made key contributions to this report are listed in appendix IX.", "Our objectives were to examine (1) what is known about the economic characteristics of midsize and large cities with declining populations and their drinking water and wastewater infrastructure needs; (2) strategies that selected midsize and large cities with declining populations and their associated utilities used to address their infrastructure needs and the affordability of their drinking water and wastewater rates; and (3) what existing federal programs and policies, if any, could assist midsize and large cities with declining populations, and their associated utilities, in addressing their water infrastructure needs.\nTo examine what is known about the economic characteristics of midsize and large cities with declining populations, we reviewed relevant studies and interviewed experts about cities that have experienced population declines and water and wastewater infrastructure needs. We identified the studies and experts through a literature review and referrals from Environmental Protection Agency (EPA) officials, representatives of water and wastewater industry associations, and academic and nonprofit experts. We contacted nine experts—individuals in academia and the nonprofit sector with expertise in water and wastewater utility management, finance, engineering, and urban planning.\nFor this report, we used U.S. Census Bureau and National League of Cities definitions for midsize cities—those with populations from 50,000 to 99,999—and large cities—those with populations of 100,000 and greater. We identified the number and size of midsize and large cities with sustained population declines by analyzing decennial census population data for midsize and large cities from 1980 through 2010, which we found to be the most extended period for reliable decennial census data related to our review of the consistency of data coding over time. To describe the economic and demographic characteristics of cities with declining populations, we analyzed the Census Bureau’s American Community Survey 5-year estimates for 2010 through 2014, which according to the bureau contain the most precise and current data available for cities and communities of all population sizes. We analyzed the survey data for all cities with population over 50,000 and compared the data for cities with declining populations to those for cities that did not experience a decline during this period. To do this, we created categories of decline and growth, in increments of 9.9 percent or less, 10 to 19.9 percent, or 20 percent and greater, in order to have a minimum number of cities within each category, using decennial census population data.\nTo determine whether cities with declining populations experienced significantly greater levels of economic distress than cities with increasing populations, we performed statistical comparisons of all key economic and demographic characteristics from the American Community Survey data (5-year estimates for 2010 through 2014), following American Community Survey methodology on statistical tests. Specific economic and demographic characteristics that we analyzed included the following: poverty rate percentage, percentage of unemployment, median household income, per capita income, percentage of vacant housing, median housing value, median year housing stock was built, percentage of households receiving Supplemental Nutrition Assistance Program benefits, percentage of white residents, percentage of African American residents, percentage of residents of other races, percentage of residents over 65 years old, percentage of residents with at least a high school diploma, and percentage of residents with a bachelor’s degree. We reviewed Census Bureau documentation for data collection and quality, and determined the decennial data to be sufficiently reliable for our purposes of categorizing cities based on the extent of population growth or decline, and the American Community Survey data sufficiently reliable for analyzing economic and demographic data on midsize and large cities.\nBecause the American Community Survey 5-year data followed a probability procedure based on random selections, the sample selected is only one of a large number of samples that we might have drawn. Since each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 90 percent confidence interval. This is the interval that would contain the actual population value for 90 percent of the samples we could have drawn. All 5-year American Community Survey percentage estimates presented have margins of error at the 90 percent confidence level of plus or minus 10 percentage points or less, unless otherwise noted. All non- percentage estimates presented using the 5-year American Community Survey had data within 20 percent of the estimate itself, unless otherwise noted.\nAs part of our work for all three objectives, we selected a nonprobability sample of 10 cities that experienced the greatest percentages of population decline from 1980 through 2010 for further review. Using our analysis of decennial census population data from 1980 through 2010, we selected the 10 cities with the greatest declines in population for that period, without repeating cities in any state to allow for geographic distribution. We also selected for size, choosing 5 midsize and 5 large cities. The 10 cities, their 2010 populations, and their percentage declines in population are listed in table 6. This sample of cities is not generalizable to all cities that experienced population declines over this period; however, it highlights the issues faced by a geographically diverse range of cities and corresponding utilities that have experienced the greatest population losses in recent decades.\nTo analyze information on water and wastewater needs for cities with declining populations, we compared national drinking water and wastewater needs data that EPA collected by to information on needs we collected for the utilities providing services to the 10 cities we selected. Because cities may be served by multiple utilities, our sample included the 14 utilities from the 10 selected cities—the 6 that were responsible for both water and wastewater infrastructure, 4 that were responsible solely for drinking water infrastructure, and 4 others that were responsible solely for wastewater infrastructure. We obtained EPA’s data on drinking water infrastructure needs from its 2011 Drinking Water Infrastructure Needs Survey and Assessment and wastewater infrastructure needs from its 2012 Clean Watersheds Needs Survey. EPA obtains these data through surveys of the 50 states, the District of Columbia, and U.S. territories, which for the drinking water needs assessment involves collecting information from a sample of drinking water systems in each state. We assessed the reliability of these data by reviewing the methodologies that EPA used to conduct these surveys and by interviewing EPA officials to understand the appropriate use of the data. We determined that both the drinking water and wastewater needs identified at the national, or aggregate, level were sufficiently reliable for purpose of reporting national needs estimates.\nHowever, the fact that some utilities serve multiple cities and counties, and that some cities are served by multiple utilities or multiple treatment facilities, prevented us from uniquely matching utilities and treatment facilities to cities. Therefore, we could not estimate the total drinking water and wastewater needs of utilities in cities with declining populations and instead identified the water and wastewater needs for each of the 14 utilities for the cities in our sample. To do this, we analyzed relevant utility documents, such as capital improvement plans and master plans, and conducted interviews with utility representatives, including executive directors, finance directors, and operations managers, about their water and wastewater infrastructure condition, their greatest infrastructure needs, and their top challenges in addressing their infrastructure needs. We also reviewed EPA wastewater needs data for utilities serving the 10 selected cities, which we found sufficiently reliable to report at the individual utility level based on reviews of documentation and interviews with knowledgeable EPA officials. However, we were unable report EPA drinking water needs data at the individual utility level for the 10 selected cities because of the way that EPA and states collect and extrapolate the data: EPA uses a statistical cost modeling approach to calculate state and national estimates using local data; as a result, the local data may be a modeled result and not actual reported data.\nTo examine the strategies that selected midsize and large cities with declining populations, and their associated utilities, used to address their infrastructure needs, we reviewed relevant reports and studies on utility management and interviewed city and utility representatives for the 10 cities and 14 utilities in our sample. We conducted semistructured interviews with representatives from 12 of the 14 drinking water and wastewater utilities willing to speak with us to gather information on changes in populations served and effects of declining population on system operations, if any; infrastructure needs and condition; financing and management strategies; challenges in managing water and wastewater infrastructure; and their perspectives on the research and assistance needed for utilities serving cities with declining populations. We also collected capital improvement plans, master plans, recent rate studies, and financial statements for fiscal years 2012 through 2014, which we analyzed to determine infrastructure condition, short-term and long-term capital needs, rate structure changes and rate increases, and changes in operating revenues and expenses. To help ensure that we collected the correct information for each city and utility, we clarified our understanding of these documents through interviews with utility officials, follow-up correspondence, and review of draft materials provided by utility officials.\nNine of the selected 10 cities are under orders from EPA or the state to correct combined sewer overflows or sanitary sewer overflows (which result in discharge of raw sewage to streams and surrounding areas), or both, from their systems. For these cities, we collected any consent decrees they have with EPA and long-term plans to address their combined sewer overflow controls. We also collected written responses to questions from city officials on basic water and wastewater system information, including estimated population served, number of customer accounts and types of customers (e.g., residential versus industrial), average residential water rate, and billing collections information. For the 2 utilities that declined an interview with us, we reviewed publicly available documents and relevant websites. For all 10 cities, we interviewed city planning officials about population and demographic trends, land use planning, infrastructure planning and strategies, access to funding and resources, and challenges they face in managing their cities with declining populations and revenues. We conducted site visits to 6 of the 10 selected cities, considering geographic distribution and size of the cities, and conducted interviews with the remaining city and utility officials by telephone. Specifically, we visited Gary, Indiana; Youngstown, Ohio; Detroit, Michigan; New Orleans, Louisiana; Niagara Falls, New York; and Macon, Georgia. During site visits, we also interviewed city planning officials; water utility representatives; and relevant stakeholders, including officials from other city departments, such as representatives of Gary’s Department of Environmental Affairs and Green Urbanism and New Orleans’s Resiliency Office. We also met with representatives of nongovernmental organizations working with cities and utilities on water and wastewater infrastructure issues, including the Center for Community Progress, Detroit Future City, and the Greater New Orleans Foundation.\nAs part of our review of utilities and the strategies they used, we reviewed financial statements for fiscal years 2012, 2013, and 2014 for all 14 utilities. Specifically, we reviewed total operating revenues and total operating expenses, excluding depreciation over these 3 years. We then used these data to calculate several basic indicators of utility financial health. We calculated indicators that reflect each utility’s ability to pay its long-term debt, sufficiency to cover operating costs and asset depreciation, the remaining years of the utility’s asset life, and its long- term debt per customer. We selected these indicators based on our review of indicators used by rating agencies, including Moody’s and Fitch, two agencies that rate utilities and the utility sector, and interviews with utility finance experts that EPA identified. We then compared these indicators to scoring systems and median indicators for water and wastewater utilities, used and gathered by Moody’s and Fitch where available, to help describe the extent of existing long-term debt, strength of a utility’s financial condition, and potential future capital needs. In addition, to gauge the financial burden of water and wastewater utility bills for median-income households and low-income households in each of our 10 selected cities, we compared the average annual utility bill as a share of income to levels EPA and the U.S. Conference of Mayors have estimated are affordable. We calculated rates as a share of income in the 10 selected cities using the average residential rate information reported by the cities’ utilities and the median household income and income for the 20th percentile for that city reported in the American Community Survey data (5-year estimates for 2010 through 2014).\nTo examine the federal programs and policies that could be used by midsize and large cities with declining populations, and their associated utilities, to help address their water infrastructure needs, we reviewed relevant laws, regulations, and policies of the federal agencies that fund water and wastewater infrastructure needs. To identify the federal programs, we used our past reports that identified federal funding for water and wastewater infrastructure. Specifically, we reviewed funding information and eligibility requirements for the following six federal programs: EPA’s Drinking Water State Revolving Fund (SRF) program, EPA’s Clean Water SRF program, the Department of Housing and Urban Development’s (HUD) Community Development Block Grant program, the Economic Development Administration’s Public Works program, and the Federal Emergency Management Agency’s (FEMA) Public Assistance and Hazard Mitigation Grant Programs. Because we found that none of the programs was specifically designed to assist cities with declining populations, we reviewed program eligibility requirements to determine if funding assistance was awarded based on the cost of infrastructure projects and a project user’s ability to pay for the projects. Under the Drinking Water and Clean Water SRF programs, states establish affordability criteria for eligibility to receive additional subsidization, and so we also reviewed states’ intended use plans, the plans they develop annually to identify candidates for SRF loans. We also interviewed agency officials from EPA, HUD, and the Economic Development Administration about the programs, and gathered information from FEMA from another GAO team.\nFor each federal funding program we reviewed, we collected funding data for water and wastewater infrastructure projects from federal fiscal years 2010 through 2015, to the extent the data were available. Specifically, we reviewed congressional appropriations and congressional budget justifications for each federal agency to determine the total available funding for each program. To determine expenditures for water and wastewater infrastructure projects, we reviewed EPA’s National Information Management System reports; HUD’s Community Development Block Grant expenditure reports; the Economic Development Administration’s annual reports to Congress; and data provided by FEMA from its Integrated Financial Management Information System. To assess the reliability of the data, we reviewed documentation and gathered information from knowledgeable agency officials about the reliability of the data and found them to be sufficiently reliable to characterize overall national expenditures. In addition to national data, we gathered information from our 10 selected cities and from 12 of the 14 drinking water and wastewater utilities on federal, state, and other funding they received to help address their water and wastewater infrastructure needs from state fiscal years 2010 through 2015.\nIn reviewing policies of the six federal agencies that could help cities and utilities address their water and wastewater needs, we identified EPA’s Combined Sewer Overflow Control policy as one policy that could help wastewater utilities in cities with declining populations address their needs. Specifically, the policy allows a city or utility to phase in combined sewer overflow controls over time, which helps to keep customers’ rates affordable. We reviewed EPA’s policy, first issued in 1994 and updated in 2012 and 2014, to determine how the policy could help cities with declining populations and their wastewater utilities keep wastewater rates affordable. Nine of the 10 cities we reviewed had wastewater utilities under consent decrees or administrative orders to comply with specified Clean Water Act requirements. These include 7 utilities under consent decrees or administrative orders requiring them to address combined sewer overflows; some of these utilities are also required to address sanitary sewer overflows, and 2 utilities are under consent decrees requiring them to address sanitary sewer overflows, according to EPA, city, and utility officials. We collected information from these cities and their utilities on the use of extended implementation schedules and reviewed the consent decrees filed in federal court or administrative orders, and the long-term control plans that the cities developed to correct problems, to the extent the documents were available. We obtained information from city and utility officials on the estimated costs to comply with the consent decrees and administrative orders. We also obtained and reviewed EPA’s list of cities that had consent decrees with extended implementation schedules.\nWe conducted this performance audit from July 2015 to September 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "This appendix provides economic and demographic characteristics for the 10 cities in our review using the U.S. Census Bureau’s American Community Survey 5-year estimates, 2010 through 2014, the most recently available data as of July 2016. Table 7 provides the economic characteristics of the 10 cities that we selected for review.\nTable 8 provides demographic characteristics for the 10 cities that we selected for review.", "This appendix presents data on general system characteristics and infrastructure needs of drinking water utilities serving 10 selected cities with declining populations (see table 9). Data were compiled from written responses and oral responses from drinking water utility representatives, annual reports, planning documents, and capital improvement plans, when available.", "This appendix presents data on general system characteristics and infrastructure needs of wastewater utilities serving 10 selected cities with declining populations (see table 10). Data were compiled from written responses and oral responses from wastewater utility officials; annual reports; planning documents; capital improvement plans; and the Environmental Protection Agency’s Wastewater Needs Survey, when available.", "This appendix presents data on operating revenues and expenses for the 14 drinking water and wastewater utilities serving the 10 cities with declining populations that we selected for review (see table 11). Data are compiled from financial statements from fiscal years 2012 through 2014. In addition, information on frequency of rate increases and rate increases from 2012 through 2014 is provided.", "No single indicator or set of indicators is definitive in describing a utility’s financial condition. Financial indicators that reflect the financial strength of a utility’s operations, along with other primary factors—such as the size and health of the system, its service area, the state laws, municipal ordinances, and charters governing its management—and the strength of its rate management and its regulatory compliance drive a utility’s financial condition. The three major rating agencies—Moody’s, Standard and Poor, and Fitch—use many and varying quantitative and qualitative financial indicators to evaluate a utility’s financial condition and associated bond rating. This appendix contains selected financial indicators for utilities serving 10 selected cities with declining populations. The indicators, shown in table 12, were calculated using data from the utilities’ fiscal year 2014 financial statements. These indicators were selected to reflect current and future financial condition, considering current and future debt to address infrastructure needs. A description of each indicator and method of calculation is described below.\nDebt service coverage ratio is a measure of a utility’s ability to pay its long-term debts. This financial indicator is a key measure in evaluating a utility’s revenue system and is used by all three rating agencies. According to the agencies, a debt service coverage ratio greater than 1.0 indicates that the utility has additional revenue available to cover additional debt payments, if needed. The magnitude by which net revenues are sufficient to cover additional debt, or debt service, indicates the utility’s margin for tolerating business risks or declines in demand, while still assuring repayment of debt. For example, a higher debt service coverage level indicates greater flexibility to withstand customer resistance to higher rates. A debt coverage ratio less than 1.0 indicates that the utility has insufficient revenues to make annual principal and interest payments on long-term debt.\nFormula: Annual net operating revenues (calculated by subtracting total operating expenses, excluding depreciation from total operating revenues) divided by the annual principal and interest payments (on all long-term debt).\nBetter operating ratio is a measure of a utility’s ability to raise revenues to pay for its operating costs, including depreciation of existing infrastructure. Including depreciation means that a utility’s ability to replace its infrastructure, or capital assets, as they depreciate is also part of the calculation. A better operating ratio greater than 1.0 indicates that the utility has revenues sufficient to cover operation and maintenance expenses, as well as the cost of replacing current capital assets.\nFormula: Total operating revenues divided by the total operating expenses (including depreciation).\nRemaining years of useful asset life is a measure of the quality of existing capital assets and overall asset condition.\nFormula: Total asset useful life (calculated by asset value divided by depreciation) minus the age of the asset in years (calculated by total accumulative depreciation divided by annual depreciation).\nLong-term debt per customer account is a measure of average debt burden per ratepayer. Utilities are taking on more debt than they have in previous years, according to a Water Research Foundation study. Fitch’s 2016 Water and Sewer Medians report also indicates an increasing trend in median long-term debt per customer for rated utilities over the last 10 years from 2007 through 2016 by 84 percent.\nFormula: Long-term debt divided by the total number of utility customers (for a combined utility, the aggregate number of water and sewer accounts are used).\nRecent bond rating is an assessment by a rating agency of a utility’s ability to repay new debt, using all the quantitative and qualitative information that the agency has gathered on the utility’s financial and operating circumstances. A rating is derived from quantitative factors, such as values of financial indicators of past financial condition, and from forecasts of future financial performance. It also depends on qualitative factors, such as utility management’s success in rate setting, complying with environmental regulations, budgeting for annual expenditures, and planning for future capital spending. In addition, a utility’s rating is affected by the rate covenants and debt service reserve requirements it has agreed to in order to issue bonds.", "This appendix presents data on water and wastewater rates and billings collection information for 14 utilities we reviewed serving 10 selected cities with declining populations (see table 13). Data were compiled from data and information collected from utility officials and American Community Survey data.", "This appendix describes the use of five cost control strategies by 14 water and wastewater utilities providing service to the 10 cities with declining populations that we reviewed. The five strategies are rightsizing to meet current demands (i.e., reducing treatment capacity or decommissioning water lines and sewer lines in vacant areas), major reorganization, expanding the utility’s customer base, public-private partnerships, and asset management. (See table 4 for corresponding summary table.)", "Three of the 14 utilities we reviewed have undertaken rightsizing. Representatives we interviewed from 2 of those utilities—Detroit Water and Sewerage Department and Gary Sanitary District—said that they were considering large-scale rightsizing of their water infrastructure to more appropriately meet current demands. According to Environmental Protection Agency (EPA) reports, rightsizing can potentially improve the overall efficiency of the system and reduce long-term maintenance costs. Detroit officials said that they were planning to downsize their water treatment capacity from 1,720 to 1,040 million gallons per day to address reduced water demand experienced in recent years. According to its 2015 updated water master plan, downsizing water treatment capacity will result in a life cycle cost savings of about $450 million to align with projected water demand, which declined by 32 percent from 2000 through 2014, in part because of population decline in the region. Detroit is also investigating selective retirement of water pipelines in vacant areas of the city as part of a long-term strategy to reduce system renewal and rehabilitation costs.\nSimilarly, according to city officials and a utility representative, the city of Gary, in collaboration with the Gary Sanitary District, was in the process of developing a new land use plan and city rezoning that will identify areas appropriate for decommissioning services, including wastewater services, to some neighborhoods with high vacancies. As of November 2015, of approximately 13,000 blighted properties in Gary, about 8,000 were vacant and occupied large portions of neighborhoods on the periphery of the city, according to city planning officials we interviewed. According to a utility representative we interviewed, some areas in the city were in obvious need of rightsizing, and the utility had already shut off water and wastewater service to some streets and city blocks.\nMany of the utility representatives we interviewed told us that rightsizing was not practical or feasible, which is consistent with the findings from several studies and EPA reports on rightsizing that we identified. For example, the representatives told us that they did not have entirely vacant blocks that would make decommissioning service lines possible—usually a few occupied houses remained. In addition, water and sewer lines must often be kept to maintain service to remaining houses that are further away. Utility and city planning officials we interviewed also noted the political challenges associated with any displacements necessary to decommission water or wastewater services to a neighborhood, or to reduce water infrastructure capacity in a way that might limit growth in the future.\nAs part of considering rightsizing their infrastructures, 5 wastewater utilities we reviewed—Detroit Water and Sewerage Department and Gary Sanitary District and 3 other wastewater utilities we reviewed—indicated that they have incorporated in their plans, or were considering using, green infrastructure to help reduce sewer overflows. Green infrastructure uses a range of controls, such as vegetated areas, stormwater collection, or permeable pavement, to enhance infiltration, evapotranspiration, or reuse of stormwater on the site where it is generated. The use of green infrastructure can help reduce the amount of stormwater that enters the sewer system, preventing sewer overflow events, and is a potentially less costly approach to helping control combined sewer overflows, according to Natural Resources Defense Council reports. Some utility representatives and city planning officials we interviewed said that green infrastructure is an opportunity for improving blighted and vacant areas within their cities.\nThe 10 cities with declining populations we reviewed had housing vacancy rates averaging 21 percent, based on our analysis of American Community Survey data, 5-year estimates 2010 through 2014. According to a study we reviewed, placement of green infrastructure on vacant properties can provide environmental, social, and economic benefits and help address problems created by vacant housing, which when left undemolished contributes to blight, crime, and the further abandonment of neighboring properties and adds debris to the sewer system and contributes to the combined sewer overflow problem. All 5 utilities that had incorporated green infrastructure in their plans to help control sewer overflows, or were considering using green infrastructure, were collaborating with city planners and others on implementation, and three of the 5 utilities collectively committed more than $150 million for green infrastructure, including funding for demolitions in areas targeted for green infrastructure, according to planning documents we reviewed. Challenges to implementing green infrastructure approaches, according to some representatives from utilities and city planning officials, include establishing responsibilities for and funding of maintenance of green infrastructure; proving the effectiveness of green infrastructure approaches; and breaking silos of organizations (e.g., utilities, city departments, and community organizations) that may benefit from supporting green infrastructure. Funding for demolition is also needed to facilitate the repurposing of these properties for green infrastructure and to address the backlog of properties on current city demolition lists, according to a few of the city officials we interviewed.", "Representatives we interviewed from some of the 14 utilities in our review described undertaking a major reorganization to reduce costs and improve management efficiencies, including the creation of new organizations to manage water and wastewater infrastructure and major staff reduction, and optimization efforts, such as revised organizational structure and job descriptions, within the existing organization. Specifically, 5 utilities we reviewed, undertook major reorganizations. Three of the reorganized utilities created entirely new organizations, independent from their city governments, to manage drinking water and wastewater infrastructure in cases where the cities faced financial challenges.\nFor example, in September 2014 the city of Detroit and surrounding counties entered into an agreement to establish the Great Lakes Water Authority to operate the water supply and sewage disposal system, which were owned by the city of Detroit and operated by the Detroit Water and Sewerage Department. Under the agreement, the Detroit Water and Sewerage Department will operate and maintain the water and sewer lines that provide service to customers within the city boundaries. In addition, the Great Lakes Water Authority will pay the city of Detroit $50 million annually to lease the regional facilities it operates; the Detroit Water and Sewerage Department will use the funds for capital improvements to city-managed infrastructure, among other things. The Great Lakes Water Authority will also dedicate 0.5 percent of revenues annually to fund a regional water assistance program for low-income residents throughout the authority’s service area. Two of the 14 utilities, including one that reorganized, downsized staffing by about 30 percent and 40 percent, respectively, after reorganizing to reduce operational costs and create efficiencies. A fifth utility created a new organizational structure, among other things, to facilitate alignment of work processes between the utility and the city to more efficiently and cost effectively replace water, sewer, and drainage infrastructure alongside the rebuilding of roads.", "By expanding their customer bases, utilities can take advantage of excess treatment capacity to generate additional revenue. They can also take advantage of economies of scale to spread their costs across a greater number of customers, resulting in lower costs per customer and a stronger financial condition for the utility. Representatives we interviewed from half of the utilities (7 of 14) we reviewed already served a regional area, with a correspondingly larger customer base, well beyond the boundaries of the cities that they serve—some provide service county- wide, some provide service across multiple counties, and a few provide service statewide. According to representatives we spoke with, some (5 of 14) of the utilities we reviewed were looking to expand their customer bases by widening their service areas (e.g., regionalizing), to attract commercial or industrial businesses to locate within their existing service areas, or both. Specifically, 2 utilities were actively seeking opportunities to expand their service areas. These 2 utilities had taken steps such as setting aside funding to support water and sewer packages and benefits for businesses or encouraging business placement within their service areas. One utility was using both approaches to expand its customer base.\nMany utilities—including some that were already taking steps to expand their customer bases—noted various limitations to doing so. For instance, a few utilities noted competition from other cities trying to attract industry and commercial businesses. In addition, surrounding communities may already have their own water and wastewater infrastructure and utilities, so expanding service areas means convincing existing utilities and their customers of the benefits of receiving services from another utility. For example, one utility representative told us that the utility’s board was discussing the possibility of providing service to a neighboring area, but the cost of connection is $12 million, more than the neighboring city would like to pay. A representative from another utility said that it had attempted to consolidate with neighboring communities but that there was a lack of interest on the part of other communities.", "Of the 14 utilities we reviewed, few used public-private partnerships as a strategy to help address infrastructure needs. Such partnerships typically involve a government agency contracting with a private partner to construct, operate, maintain, or manage a facility or system, in part or in whole, that provides a public service. Public-private partnerships can take different forms short of a private company purchasing the utility and its facilities, including long-term contractual agreements between a public and a private entity to provide day-to-day operational or management services of facilities or contracting for management consulting services.\nOf the 14 utilities we reviewed, 4 had some experience with public-private partnerships. One utility had—over the last 25 years—an ongoing contract with a private company to manage the day-to-day operations of its wastewater facility. In the past, another utility had a similar contract with a private company to manage daily operations of its wastewater facility. The third utility hired a private company to work with the utility’s management for several years to identify cost reduction opportunities. Finally, according to the 2015 annual report of its parent company, 1 of the 2 privately owned utilities we reviewed had a series of agreements with public entities for the construction and financing of utility infrastructure, which was leased to its public partners.\nOf the remaining 10 utilities that did not have experience with public- private partnerships, a few shared varying perspectives on public-private partnerships. Representatives from 1 said that the utility was open to using the strategy. However, representatives from 2 others said that their utilities preferred to be self-reliant because of public perception that private contractors would not take as great care of the facility as the public utility. In addition, representatives from 1 of these privately owned utilities highlighted the benefit to the community of enhanced economies of scale and additional resources provided by a large private utility, such as its parent company, including investor support and shared laboratories for water quality testing.", "Of the 12 utilities whose representatives we interviewed, representatives from 4 utilities told us that they had asset management systems in place.\nAsset management is a framework for providing the best level of service at the lowest appropriate cost and involves identifying and prioritizing assets for routine repair or replacement (versus emergency repair). It is a widely recognized tool used across a variety of sectors to manage physical assets, such as highways, machinery, and buildings; in the case of water and wastewater infrastructure, key assets are pipelines, tanks, pumps, and other facilities.\nRepresentatives from 1 of the 12 utilities we interviewed, Macon Water Authority, said that it had fully integrated the use of asset management in physical and financial management of the utility. Macon representatives said that they integrated information from their asset management program into a 10-year long-range planning model used to estimate needed income and revenue requirements to manage day-to-day operations, fund replacement of infrastructure, fund normal repairs, and fund maintenance and upgrades. The utility has done this, according to the representatives, while keeping rates low, and representatives acknowledged that receiving a $93.5 million grant from the Federal Emergency Management Agency to replace the utility’s drinking water treatment plant also helped to keep rates low.\nRepresentatives we interviewed from 7 of the remaining utilities said that they had partially implemented or were in the initial stages of developing asset management inventories and plans. A few utility representatives we spoke with acknowledged the value of the strategy in identifying priorities for spending. One utility did not have an asset management plan and was not developing one because, according to its officials, it tracks locations of breaks and other maintenance needs and focuses resources on repairing those.", "", "", "In addition to the contact named above, Susan Iott (Assistant Director), Mark Braza, John Delicath, Kaitlan Doying, Holly Halifax, John Mingus, Robert Sharpe, Jeanette Soares, Anne Stevens, Sara Sullivan, Kiki Theodoropoulos, and Swati Sheladia Thomas made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 2, 2, 3, 3, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 1, 2, 2 ], "alignment": [ "h3_title", "h3_full", "", "h0_full h3_title", "h0_full h3_full", "h0_title", "", "h0_full", "h1_full", "h1_full", "", "", "h3_full h2_full", "h2_full", "", "", "h0_full h4_full h2_full", "", "", "", "", "", "", "h1_title", "h1_full", "", "", "", "", "", "", "" ] }

{ "question": [ "How do cities with declining populations differ from growing cities?", "How did GAO determine the water and wastewater infrastructure needs of cities?", "What major needs were expressed by water and wastewater utility representatives?", "How did cities address concerns about rate affordability for utilities?", "How do customer assistance programs help make rates more affordable?", "How did city utilities use rightsizing to address costs?", "What options exist to assist cities with declining populations?", "How can the EPA provide assistance to cities with declining populations?", "How was the Birmingham Water Works Board affected by its funding from this program?", "What regions have been most affected by population loss?", "Why do these cities face a decline in utility revenues as well?", "What challenges face all U.S. water and wastewater utilities un the future?", "Why was this review undertaken?", "What does this report examine?", "How did GAO conduct research for this report?" ], "summary": [ "Midsize cities (with populations from 50,000 to 99,999) and large cities (with populations of 100,000 and greater) that have experienced a population decline are generally more economically distressed than growing cities. Specifically, GAO's review of American Community Survey data for 674 midsize and large cities showed that the 99 cities with declining population had higher poverty and unemployment rates and lower median income than cities with growing populations.", "Little research has been done about these cities' overall water and wastewater infrastructure needs, but the needs of the 10 midsize and large cities that GAO reviewed generally reflected the needs of cities nationally, as identified in needs assessments conducted by the Environmental Protection Agency (EPA).", "Water and wastewater utility representatives whom GAO interviewed described major infrastructure needs, including pipeline repair and replacement and wastewater improvements to control combined sewer overflows (i.e., wastewater discharges to streams and other water bodies during storms).", "Utilities for the 10 cities GAO reviewed used the strategy of raising rates to increase revenues to address water and wastewater infrastructure needs and used other strategies to address concerns about rate affordability for low-income customers. Most of the 14 utilities GAO reviewed raised rates annually to cover declines in revenues related, in part, to decreasing water use from declining populations, or to pay for rising operating and capital expenses. To help address rate affordability concerns, all of the utilities reviewed had developed customer assistance programs, a strategy to make rates more affordable, for example, by developing a payment plan agreeable to the customer and the utility. In addition, most utilities were using or had plans to use one or more cost-control strategies to address needs, such as rightsizing system infrastructure to fit current demands (i.e., reducing treatment capacity or decommissioning water or sewer lines in vacant areas).", "To help address rate affordability concerns, all of the utilities reviewed had developed customer assistance programs, a strategy to make rates more affordable, for example, by developing a payment plan agreeable to the customer and the utility.", "In addition, most utilities were using or had plans to use one or more cost-control strategies to address needs, such as rightsizing system infrastructure to fit current demands (i.e., reducing treatment capacity or decommissioning water or sewer lines in vacant areas). For example, as part of rightsizing, representatives GAO interviewed for 5 wastewater utilities said that they planned or were considering using vacant areas for green infrastructure (vegetated areas that enhance on-site infiltration) to help control stormwater that can lead to sewer overflows.", "As of June 2016, six federal programs and one policy could assist midsize and large cities with declining populations in addressing their water and wastewater infrastructure needs. Cities with declining populations may receive funding from the six programs, managed by EPA, the Economic Development Administration, the Department of Housing and Urban Development (HUD), and the Federal Emergency Management Agency, for such projects.", "For example, states can use a portion of EPA's Clean Water and Drinking Water State Revolving Funds to provide additional subsidies in the form of principal forgiveness or negative interest loans to cities that meet state affordability criteria, such as median household income.", "The Birmingham Water Works Board, one of the 14 utilities GAO reviewed, received $11.6 million from the Drinking Water State Revolving Fund in fiscal years 2010 through 2015, including $1.7 million with principal forgiveness to pay for green projects, such as water efficiency projects.", "Many midsize and large cities throughout the United States, including the Midwest and Northeast, have lost a substantial percentage of their population.", "These cities face the challenge of a corresponding decline in utility revenues from a loss of ratepayers, which makes it difficult to address their water infrastructure needs.", "Overall, water and wastewater utilities across the United States face substantial costs to maintain, upgrade, or replace aging and deteriorating infrastructure—approximately $655 billion for water and wastewater utilities over the next 20 years according to EPA's most recent estimates.", "GAO was asked to review the water and wastewater infrastructure needs in midsize and large cities with declining populations.", "This report examines (1) the economic characteristics of such cities and their water and wastewater infrastructure needs; (2) strategies that selected cities and utilities have used to address their infrastructure needs and the affordability of their water and wastewater rates; and (3) what existing federal programs and policies, if any, could assist such cities in addressing their needs.", "GAO analyzed decennial census and American Community Survey data, relevant studies, and utility financial statements for 10 cities with the largest population declines from 1980 through 2010 and 14 water and wastewater utilities in those cities. GAO also reviewed laws, regulations, policies, and guidance for six federal programs; analyzed program and city and utility funding data; and interviewed agency and city officials and representatives from 12 of the 14 utilities." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, -1, 0, 1, -1, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "FITARA Can Improve Agencies’ Management of IT", "IT Acquisitions and Operations Identified by GAO as a High-Risk Area", "Full Implementation of FITARA Needed to Improve IT Management", "Agencies Have Made Progress in Consolidating Data Centers, but Need to Take Action to Achieve Planned Cost Savings", "Risks Need to Be Fully Considered When Agencies Rate Their Major Investments on OMB’s IT Dashboard", "Agencies Need to Increase Their Use of Incremental Development Practices", "GAO Contacts and Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "The federal government is likely to invest more than $89 billion on IT in fiscal year 2017. However, as we have previously reported, investments in federal IT too often result in failed projects that incur cost overruns and schedule slippages, while contributing little to the desired mission-related outcomes. For example:\nThe Department of Veterans Affairs’ Scheduling Replacement Project was terminated in September 2009 after spending an estimated $127 million over 9 years.\nThe tri-agency National Polar-orbiting Operational Environmental Satellite System was stopped in February 2010 by the White House’s Office of Science and Technology Policy after the program spent 16 years and almost $5 billion.\nThe Department of Homeland Security’s Secure Border Initiative Network program was ended in January 2011, after the department obligated more than $1 billion to the program, because it did not meet cost-effectiveness and viability standards.\nThe Office of Personnel Management’s Retirement Systems Modernization program was canceled in February 2011, after spending approximately $231 million on the agency’s third attempt to automate the processing of federal employee retirement claims.\nThe Department of Veterans Affairs’ Financial and Logistics Integrated Technology Enterprise program was intended to be delivered by 2014 at a total estimated cost of $609 million, but was terminated in October 2011 due to challenges in managing the program.\nThe Department of Defense’s Expeditionary Combat Support System was canceled in December 2012 after spending more than a billion dollars and failing to deploy within 5 years of initially obligating funds.\nThese and other failed IT projects often suffered from a lack of disciplined and effective management, such as project planning, requirements definition, and program oversight and governance. In many instances, agencies had not consistently applied best practices that are critical to successfully acquiring IT investments.\nFederal IT projects have also failed due to a lack of oversight and governance. Executive-level governance and oversight across the government has often been ineffective, specifically from chief information officers (CIO). For example, we have reported that not all CIOs had the authority to review and approve the entire agency IT portfolio and that CIOs’ authority was limited.", "Recognizing the severity of issues related to government-wide management of IT, FITARA was enacted in December 2014. The law was intended to improve agencies’ acquisitions of IT and enable Congress to monitor agencies’ progress and hold them accountable for reducing duplication and achieving cost savings. FITARA includes specific requirements related to seven areas.\nFederal data center consolidation initiative (FDCCI). Agencies are required to provide OMB with a data center inventory, a strategy for consolidating and optimizing the data centers (to include planned cost savings), and quarterly updates on progress made. The law also requires OMB to develop a goal for how much is to be saved through this initiative, and provide annual reports on cost savings achieved.\nEnhanced transparency and improved risk management. OMB and agencies are to make detailed information on federal IT investments publicly available, and agency CIOs are to categorize their IT investments by level of risk. Additionally, in the case of major IT investments rated as high risk for 4 consecutive quarters, the law requires that the agency CIO and the investment’s program manager conduct a review aimed at identifying and addressing the causes of the risk.\nAgency CIO authority enhancements. Agency CIOs are required to (1) approve the IT budget requests of their respective agencies, (2) certify that OMB’s incremental development guidance is being adequately implemented for IT investments, (3) review and approve contracts for IT, and (4) approve the appointment of other agency employees with the title of CIO.\nPortfolio review. Agencies are to annually review IT investment portfolios in order to, among other things, increase efficiency and effectiveness and identify potential waste and duplication. In establishing the process associated with such portfolio reviews, the law requires OMB to develop standardized performance metrics, to include cost savings, and to submit quarterly reports to Congress on cost savings.\nExpansion of training and use of IT acquisition cadres. Agencies are to update their acquisition human capital plans to address supporting the timely and effective acquisition of IT. In doing so, the law calls for agencies to consider, among other things, establishing IT acquisition cadres or developing agreements with other agencies that have such cadres.\nGovernment-wide software purchasing program. The General Services Administration is to develop a strategic sourcing initiative to enhance government-wide acquisition and management of software. In doing so, the law requires that, to the maximum extent practicable, the General Services Administration should allow for the purchase of a software license agreement that is available for use by all executive branch agencies as a single user.\nMaximizing the benefit of the federal strategic sourcing initiative. Federal agencies are required to compare their purchases of services and supplies to what is offered under the federal strategic sourcing initiative. OMB is also required to issue related regulations.\nIn June 2015, OMB released guidance describing how agencies are to implement FITARA. OMB’s guidance is intended to, among other things: assist agencies in aligning their IT resources with statutory establish government-wide IT management controls that will meet the law’s requirements, while providing agencies with flexibility to adapt to unique agency processes and requirements; clarify the CIO’s role and strengthen the relationship between agency CIOs and bureau CIOs; and strengthen CIO accountability for IT cost, schedule, performance, and security.\nThe guidance identified several actions that agencies were to take to establish a basic set of roles and responsibilities (referred to as the common baseline) for CIOs and other senior agency officials, which are needed to implement the authorities described in the law. For example, agencies were required to conduct a self-assessment and submit a plan describing the changes they intended to make to ensure that common baseline responsibilities are implemented. Agencies were to submit their plans to OMB’s Office of E-Government and Information Technology by August 15, 2015, and make portions of the plans publicly available on agency websites no later than 30 days after OMB approval. As of November 2016, all agencies had made their plans publicly available.\nIn addition, in August 2016, OMB released guidance intended to, among other things, define a framework for achieving the data center consolidation and optimization requirements of FITARA. The guidance includes requirements for agencies to: maintain complete inventories of all data center facilities owned, operated, or maintained by or on behalf of the agency; develop cost savings targets due to consolidation and optimization for fiscal years 2016 through 2018 and report any actual realized cost savings; and measure progress toward meeting optimization metrics on a quarterly basis.\nThe guidance also directs agencies to develop a data center consolidation and optimization strategic plan that defines the agency’s data center strategy for fiscal years 2016, 2017, and 2018. This strategy is to include, among other things, a statement from the agency CIO stating whether the agency has complied with all data center reporting requirements in FITARA. Further, the guidance indicates that OMB is to maintain a public dashboard that will display consolidation-related costs savings and optimization performance information for the agencies.", "In February 2015, we introduced a new government-wide high-risk area, Improving the Management of IT Acquisitions and Operations. This area highlights several critical IT initiatives in need of additional congressional oversight, including (1) reviews of troubled projects; (2) efforts to increase the use of incremental development; (3) efforts to provide transparency relative to the cost, schedule, and risk levels for major IT investments; (4) reviews of agencies’ operational investments; (5) data center consolidation; and (6) efforts to streamline agencies’ portfolios of IT investments. We noted that implementation of these initiatives has been inconsistent and more work remains to demonstrate progress in achieving IT acquisitions and operations outcomes.\nFurther, in our February 2015 high-risk report, we identified actions that OMB and the agencies need to take to make progress in this area. These include implementing FITARA, as well as implementing at least 80 percent of our recommendations related to the management of IT acquisitions and operations within 4 years. As noted in that report, we made multiple recommendations to improve agencies’ management of IT acquisitions and operations, many of which are discussed later in this statement. Specifically, between fiscal years 2010 and 2015, we made 803 recommendations to OMB and federal agencies to address shortcomings in IT acquisitions and operations, including many to improve the implementation of the recent initiatives and other government-wide, cross-cutting efforts.\nAs of October 2016, OMB and the agencies had fully implemented about 46 percent of these recommendations. This is a 23 percent increase compared to the percentage we reported as being fully implemented in 2015. Figure 1 summarizes the progress that OMB and the agencies have made in addressing our recommendations, as compared to the 80 percent target.\nIn addition, in fiscal year 2016, we made 202 new recommendations, thus further reinforcing the need for OMB and agencies to address the shortcomings in IT acquisitions and operations.", "Agencies have taken steps to improve the management of IT acquisitions and operations by implementing key FITARA initiatives. However, agencies would be better positioned to fully implement the law, and thus realize additional management improvements, if they addressed the numerous recommendations we have made aimed at improving data center consolidation, increasing transparency via OMB’s IT Dashboard, and incremental development.", "One of the key initiatives to implement FITARA is data center consolidation. OMB established FDCCI in February 2010 to improve the efficiency, performance, and environmental footprint of federal data center activities. In a series of reports over the past 5 years, we determined that while data center consolidation could potentially save the federal government billions of dollars, weaknesses existed in several areas, including agencies’ data center consolidation plans and OMB’s tracking and reporting on cost savings. In total, we have made 111 recommendations to OMB and agencies to improve the execution and oversight of the initiative. Most agencies agreed with our recommendations or had no comments.\nIn March 2016, we reported that the 24 agencies participating in FDCCI collectively had made progress on their data center closure efforts. Specifically, as of November 2015, these agencies had identified a total of 10,584 data centers, of which they reported closing 3,125 through fiscal year 2015. Notably, the Departments of Agriculture, Defense, the Interior, and the Treasury accounted for 84 percent of these total closures. Further, the agencies have reported that they are planning to close additional data centers by the end of fiscal year 2019.\nIn addition, we noted that 19 of the 24 agencies had reported achieving an estimated $2.8 billion in cost savings and avoidances from their data center consolidation and optimization efforts from fiscal years 2011 through 2015. The Departments of Commerce, Defense, Homeland Security, and the Treasury accounted for about $2.4 billion (or about 86 percent) of the total. Further, 21 agencies collectively reported planning an additional $5.4 billion in cost savings and avoidances, for a total of approximately $8.2 billion, through fiscal year 2019. Figure 2 summarizes agencies’ reported achieved and planned cost savings and avoidances from fiscal years 2011 through 2019.\nTo better ensure that federal data center consolidation and optimization efforts improve governmental efficiency and achieve cost savings, we recommended that 10 of the 24 agencies take actions to complete their planned data center cost savings and avoidance targets for fiscal years 2016 through 2018. We also recommended that 22 of the 24 agencies take actions to improve optimization progress, including addressing any identified challenges. Fourteen agencies agreed with our recommendations, 4 did not state whether they agreed or disagreed, and 6 stated that they had no comments.", "To facilitate transparency across the government in acquiring and managing IT investments, OMB established a public website—the IT Dashboard—to provide detailed information on major investments at 26 agencies, including ratings of their performance against cost and schedule targets. Among other things, agencies are to submit ratings from their CIOs, which, according to OMB’s instructions, should reflect the level of risk facing an investment relative to that investment’s ability to accomplish its goals. In this regard, FITARA includes a requirement for CIO’s to categorize their major IT investment risks in accordance with OMB guidance.\nOver the past 6 years, we have issued a series of reports about the IT Dashboard that noted both significant steps OMB has taken to enhance the oversight, transparency, and accountability of federal IT investments by creating its IT Dashboard, as well as issues with the accuracy and reliability of data. In total, we have made 47 recommendations to OMB and federal agencies to help improve the accuracy and reliability of the information on the IT Dashboard and to increase its availability. Most agencies agreed with our recommendations or had no comments.\nMost recently, in June 2016, we determined that agencies had not fully considered risks when rating their major investments on the IT Dashboard. Specifically, our assessments of risk for 95 investments at 15 selected agencies matched the CIO ratings posted on the Dashboard 22 times, showed more risk 60 times, and showed less risk 13 times.\nFigure 3 summarizes how our assessments compared to the selected investments’ CIO ratings.\nAside from the inherently judgmental nature of risk ratings, we identified three factors which contributed to differences between our assessments and the CIO ratings:\nForty of the 95 CIO ratings were not updated during the month we reviewed, which led to more differences between our assessments and the CIOs’ ratings. This underscores the importance of frequent rating updates, which help to ensure that the information on the Dashboard is timely and accurately reflects recent changes to investment status.\nThree agencies’ rating processes spanned longer than 1 month.\nLonger processes mean that CIO ratings are based on older data, and may not reflect the current level of investment risk.\nSeven agencies’ rating processes did not focus on active risks.\nAccording to OMB’s guidance, CIO ratings should reflect the CIO’s assessment of the risk and the investment’s ability to accomplish its goals. CIO ratings that do no incorporate active risks increase the chance that ratings overstate the likelihood of investment success.\nAs a result, we concluded that the associated risk rating processes used by the agencies were generally understating the level of an investment’s risk, raising the likelihood that critical federal investments in IT are not receiving the appropriate levels of oversight. To better ensure that the Dashboard ratings more accurately reflect risk, we recommended that the 15 agencies take actions to improve the quality and frequency of their CIO ratings. Twelve agencies generally agreed with or did not comment on the recommendations and three agencies disagreed.", "OMB has emphasized the need to deliver investments in smaller parts, or increments, in order to reduce risk, deliver capabilities more quickly, and facilitate the adoption of emerging technologies. In 2010, it called for agencies’ major investments to deliver functionality every 12 months and, since 2012, every 6 months. Subsequently, FITARA codified a requirement that agency CIOs certify that IT investments are adequately implementing OMB’s incremental development guidance.\nIn May 2014, we reported that 66 of 89 selected investments at five major agencies did not plan to deliver capabilities in 6-month cycles, and less than half of these investments planned to deliver functionality in 12-month cycles. We also reported that only one of the five agencies had complete incremental development policies. Accordingly, we recommended that OMB develop and issue clearer guidance on incremental development and that the selected agencies update and implement their associated policies. Four of the six agencies agreed with our recommendations or had no comments; the remaining two agencies partially agreed or disagreed with the recommendations.\nMore recently, in August 2016, we reported that agencies had not fully implemented incremental development practices for their software development projects. Specifically, we noted that, as of August 31, 2015, 22 federal agencies had reported on the IT Dashboard that 300 of 469 active software development projects (approximately 64 percent) were planning to deliver usable functionality every 6 months for fiscal year 2016, as required by OMB guidance. Regarding the remaining 169 projects (or 36 percent) that were reported as not planning to deliver functionality every 6 months, agencies provided a variety of explanations for not achieving that goal. These included project complexity, the lack of an established project release schedule, or that the project was not a software development project. Table 1 lists the total number and percent of federal software development projects for which agencies reported plans to deliver functionality every 6 months for fiscal year 2016.\nIn reviewing seven selected agencies’ software development projects, we determined that 45 percent of the projects delivered functionality every 6 months for fiscal year 2015 and 55 percent planned to do so in fiscal year 2016. However, significant differences existed between the delivery rates that the agencies reported to us and what they reported on the IT Dashboard. For example, in four cases (Commerce, Education, HHS, and Treasury), the percentage of delivery reported to us was at least 10 percentage points lower than what was reported on the IT Dashboard. These differences were due to (1) our identification of fewer software development projects than agencies reported on the IT Dashboard and (2) the fact that information reported to us was generally more current than the information reported on the IT Dashboard. Figure 4 compares the software development projects’ percentage of planned delivery every 6 months reported on the IT Dashboard and to us.\nWe concluded that by not having on the IT Dashboard up-to-date information about whether the project is a software development project and the extent to which projects are delivering functionality, these seven agencies were at risk that OMB and key stakeholders may make decisions regarding the agencies’ investments without the most current and accurate information.\nFinally, while OMB has issued guidance requiring agency CIOs to certify that each major IT investment’s plan for the current year adequately implements incremental development, only three agencies (the Departments of Commerce, Homeland Security, and Transportation) had defined processes and policies intended to ensure that the department CIO certifies that major IT investments are adequately implementing incremental development. Officials from three other agencies (the Departments of Education, Health and Human Services, and the Treasury) reported that they were in the process of updating their existing incremental development policy to address certification, while the Department of Defense’s policies that address incremental development did not include information on CIO certification. We concluded that until all of the agencies we reviewed define processes and policies for the certification of the adequate use of incremental development, they will not be able to fully ensure adequate implementation of, or benefit from, incremental development practices, as required by FITARA.\nTo improve the reporting of incremental data on the IT Dashboard and policies for CIO certification of adequate incremental development, we made 12 recommendations to seven agencies and OMB. Five agencies agreed with our recommendations. In addition, the Department of Defense partially agreed with one recommendation and disagreed with another, OMB did not agree or disagree, and the Department of the Treasury did not comment on the recommendations.\nIn summary, with the enactment of FITARA, the federal government has an opportunity to improve the transparency and management of IT acquisitions and operations, and to strengthen the authority of CIOs to provide needed direction and oversight. To their credit, agencies have taken steps to improve the management of IT acquisitions and operations by implementing key FITARA initiatives, including data center consolidation, efforts to increase transparency via OMB’s IT Dashboard, and incremental development; and they have continued to address recommendations we have made over the past several years. However, additional improvements are needed, and further efforts by OMB and federal agencies to implement our previous recommendations would better position them to fully implement FITARA. To help ensure that these efforts succeed, continued congressional oversight of OMB’s and agencies’ implementation of FITARA is essential. In addition, we will continue to monitor agencies implementation of our previous recommendations.\nChairmen Meadows and Hurd, Ranking Members Connolly and Kelly, and Members of the Subcommittees, this completes my prepared statement. I would be pleased to respond to any questions that you may have at this time.", "If you or your staffs have any questions about this testimony, please contact me at (202) 512-9286 or at pownerd@gao.gov. Individuals who made key contributions to this testimony are Kevin Walsh (Assistant Director), Chris Businsky, Rebecca Eyler, and Bradley Roach (Analyst in Charge).", "Information Technology Reform: Agencies Need to Increase Their Use of Incremental Development Practices, GAO-16-469. Washington, D.C.: August 16, 2016.\nIT Dashboard: Agencies Need to Fully Consider Risks When Rating Their Major Investments, GAO-16-494. Washington, D.C.: June 2, 2016.\nData Center Consolidation: Agencies Making Progress, but Planned Savings Goals Need to Be Established . GAO-16-323. Washington, D.C.: March 3, 2016.\nHigh-Risk Series: An Update. GAO-15-290. Washington, D.C.: February 11, 2015.\nData Center Consolidation: Reporting Can Be Improved to Reflect Substantial Planned Savings. GAO-14-713. Washington, D.C.: September 25, 2014.\nInformation Technology: Agencies Need to Establish and Implement Incremental Development Policies. GAO-14-361. Washington, D.C.: May 1, 2014.\nIT Dashboard: Agencies Are Managing Investment Risk, but Related Ratings Need to Be More Accurate and Available. GAO-14-64. Washington, D.C.: December 12, 2013.\nData Center Consolidation: Strengthened Oversight Needed to Achieve Cost Savings Goal. GAO-13-378. Washington, D.C.: April 23, 2013.\nInformation Technology Dashboard: Opportunities Exist to Improve Transparency and Oversight of Investment Risk at Select Agencies. GAO-13-98. Washington, D.C.: October 16, 2012.\nData Center Consolidation: Agencies Making Progress on Efforts, but Inventories and Plans Need to Be Completed. GAO-12-742. Washington, D.C.: July 19, 2012.\nIT Dashboard: Accuracy Has Improved, and Additional Efforts Are Under Way to Better Inform Decision Making. GAO-12-210. Washington, D.C.: November 7, 2011.\nData Center Consolidation: Agencies Need to Complete Inventories and Plans to Achieve Expected Savings. GAO-11-565. Washington, D.C.: July 19, 2011.\nFederal Chief Information Officers: Opportunities Exist to Improve Role in Information Technology Management. GAO-11-634. Washington, D.C.: September 15, 2011.\nInformation Technology: OMB Has Made Improvements to Its Dashboard, but Further Work Is Needed by Agencies and OMB to Ensure Data Accuracy. GAO-11-262. Washington, D.C.: March 15, 2011.\nInformation Technology: OMB’s Dashboard Has Increased Transparency and Oversight, but Improvements Needed. GAO-10-701. Washington, D.C.: July 16, 2010.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 2, 2, 1, 2, 2, 2, 1, 1 ], "alignment": [ "h3_full h0_title", "h0_full h3_full", "h3_full", "h0_title h2_title h1_title", "h0_full", "h0_full h1_full", "h2_full", "", "h1_full" ] }

{ "question": [ "How has OMB worked to consolidate data centers?", "What were GAO's findings regarding data center closures?", "How will consolidation help agencies in the future?", "What were GAO's recommendations to agencies regarding data center consolidation?", "How did agencies respond to GAO's recommendations?", "How does OMB's IT Dashboard provide transparency?", "Why did GAO report that agencies had not fully considered risks?", "Why did the GAO ratings differ from the CIO ratings?", "What did GAO recommend to the agencies in light of their findings?", "How did agencies respond to GAO's recommendations?", "Why has OMB implemented incremental development?", "How has OMB implemented incremental development?", "What were GAO's findings in 2016?", "Why were there such significant differences in the percentages of software projects delivering functionality every 6 months compared to what was reported on the IT Dashboard?", "How did GAO respond to agencies with regards to improving the reporting on incremental data?", "How did the agencies respond to GAO's recommendations?", "How will the federal government invest in IT in FY2017?", "What is the typical result of government investment in IT?", "How was this historic failure addressed in 2014?", "How has GAO addressed the historic failure of IT investment?" ], "summary": [ "Consolidating data centers. In an effort to reduce the growing number of data centers, OMB launched a consolidation initiative in 2010.", "GAO reported in March 2016 that agencies had closed 3,125 of the 10,584 total data centers and achieved $2.8 billion in cost savings and avoidances through fiscal year 2015.", "Agencies are planning a total of about $8.2 billion in savings and avoidances through fiscal year 2019.", "GAO recommended that the agencies take actions to meet their cost savings targets and improve optimization progress related to their data center consolidation and optimization efforts.", "Most agencies agreed with the recommendations or had no comment.", "Enhancing transparency. OMB's IT Dashboard provides detailed information on major investments at federal agencies, including ratings from Chief Information Officers (CIO) that should reflect the level of risk facing an investment.", "GAO reported in June 2016 that agencies had not fully considered risks when rating their major investments on the IT Dashboard. In particular, of the 95 investments reviewed, GAO's assessments of risks matched the CIO ratings 22 times, showed more risk 60 times, and showed less risk 13 times.", "Several issues contributed to these differences, such as CIO ratings not being updated frequently.", "GAO recommended that agencies improve the quality and frequency of their ratings.", "Most agencies generally agreed with or did not comment on the recommendations.", "Implementing incremental development. A key reform initiated by OMB has emphasized the need for federal agencies to deliver investments in smaller parts, or increments, in order to reduce risk and deliver capabilities more quickly.", "Since 2012, OMB has required investments to deliver functionality every 6 months.", "In August 2016, GAO reported that 22 agencies had reported that 64 percent of 469 active software development projects planned to deliver usable functionality every 6 months for fiscal year 2016. Further, for 7 selected agencies, GAO identified significant differences in the percentages of software projects reported to GAO as delivering functionality every 6 months, compared to what was reported on the IT Dashboard.", "Further, for 7 selected agencies, GAO identified significant differences in the percentages of software projects reported to GAO as delivering functionality every 6 months, compared to what was reported on the IT Dashboard. This was due to, among other things, inconsistencies in agencies' reporting on non-software development projects, and the timing of reporting data.", "GAO made 12 recommendations to 7 agencies and OMB to improve the reporting of incremental data on the IT Dashboard and the policies for CIO certification of adequate incremental development.", "Most agencies agreed or did not comment on our recommendations, and OMB did not agree or disagree.", "The federal government is likely to invest more than $89 billion on IT in fiscal year 2017.", "Historically, these investments have frequently failed, incurred cost overruns and schedule slippages, or contributed little to mission-related outcomes.", "Accordingly, in December 2014, IT reform legislation was enacted, aimed at improving agencies' acquisitions of IT.", "Further, in February 2015, GAO added improving the management of IT acquisitions and operations to its high-risk list. Between fiscal years 2010 and 2015, GAO made about 800 recommendations related to this high-risk area to OMB and agencies." ], "parent_pair_index": [ -1, 0, 0, 0, 3, -1, 0, 1, 0, 3, -1, 0, -1, 2, -1, 4, -1, 0, 1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "", "Overview", "The U.S. Trade Deficit", "Global Value Chains", "Source of the Trade Deficit", "Oil Prices and the Trade Deficit", "Trade Agreements and the Trade Deficit", "Bilateral Trade and the Trade Deficit", "Trade Deficits and Unemployment", "Trade Deficits and Import Tariffs", "Industry and Consumer-level Effects", "Macroeconomic Effects", "Issues for Congress" ], "paragraphs": [ "", "Congress has demonstrated long-standing interest in the U.S. trade deficit as part of its efforts to examine U.S. trade policy and key trading relationships. Congress's role in trade policy stems from a number of overlapping responsibilities, including Congress's constitutional authority over regulating commerce with foreign countries and broad oversight responsibility over the performance of the economy. In some areas, particularly in negotiating trade agreements, Congress has opted to delegate certain authorities to the executive branch. Interest in the trade deficit has been heightened by the Trump Administration, which has addressed trade broadly and trade agreements more directly through an assertive trade policy agenda that includes proposed increased tariff measures based on various trade investigations and vocal skepticism of past U.S. trade agreements and the potential benefits of trade.\nAt times, the Trump Administration's approach to international trade agreements has been termed a \"reset,\" or a renegotiation of past agreements, while at other times it has been viewed as a fundamental change in U.S. trade policy. A key element of the Trump Administration's approach to international trade has been the use of the U.S. trade deficit as a barometer for evaluating the success or failure of the global trading system, U.S. trade policy, and trade agreements.\nAlthough Congress and previous Administrations have focused on the trade deficit as a key economic issue at times, they generally have not implemented specific measures to lower the trade deficit or to make reducing bilateral trade deficits a major objective in evaluating or negotiating U.S. free trade agreements (FTAs). In addition, previous Administrations have largely avoided linking the broad rubric of national economic security, including trade policy and U.S. trade deficits, with other elements of U.S. national security. Rather than using tariffs and other sectoral policies to protect the interests of specific firms or specific sectors of the economy, the United States has used monetary, fiscal, and other broad policies to affect the overall course of the economy and relied on market forces to sort out which firms or sectors are successful. It also has used numerous other policy tools to address specific trade and investment issues regarding U.S. commercial economic engagement with other countries to achieve a level playing field, and other trade policy objectives.\nThe Trump Administration has reportedly justified its approach to trade negotiations by characterizing U.S. free trade agreements (FTAs) as unfair and detrimental to the economy, in part basing this conclusion on the size of bilateral and overall U.S. trade deficits. The Administration also has reportedly characterized the trade deficit as a major factor in a number of perceived ills afflicting the U.S. economy, including the rate of unemployment and slow gains in wages. Some analysts argue that trade agreements play an important role in the U.S. trade deficit; they contend the agreements have failed to provide U.S. exporters with reciprocal treatment or have exposed U.S. producers to increased competition. They also argue that trade deficits have cost U.S. jobs; depressed wages; are economically unsustainable; or result from unfair trade practices by foreign competitors. These issues will be addressed in later sections of this report.\nWhile most economists are concerned over the long-term impact of sustained trade deficits on the economy, they question the role that trade agreements play in determining the trade deficit or the conclusion that the trade deficit is substantially the product of unfair treatment. Instead, standard trade theory contends that trade represents an exchange of assets between willing participants who engage in trade because they believe it maximizes their best interests.\nOn March 8, 2018, the Trump Administration announced that it would apply 10% tariffs on aluminum and 25% on steel products from several U.S. trading partners, based on an investigation under Section 232 of the potential national security impact of these imports. Similarly, the Administration announced on May 24, 2018, a Section 232 investigation into the potential national security implications of imported automobiles with potential imposition of new tariffs depending on the outcome of the investigation. The Administration also announced on March 22, 2018, that it would impose new tariffs on $50 billion in Chinese exports to the United States as a result of an investigation under Section 301 of China's trade practices on intellectual property and forced technology transfers; subsequently, the Trump Administration and the Chinese government announced the possible imposition of additional tariffs on each other's imports.\nAlthough negotiations had been underway to remove some of the proposed tariff measures related to steel and aluminum imports, the Trump Administration ended a temporary exemption from the tariffs on May 31, 2018, and proceeded to impose tariffs on steel and aluminum products imported from China, Canada, Mexico, the European Union, and other countries. To date, the amounts of proposed tariffs that have been announced are small relative to the total value of U.S. annual imports (over $2 trillion), but the actions have raised concern in financial markets, various industries, and U.S. allies over the prospect of escalating tariffs among trading partners. As the chief architect of the post-WWII global trading system rules and institutions, the United States generally has imposed trade restrictions under Sections 232 and 301 in limited instances since these laws were first enacted decades ago.\nThe overall U.S. trade deficit, or more broadly the current account balance, represents an accounting principle that expresses the difference between the country's exports and imports of goods and services. The United States has experienced an annual current account deficit since the mid-1970s. Some observers view this deficit with concern because they believe it costs U.S. jobs; depresses wages; is economically unsustainable; or results from unfair trade practices by foreign competitors. Most economists, however, argue that this characterization misrepresents the nature of the trade deficit and the role of trade in the U.S. economy. In general, most economists conclude that the overall U.S. trade deficit stems from U.S. macroeconomic policies and, as such, attempting to alter the trade deficit without addressing the underlying macroeconomic issues would be counterproductive and create distortions in the economy. This approach, however, does not preclude the possibility that some countries are not fully abiding by international trade agreements and rules or have in place other trade practices that may be discriminatory or present barriers to U.S. market access. Addressing these issues may be worthwhile, but is unlikely to affect the overall U.S. trade deficit.\nEconomic theory also generally concludes that liberalized trade creates both economic costs and benefits, but that the economy as a whole benefits over the long run from a more open trade environment and greater competition, because such an environment pushes an economy to use its resources more efficiently. Standard economic theory recognizes, however, that some workers and producers in the economy may experience a disproportionate share of the short-term adjustment costs that are associated with shifts in resources stemming from greater international competition. Although the attendant adjustment costs for businesses and labor are difficult to measure, some estimates suggest they may be significant over the short run and can entail dislocations for some segments of the labor force, companies, and communities. Closed plants can result in depressed commercial and residential property values and lost tax revenues, with effects on local schools, local public infrastructure, and local community viability.\nThis report examines the components of the U.S. trade deficit in terms of the merchandise trade account and the broader current account. It also assesses the relationship between the trade deficit and U.S. free trade agreements, perceived unfair treatment in trading relationships, the trade deficit and U.S. rates of unemployment, and the impact of tariffs on the U.S. trade deficit, as well as raises issues for potential congressional consideration.", "The U.S. merchandise trade deficit, a frequent focus of the Trump Administration, is an accounting of the net balance of exports and imports of goods; it is one component of the overall balance of payments. A broader measure of U.S. global economic engagement, the current account, includes trade in goods, services, and some official, or government, flows. U.S. exports in 2017 are estimated to be about $1.5 trillion; imports are estimated at $2.4 trillion; and the merchandise (goods) trade deficit is estimated to be around $811 billion on a balance of payments basis. Exports account for about 13% of U.S. GDP, while imports account for about 16%. Exports of services in 2017 are estimated to be about $781 billion, with services imports valued at about $538 billion, or a services surplus of about $243 billion. As a result, the combined goods and services deficit, or the current account balance, is estimated to have been about -$568 billion in 2017. Relative to the size of the U.S. economy, as measured by U.S. gross domestic product (GDP), the current account deficit currently is equivalent to less than 3.0% of U.S. GDP, as shown in Figure 1 .\nBetween 2002 and 2007, the current account deficit grew from less than -4.0% to nearly -6.0% of U.S. GDP, reflecting a low overall national rate of saving and large capital inflows. The financial and housing mortgage lending crises from 2007 to 2009 and slowdown in global trade reduced the current account deficit by half by 2010, where it has since moved between -2.0% and -3.0% of U.S. GDP. During the decade of the 2000s, the current account deficit-to-GDP ratio averaged about -4%; after 2010, the share averaged about -3% of U.S. GDP. These values contrast with the average shares in the 1940-1970 period, when the current account-to-GDP share typically averaged less than a positive 1%, or the current account was in surplus.\nAs shown in Figure 2 , the United States annually experiences a deficit in goods trade, but a surplus in services trade. By standard convention, each transaction in the balance of payments has a corresponding and offsetting transaction. This means that a surplus or deficit in the merchandise trade account is offset by a transaction in the financial accounts, or a deficit in the current account is financed by an offsetting surplus transaction in the financial accounts, represented by a capital inflow.", "Trade data typically have treated exports and imports of goods and services as strictly domestic or foreign goods. However, the rapid growth of global value chains (GVCs) and intra-industry trade (importing and exporting goods in the same industry) have significantly increased trade in intermediate goods in ways that can blur the distinction between domestic and foreign firms and goods and the accuracy of bilateral trade balances as drivers of public policy. Intermediate goods are products that are used as inputs into the production of final goods and services. Foreign value added in goods and services, or the share of the value of a good that was imported as an intermediary product, accounts for about 28% of the content on average of global exports, This share, however, can vary considerably by country and industry.\nAs a result of the growth in GVCs, traditional methods of counting trade may obscure the actual sources of goods and services and the allocation of resources used in producing those goods and services. Trade in intermediate goods also means that imports may be essential inputs for exports. As a result, countries that impose trade measures restricting imports may hurt their own exports. Trade in intermediate goods and services through value chains uses a broad range of services in ways that have expanded and redefined the role that services play in trade. It also has increased the number of jobs in the economy that are tied directly and indirectly to international trade. Often this expanded role of trade in goods and services through trade in intermediate goods is not fully captured in trade data, particularly in bilateral merchandise trade data. While some imports and exports are substitutable, other imports represent items that are either unavailable or more costly to produce domestically. Also, demands on labor and capital markets vary substantially between export and import sectors. While some job losses associated with imports can be highly concentrated, imports also support a broad range of widely dispersed service-sector jobs in such areas as transportation, sales, finance, marketing, insurance, legal, and accounting.", "Given the current composition of the U.S. economy, most economists contend that the U.S. trade deficit is largely the product of U.S. macroeconomic policy, or the combination of fiscal and monetary policies. While this conclusion may seem counterintuitive, it stems from some basic economic relationships and the interaction of the U.S. economy with the global economy through trade and financial linkages. The economy can be represented by four major sectors: households, businesses, government, and foreign trade, represented here by the current account balance. These sectors interact to provide the basic funds for business investment and funds for the government sector. Generally, the household sector supplies the funds that are used by the government sector and by businesses to invest, as shown in Figure 3 .\nWhen the combination of three sectors—households, business, and government—creates a net savings deficit, the economy is said to experience a savings-investment imbalance. Currently, the demand for capital in the U.S. economy from the business and government sectors is outstripping the amount of savings supplied domestically by households. This gap between domestic savings and the demand for capital is filled by capital inflows. Following the financial crisis of 2008-2009, household savings increased sharply and personal consumption fell, while the business and government sectors experienced similarly sharp swings into negative net balances. The combination of these three forces tended to reduce capital inflows and the current account deficit fell from the values recorded in 2005-2007. Since 2009, household savings has remained above the levels recorded in the period immediately preceding the financial crisis, but the amounts generally have declined annually. During the same period after the financial crisis, the government sector continued to experience large net negative balances, while the business sector alternated between positive and negative net balances. Since 2009, the annual U.S. current account deficit has remained around -$500 billion (-$486.6 billion in 2016).\nWith floating exchange rates and liberalized capital flows, capital inflows bridge the gap between domestic sources of capital and demand, or between the total amount of savings in the economy relative to the total amount of investment, allowing the country to spend beyond its means, represented by the current account deficit. Typically, the exchange rate would be expected to adjust to eliminate the current account deficit over time. The United States, however, is unique in its ability to sustain current account deficits. The dollar serves as the de facto global reserve currency; this means the international value of the dollar reflects a broad range of international and domestic economic activities that can far outweigh the size of domestic trade balances alone. The overall performance of the U.S. economy, combined with economic, political, and legal institutions also make the United State an attractive location for foreign investors, especially during periods of heightened economic, political, or financial uncertainty.\nForeign capital inflows also keep U.S. interest rates below the level they otherwise would reach, which tends to support a higher rate of economic growth through increased personal consumption and business investment, but also may increase demand for imports and potentially lead to a larger current account deficit. Economists generally argue that it is this interplay between the demand for and the supply of credit in the economy, rather than the flow of manufactured goods and services, that drives the broad inflows and outflows of capital and serves as the major factor in determining the international exchange value of the dollar and, therefore, the overall size of the nation's trade deficit.\nAs U.S. demand for capital outstrips domestic sources of funds, domestic interest rates rise relative to those abroad, which tend to draw capital away from other countries to the United States. Capital inflows also place upward pressure on the dollar's exchange rate, pushing the exchange value of the dollar higher relative to other currencies. As the dollar rises in value, the price of U.S. exports rises and the price of imports falls, which tends to increase the current account deficit. These foreign funds have been available to the United States because foreign investors have remained willing to loan their excess savings to the United States in the form of acquiring U.S. assets. In turn, these capital inflows have accommodated the current account deficits. The sustained current account deficit would not have been possible without the accommodating inflows of foreign capital.\nDue to the savings-investment imbalance in the U.S. economy, usually as the economy approaches its potential full-employment level of output, the rate of unemployment falls, credit markets tighten, interest rates rise, the savings-investment imbalance worsens, and capital inflows increase. These developments tend to strengthen the value of the dollar relative to other currencies. As a result of the appreciation in the exchange value of the dollar, generally import prices fall relative to U.S. export prices, increasing the merchandise trade deficit. In addition, usually as the economy approaches full employment, national income rises, and consumers increase their purchases of all goods, including imports, which adds to the trade deficit.\nIn contrast, usually when the U.S. economy is growing at a rate below its potential, demands on financial markets are reduced, interest rates fall, the savings-investment imbalance lessens, and capital inflows decline, which reduces pressure on the dollar, all other things being equal. As a result, generally the international exchange value of the dollar falls relative to other currencies and the price of U.S. exports falls, while the relative price of imports rises, which tends to make U.S. exports more competitive and reduce the trade deficit. In addition, usually when the economy underperforms, national income is below its potential and consumer spending falls. This drop in consumption reduces demand for domestic goods and for imports, which contributes to a decline in the trade deficit.\nForeign investors also often seek dollar-denominated assets as safe-haven assets during times of economic stress. This means that the balance of payments records not only the accommodating flows of capital which correspond to imports and exports of goods and services, but also autonomous flows of capital that are induced by a broad range of economic factors that are unrelated directly to the trading of merchandise goods. Foreign demand for dollars and dollar-denominated assets places upward pressure on the exchange value of the dollar, which raises the cost of U.S. exports and reduces the cost of imports. As a result, the trade deficit is the offsetting amount of the capital inflows. Demand for U.S. assets, such as financial securities, translates into demand for the dollar, since U.S. securities are denominated in dollars. As demand for the dollar rises or falls according to overall demand for dollar-denominated assets, the value of the dollar changes. These exchange rate changes, in turn, have secondary effects on the prices of U.S. and foreign goods, which tend to alter the U.S. trade balance.\nOne concern expressed by economists and others is the debt accumulation associated with sustained trade deficits. They argue that the long-term impact on the economy of borrowing to finance imports depends on whether those funds are used for greater investments in productive capital with high returns that raise future standards of living, or whether they are used for current consumption. Economists argue, however, that attempting to reduce the trade deficit as a public policy goal without addressing the underlying macroeconomic imbalances likely will make the economy less productive and reduce the annual rate of economic growth. Furthermore, most economists argue that domestic wage rates, the rate of unemployment, and the overall rate of growth in the economy are the product of the macroeconomic policy environment rather than from trade generally or from the trade deficit.", "The macroeconomic origins of the trade deficit are apparent when considering changes in the price of oil and its impact on the U.S. trade deficit. Given the prominent role that energy imports have played at times in U.S. trade, the U.S. trade deficit might be expected to decline along with a decline in the price of imported oil, but that has not been the case. From 2014 to 2015, for example, the average price of an imported barrel of crude oil fell by nearly half from an average annual price of $91 per barrel to an average annual price of $47 per barrel, although the price of imported crude oil fell below $40 per barrel by the end of 2015. During this period, petroleum imports as a share of the total annual U.S. trade deficit fell from 26% to 11%. However, while the average price of imported crude oil dropped by nearly half from 2014 to 2015, the quantity of imported crude oil fell by 1.4%. As a result of the drop in crude oil prices combined with the relatively stable quantity of imports, crude oil imports fell from accounting for more than 40% on average of the annual U.S. merchandise trade deficit in 2012 to about 10% on average of the annual U.S. trade deficit in 2015. During 2016, the average price of imported crude oil fell to an average monthly price of $36 per barrel, before rising to an average price of $46 per barrel in 2017 and continued rising in 2018 to reach over $70 per barrel at times. By December 2017, oil imports accounted for 4% of the U.S. merchandise trade deficit, but averaged 12% of the deficit in the first quarter of 2017, compared with 9% of the deficit in the comparable period of 2018.\nDespite the drop in the average annual price of imported crude oil in 2015 and the decline in the role of imported crude oil in the value of the U.S. trade deficit, the total U.S. merchandise trade deficit increased in 2015 over that recorded in 2014, as shown in Figure 4 . Instead of seeing the overall trade deficit decline, the composition of the trade deficit changed, with non-petroleum products replacing petroleum products, reflecting a growing economy and rising household consumption, seemingly affirming the proposition that the overall value of the trade deficit is determined by macroeconomic forces.", "Some analysts argue there is a link between the trade deficit and the level of unemployment in the economy; they contend that domestic production could be substituted for imports, which could boost both production and employment in the U.S. economy. As indicated, most economists argue that the macroeconomic origins of the U.S. trade deficit mean that trade agreements tend to alter the composition of the trade deficit among various trading partners and among a different mix of goods and services, but they are unlikely to alter the overall size of the U.S. trade deficit. Consequently, without any changes in the underlying savings-investment balance in the economy, attempts to alter the U.S. bilateral trade balance with one country, or group of countries, could cause an offsetting deterioration in all other bilateral balances.\nUltimately, bilateral trade depends on the choices of individual firms and consumers. At the same time, bilateral trade balances are influenced by a seemingly innumerable list of economic activities at the micro level, or at the level of the individual firm or consumer, that are as diverse as the trading partners themselves. These activities can include, but are not limited to, the overall level of economic development, the abundance of raw materials, relative rates of economic growth, rates of technological change, changes in productivity, differences in rates of inflation, changes in commodity prices (especially the price of oil), and changes in exchange rates.\nEconomists have identified other economic effects that can arise specifically from trade agreements between two or more countries, often termed preferential trade agreements, in terms of trade creation and trade diversion. These effects can alter existing trade relationships among participants and nonparticipants in trade agreements in ways that complicate efforts to observe the cause and effect relationship between trade agreements, bilateral trade, and the trade deficit. Trade creation stems from lower tariff rates and lower import prices for the participants of the trade agreement, which tends to create new trade opportunities. In contrast, trade diversion reflects a shift in trade patterns that may arise as a result of lower tariff rates among the participants to a trade agreement. In this case, trade can be diverted away from the relatively higher-priced competitors who are not party to the agreement to competitors with relatively lower-priced goods as a result of the reduction in tariff rates. At times, countries are motivated to participate in trade agreements to forestall this type of trade diversion.\nAs noted above, the United States experienced an overall merchandise trade deficit in 2016 of $734.3 billion and a surplus in services trade of $247.7 billion, for a combined total of -$486.6 billion. During the same year, the United States ran a merchandise trade deficit of -$71.3 billion with the 20 FTA partner countries and a services surplus of $68.9 billion, or a goods and services deficit of -$2.5 billion. The share of the U.S. trade deficit with FTA partners, however, has fallen by nearly half over the 2007-2017 period, from 18% to about 10% of the total U.S. merchandise trade deficit, as shown in Figure 5 .\nIn trade with the European Union in 2016, the United States ran a goods deficit of -$146 billion and a services surplus of $54.8 billion, or a combined goods and services deficit of -$91.5 billion. With NAFTA, the United States experienced a merchandise goods trade deficit in 2016 of -$74.4 billion and a services surplus of $31.5 billion, or a combined goods and services deficit of -$42.9 billion.\nEstimating the economic effect of trade agreements on trade balances is complicated further by two major economic forces. When import prices are lowered due to a trade agreement, the lower prices have two main effects: (1) they lower the prices of imported goods, which can stimulate a shift in domestic demand toward the comparably lower-priced imported goods (the substitution effect); and (2) they increase the real purchasing power of consumers and producers, which may increase demand for all goods and services (the income effect). For some goods, these two effects work in tandem to unambiguously increase demand, tending to increase production and employment. In some cases, however, the two effects work in opposite directions: the substitution effect has a negative impact on demand, while the income effect has a positive impact on demand. In these cases, the net result of these two effects can be ambiguous.\nThe U.S. International Trade Commission (ITC) is tasked by Congress to provide the official U.S. government assessment of the economic effects of U.S. trade agreements. In June 2016, the ITC published a congressionally mandated report on the estimated economic effects of U.S. FTAs. The ITC's analysis considered industry-specific agreements and bilateral, regional, and multilateral agreements.\nThe commission's economic analysis, as seen in Table 1 , indicates that in 2012 U.S. bilateral and regional trade agreements increased U.S. aggregate trade by about 3% and U.S. real GDP and U.S. employment by less than 1%, $32.2 billion and 159,300 fulltime equivalent employees, respectively, and increased bilateral trade with partner countries by 26.3%. The ITC also estimated that bilateral and regional trade agreements had a positive effect, on average, on U.S. bilateral merchandise trade balances with the partner countries, increasing trade surpluses or reducing trade deficits by a total of $87.5 billion (59.2%) in 2015. The ITC's analysis also indicated that agreements that focus on specific industries had larger impacts on trade in their targeted industries than bilateral agreements that cover many sectors. The ITC also estimated that FTAs provided\ngains to consumers through lower prices to the extent that the lower-priced items were present in consumers' budgets; greater product variety; increased receipts for intellectual property; and a positive effect, on average, on U.S. bilateral merchandise trade balances with partner countries.", "Most economists argue that a broad range of factors affect national economies and trade balances more than even the most robust bilateral or international trade agreement. Generally, it is difficult to unravel the complicated linkages that exist between a trade agreement and the broader economy in order to track movements in bilateral trade balances. Also, global trade has been affected by macroeconomic events like the 2008-2009 financial crisis and the associated economic recession in the United States and elsewhere, which caused global trade to decline by 30% in 2009 from the previous year. As a result, most economists question the usefulness of using bilateral trade balances as indicators of trade relations, the effectiveness of a trade agreement, or the costs and benefits of a trade agreement. With or without a formal trade agreement, trade with specific countries may have a concentrated impact on certain sectors of the economy and entail certain adjustment costs, including changes in employment, which can be highly concentrated, with some workers, firms, and communities affected disproportionately.\nOn a bilateral basis, trade balances are shaped by a host of factors. Indeed, U.S. FTA partners display great variation in their economies, ranging from Canada, which has a highly developed open economy and is very close to the United States, to small, Central American developing countries whose economies are quite different in structure from the U.S. economy and who are further away from the United States. In addition, many U.S. FTA partners represent economies that are substantially smaller than the U.S. economy and often are limited in what they produce. As a result, U.S. trade with these countries often is concentrated in a small number of items and often is comprised of trade in raw materials and intermediate processed goods. In most of the countries that have an FTA with the United States, the top 10 export and import commodities account for significant shares of total bilateral trade: more than 90% in some cases. Also, bilateral trade is reliant in some cases on trade in raw materials and agricultural commodities; in other cases, bilateral trade is based on trade in energy items, particularly U.S. trade with Canada and Mexico. Such differences in the underlying structure of trade with particular trading partners, however, complicate efforts to compare the performance of one trade agreement with another and to derive cause and effect relationships between the implementation of an FTA and bilateral trade balances.\nAnother factor that can affect bilateral trade relations and trade balances is the composition of trade relationships, which differ from one country to another. While trade agreements determine the rules by which nations conduct trade and provide incentives to consumers in the form of lower tariff rates and firms in the form of lower trade barriers, behavioral characteristics of consumers and firms determine how those incentives affect bilateral trade. Economists often attempt to estimate the impact of a trade agreement on bilateral trade based on estimates of the strength of the responsiveness by consumers and firms to the incentives provided by the agreement. The responsiveness of consumers and firms to the incentives associated with trade agreements seems to vary by different types of goods, or by major end-use categories. Consumer purchases of luxury goods, for instance, are highly responsive to changes in prices and consumers' incomes, while consumer consumption of agricultural products is less responsive.\nAlthough China is a major U.S. trading partners with large trade imbalances, the United States does not have an FTA with China. Over four decades, China has risen from a poor developing country to become a major global economic power in ways that are challenging the established economic order. In particular, China is intervening in its economy in various ways to alter the basic structure of its economy and its trade relationships, while seeking to exert a role in the global economic order in line with its economic presence. Given the size of the U.S. trade deficit with China, it has received particular attention from the Trump Administration, which has indicated its interest is gaining commitments from China to reduce the size of its annual bilateral trade deficit.\nAnother factor potentially affecting U.S. bilateral trade deficits mentioned by the Trump Administration, some Members of Congress, and others is the prospect of \"unfair\" foreign trade practices. There is no official definition of what constitutes an \"unfair\" foreign trade practice. Some countries, however, may not be fully abiding by international trade agreements and rules, or they may continue to maintain certain trade barriers. Annually, the United States Trade Representative (USTR) prepares a report mandated by Congress on formal and informal barriers that negatively affect U.S. exports of goods and services to, and investments with, U.S. trade partners. While formal barriers to trade in goods, often constituting product-specific tariffs, can be estimated, barriers to trade in services and investments and other nontariff barriers rarely have an estimated dollar-equivalent value. The report also notes that:\nTrade barriers elude fixed definitions, but may be broadly defined as government laws, regulations, policies, or practices that either protect domestic goods and services from foreign competition, artificially stimulate exports of particular domestic goods and services, or fail to provide adequate and effective protection of intellectual property rights.\nIn evaluating foreign trade barriers, the Trade Barriers report classifies trade barriers into ten categories, including\nImporting policies (tariffs and other import charges, quantitative restrictions, import licensing, customs barriers, and other market access barriers); Sanitary and phytosanitary measures and technical barriers to trade; Government procurement ( e.g ., buy national policies and closed bidding); Export subsidies ( e.g. , export financing on preferential terms and agricultural export subsidies that displace U.S. exports in third country markets); Lack of intellectual property protection ( e.g. , inadequate patent, copyright, and trademark regimes and enforcement of intellectual property rights); Services barriers ( e.g. , limits on the range of financial services offered by foreign financial institutions, restrictions on the use of foreign data processing, and barriers to the provision of services by foreign professionals); Investment barriers ( e.g. , limitations on foreign equity participation and on access to foreign government-funded research and development programs, local content requirements, technology transfer requirements and export performance requirements, and restrictions on repatriation of earnings, capital, fees and royalties); Government-tolerated anticompetitive conduct of state-owned or private firms that restricts the sale or purchase of U.S. goods or services in the foreign country's markets; Digital trade barriers ( e.g. , restrictions and other discriminatory practices affecting cross-border data flows, digital products, internet-enabled services, and other restrictive technology requirements); and Other barriers (barriers that encompass more than one category, e.g. , bribery and corruption, or that affect a single sector).\nThe Trade Barriers report notes that it attempts to provide a quantitative assessment of the potential effect of removing certain foreign trade barriers on particular U.S. exports, but that such estimates cannot be used to determine the total effect on U.S. exports either to the country in which a barrier has been identified or to the world in general. According to the report, the estimates cannot be aggregated to derive a total estimate of the gains in U.S. exports to a given country or to the world that would be derived from reducing or eliminating the identified trade barriers.", "Some analysts argue that the trade deficit translates to a net loss of jobs in the economy by implying that domestic production could be substituted for imports, which would boost both production and jobs in the U.S. economy. Most economists argue that equating a trade deficit, whether on a bilateral basis or overall, with unemployment or job losses is questionable given the macroeconomic origin of the trade deficit and the relatively limited role trade plays in the U.S. economy. In general terms, viewing trade balances in isolation or as a measure of a trade agreement represents an approach that is fundamentally different from general economic arguments concerning the costs and benefits of trade and trade agreements.\nThe Commerce Department's International Trade Administration (ITA) estimates that U.S. exports of goods and services in 2016 supported 10.7 million jobs, or 7.4% of the U.S. workforce—6.3 million in the goods producing sector and 4.4 million in the services sector. In some cases, various groups have argued that if a certain number of jobs were supported by $1 billion of exports, then that same number could be used to estimate the number of jobs that would be \"lost\" by $1 billion of imports, represented by the trade deficit, so any net increase in imports with FTA countries would necessarily result in a loss of employment for the economy. The ITA's methodology, however, is unique to estimating a static number of jobs supported (not created) by exports. The composition of U.S. imports is fundamentally different from that of U.S. exports.\nWhile some imports and exports represent clearly substitutable items, which may adversely affect U.S. jobs, other imports represent inputs to further processing, or are items that either are not available or are not fully available in the economy. In addition, import-competing industries likely do not have the same mix of capital and labor in their production processes as do export-oriented industries so that demands on capital and labor markets could vary substantially across industrial sectors. Also, demands on labor and capital markets vary between export and import sectors. Some job losses associated with imports can be highly concentrated. Imports also support a broad range of widely dispersed service-sector jobs, in such areas as transportation, sales, finance, marketing, insurance, and accounting.\nAlthough some observers argue that international trade and trade deficits in particular tend to reduce the number of jobs and increase the unemployment rate for the economy as a whole, the data and economic theory offer a mixed assessment. International competition may be one among a number of factors that affect the overall composition of employment in the economy and may result in job gains and losses. In general, the unemployment rate and the trade deficit are not directly related. Over the long run, however, sustained trade deficits in which foreigners acquire U.S. assets through export earnings and expropriate profits or other income earned from their asset holdings could result in a reduced amount of capital available in the U.S. economy and, thereby, potentially reduce the rate of economic growth and total employment. Such effects could be offset somewhat by the extent to which the capital outflows tended to weaken the exchange value of the dollar and improve the price competitiveness of U.S, exports, potentially increasing production and employment in the export sector.\nRecent data indicate that high unemployment rates have occurred during periods when there were smaller deficits in the merchandise trade accounts as a result of the overall industrial composition of the economy. For instance, in 2006, the U.S. unemployment rate had fallen to about 4.0%, with the economy growing at an annual rate of 2.7%. At the same time, the economy experienced a merchandise trade deficit of over -$800 billion, as shown in Figure 6 . In 2009, however, the rate of economic growth had fallen to a negative 3.0% and the rate of unemployment had risen to 9.9%, but the trade deficit had fallen to -$510 billion.\nSince 2009, the annual U.S. merchandise trade deficit increased from around -$500 billion to around -$750 billion in 2011; it has remained within a narrow range through 2017. During this same period, however, the rate of unemployment has fallen from nearly 10% in 2010 to under 4.0% in mid-2018.\nWhile many of the economic arguments can be arcane at times, economists generally contend that from the perspective of the economy as a whole, both consumers and producers benefit from liberalized trade and that the gains for the economy as a whole outweigh the costs, irrespective of the bilateral trade deficit or surplus. Most economists argue that the economy operates more efficiently as a result of competition through international trade and that consumers throughout the economy experience a wider variety of goods and services at varying levels of quality and price than would be possible in an economy closed to international trade. They also contend that trade may have a long-term positive dynamic effect on an economy that enhances both production and employment. In addition, U.S. trade agreements comprise a broad range of issues that may affect trade and commercial relations over the long run between the negotiating parties, particularly for developing and emerging economies.\nIn a dynamic economy like that of the United States, jobs are constantly being created and replaced as some economic activities expand, while others contract. For instance, the Department of Labor reported that there was an annual average of 147 million jobs in the U.S. economy in 2017. During this same period, jobs supported by exports were estimated at 10.7 million jobs. The data also indicate that in 2017 there were 12.9 million gross jobs gained in the economy and 10.9 million gross jobs lost, accounting for 8.8% and 7.4%, respectively, of the number of jobs in the economy, or amounts that are greater than the total number of jobs in the economy that were supported by exports. The combined share of 16.2% (the combined shares of gross jobs gained and lost) reflects the process of job turnover during the year, or the churning in the labor market. As part of this constant economic transformation process, various industries and sectors evolve at different speeds, reflecting differences in technological advancement, productivity, and efficiency. Those sectors that are the most successful in developing or incorporating new technological advancements generate greater economic rewards and are capable of attracting larger amounts of capital and labor. In contrast, those sectors or individual firms that lag behind attract less capital and labor and confront ever-increasing competitive challenges. Indeed, to avoid economic stagnation, some sectors may need to relinquish some capital and labor so that others sectors can grow.\nBeyond external forces that affect the economy, multi-directional interactions within the economy complicate efforts to determine cause and effect relationships between trade and trade agreements and the gains or losses of jobs. International trade is not the primary force that creates jobs in the U.S. economy; exports account for about 13% of total U.S. annual GDP, compared with 45% in Germany and 30% in Canada. The total number of jobs and the overall level of production in the United States are determined by such macroeconomic factors as productivity growth, the growth rate of the population, worker participation rates, and the pace of technological innovation. To the extent that foreigners repatriate profits from their U.S. activities, the international exchange value of the dollar would decline as foreigners trade dollars for foreign currency. A lower-valued dollar, in turn, reduces the price of U.S. exports in foreign markets, potentially increasing U.S. production and employment in the export sector.", "The United States generally has aimed over several decades to negotiate lower tariff and other trade barriers through reciprocal multilateral, regional and bilateral agreements. It has avoided imposing import tariffs as a broad approach to reducing the trade deficit out of a commitment to support principles of multilateral rules and nondiscrimination and due to concerns over the potentially negative effects on the economy of higher tariffs. At the same time, the United States and its trading partners have adopted special safeguards and other specific rules to address import surges and certain unfair trade practices that may cause or threaten to cause injury to domestic industries, which could lead to tariff remedies in specific instances. It also has supported worker retraining and other social safety net policies to mitigate the potential adverse effects of trade liberalization. The three most frequently applied U.S. trade remedies are: (1) antidumping (AD), which provides relief to domestic industries that have experienced, or are threatened with, material injury caused by the adverse impact of imports sold in the U.S. market at prices determined to be less than fair market value; (2) countervailing duties (CVD), which provide relief to domestic industries that are threatened with material injury due to the adverse impact of imported goods that have been subsidized by a foreign government or public entity; and (3) safeguards (also referred to as escape clauses), which provide temporary relief from imports of fairly traded goods that cause or threaten to cause serious injury. Identified as Section 201 of the Trade Act of 1974, the safeguards clause may provide domestic industries with temporary relief from import competition through a temporary import duty, import quota, or a combination of both, based on a presidential decision. In January 2018, the Trump Administration announced safeguard tariffs on imports of large washing machines, solar cells and modules for three years.\nAccording to standard economic theory, import tariffs generally create two sets of effects: microeconomic effects at the consumer and firm level; and macroeconomic effects through movements in the exchange rate. These combined effects may partially or fully offset the intended impact of the tariff, challenging the tariff's usefulness as a policy tool for correcting trade imbalances. In general, an import tariff raises the price of imports relative to similar domestically produced goods. The difference in price between imports and domestic goods is intended to shift demand toward domestic products, with anticipated changes in increased domestic production and employment in the protected sector. How these microeconomic effects unfold, however, likely depends on a number of factors, including the response by domestic producers, foreign producers, and domestic consumers.", "As domestic producers attempt to increase production in response to a tariff-induced shift in demand, they would require additional capital and workers. The cost of acquiring these resources, however, depends on how fully employed such resources are within the economy. As the economy approaches full employment, firms attempting to increase employment or gain additional capital need to bid those resources away from other firms and economic activities in the economy, ultimately raising production costs for all firms. Such resource constraints would become increasingly more binding the closer the economy moves toward full employment. To the extent that such price increases are passed along through the economy to other producers and consumers, the real incomes of firms and consumers would be eroded, leading to a lower overall level of consumption of domestic and imported goods. In addition, an increase in domestic prices could erase the price advantage for domestic firms that initially stems from the tariff on imports, making them no more competitive with foreign firms than they were prior to the tariff, while saving neither workers nor firms in the protected sectors. For instance, various studies suggest that protection for the steel sector through tariffs and quotas have not reversed the decline in the steel sector. To the extent that domestic firms can find substitutes for the imported items, such as glass and plastic for aluminum, they may be successful in avoiding prices increases over the near term. Over the long term, however, a shift to substitutes will require additional resources shifting to those sectors with associated price increases as firms attempt to increase output by drawing resources away from other economic activities.\nForeign firms can also affect the domestic economic impact of tariffs on imports. In general terms, standard economic theory assumes that foreign firms will pass along the entire tariff in terms of higher prices. In some cases, however, foreign firms may opt to reduce their profit margins to maintain their market shares. In this case, domestic firms in the protected market would not experience a shift in demand away from higher-priced imports and market conditions would remain as before the imposition of the tariff.\nThe impact of an import tariff on consumers generally is considered to be the single largest effect. Price increases in the economy associated with an import tariff likely would ripple through the economy, ultimately affecting all consumers. Although the economic impact on any single consumer may be small, the cumulative effect for the economy as a whole could be large. Price increases in the economy associated with the tariff would erode consumers' real incomes and result in a lower level of consumption of domestic and imported goods. To the extent that the tariffs reduce imports, consumers could also experience fewer consumption choices.", "In a global economy with floating exchange rates and markets interconnected through large cross-border capital flows, movements in the values of exchange rates could have a determinative effect on the economic impact of an import tariff. As previously indicated, an import tariff raises the price of imports relative to domestic goods, spurring a shift in demand away from imports toward domestically produced goods. This shift away from foreign goods also implies a shift in demand away from foreign currencies, since imports are priced in foreign currency. For the United States, such a shift would imply a weaker foreign currency relative to the dollar, or an appreciation in the relative exchange value of the dollar. In turn, a stronger dollar makes imports less expensive, thereby offsetting some or potentially the entire tariff, while raising the price of U.S. exports. As a result, imports as a whole would increase, while U.S. exports would decline, thereby increasing the overall U.S. trade deficit. To the extent that lower foreign exports due to the tariff negatively affect the economic growth prospects of U.S. trade partners, the United States could become a relatively more attractive place to invest, resulting in additional capital inflows likely appreciating the international exchange value of the dollar.", "The persistence of the U.S. current account deficit and its impact on the economy are hotly debated among policymakers and among some economists. For Members of Congress and other policymakers, the trade deficit may raise questions concerning the impact on jobs and the economy more broadly, especially for some communities, firms, and workers. Among economists, concerns generally focus on the long-term impact of the deficit on the accumulation of the debt associated with sustained trade deficits. Since taking office, the Trump Administration has used the U.S. trade deficit as a proxy for evaluating the success or failure of the global trading system and of U.S. trade policy. It also has characterized the trade deficit as a major factor in a number of ills afflicting the U.S. economy.\nFor Congress, the U.S. trade deficit potentially raises a number of questions, including\nGiven the macroeconomic nature of the trade deficit, as is generally accepted, what policy mix should Congress pursue to address the underlying economic issues that are driving the trade deficit? What role should or do trade agreements and U.S. trade policy play in addressing the trade deficit? Congress faces a number of complex trade policy issues. Within this mix, how much importance should Congress place on lowering the trade deficit relative to competing policy goals, given the combination of macroeconomic, or fiscal and monetary policies, the nation has chosen that drive the trade deficit? Another issue facing Congress is the role of foreign trade barriers and \"unfair\" trade practices in affecting the U.S. trade deficit. Addressing foreign trade barriers and unfair trade practices has been a long-term objective of Congress and U.S. trade policy and aimed at removing such barriers and practices potentially can improve the international trading system and build public support for trade and trade agreements. At the same time, given the underlying macroeconomic drivers of the trade deficit can governments lower or increase trade deficits by mandating reductions through managed trade? Will proposed and increased U.S. tariffs achieve a lower trade deficit? Given the link often made between the trade deficit and employment in the economy, should there be a closer examination of the role the trade deficit plays relative to other domestic factors in determining wages and employment in the economy? The role of the dollar as the preeminent global reserve currency facilitates the persistent current account deficits. Should the costs and benefits of this role be examined more closely?" ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 1, 1, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full h1_full", "", "", "", "", "h3_full h2_full", "h3_full", "h1_full", "h3_full", "", "", "" ] }

{ "question": [ "How can Congress influence foreign trade?", "How does Congress exercise its authority to regulate foreign trade?", "How has Congress delegated trade authority in some cases?", "Why has Congress focused on the trade deficit at times?", "What has been Congress' attitude towards lowering the trade deficit?", "How does the Trump administration differ from past administrations with regards to the trade deficit?", "How does the Trump administration characterize the trade deficit?", "How does the Trump administration's view differ from that of most economists?", "Why would altering the trade deficit without addressing underlying issues be counterproductive?", "What do economists think about the role of trade agreements in the trade deficit?", "How could the U.S. be affected by countries which do not fully abide by international trade agreements?", "How does addressing these issues benefit the U.S.?", "Why are such distortions unlikely to affect the overall deficit?" ], "summary": [ "The economic effects of the U.S. trade deficit have been a topic of long-standing congressional interest. The U.S. Constitution grants authority to Congress to regulate commerce with foreign nations and to lay and collect duties, and Congress exercises this authority in numerous ways.", "These include oversight of trade policy and consideration of legislation to implement trade agreements and to authorize trade programs.", "In some cases, Congress has delegated certain authorities over trade policy to the Executive Branch: for example, to facilitate trade negotiations.", "As part of efforts to examine U.S. trade policy and key trading relationships, Congress and previous Administrations have focused on the trade deficit at times, but generally have not implemented specific measures to lower the trade deficit.", "As part of efforts to examine U.S. trade policy and key trading relationships, Congress and previous Administrations have focused on the trade deficit at times, but generally have not implemented specific measures to lower the trade deficit. Nor has reducing bilateral trade deficits been a major objective in evaluating or negotiating U.S. free trade agreements (FTAs) and implementing trade laws. Previous Administrations rarely linked trade deficits and import tariffs with U.S. national security.", "The Trump Administration, however, is using the U.S. trade deficit as a barometer for evaluating the success or failure of the global trading system, U.S. trade policy, and bilateral trade relations with various countries.", "It also characterizes the trade deficit as harming the performance and national security of the U.S. economy.", "The Trump Administration's approach contrasts with the views of most economists, who argue that the overall U.S. trade deficit stems from U.S. macroeconomic policies that create a savings and investment imbalance in which domestic sources of capital are not sufficient to meet domestic capital demands.", "The Trump Administration's approach contrasts with the views of most economists, who argue that the overall U.S. trade deficit stems from U.S. macroeconomic policies that create a savings and investment imbalance in which domestic sources of capital are not sufficient to meet domestic capital demands. As such, attempting to alter the trade deficit without addressing the underlying macroeconomic issues will likely be counterproductive and create distortions in the economy.", "Some analysts argue that trade agreements play an important role in the U.S. trade deficit; they contend the agreements have failed to provide U.S. exporters with reciprocal treatment or have exposed U.S. producers to increased competition. Most economists, however, question both the role that trade agreements play in determining the trade deficit and the position that the trade deficit is substantially the product of unfair treatment.", "The Trump Administration's approach does not rule out the possibility that some countries may not be fully abiding by international trade agreements and rules, or may be maintaining certain trade barriers. Such actions may distort market performance and erode public support for the international trade system.", "As a result, addressing these issues and continuing to negotiate new agreements to remove trade barriers are likely to have benefits by improving efficiency and creating a level playing field in the global trading system.", "Nevertheless, given the macroeconomic origins of the trade deficit, as is generally accepted, addressing such distortions may alter the composition of U.S. trade among trading partners and commodities, but would be unlikely to affect the overall U.S. trade deficit." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 0, 2, -1, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "What Is a Default?", "Third Parties May Develop Their Own Definitions of Default", "Contracts Are Incomplete", "Treasury Securities Carry No Contractually Specified Default Clauses", "Consequences of Default Depend on Expectations", "Do Intentions Matter?", "Has the Federal Government Defaulted?", "Federal Finances in Disarray During the War of 1812", "Absence of Fiscal Agent and Internal Revenues Constrain Federal Finances", "Madison Belatedly Calls for Raising Internal Revenues", "Specie Payment Suspended in August 1814", "Treasury Suffers \"Every Kind of Embarrassment\"", "The Great Depression and the Gold Clause Cases", "Gold Clauses and Treasury Securities", "The Great Depression and State Bank Holidays", "Withdrawals Threaten to Exhaust Federal Reserve's Excess Gold", "Newly Inaugurated President Roosevelt Takes Emergency Actions", "Supreme Court Upholds Congressional Actions", "Economic Consequences of the Cancellation of the Gold Clauses", "The So-Called 1979 \"Mini-Default\"", "Treasury Payment Delays in the Spring of 1979", "Why Were Payments Delayed?", "Compensating Small Investors", "Payment Delays Caused No Discernable Change in Treasury Yields", "Federal Reserve Took Steps to Tighten Credit", "Federal Payment Delays Not Uncommon in Late 1970s", "Assessing the U.S. Government's Payment Record", "Was the Government's Ability to Borrow Affected?", "What Lessons Can Be Learned?" ], "paragraphs": [ "C oncerns arise during debt limit episodes that the lack of action to raise or suspend the debt limit could impede the U.S. Treasury's ability to meet federal obligations. In October 2015, the U.S. Treasury argued that allowing the debt limit to constrain the government's ability to meet its obligations \"would represent an irresponsible retreat from a core American value: we are a nation that honors all of its commitments\"; and that \"(f)ailing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations.\"\nHow the term \"default\" would apply to Treasury's ability to pay federal bills, however, has been controversial. For instance, during a September 2015 House Ways and Means Committee markup of H.R. 692 , some Members stated that a binding debt limit that would limit the Treasury Secretary's ability to meet federal obligations on a timely basis would be tantamount to default, while other Members stated that default would only encompass a failure to make principal and interest payments linked to U.S. Treasury securities.\nThis report discusses the concept of default in the context of the federal government's financial obligations. The report then discusses past cases in which the federal government failed to make certain payments on time. During the War of 1812, the lack of a fiscal agent and the pressures of funding military operations at times left the U.S. Treasury without the means of meeting its obligations. The suspension of the gold standard in 1933-1934 has been considered by some to constitute default, even though the Supreme Court affirmed that taking that action was within the power of Congress to set monetary policy.\nDuring the 2011 debt limit episode, some noted that the U.S. Treasury had failed to make timely payments to some small investors in the spring of 1979, which in the eyes of some, constituted a \"technical default.\" The 1979 incident, however, is more properly regarded as an inadvertent payment delay.", "How the term \"default\" is applied depends on specific contexts. Default can be defined as failure to make a payment or more generally the failure to act or appear. Default, in the sense of failure to pay or perform, generally derives from contract law. Private contracts typically specify in some detail what actions or omissions would constitute default. For example, a firm that has borrowed funds by issuing a bond could in a contract be considered in default by failing to pay interest or principal, or by taking on additional debt, or by failing to deliver additional collateral in the event of a credit rating downgrade. Bond contracts can run to thousands of pages, in which various contingencies and default consequences are described. Private contractual terms can be specified in greater detail than public laws, and can be shaped to the interests of particular counterparties.\nDefault in some cases may be \"cured\" in some way that brings a party back into compliance with a contract. For example, a default caused by failure to pay may be cured by payment, perhaps along with specified penalties. A damaged party may also sue for breach of contract to compel a counterparty to perform as agreed or to void a contract or to seek other remedies.", "Third parties sometimes want to make their own evaluations of how well parties comply with a contract, and may therefore develop their own definitions of default or noncompliance. Those not party to a contract may be interested in how well those who have entered into a contract comply with its terms. A third party could become interested in compliance to contract terms as it assesses future dealings with contract parties. A potential breach of a contract could also directly affect third parties. For example, when one firm fails to pay another firm, that firm may in turn become unable to pay others.\nThird parties might evaluate compliance in a different way than those party to a contract. For instance, one company may treat a delayed payment as a nonessential lapse, while a third party may view that delay as a more serious case of noncompliance. Moreover, third parties may have difficulty evaluating compliance because some contracts are private. While contract terms for publicly issued bonds in general must be disclosed, terms for other types of contracts and for securities issued to a small number of creditors might not be disclosed.\nA substantial literature on international sovereign default has developed in recent years based on data stretching back centuries. In many cases, however, lists of defaults compiled by academic researchers have differed from lists developed from credit rating agencies.\nThird parties, therefore, may make or rely on compliance judgments that are not based directly on contract terms. Credit ratings agencies can make their own judgments on what constitutes a default. The credit default swap market sidesteps the issue of defining default by relying on committees organized by the International Swaps and Derivatives Association (ISDA) to determine when a \"credit event\" has occurred. In some cases, debts or other obligations might be restructured in ways that parties describe as voluntary, which outside parties might describe as default or, in ISDA's terms, as a credit event. Thus, default or related terms like credit default can be linked to how parties comply with a contract, even if contracted parties have not contended that a default had occurred.\nDefault due to failure to meet obligations set out in a private contract may also act as a trigger for other legal consequences. For instance, Title II of the Dodd-Frank Act ( P.L. 111-203 ) allows the Treasury Secretary to act upon a recommendation to put a financial institution into a receivership if the \"financial company is in default or in danger of default\" to limit damage to the wider financial system. Those provisions of Dodd-Frank appear to reflect concerns that default by a major banking institution in some circumstances may lead to financial contagion affecting many other firms, even those without direct commercial ties to the defaulting institution.", "No contract can anticipate or specify consequences for all possible future contingencies. All contracts are therefore incomplete to some extent. Contracts might not spell out contingencies because the benefits of doing so might seem remote, or because parties are confident that unanticipated situations could be worked out. For example, credit markets, according to one legal scholar, assess the riskiness of borrowers and impose substantial constraints only on those borrowers with the strongest incentives to take risks or to fail to repay debts. In many cases, the usual principles of contract law are sufficient to resolve issues not made explicit in agreements.", "Conditions governing Treasury securities are specified in the U.S. Department of the Treasury's Uniform Offering Circular (UOC), which describes how securities are sold, when payments are made, and what rules buyers must follow. In particular, the UOC details when bids must be submitted, when payments must be received, when interest will be paid, and when redemptions will be settled. The UOC states that the U.S. government \"will pay principal on bills, notes, and bonds on the maturity\" either by crediting a Federal Reserve account for those using the commercial book-entry system or by making a payment to an account at a depository institution specified by a security owner using the TreasuryDirect system.\nThe UOC, however, contemplates no contingency related to payment delays or default. Thus any discussion of potential default by the U.S. government on obligations related to Treasury securities cannot be based on contractual terms specified in the UOC. The absence of any provision in the UOC mentioning payment delays or defaults presumably stems from the widely held view that U.S. Treasury securities are risk-free assets. If Treasury payment delays or defaults were to become an issue, legal consequences would depend on how the corpus of contract law were applied.\nSome federal laws do anticipate payment delays. The 1982 Prompt Payment Act ( P.L. 97-177 ; 31 U.S.C. 3902) requires most federal agencies to take steps to ensure that bills are paid on time and provides for interest charges on late payments. The federal government is also mandated in general to pay clean claims from Medicare providers within 30 days or to pay interest as specified in the Prompt Payment Act. Federal payment delays may be inconvenient to those awaiting payment, but they are not considered defaults.\nPayments of interest and principal on Treasury securities and other federal payments might be distinguished in two ways. First, the U.S. Treasury has sought to make its debt operations \"regular and predictable\" with the aim of reducing federal borrowing costs by issuing securities on a schedule designed to avoid surprising financial markets. Moreover, Treasury markets only issue a narrow set of security types, which aids in the standardization of the market in federal securities. By contrast, other federal agencies may deal with various types of payments that are far from \"regular and predictable.\" This in turn may lead to higher expectations that Treasury transactions will be completed on a more timely basis than those involving other parts of the federal government.", "The consequences of a failure to pay or a late payment by the federal government or any other organization depend on the expectations of counterparties and others. The U.S. Treasury, as noted above, has sought to make its debt management processes as predictable as possible and to protect the reputation of Treasury securities as risk-free assets. A disruption to Treasury interest payments or redemptions would diverge sharply from market expectations of Treasury's reliability. Holders of Treasury securities often undertake investment strategies that depend on Treasury's payment schedule being fulfilled. In a simple case, firms use Treasury securities as collateral to obtain funding. A perceived change in the quality of that collateral could constrain the availability of credit, which could raise borrowing costs for the government and for others.\nThe expectation that some other federal payments will be made on time may be weaker. For instance, few would be surprised if federal payments to some international organizations were not made on time. In other cases, complex administrative processes, such as review of a federal retirement application or review of a major federal contract, may hinder efforts to pay in full and on time. In addition, federal agencies are mandated to avoid improper payments, which could be hard to flag with compressed payment schedules. In those cases, well-informed federal payees may take steps to protect themselves from federal payment delays. For federal payments such as Social Security, beneficiaries generally expect that benefits will continue regularly, and thus might not have taken steps to protect themselves from payment delays.", "While expectations of payees and others would shape reactions to payment delays, intentions of payors generally matter less. If a debtor fails to pay interest or principal set out in a contract, good intentions do not alter the character of that default. For example, if a sovereign government's fiscal agent is barred from making payments to creditors, the willingness of that government to pay does not excuse the government from its obligations or relieve it from the consequences of nonpayment. In some cases, good intentions may be one factor that persuades a creditor from taking action against a debtor that has failed to pay, although such forbearance depends on the creditor's judgement, rather than upon any legal basis.\nNonpayment due to events arguably beyond the control of the debtor might be considered \"excused defaults\" in certain cases. Some research suggests financial markets are less likely to react adversely to defaults due to natural disasters or commodity price falls than to defaults that are viewed as strategic—that is, defaults driven by an unwillingness to pay. In many cases, however, judging whether a default is an avoidable strategic default or one a debtor could not avoid may be difficult, which may lead to creditors being less willing to excuse defaults.", "During recent debt limit episodes, Treasury Secretary Lew and his predecessors have urged Congress to act to avoid an unprecedented failure to meet obligations. For instance, Secretary Lew on October 15, 2015, asked Congress to take action on the debt li mit so that the Treasury would not be \"unable to satisfy all of these obligations for the first time in the history of the United States.\" An examination of American fiscal history, however, suggests that the federal government's record of meeting its obligations is not unblemished.\nThis report focuses on three historical events in which the federal government's reputation has been questioned: the War of 1812, the withdrawal from the gold standard during the Great Depression, and the so-called 1979 \"mini-default.\" Others might point to additional incidents, not considered in this report, such as the refusal to redeem Continental paper money issued during the Revolutionary War, or the issuance of \"greenbacks\" during the Civil War, or the abandonment of the gold standard in the early 1970s during the breakup of the post-World War II system of fixed exchange rates.", "In June 1812, war broke out between the United States and Great Britain, which lasted until February 1815. The federal government, aside from military challenges including the burning of the Capitol and White House, suffered from severe institutional deficiencies that hindered its ability to meet its financial obligations. One pair of historians concluded that while the War of 1812 \"was ill-managed militarily, [it] was even more bungled financially.\" Those financial difficulties included unambiguous examples of default.", "Aside from the central difficulty of mobilizing sufficient financial resources to conduct military operations, the federal government had to contend with two serious institutional shortcomings. First, Congress declined in 1811 to renew the charter of the first Bank of the United States, which acted as the government's fiscal agent. A fiscal agent carries out financial operations such as accepting tax payments, redeeming securities, or paying invoices. The absence of a national bank greatly complicated federal finances. Once the Bank of the United States closed, the federal government deposited its funds in local banks. By 1812, Treasury had accounts in 21 banks, which fragmented Treasury's operational controls.\nSecond, Congress had followed President Jefferson's call to repeal direct and excise taxes in 1802, leaving federal coffers dependent on tariff and customs revenue. Even three years before the outbreak of war, restrictions on shipping from American ports cut customs revenues by more than half. Treasury Secretary Gallatin, however, had trusted that war expenses could be financed by loans, rather than by taxes. By December 1811, however, Gallatin called for imposing internal taxes to supplement falling customs revenues. Soon after war was declared in June 1812, Congress doubled customs rates and authorized Treasury to issue notes, thereby avoiding reliance on internal revenues. Customs revenues rose temporarily, but fell even lower in the next year, while war costs rose. Thus by mid-1813, the government's ability to borrow on reasonable terms had dwindled.", "Expanding federal purchases to support war efforts increased payment demands on the Treasury, while a dearth of effective tax instruments left it little alternative to additional borrowing. By the summer of 1813, President Madison was compelled to call Congress to a special session to consider new revenue sources. Congress agreed to reinstate internal revenue sources to raise an estimated $5 million and authorized the Administration to borrow $7.5 million. The government's ability to obtain credit, however, continued to deteriorate, and by early 1814 it could only borrow by offering unusually high yields, while efforts to borrow from American banks and European markets were rebuffed. Internal revenue rates were raised at the end of 1814, although lags in the administration of those taxes meant that most of those revenues were collected after the war.", "The U.S. Treasury's situation was further complicated by its lack of control over monetary policy. With the disappearance of the Bank of the United States, state banks proliferated and issued rising volumes of bank notes. Those notes, along with those issued by Treasury—some with denominations as low as $3—effectively expanded the money supply. A growing imbalance between government purchases and receipts, along with the absence of monetary controls, helped spur inflation, leading the value of state bank notes to diverge from amounts defined in terms of specie, that is, in gold or silver coin.\nIn August 1814, payment in specie was suspended for most of the country outside of New England. Without specie payment, bank notes issued in one state were not accepted in other states. Thus, notes issued by a Philadelphia bank could not be used to pay bills in Boston or New York. The breakdown of banks' willingness to accept notes issued by other banks obliged Treasury to expand the number of accounts it maintained. By 1814, Treasury had accounts in 94 banks. Moreover, Treasury had to keep separate bank accounts for in-state bank notes, out-of-state bank notes, interest-bearing federal securities, and non-interest-bearing securities. While Treasury held some $2.5 million in bank credits in the fall of 1814, they were of little use because they were so widely dispersed and could not easily be transferred from place to place.\nIn addition, because the federal government could no longer redeem obligations in specie it effectively could not demand specie or equivalent for tax payments. It thus began to accept heavily discounted bank notes as payment for taxes or for purchase of federal securities, further undermining the Treasury's ability to meet its obligations.", "Alexander J. Dallas, who became Treasury Secretary in October 1814, soon complained that Treasury \"was suffering from every kind of embarrassment\" and that \"the dividend on the funded debt has not been punctually paid; a large amount of treasury notes has already been dishonored.\" For instance, interest federal debt due to Boston investors on October 1, 1814, could not be paid and those investors refused to accept Treasury notes as payment rather than specie, thus providing a clear example of default. At that time, the Treasury had not exhausted its authority to borrow or issue notes. Banks and investors, however, were unwilling to lend or to accept notes on terms that Treasury felt prudent to offer. Dallas lamented that, while \"[p]ublic credit depends essentially upon public opinion, … public opinion, manifested in every form, and in every direction, hardly permits us, at the present junction, to speak of the existence of public credit.\"\nGovernment finances improved with the end of the war and the rebound in customs revenues stemming from the resumption of international commerce. President Monroe in December 1815 noted that \"great satisfaction has been derived in contemplating the revival of the public credit.\" The Second Bank of the United States, chartered in 1816 and opened the following year, for a time laid a more stable foundation for banking and currency. Not until the 1820s were public finances restored to a sound basis, as land sales and rising customs revenues began to outrun federal expenditures consistently.", "The decision by President Franklin Roosevelt and Congress to move the U.S. government off the gold standard in 1933 and 1934, in the eyes of some, amounted to a repudiation of the contract terms, and in particular, to the terms of the Second Liberty Bonds issued in 1917. The abandonment of the gold standard in 1933 was the culmination of a banking crisis that began with the onset of the Great Depression in October 1929.\nAn enormous literature discusses the Great Depression and the suspension of the U.S. gold standard. This section provides a thumbnail sketch of those events to focus on whether the U.S. government met its obligations.", "During the first part of the 20 th century, several Treasury securities carried gold clauses that specified that interest and principal would be paid in \"U.S. gold coin of the present standard of value.\" Some, during that period, argued that U.S. bonds without such protections would be \"absolutely unsaleable.\" If Treasury had omitted gold clauses, higher yields would have been necessary to sell bonds, which would have increased debt service costs.\nInvestors were presumably wary that the U.S. government might leave the gold standard, as it had during the War of 1812 (as noted above) and during the Civil War.", "The October 1929 Wall Street crash left many banks holding assets worth less than they had paid for them. As the financial crisis began to affect the real economy, the price level dropped sharply, and unemployment rose. Difficult economic conditions made debtors less able to pay, while constricted credit further reduced economic activity.\nBetween 1929 and 1933, over 9,700 of the 25,000 banks in operation before the Great Depression failed. A failure of one bank, in the era before deposit insurance, diminished the public's trust in ability of other nearby banks to redeem deposits. Governors began to impose state-wide bank holidays to tamp down contagion of bank runs, starting with Nevada in October 1932. By 1933, 34 of 48 state governors had declared banking holidays to allow financial institutions to reorganize, and at 2:30 on the morning of Franklin Roosevelt's inauguration, the governor of New York declared a banking holiday. Other banks were closed under the authority of the Comptroller of the Currency.", "Concerns about the state of the American banking system and uncertainty about policies of the new President prompted international investors to withdraw funds from the United States. The United Kingdom and four Scandinavian countries suspended the gold standard in 1931, which fueled concerns that other countries would follow. The Federal Reserve attempted to attract gold by raising discount rates in the fall of 1931 and in February 1933, which tightened the supply of credit and led to further falls in the price level. Withdrawals of U.S. deposits strained the gold reserves of the Federal Reserve, which were required to be at least 40% of the value of currency issued. While the Federal Reserve normally had gold reserves well above the 40% minimum, heavy outflows in March 1933 drained those reserves. On Friday, March 3, 1933, the Federal Reserve Bank of Chicago (Chicago Fed) refused a loan to the Federal Reserve Bank of New York (NY Fed), which forced the Federal Reserve Board to suspend its gold reserve requirement. The governor of New York, as noted above, declared a banking holiday early the next morning, which could have disrupted operations of the country's largest banks.", "President Franklin Roosevelt, upon assuming office, took a series of steps to resolve the banking crisis, including a suspension of the gold standard. Roosevelt, inaugurated on Saturday, March 4, 1933, declared a four-day federal bank holiday early the following Monday that suspended all banking activities and barred trade in gold bullion, thus ending the immediate banking crisis. At the end of that holiday, Congress passed the Emergency Banking Act (P.L. 73-1), which empowered the President to control international and domestic gold shipments and gave the Treasury Secretary the power to compel exchanges of gold for currency. The President, in response to persistent gold outflows, suspended the gold standard on April 20, 1933. On May 12, 1933, President Roosevelt signed legislation (P.L. 73-10) into law that reduced the gold content of a dollar by half and allowed the President to tie the dollar's value to silver. On June 5, 1933, Congress passed a resolution that abrogated gold clauses in private and public contracts, which President Roosevelt signed the next day. Reducing the gold content assigned to the dollar had the effect of depreciating the dollar, making dollar-priced exports cheaper and imports more expensive, which improved the U.S. trade balance.\nIn October 1933, the Roosevelt Administration directed purchases of gold at set prices, which provided a link to the value of a dollar, even if gold were not exchanged for dollars. In the following year, the Gold Reserve Act of 1934 (P.L. 73-87 , 48 Stat. 337), signed into law by President Roosevelt on January 30, 1934, set a book value of gold at $35, thus reestablishing a gold standard. The act, however, ratified earlier actions by barring private trade in monetary gold and brought all federal holdings of gold under the control of the U.S. Treasury.", "The cancellation of gold clauses prompted some investors to sue the U.S. government. Holders of many Treasury bonds that promised payment in gold viewed the cancellation as a repudiation of federal obligations. In 1935, however, the Supreme Court upheld the power of Congress to regulate the value of money, but that \"insofar as it attempted to override the obligation created by the bond in suit, went beyond the congressional power.\" The Court held that bondholders were not damaged, in part, because if they had been paid in gold, they would have been mandated to sell that gold to the federal government at the price set by the Gold Reserve Act or previous measures. The dissent, however, contended that in cancelling the gold clauses \"Congress really has inaugurated a plan primarily designed to destroy private obligations, repudiate national debts, and drive into the Treasury all gold within the country in exchange for inconvertible promises to pay, of much less value.\"", "The cancellation of the gold clauses appeared to have little effect on Treasury's ability to borrow on financial markets. While the suspension of the gold standard in the United States led some to shift investments to countries still on the gold standard, the U.S. Treasury had little difficulty in borrowing. Treasury auctions continued to be oversubscribed even after the 1933 actions to suspend the gold standard and after the 1935 Supreme Court decisions that upheld those measures. Over 80% of holders of Treasury securities with gold clauses rolled over their investments in new Treasury issues. Moreover, the improvement in the U.S. balance of trade, spurred by the devaluation of the dollar, served to bring gold back, and official government purchases of gold increased the Treasury's holdings.\nThe suspension of the gold standard, while disappointing creditors, helped stimulate economic recovery and laid the foundations for modern monetary policy, according to economists who have studied the issue. Researchers also concluded that the gold standard and how it was maintained by central banking authorities helped spread shocks from country to country, helping propagate the Great Depression. Several economists found that countries that left the gold standard earlier in the 1930s recovered more quickly than those that remained longer on the gold standard. In the case of the United States, the economy grew at an annual average real rate of 9.4% a year from 1933 to 1937, while the economy in 1933 was 26% below its 1929 level. Although some have called for a return to the gold standard, no country currently operates on a gold standard. One survey of economists found no support for reinstituting the gold standard.", "Delays in payments from the U.S. Treasury to some investors in the spring of 1979 were dubbed by some as a \"mini-default.\" The timing of the first payment delay coincided with a sharp increase in Treasury yields. A security's yield is its effective interest rate, which varies inversely with the security's market price. The price investors are willing to pay for a security reflects judgements about credit risks and the expectations of the future inflation rate, among other factors.\nIf payment delays persuaded investors that Treasury securities were not risk-free investments, market demand for those securities would fall, leading to lower prices and higher yields. Higher yields, in turn, would imply an increase in Treasury's borrowing costs. A reexamination of available information, however, indicates that interest rate movements at that time were more likely driven by news that anticipated major changes in U.S. monetary policy aimed at reducing the inflation rate. Moreover, only a small fraction of holders of Treasury securities were affected. While the 1979 payment delays certainly inconvenienced many small investors, the stability of the wider market in Treasury securities was not put at risk.", "In late April and early May 1979, about 4,000 Treasury checks for interest payments and for the redemption of maturing securities held by individual investors worth an estimated $122 million were not sent on time. F oregone interest due to the delays was estimated at $125,000 . Wire transfers to financial institutions and large-scale investors, whose holdings were reflected in the Federal Reserve's book-entry system, were unaffected. At the time, over 90% of marketable Treasury securities were held in book-entry form. In addition, small investors who opted to roll over proceeds of maturing Treasury bills also would have been unaffected. Check processing returned to normal by May 14, 1979, and payments for securities maturing on May 10, 1979 , were mailed the following day.", "Payment delays were chiefly due to back-office technical and organizational problems. At the time, the Bureau of the Public Debt was in the process of automating its own book-entry system of accounts and its data processing office was being reorganized. The U.S. Treasury's check issuance operations were also in the midst of a relocation and word processing equipment failed unexpectedly.\nRising small investor demand for T-bills also contributed to pressures on Treasury operations. T-bills had become increasingly attractive as inflation was increasing yields. By the end of 1977, yields on Treasury securities rose above interest rate ceilings imposed by federal regulations on standard demand deposit accounts. By late April 1979, the 3-month Treasury bill carried a yield of over 9%, while federal regulations limited interest rates on standard demand deposit accounts to 5.25%.\nThe widening gap between Treasury yields and regulated rates on bank deposits spurred many small investors to invest directly in Treasury securities. While the U.S. Treasury had sought to discourage small investor purchases by raising the minimum denomination of Treasury bills from $1,000 to $10,000 in February 1970, by the late 1970s inflation and rising real incomes had made that minimum a less formidable hurdle to many small investors. One investment guide noted that until about 1978, very few average investors knew about investing in Treasury securities.\nBy 1979, small investor demand for Treasury securities was rising rapidly. From January 1978 to late April 1979, purchase requests (tenders) for Treasury bills rose 379% and the volume of Treasury's daily bill transactions increased by 427%. Small investors were also given the option of rolling over the principal for maturing Treasury bills into new bills. Many of those investors, according to Treasury officials, waited until the last minute to request rollovers, which added additional administrative burdens onto debt management operations.\nThe U.S. Treasury also attributed the delays, in part, to auctions that were postponed due to a contentious debt limit episode that culminated in a temporary increase in the debt limit on April 2, 1979 ( P.L. 96-5 ). The debt limit, however, was not a direct cause of payment delays, as federal debt was a comfortable $32.5 billion below its limit when the first checks were delayed. Thus, the U.S. Treasury had the financial means to make all payments that were due, even if its operational capacity to cut checks may have been impaired for some weeks.", "The U.S. government has no legal mechanism in place to compensate investors for the consequences of payment delays. In particular, the U.S. Treasury has no authority to reimburse investors for the time-value of delayed payments. Moreover, Treasury bond offering documents then, as at present, did not contemplate delays in payments to bondholders.\nOne small investor, Claire Barton of Encino, CA, represented by her attorney husband, filed a class action suit against the U.S. government on May 11, 1979, in the U.S. District Court for the Central District of California. The suit alleged that payment delays, by allowing the government to use funds that were due to investors, \"constituted unjust enrichment\" at the \"cost, loss, and expense\" of Mrs. Barton and similar Treasury debt holders. The government was granted a stay to allow time to put forth a settlement offer to affected investors, and reportedly more than 80% of them accepted. Representative Richard Gephardt introduced a measure ( H.R. 6054 , 96 th Congress) on December 6, 1979, to authorize the Treasury Secretary to compensate the remaining investors from the case. The bill was referred to the House Committee on Banking, Finance and Urban Affairs. No further action was taken. The class action suit was dismissed with prejudice on May 12, 1980.", "A decade after the so-called 1979 mini-default, a 1989 Financial Review article noted that the day the first delayed payments were due (April 26, 1979), Treasury yields spiked up by 60 basis points (100 basis points=1%). The resulting increase in annual borrowing costs of the federal government, according to estimates presented in the article, was about $12 billion. The Financial Review article's authors contended that the payment delays \"apparently warned investors that Treasury issues were not completely riskless.\"\nThis spike is evident in Figure 1 , which shows secondary market daily yields for 3-month, 6-month, and 1-year Treasury bills from November 1978 through November 1979. This period is bookended by November 17, 1978 (first vertical line), when several banks announced increases in lending rates shortly after an influential Solomon Brothers economist, Henry Kaufman, delivered a speech predicting a sharp rise in interest rates, and October 6, 1979 (last vertical line), when the Federal Reserve announced a new approach to monetary policy.\nWhether the spike in Treasury yields noted in the Financial Review article stemmed from payment delays to small investors, which indicated that Treasury securities were not risk-free assets, or from larger shifts in monetary policy becomes a natural question. This time period spanned by Figure 1 contains not only the so-called mini-default, but also one of the most dramatic shifts in U.S. monetary policy. In particular, President Jimmy Carter's nomination of Paul Volcker to serve as chairman of the Board of Governors for the Federal Reserve System on July 25, 1979, reflected growing concerns about accelerating inflation rates and signaled a coming change in monetary policy.\nAlthough the first delayed payments were due on April 26, 1979 (second vertical line), the Wall Street Journal (WSJ) first reported on those payment delays on May 9, 1979 (third vertical line). The previous day, the U.S. Treasury issued a press release noting the delay in mailing checks for Treasury bills. On both dates (May 8 and 9), no large movements in Treasury yields were observed.\nWell-informed market traders conceivably could have known of the payment delays a few days before the WSJ report. Treasury yields for various bills, however, were falling in the days leading up to that date. Alternatively, traders may have taken a few days to absorb the implications of the WSJ report. Treasury yields fell, however, in the days after that news, as can be seen in Figure 1 . In either case, market movements of Treasury yields around the time that payment delays became widely known are inconsistent with the contention that those delays reduced demand for Treasury securities by changing risk perceptions of investors.\nOne might argue, however, that large traders might have learned of the payment delays well before the first newspaper report, perhaps through banks that held accounts of affected small investors. Traders wishing to benefit from that information would have needed to short Treasury bills to profit. In a short sale, a trader borrows a security and promises to return it at a future date along with a borrowing cost adjustment. A short seller profits if the security's price falls. In general, short sellers aim to persuade others that an asset's underlying value has decreased. Short sellers often propagate that information aggressively once a short position is established. The lag of nearly two weeks between the first payment delay and the first report of it suggests that few or no such short sellers actively traded on information of those delays.", "The absence of discernable market reactions to news of Treasury payment delays suggests other factors might explain a spike in Treasury yields in late April 1979. The same day that delayed Treasury payments were first due, monetary policy developments signaled a turn toward credit tightening. As noted above, the Federal Reserve was in the midst of a major policy shift in its willingness to use monetary policy to restrain inflation.\nIn the week before the first payment delays, market watchers thought the Federal Reserve was unlikely to tighten credit. On April 26, 1979—the maturity date for the first Treasury bills affected by payment delays—a consumer price index estimate was released that indicated inflation was proceeding at a 13% annual rate. A few hours later, the Federal Reserve announced a large, unexpected increase in the U.S. money supply. Financial markets reacted within minutes to that announcement, which signaled new expectations that the Federal Reserve would act to restrict credit.\nIn addition, that same day the WSJ noted a Federal Reserve research paper that argued that aggregate money measures should be redefined to include near-money substitutes, such as money market funds, which were expanding exponentially at the time, and repurchase (repo) agreements that large corporations had begun to use. The expansion of near-money substitutes, the paper argued, was matched by slower than expected growth in traditionally defined monetary aggregates, which could lead to an underestimation of the expansion of the money supply. A broadening of those definitions might be expected to affect Federal Reserve policy statements, which were phrased in terms of those monetary aggregates.\nOn the following day (April 27, 1979), the Federal Reserve, according to market observers, took steps to tighten credit, which was generally taken as a signal that it would raise benchmark interest rates.\nMarket concerns about inflation, credit conditions, news of a rapid expansion of the money supply, and Federal Reserve actions provide a straightforward explanation for those Treasury yield movements in late April 1979. That payment delays experienced by small investors increased federal borrowing costs by changing perceptions of the riskiness of Treasury securities appears to be an implausible explanation of those movements.", "Paying federal obligations on time makes the U.S. government a more attractive business counterparty. The U.S. Treasury and other agencies have therefore sought over time to improve the timeliness of federal payments. Despite those improvements, some payment delays still occur, and were more common during the 1970s when the federal government was transitioning payment to electronic systems.\nThe delays in Treasury interest and maturity payments in 1979 were unusual. Delays in federal payments for other types of obligations, however, were common during that time. In the late 1970s, federal benefits provided via direct deposit, such as Social Security payments, were often late, or early, misposted, or not issued. A 1978 GAO report that analyzed a sample of contractor bills found that only 61% of the number of bills and 81% of the dollar amounts owed were paid within 30 days. For bills not paid within 30 days, the time between invoice and payment averaged 74 days. Congress responded to those findings by passing the Prompt Payment Act of 1982 ( P.L. 97-177 ), which generally requires agencies to pay bills on time or pay interest on delayed payments. A 1986 GAO follow-up study found that timeliness of agency payments was better, but could be improved.\nCauses of payment delays were diverse. The 1978 GAO report attributed most delays to lags in acknowledging delivery of goods, acquiring necessary paperwork, and failure of agencies to adopt procedures that would minimize paperwork. The 1979 Treasury bill redemption payment delays, as noted above, appeared to stem from the confluence of specific historical trends and unforeseen operational challenges, but were not the only payment delays in those years. For instance, t he U.S. Treasury reportedly delayed some tax refunds in 1980 as part of a cash management strategy.", "The historical record appears not to support the contention that the U.S. government has had an unblemished payment record since its origin. Under any reasonable definition of default, the federal government defaulted in 1814. The Treasury Secretary of the time, Alexander Dallas, referred to \"every sort of embarrassment.\" The current website of the U.S. Treasury notes that Secretary Dallas faced a \"bankrupt\" Treasury. The failure of the Treasury to pay interest on its securities due to Boston banks in 1814 represents an unambiguous default event.\nWhether the suspension of the gold standard in 1933-1934 amounted to a default is controversial. Bondholders were repaid, albeit on terms other than those specified in their contracts. Breaking the linkage between gold and the dollar enabled the federal government to implement a more modern monetary policy that helped promote economic recovery. That linkage, however, could also have been severed in a way that could have mitigated losses of owners of bonds that contained gold clauses.\nClaims that payment delays to small investors holding Treasury securities in the spring of 1979 constituted a default or a \"technical default\" appear weaker. Delays affected only a relatively small proportion of Treasury securities and the federal government responded to mitigate the inconvenience suffered by those investors. The legal document setting out terms for Treasury securities contained no default clause. Claims that such payment delays increased federal borrowing costs appear weak, if not implausible, in the face of stronger explanations reflecting shifts in monetary conditions and policy.\nDelays to holders of Treasury securities might also be put in context of delays to other federal payees. Federal statutes provide no clear basis for prioritizing payment of one obligation over another. In an organization as complex as the federal government, delays in meeting some financial obligations may be inevitable, and bondholders affected by the so-called 1979 mini-default represent a small fraction of those affected by federal payment delays.", "Analysis of available evidence suggests that the federal government's ability to borrow did not suffer lasting damage from any of the events discussed in this report. After the War of 1812 concluded, belated collections from internal revenue measures came into the Treasury and the resumption of international trade and higher tariff rates led to a rebound in customs revenues. Federal revenues in the following decades were strong enough to retire the federal debt in 1835. Recent research, discussed above, indicates that the U.S. Treasury faced little or no observable difficulty in borrowing after the 1933-1934 suspension of the gold standard. In 1979, as noted above, a major shift in monetary policy and conditions can explain changes in market yields on Treasury securities. Financial markets exhibited no discernable reaction to newspaper reports of the Treasury payments delays to some small investors. The U.S. experience accords with broader research on sovereign default. Countries that defaulted in the 19 th century or 1930s, but not since, have suffered no credit market consequences.\nThat the U.S. Treasury's ability to borrow on reasonable terms was not hindered by events in the 19 th century or 1930s does not suggest that the consequences of a Treasury default in the present day would be minor. The market for U.S. Treasuries is broad, meaning that large numbers of buyers and sellers trade in them, and liquid, meaning that traders believe they could engage in large transaction in Treasuries without significant price effects. Treasuries often serve as collateral, enabling financial firms to borrow or lend at low cost, which promotes the efficient supply of credit. Concerns about the quality of collateral assets can cause serious problems in credit markets. Market participants have stated that systematic payment delays by the U.S. Treasury could have serious economic consequences.", "In each historical episode examined here, the federal government was confronted with financial and operational challenges that it was poorly prepared to meet. The neglect of operational capacities appears to have played a key role. More recently, the federal government has paid more attention to contingencies that could affect its financial operations. For instance, the U.S. Treasury recently changed its cash management policies to keep a larger cash cushion to ensure continuity of operations in the face of catastrophic events.\nOn the other hand, expressions of fiscal constraint, such as promises to balance federal budgets, were not sufficient to prepare the federal government to address fiscal emergencies. In the years preceding each episode, policymakers had expressed a strong commitment to budgetary and fiscal discipline. Treasury Secretary Gallatin had reduced federal debts in the decade preceding the War of 1812, and President Herbert Hoover attempted to maintain a balanced budget in the early years of the Great Depression. Less than four weeks before the first Treasury payment delay in April 1979, Congress stated it \"shall balance the Federal budget\" and directed the Budget Committees to submit budget plans for the next three fiscal years that would be in balance.\nThe failure to establish or maintain key operational capabilities, however, presented the government with obstacles that could not be overcome in short order. The lack of a fiscal agent or the administrative capacity to administer internal revenues undermined the U.S. Treasury's ability to meet federal obligations during the War of 1812. On a smaller scale, the U.S. Treasury in 1979 found itself unable to cope with the strains of overhauling financial processing systems and procedures while relocating some of its fiscal operations, in the face of unprecedented increases in small investor demands for Treasury securities.\nPresident Franklin Roosevelt, when he took office in March 1933, by way of contrast, was aided by proposals drafted by officials from the Hoover Administration. Furthermore, the Reconstruction Finance Corporation, which the Hoover Administration had created, provided the federal government with a powerful vehicle for economic policy.\nThe reluctance to set aside adequate fiscal resources to respond to emergency conditions may also have played a role. Congress, in the view of historians, was slow to make military or fiscal preparations ahead of declaring war in 1812. In more modern terms, macroeconomists have stressed the importance of \"fiscal space,\" that is, having a sound fiscal situation that enables a government to respond energetically to serious economic downturns.\nEven if the payment history of the U.S. government is not completely unblemished, it does compare favorably to nearly all other advanced countries. Acknowledging past episodes when the U.S. Treasury's ability to meet obligations was strained would underline the benefits of maintaining a strong fiscal and credit reputation." ], "depth": [ 0, 1, 2, 2, 3, 2, 3, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 4, 3, 1, 2, 2 ], "alignment": [ "h0_title h2_title h4_title h3_title h1_title", "h0_title h1_full", "h0_full h1_full", "", "", "h0_full", "", "h0_full h2_full h4_title h3_title", "h2_full", "h2_full", "", "", "h2_full", "h3_full", "", "", "", "", "h3_full", "h3_full", "h4_full", "", "h4_full", "", "h4_full", "", "", "h2_title h1_full", "", "h2_full" ] }

{ "question": [ "What would happen if the government can't meet its oligations?", "What has the U.S. Treasury stated would be the consequences of a \"default\"?", "What else would a \"default\" represent?", "What is the central indicator of default?", "Why is the concept of default ambiguous?", "What is an example of this ambiguity?", "What have some people done to remedy this?", "What does this report examine?", "Why did the federal government become unable to meet its obligations in 1812?", "What else contributed to this event?", "How did the U.S. get back to a sounder economic foundation?", "What was one step taken to address the Great Depression?", "What did people argue would be a negative consequence of cancelling the gold standard?", "What was the actual consequence of suspending the gold standard?", "What is an example of a more recent default?", "What differentiated this \"mini default\" from others before?", "What is an explanation for changes in yields in federal securities?", "Why was the payment delay ultimately not a big risk?" ], "summary": [ "During recent debt limit episodes, federal officials have contended that if the debt limit were to constrain the government's ability to meet its obligations, that would be an unprecedented blemish on the nation's credit.", "For example, the U.S. Treasury has asserted that \"(f)ailing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations\" or that it \"would represent an irresponsible retreat from a core American value: we are a nation that honors all of its commitments.", "It would cause the government to default on its legal obligations.\"", "Failure to pay obligations on time is regarded as a central indicator of default, although default may be triggered by a wide range of contractual provisions.", "More generally, the concept of default stems from contract law, and thus may be ambiguous because contract terms may be private or contracts may be incomplete, in that the consequences of some contingencies are left unspecified.", "For instance, the terms under which Treasury securities are offered lack any mention of payment delays or nonpayment.", "The ambiguity of the term \"default\" leads many third parties to develop their own definitions to monitor compliance with promises to pay.", "This report examines three episodes in the federal government's fiscal history when some have questioned the public credit of the U.S. government.", "During the War of 1812, the federal government eventually became unable to meet its obligations. Shortly before that war, Congress had declined to renew the charter of the first Bank of the United States, leaving the government without a fiscal agent.", "In addition, President Jefferson and Treasury Secretary Gallatin had dismantled the administrative machinery needed to collect internal revenues, leaving Treasury revenues heavily dependent on customs income.", "In 1814, military expenses and lagging revenue left the U.S. Treasury unable to meet all of its obligations, including some interest payments on federal debt. The end of that war, the establishment of the second Bank of the United States, and the rebound of tariff revenues put federal finances on a sounder foundation.", "In March 1933, newly inaugurated President Franklin Roosevelt soon took steps to suspend the gold standard, as one measure to address severe disinflation, a collapse of the banking system, and other consequences of the Great Depression.", "While the Supreme Court upheld actions that suspended the gold standard, others contended that the cancellation of gold clauses in federal bond contracts amounted to a restructuring of debt.", "Although the cancellation of gold clauses in 1933-1934 had no discernable effect on the U.S. Treasury's ability to borrow, holders of Treasury securities lost money relative to what they had expected to receive.", "More recently, when the U.S. Treasury failed to make timely payments to some small investors in the spring of 1979, some dubbed the incident a \"mini-default.\"", "While the payment delays inconvenienced many investors, the stability of the wider market in Treasury securities was never at risk.", "Shifts in monetary policy, as constraining inflation became a policy priority, provide a stronger explanation for changes in yields in federal securities.", "Moreover, payment delays were not uncommon at that time, when automatic data processing was at a relatively primitive stage." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, 1, -1, -1, 1, -1, -1, 0, 1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 3, 3, 3, 3, 4, 4, 4, 5, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "Who Is Entitled to Testing Accommodations?", "Pre-ADAAA Decisions", "Post-ADAAA Judicial Decisions", "What Testing Accommodations Are Required?", "Legal Questions Raised by Binno v. American Bar Association", "Conclusion" ], "paragraphs": [ "", "Tests and examinations can pose unique challenges to individuals with disabilities and, if accommodations are not made, prevent these individuals from advancing professionally or academically. To ameliorate these challenges, the Americans with Disabilities Act (ADA) prohibits the administration of tests in a manner that discriminates against people with disabilities. This prohibition applies to most educational and employment testing or assessment programs, regardless of whether the programs are public or private. In general, to comply with the ADA, entities offering examinations must provide testing accommodations to those examinees who have disabilities and need accommodations in order to demonstrate their skill or aptitude in the area tested.\nHowever, examinees are entitled to accommodations under the ADA only if they have a \"disability\" for the purposes of the statute. In the past, courts interpreted the term \"disability\" rather narrowly. Concerned that this construction diminished the reach of the ADA's protections, Congress enacted the ADA Amendments Act (ADAAA), P.L. 110-325 , in 2008. The ADAAA sought to expand judicial and agency interpretations of the ADA's definition of disability so as to ensure that the ADA provided broad antidiscrimination protection. The ADAAA effectively shifted the focus in many ADA cases from whether the plaintiff is entitled to the ADA's protection to whether the defendant has complied with the ADA. This shift is expected to improve the likelihood that individuals with learning disabilities, attention deficit disorders, and other health impairments are entitled to testing accommodations under the ADA.\nBecause the ADAAA lowers the initial \"disability\" hurdle in ADA cases, some expect that the ADAAA will increase the judiciary's role in determining the adequacy of—or outright prescribing—testing accommodations. Section 309 of the ADA prescribes the general standard by which the sufficiency of particular testing accommodations is assessed. Section 309 requires persons and entities that offer examinations or courses \"related to applications, licensing, certification, or credentialing for secondary or post-secondary education, professional, or trade purposes\" to offer them \"in a place and manner accessible to persons with disabilities or offer alternative accessible arrangements.\" The Department of Justice (DOJ), which is charged with implementing Section 309, has promulgated regulations stating that private testing entities must provide individuals with disabilities with accommodations that \"best ensure\" that the test accurately assesses the individual's aptitude \"or whatever other factor the examination purports to measure.\" In a series of recent decisions, federal courts have deferred to this interpretation of Section 309, but a petition to review one of these decisions is now pending with the U.S. Supreme Court.\nThis report discusses the recent federal court cases determining who is entitled to testing accommodations under the ADA and whether a particular testing accommodation is ADA-compliant. It emphasizes areas where the ADAAA has affected the analysis or outcome in a case. It also identifies new questions about the liability of an entity that requires, but does not administer, a test that purportedly discriminates against disabled examinees. Although the ADA does not require defendants to provide accommodations when doing so would impose an undue hardship, this report does not discuss the \"undue burden\" defense. It also does not discuss testing accommodations required under the Individuals with Disabilities Education Act (IDEA).", "An individual falls within the scope of the ADA's protection if he has a \"disability\" for the purposes of the ADA. The ADA defines the term \"disability\" as\na \"physical or mental impairment\" that \"substantially limits\" one or more of the \"major life activities\" of such individual; a record of such an impairment; or the state of being regarded as having such an impairment.", "Before the ADAAA, courts interpreting the ADA viewed the phrases \" substantially limits\" and \" major life activities\" as sharply confining the term \"disability.\" This meant that people with disabilities often struggled to establish in court that their disability entitled them to protection from discrimination under the ADA. In cases alleging discrimination in the administration of tests and examinations, plaintiffs with learning disabilities and attention deficit disorders frequently had their claims under the ADA dismissed because they failed to establish that their impairments \"substantially limited\" one of their \"major life activities.\" Courts viewed a plaintiff's record of academic achievement or methods of coping with a disability as evidence that the plaintiff's impairment was not substantially limiting.\nFor example, in Gonzales v. National Board of Medical Examiners , the U.S. Court of Appeals for the Sixth Circuit held that a medical student's learning disabilities did not \"substantially limit\" one or more of his major life activities. The student, the Sixth Circuit reasoned, was not entitled to testing accommodations under the ADA because he was able to get good grades and achieve average standardized test scores despite his learning disabilities—that is, his impairments did not \"substantially limit\" one of his major life activities. Similarly, in Price v. National Board of Medical Examiners, the U.S. District Court for the Southern District of West Virginia determined that medical students with learning disabilities did not have a disability under the ADA because the students' histories of \"significant scholastic achievement\" proved that they had a capacity to learn \"at least as well as the average person.\"\nMoreover, even when a plaintiff did not have a strong academic history, it might still be difficult to sufficiently link the plaintiff's academic difficulties with a \"substantially limiting\" impairment. For example, in Gonzalez v. Supreme Court of Texas , the U.S. District Court for the Western District of Texas rejected the argument that the plaintiff's Attention Deficit Hyperactivity Disorder (ADHD) \"substantially limited\" him in a major life activity because, it found, his ADHD caused problems that were not meaningfully distinguishable—in type or degree—from the problems that face the majority of people coping with work and academic life.\nNevertheless, a few plaintiffs in the pre-ADAAA era were able to establish that their learning disabilities substantially limited them in one or more major life activities. In Bartlett v. New York State Board of Bar Examiners , for example, the U.S. District Court for the Southern District of New York found that the ADA protected a law student with dyslexia who was seeking testing accommodations on the New York State Bar Examination. In that case, the court held that the plaintiff's dyslexia substantially limited her in the major life activity of reading even though the plaintiff had developed mechanisms for coping with her dyslexia so that she could function academically and obtain both a Ph.D. and a law degree.", "Concerned that narrow judicial interpretations of the term \"disability\" prevented individuals with disabilities from receiving necessary accommodations under the ADA, Congress enacted the ADAAA in 2008. The primary purpose of the ADAAA was to ensure that the courts and executive agencies defined \"disability\" more expansively so that the ADA provided a \"broad scope of protection.\" According to the ADAAA, a more inclusive interpretation comported with Congress's intent when it enacted the ADA.\nTo achieve its goal, the ADAAA preserved the ADA's three-part definition of \"disability\" but defined \"major life activities\" and articulated new rules for the construction of the term \"substantially limits.\" Because of these changes, a person with an impairment that substantially limits, inter alia , learning, reading, concentrating, and thinking is a person with a disability for the purposes of the ADA. Moreover, courts must assess whether an impairment is \"substantially limiting\" without regard to the ameliorative effects of mitigating measures, including learned behavioral or adaptive neurological modifications. The ADAAA also states that\nthe definition of disability must be construed in favor of broad coverage to the maximum extent permitted by the terms of the act; and the term \"substantially limits\" must be interpreted consistently with the findings and purposes of the ADA Amendments Act.\nDuring the House debate, Representative Pete Stark stated that people with specific learning disabilities, such as dyslexia, have disabilities for the purposes of the ADA. The ADAAA, he said, \"will reestablish coverage for these individuals\" and ensure that the ADA's definition of disability \"is broadly construed and the determination does not consider the use of mitigating measures.\" Similarly, Representative George Miller described the ADAAA as supporting the finding in Bartlett v. New York State Board of Bar Examiners, that an individual should not be penalized due to adaptive strategies that may lessen the impact of the disability.\nThe ADAAA went into effect January 1, 2009. Because the courts do not generally apply a new statute to cases already pending, few federal cases have interpreted the scope of the ADA's protection in light of the ADAAA's amendments. However, when the plaintiff is bringing a claim under the ADAAA solely for injunctive relief, at least one court has held that the ADAAA does apply retroactively. In that case, Jenkins v. National Board of Medical Examiners , the Sixth Circuit reasoned that because the plaintiff was only seeking accommodations for an examination in the future, he was seeking prospective relief, and, therefore, the retrospective application of the ADAAA would not work an injustice to the defendant. Having found that the ADAAA's standards applied in Jenkins , the Sixth Circuit remanded the case to the district court to determine whether the plaintiff—a medical student with a reading disorder—was a person with a disability under the ADA as amended.\nDespite its infancy, the ADAAA is expected to shift the analysis in an ADA case from whether the plaintiff is entitled to the ADA's protection to whether the defendant has complied with the ADA. In practice, this shift may delay the disposition of these cases from the summary judgment stage to the merits. Many commentators also predict that people with learning disabilities, attention deficit disorders, other health impairments, and cognitive disorders are more likely to qualify for testing accommodations because of the ADAAA. This view draws support from both the plain language of the statute and its legislative history, but few federal courts have had an opportunity to consider this demographic's eligibility for testing accommodations under the ADAAA.", "In addition to questions about whether a test-taker has a disability under the ADA, courts are also asked to assess the adequacy of the testing accommodations being provided. In particular, by broadening the ADA's coverage, the ADAAA may have heightened the role of district courts in determining what accommodations are necessary to satisfy the requirement in Section 309 of the ADA that examinations be \"accessible\" to people with disabilities.\nSection 309 of the ADA requires persons, such as testing companies, that offer examinations or courses \"related to applications, licensing, certification, or credentialing for secondary or post-secondary education, professional, or trade purposes shall offer such examinations or courses in a place and manner accessible to persons with disabilities or offer alternative accessible arrangements for such individuals.\" This requirement was intended to assure that people with disabilities were not foreclosed from educational or professional opportunities on the basis of exams that failed to measure their skill or aptitude in the area being tested. Department of Justice regulations implement Section 309. These regulations require private entities offering examinations to assure, inter alia , that:\nThe examination is selected and administered so as to best ensure that, when the examination is administered to an individual with a disability that impairs sensory, manual, or speaking skills, the examination results accurately reflect the individual's aptitude or achievement level or whatever other factor the examination purports to measure, rather than reflecting the individual's impaired sensory, manual, or speaking skills (except where those skills are the factors that the examination purports to measure ...).\nThe DOJ specifies that required modifications to a test \"may include changes in the length of time permitted for completion of the examination and adaptation of the manner in which the examination is provided.\" Moreover, a private entity administering a test may be required to provide \"appropriate auxiliary aids for persons with impaired sensory, manual, or speaking skills, unless that entity can demonstrate that offering a particular auxiliary aid would fundamentally alter the measurement of the skills or knowledge the examination is intended to test or would result in an undue burden.\" These aids and services may include\ntaped examinations, interpreters, or other effective methods of making orally delivered materials available to individuals with hearing impairments; Brailled or large print examinations and answer sheets or qualified readers for individuals with visual impairments or learning disabilities; transcribers for individuals with manual impairments; and other similar services and actions.\nA private testing entity may request documentation regarding a test-taker's disability, but that request must be \"reasonable and limited to the need for the modification, accommodation, or auxiliary aid or service requested.\" Entities administering examinations must give considerable weight in their consideration of a request for accommodations to accommodations that were provided in testing situations under an Individualized Education Program (IEP) pursuant to the Individuals with Disabilities Education Act or a plan adopted pursuant to section 504 of the Rehabilitation Act of 1973 (often referred to as a Section 504 Plan). Thirdly, the DOJ requires entities administering examinations to respond to requests for accommodations in a \"timely manner ... to ensure equal opportunity for individuals with disabilities.\"\nIn 2011, a petition for writ of certiorari was filed with the U.S. Supreme Court in the case of National Conference of Bar Examiners v. Enyart . That petition, filed by the National Conference of Bar Examiners (NCBE), seeks review of a Ninth Circuit decision upholding an injunction that required the NCBE to permit Stephanie Enyart—a legally blind law student—to take the Multistate Professional Responsibility Exam and the Multistate Bar Exam with the aid of technology that would read aloud the text and adjust its size, font, and color. While the State Bar had no problem with these accommodations, the National Conference of Bar Examiners (NCBE) refused to permit them. Instead, NCBE offered to provide one or more of the following accommodations: a human reader; an audio CD of the test questions; a Braille version of the test; and a CCTV with a hard-copy version in large font with white letters printed on a black background. In district court, NCBE argued that the accommodations it offered would make the exams accessible to Enyart. It contended that similar accommodations had helped Enyart take exams in college and on the LSAT. However, Enyart persuaded the court that NCBE's proposed accommodations would not be effective on these exams: (1) her blindness was progressive, necessitating increasingly substantial accommodations over time; (2) the bar exam was a longer and more rigorous exam and therefore required different accommodations; and (3) the accommodations NCBE proposed would cause her \"extreme discomfort and disability-related disadvantage.\"\nOn its appeal to the Ninth Circuit, the NCBE argued that the DOJ regulation implementing Section 309 of the ADA was invalid because it interpreted NCBE's statutory obligation to make its exams \"accessible\" as an obligation to provide accommodations that \"best ensure\" that the examinee's results reflected her aptitude. NCBE contended that DOJ should have interpreted Section 309 as imposing a less onerous obligation: to provide \"reasonable\" accommodations. However, the Ninth Circuit found that the use of the word \"accessible\" in Section 309 of the ADA was ambiguous and the DOJ's interpretation was a \"permissible construction\" of Section 309's entitled to judicial deference. The fact that other sections of the statute used the word \"reasonable\" rather than \"accessible\" suggested to the court that DOJ was within its authority in interpreting Section 309 of the ADA as imposing a higher burden on test administrators than the burden that would be imposed under a \"reasonable\" accommodations standard.\nThe Ninth Circuit then affirmed the lower court's findings that the accommodations NCBE had offered Enyart were not sufficient. The court stated that the sufficiency of testing accommodations should be determined in an individualized inquiry of whether they \"best ensure\" that the examinee's results are determined by her aptitude rather than her disability. In conducting its inquiry, the court evaluated NCBE's proposed accommodations' capacity to help the plaintiff overcome the limitations created by her disability as well as their utility given the requirements and rigorousness of the particular exam at issue and the current state of technology. Pointing specifically to NCBE's arguments that the accommodations it offered would make the bar exam accessible to Enyart because they had made her prior tests accessible, the court stated that \"assistive technology is not frozen in time; as technology advances, testing accommodations should advance as well.\"\nA series of federal district courts have followed the Ninth Circuit's approach in Enyart . In Jones v. National Conference of Bar Examiners , for example, a federal district court in Vermont refused to uphold the NCBE's proposed accommodations for the plaintiff based solely on the fact that \"Congress, the U.S. Department of Justice, other courts, and advocacy groups for the blind have indicated [they] are reasonable and appropriate in other cases.\" In an \"individualized inquiry,\" the court wrote, accommodations \"deemed appropriate many years ago, or for different individuals with different needs [are] an inappropriate benchmark.\" Similarly, in Bonnette v. D.C. Court of Appeals , the U.S. District Court in Washington, DC, rejected the defendant's contention that the testing accommodations it had offered to the plaintiff were sufficient as a matter of law because, inter alia , they had been approved by the DOJ in settlement agreements with other testing entities and the plaintiff had used them successfully on exams in the past.", "In addition to cases alleging that the accommodations provided on various exams are insufficient, at least one federal court case is pending over the ADA consistency of policies that purportedly jeopardize the accreditation of educational institutions that exempt applicants with disabilities from discriminatory entrance exams. According to the complaint in Binno v. American Bar Association, the American Bar Association (ABA) conditions the accreditation of law schools on their adherence to a policy under which students who have not completed the LSAT (or a \"valid and reliable\" admission test) may not be admitted. The plaintiff alleges that law schools that waive or exempt students with disabilities from completing the LSAT risk remedial action, sanctions, probation, or full removal from the ABA's list of accredited law schools. If Binno is not resolved on the basis of standing, it should clarify the breadth of Section 309's applicability—does it only apply to entities that physically administer the exams, or, as the plaintiff alleges, does it apply to other entities that mandate its administration? Binno also has the potential to address whether it is legally possible for a test to be inaccessible to a particular individual with a disability regardless of the testing accommodations made available.", "The ADA's general prohibitions on disability-based discrimination protect only those people who have a \"disability\" for the purposes of the statute. In the past, courts interpreted the term \"disability\" narrowly, often creating legal obstacles to test-takers with cognitive disorders who sought testing accommodations under Section 309 of the ADA.\nThe enactment of the ADA Amendments Act in 2008 was intended to broaden the definition courts and executive agencies used in administering the ADA. The ADAAA's passage is expected to improve the likelihood that students with learning disabilities and other health impairments will be deemed entitled to testing accommodations under the ADA. The lowering of the \"disability\" hurdle also means more test-taking cases under the ADA will proceed to consideration of the adequacy of proposed accommodations. Accordingly, the federal district courts are expected to play a heightened role in evaluating the sufficiency of testing accommodations under Section 309 of the ADA.\nA series of recent federal court cases suggests testing accommodations are sufficient if, after an individualized inquiry, they are deemed to \"best ensure\" that the test accurately assesses the individual's aptitude. Factors that may be relevant to this analysis include their capacity to help the plaintiff overcome the limitations created by her disability, their utility given the requirements and rigorousness of the particular exam at issue, and current technology.\nIn addition to questions about who is entitled to testing accommodations under the ADAAA and what testing accommodations must be provided, at least one pending federal court case raises the question: what role must an entity play in mandating or administering an examination in order for it to have \"offered\" the exam for the purposes of Section 309 of the ADA? This case, Binno v. American Bar Association , also has the potential to address whether it is legally possible for a test to be inaccessible to a particular individual with a disability regardless of the testing accommodations made available." ], "depth": [ 0, 1, 1, 2, 2, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h2_title h3_title", "", "h3_full h2_full", "h2_full h1_full", "", "h2_full h1_full" ] }

{ "question": [ "What is the purpose of examinations?", "What groups can be affected by these examinations?", "What can happen if an entity does not provide accommodations for people with disabilities during examinations?", "What kinds of institutions does the ADA apply to?", "What Department is responsible for enforcing this?", "Under DOJ regulations, what do private testing entities have to do?", "What kinds of factors are relevant to individuals with disabilities?", "Why are not all test-takers with a disability entitled to accommodations under the ADA?", "Why have some people with disabilities not received accommodations under the ADA?", "What kinds of people didn't fall under the ADA's protections?", "What concern led to the ADA Amendments Act in 2008?", "What is the primary purpose of ADAAA?", "What was the impact of the ADAAA in court?", "What is an example of how the ADAAA shifts the case for plaintiffs who previously wouldn't have gotten ADA's protections?" ], "summary": [ "Tests and examinations are widely used to decide whether a person is qualified to take up a particular occupation, advance professionally, or attend a certain educational institution.", "These tests can pose unique challenges to individuals with disabilities.", "Under the Americans with Disabilities Act (ADA), an entity that offers an exam without providing accommodations to examinees with disabilities may be liable for disability-based discrimination.", "The ADA applies to both public and private educational and employment-related testing, and Section 309 of the ADA requires persons offering certain examinations to do so \"in a place and manner accessible to persons with disabilities.\"", "The Department of Justice (DOJ) is responsible for implementing this provision, and a series of federal court decisions have held that the DOJ's current interpretation of Section 309 is entitled to judicial deference.", "Under the DOJ regulations, private testing entities must provide individuals with disabilities with accommodations that \"best ensure\" that the test accurately assesses the individual's aptitude \"or whatever other factor the examination purports to measure.\"", "Factors that may be relevant to this analysis include the accommodations' capacity to help the plaintiff overcome the limitations created by her disability, their utility given the requirements and rigorousness of the particular exam at issue, and current technology.", "However, not every test-taker with a disability is entitled to accommodations under the ADA. The ADA's protections only apply to test-takers who establish that their impairments fall within the ADA's definition of a \"disability.\"", "In the past, courts had narrowly interpreted the term \"disability.\"", "In the field of educational and professional testing, this often meant that people with learning disabilities, attention deficit disorders, other health impairments, and cognitive disorders could not establish that they had a \"disability\" for the purposes of the ADA if they had developed methods of coping with their impairments.", "Concerned that narrow judicial interpretations of the term \"disability\" prevented individuals with disabilities from receiving necessary accommodations under the ADA, Congress enacted the ADA Amendments Act (ADAAA), P.L. 110-325, in 2008.", "The primary purpose of the ADAAA was to ensure that the courts and executive agencies adopted a more expansive interpretation of \"disability.\"", "The ADAAA is widely viewed as shifting the focus in an ADA case from whether the plaintiff is entitled to the ADA's protection to whether the defendant has complied with the ADA.", "For example, the ADAAA prevents courts from taking into account a test-taker's coping mechanisms when determining whether that test-taker is entitled to the ADA's protections. Accordingly, people with learning disabilities, attention deficit disorders, other health impairments, and cognitive disorders are more likely now to qualify for testing accommodations." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, 2, -1, 0, 0, -1, 0, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction and Overview1", "Key Existing Kyoto Protocol Provisions", "Obligations of All Parties", "Emissions Reductions", "Implementation: \"Flexibility\" Mechanisms", "Emissions Trading", "Clean Development Mechanism (CDM)", "Joint Implementation (JI)", "Carbon \"Sinks\"", "Compliance Mechanism", "Leading up to COP-13/MOP-3 in Bali, Indonesia", "Outcome of the Bali Negotiations: A Framework for Negotiating Post-Kyoto Commitments", "Outcome in Bali: The \"Bali Action Plan\"", "Prospects for Compliance by Kyoto Protocol Parties", "Status of Annex I Countries on Compliance", "U.S. Positions", "Asia-Pacific Partnership on Clean Development and Climate", "\"Major Economies\" Initiative by President Bush on Climate Change", "Other International Meetings", "United Nations Security Council", "Group of 8 (G-8) Meeting in Germany", "United Nations General Assembly" ], "paragraphs": [ "", "Responding to concerns that human activities are increasing concentrations of \"greenhouse gases\" (such as carbon dioxide and methane) in the atmosphere and causing potentially damaging climate change and global warming, nearly all nations of the world joined together in 1992 to sign the United Nations Framework Convention on Climate Change (UNFCCC). The United States was one of the first nations to ratify this treaty. It included a legally non-binding, voluntary pledge that the major industrialized/developed nations would establish national action plans aiming to reduce their greenhouse gas emissions to 1990 levels by the year 2000, and that all nations would undertake voluntary actions to measure and report greenhouse gas emissions to the UNFCCC Secretariat.\nThe parties to the UNFCCC hold annual meetings called Conferences of the Parties (COPs), at which unresolved issues are negotiated, rules of procedure are established or amended, and reviews of progress are considered. As scientific consensus grew that human activities are having a discernible impact on global climate systems, contributing to a warming of the Earth that could result in major impacts such as sea level rise, changes in weather patterns, and health effects—and as it became apparent that many major nations such as the United States and Japan would not be able to reduce their emissions to 1990 levels by 2000—parties to the treaty decided in 1995 that it would be necessary to move beyond voluntary measures and to enter into legally binding commitments. Negotiations began on a protocol to establish legally binding limitations or reductions in greenhouse gas emissions. It was decided by the parties that this round of negotiations would, in keeping with principles established in the UNFCCC, establish limitations only for the developed countries—the 38 nations listed in Annex I to the UNFCCC, including the former Communist countries, plus the European Union, and referred to as \"Annex I countries.\" Developing countries are referred to as \"non-Annex I countries.\"\nA basic principle established in the UNFCCC and continuing in negotiations on the Kyoto Protocol is that parties have \"common but differentiated responsibilities\" in dealing with climate change issues, and that first steps in reducing greenhouse gas emissions should be taken by the Annex I countries. Because developed countries have emitted the largest share of the greenhouse gases already in the atmosphere (carbon dioxide releases remain in the atmosphere for many decades), and because they are wealthier and more able to incur costs of any necessary changes in their economies, it was agreed by negotiators of the UNFCCC, and subsequently the Kyoto Protocol, that this principle would be a basic tenet of climate negotiations.\nThe Kyoto Protocol negotiations were completed in late 1997. The protocol establishes legally binding, mandatory emissions reductions for the six major greenhouse gases . It requires that Annex I countries (listed again in Annex B of the Protocol) reduce their aggregate greenhouse gas emissions by 5% below 1990 levels (1990 is the baseline for carbon dioxide, methane, and nitrous oxide; 1995 is the baseline year for the other 3 gases), averaged over the \"commitment period\" of 2008 to 2012. Each country was assigned individually negotiated targets which differed according to their situations.\nThe United States signed the Protocol in 1998. However, no country is subject to the provisions of a treaty until it has been ratified, which in the United States requires the consent of the U.S. Senate. Because the Senate was on record in mid-1997 in S.Res. 98 , objecting to a treaty that had no mandatory obligations for developing countries, President Clinton did not submit the Protocol to the Senate for advice and consent; therefore the United States did not ratify the Protocol during his Administration. Then in March 2001, soon after President George W. Bush took office, he rejected the Kyoto Protocol, and the United States declined further participation in Kyoto Protocol negotiations. After several years, the required number of Annex I countries had ratified, and the Protocol entered into force in February 2005. As of December 2007, following the announcement that Australia had ratified the Protocol, 175 nations plus the European Union had ratified it, representing over 62% of Annex I countries' 1990 greenhouse gas emissions. Since the United States has not ratified the Protocol, it is not subject to its terms.\nNegotiations continued after the 1997 treaty was finalized in order to put in place the detailed rules for how the Kyoto Protocol would operate and to establish procedures for how its provisions would be carried out. These negotiations were continued through two subsidiary bodies that address technical issues, and then decisions were made at the annual conferences of the parties (COPs) to the UNFCCC until February 2005 when the Kyoto Protocol had achieved the necessary ratifications to enter into force; the annual meeting is now a UNFCCC COP, combined with a \"meeting of the parties (MOP)\" to the Protocol. Thus the annual meetings are now referred to as COP/MOP meetings. The United States continues to participate in the discussions and negotiations of the COPs, but as it is not a party to the Kyoto Protocol, it does not participate in Kyoto-related (MOP) negotiations, attending those as an observer.\nIn December 2007, COP-13/MOP-3 convened in Bali, Indonesia, and began the process of formulating an agreement that would succeed the Kyoto Protocol when its commitment period ends in 2012. As summarized below in the section on the Bali Action Plan, the negotiations at this meeting were closely watched for signs that the process agreed on would produce an outcome that would be sufficient to the challenge of mitigating and adapting to climate change. Final decisions on what the commitments of developing and developed countries would be were not expected at Bali, but the considerations to be included in negotiations toward these decisions are outlined in the \"Bali Action Plan.\"", "The major commitments in the treaty on the key issues are as follows:", "The Kyoto Protocol calls on all Parties—developed and developing—to take a number of steps outlined in Article 10 to contribute to scientific research and monitoring of the climate system and greenhouse gases in their countries. They are also committed to formulate national and regional programs to improve local emission factors; carry out steps to promote and transfer environmentally sound technologies; strengthen national capacity building activities; and conduct national inventories of greenhouse gas emissions and sinks that remove these gases from the atmosphere.\nIn keeping with the principle of common but differentiated responsibilities, the UNFCCC and the Kyoto Protocol recognize the relatively low per capita greenhouse gas emissions in developing countries, and the need to take into account the development activities of these countries that will require increased energy use. The Protocol does not impose any binding requirements on developing countries; the commitments in Article 10 are regarded as essentially voluntary.\nObligations to reduce greenhouse gas emissions by Annex I countries are the focus of most of the Kyoto Protocol, which outlines the legally binding emissions reductions that the Parties to the treaty are to undertake, and provides for development of procedures and rules that apply to Parties as they move toward meeting these binding obligations. These are briefly summarized below.", "The Kyoto Protocol states that Annex I Parties are committed—individually or jointly—to ensuring that their aggregate anthropogenic carbon dioxide equivalent emissions of greenhouse gases do not exceed amounts assigned to each country in Annex B, \"with a view to reducing their overall emissions of such gases by at least 5% below 1990 levels in the commitment period 2008 to 2012.\" Negotiations on the Kyoto Protocol included a nation-by-nation allocation of the percentage each Annex I country would be obligated to reduce its greenhouse gas emissions in order to collectively reach the overall 5% reduction agreed to in the Protocol.\nAnnex B to the Kyoto Protocol lists 39 nations, including the United States, the European Union plus the individual EU nations, Japan, and many of the former Communist nations (the same countries as Annex I to the UNFCCC). The amounts for each country are listed in this annex as percentages of the base year, 1990 (except for some former Communist countries, which use a more recent year), and range from 92% (a reduction of 8%) for most European countries—to 110% (an increase of 10%) for Iceland. In negotiations on the Protocol, the United States agreed to a commitment on this list to 93%, or a reduction of 7% below 1990 levels. These commitments refer to averages that would be below each Party's 1990 levels for three major greenhouse gases, including carbon dioxide, (and below 1995 levels for the three other, man-made gases), averaged over the \"commitment period\" 2008 to 2012. (As noted above, only nations that ratify the Protocol are subject to its terms; the United States later rejected participation, and thus is not bound by it.)\nHowever, two of the most difficult issues unresolved in 1997 at Kyoto and still under discussion are related to counting emissions of a nation, specifically how to take into account: (1) emissions trading—specifically, how much of a country's obligation to reduce emissions can be met through purchasing credits from outside, vs. taking domestic action; and (2) the extent to which carbon sequestration by forests, soils and agricultural practices can be counted toward a country's emission reductions. These are discussed below.", "", "Emissions trading is one of three \"flexibility\" mechanisms contained in the Kyoto Protocol (article 17). Under the Kyoto Protocol, developed countries are given greenhouse gas emissions \"budgets\" (or emissions \"caps\") for the compliance period 2008-2012 based on a percentage of their 1990 or 1995 emissions levels (depending on the particular greenhouse gas). If a country determined that it would exceed its emissions limit during the compliance period, emissions trading would permit it to purchase emissions reductions \"credits\" from another country that determined it would achieve more emissions reductions than necessary to comply. With emissions trading, countries that can make relatively inexpensive emissions reductions have an incentive to reduce emissions below the level required by the Kyoto Protocol, and sell the extra credits to other countries whose emissions control costs are more expensive. Thus, both the seller and the buyer would have lower costs by virtue of the seller's profit and the buyer's savings. This type of implementation scheme is commonly called a \"cap-and-trade\" program.\nThis mechanism, however, comes with significant restrictions under the Kyoto Protocol. First, emissions trading is restricted to countries that have legally binding greenhouse gas emission limitations—the Annex 1 parties, which as noted above includes only developed, industrialized countries that have ratified the Protocol. Another requirement is that emissions credits must \"be supplemental to domestic actions for the purpose of meeting quantified emission limitations and reduction commitments....\" However, the Protocol is vague as to what \"supplemental\" means, and the term is subject to continuing interpretation.\nCurrently, the largest emissions trading scheme in use under the Kyoto Protocol is the European Union's Emissions Trading system (ETS). The EU-ETS is a cornerstone of the EU's efforts to meet its obligation under the Kyoto Protocol, and it currently covers more than 11,500 energy-intensive facilities across the now 27 EU Member countries, including oil refineries, powerplants over 20 megawatts in capacity, coke ovens, and iron and steel plants, along with cement, glass, lime, brick, ceramics, and pulp and paper installations. Covered entities emit about 45% of the EU's carbon dioxide emissions. The trading program does not cover emissions of non-CO 2 greenhouse gases, which account for about 20% of the EU's total greenhouse gas emissions. The first trading period began January 1, 2005. A second trading period is scheduled to begin in 2008, covering the period of the Kyoto Protocol, with a third period planned for 2013.", "The Kyoto Protocol supplements the cap-and-trade implementation scheme discussed above with two project-based schemes that permit Annex 1 countries to obtain additional credits that they can use to meet their emission caps. The first is CDM—the only mechanism under the Kyoto Protocol that involves non-Annex 1 countries. Under its provisions, industrialized countries can receive Certified Emissions Reduction credits (CERs) for reductions achieved from a greenhouse gas reduction project in a \"host\" non-Annex 1 country. CERs can then be used by the industrialized country to meet its compliance requirements. The process is overseen by a CDM Executive Board that registers and validates projects, issues CERs, and manages a series of panels and working groups. A critical component of the process is the requirement that CERs issued under the CDM represent only reductions in excess of those that would have occurred in the absence of the project. CERs can be issued from appropriate projects initiated after 2000. In 2005, China, India, and Brazil were estimated by Point Carbon to be responsible for about 63% of the total volume of all projects at the Project Design Document (PDD) stage of development. In the case of China, large volumes of CDM contracts are primarily the result of a few large HFC-23 reduction projects.", "In contrast, JI is a program in which industrialized countries can receive Emission Reduction Units (ERUs) from greenhouse gas reduction projects conducted jointly between two Annex 1 countries. Like CERs, ERUs can be used by the participating countries for compliance purposes. There are two tracks under JI (called Track 1 and Track 2). Track 2 mirrors the process used by the CDM but involves different institutions. Track 1 is a simplified process that puts more of the responsibility on the host country. Like the CDM, ERUs issued under JI must represent reductions achieved in addition to those that would have occurred in the absence of the project. Unlike CDM projects, ERUs can only be transferred beginning in 2008. Romania has been the most active host JI country. However, it should be noted that in 2005, the volumes involved in the project markets were overwhelmingly the result of CDM projects, which accounted for 93% of tonnage transacted (397 million metric tons (MMt) compared with 28 MMt for JI).", "One of the most contentious issues in the negotiations over Kyoto Protocol rules has been how to give nations credit for carbon \"sinks\": forests and land uses that absorb (sequester) carbon from the atmosphere and have the effect of reducing the net additions a country makes to atmospheric CO 2 levels. This has been negotiated under the term \"Land Use, Land-Use Change, and Forestry\" (LULUCF). Issues include how to allocate credit for existing forest cover (of which some nations, like the United States, have a great deal and others have very little) and what actions in relation to LULUCF would constitute legitimate carbon reductions. Only increased sequestration above 1990 levels, achieved by specific sequestration activities, would be counted.\nThe final decisions were that only certain activities would be eligible for use as offsets against Protocol obligations: afforestation (planting forest cover where there had been none); reforestation (re-planting tree cover where it had been removed); deforestation prevention; forest management; cropland management; grazing land management; and revegetation. The rules of the Protocol do not put an overall cap on sinks for countries, but instead incorporated country-specific limits on each of the categories of sinks activities, listed in an Appendix Z. Exactly how carbon absorbed in sinks will count toward a nation's obligations is still the subject of on-going discussion and refinement.", "Achieving agreement among Kyoto Protocol negotiators on compliance—in particular, penalties for non-compliance by Annex B Protocol parties—was difficult, and took several years after the Protocol was finalized in 1997. This was one of several controversial issues that was resolved as part of the Marrakech accords at the COP-7 meeting in 2001. In the final rules on compliance, parties agreed that if a Party falls short of its emissions target during the first commitment period (2008 to 2012), it must make up the difference in the second commitment period plus a penalty of 30%. Such a party will lose its eligibility for emissions trading, and must develop a \"compliance action plan.\"\nThis decision included establishment of a Compliance Committee, composed of a plenary, an operational bureau, and two branches: the Facilitative Branch and the Enforcement Branch. The Facilitative Branch is intended to provide advice and assistance to Parties, and to provide an \"early warning\" to Parties that may be in danger of not complying; the Enforcement Branch would have the responsibility of applying consequences for Parties that do not meet their commitments. A Protocol rulebook provides procedures for considering cases of non-compliance or possible non-compliance, and a procedure for reviewing the cases regarding eligibility to participate in the Protocol's financial and other mechanisms.\nCompliance involves not only meeting emissions reductions commitments, but also preparation of adequate GHG inventories and several other procedural requirements; there are no penalties for failures of compliance in these areas. However, the mechanism's penalties for failure to meet emissions reductions targets would come into play only when the commitment period is well underway; there remain a number of uncertainties as to how it will function. It does appear, as discussed below, that many parties to the Protocol may find that achieving their emissions reductions obligations will prove to be difficult or impossible within the commitment period.", "At the first \"Meeting of the Parties\" of the Kyoto Protocol in November/December 2005 (the 11 th COP of the UNFCCC)—COP-11/MOP-1—in Montreal, Canada, both the United States and developing countries were resistant to the idea of negotiating new legally binding commitments for the post-Kyoto (after 2012) period. The Kyoto Protocol parties were also reluctant to discuss new commitments in the post-Kyoto period if they did not include all the major emitters—including the United States, China, and India. By the end of that meeting a compromise was reached in which two processes were set in motion to consider next steps:\nAn \"Ad hoc Working Group\" (AWG) was established under the Protocol to begin consideration of next steps for developed country parties in the Post-Kyoto period; since the United States is not a party to the Protocol, it does not play a role in this process (except, of course, as an observer—from which vantage point its position has generally been made known and generally taken into account by the parties). A non-binding, two-year \"dialogue on long-term cooperation\" was launched under the auspices of the UNFCCC that includes the United States and all parties to the UNFCCC (virtually all of the world's countries). The decision on establishing the dialogue specifically ruled out including any negotiations leading to new commitments. Its goals are to support implementation of existing commitments under the Convention, support voluntary actions by developing countries, and to support development of national and international responses to climate change. The areas of focus for these discussions are: sustainable development, adaptation, technology development and transfer, and market-based opportunities.\nBoth of these processes involve workshops and meetings with reports to the COP/MOP meetings in 2006 and 2007. Neither involves any deadlines for completion of the discussions or negotiations.\nAt COP-12/MOP-2 held in Nairobi, Kenya, in November 2006, both the AWG and the Dialogue were involved in workshops and discussions, and the AWG formulated a work program for future meetings that involve analytical subjects that would underlie any consideration of post-2012 targets for developed countries. The Nairobi meeting also included the beginning of a review of the Protocol's effectiveness—a somewhat controversial issue because of the implications the review process is thought to have for future commitments. Little progress was made at this COP/MOP, however, and decisions on the scope and content of the review were put off until the COP-14/MOP-4 to be held in 2008. Issues related to adaptation to climate change focused primarily on administration of an Adaptation Fund established to assist adaptation efforts in developing countries.", "During 2007, climate change gained widespread attention as a critical issue facing the nations of the world, and the negotiations held in Bali, Indonesia, December 3-14, 2007, were widely regarded as a key next step in continuing to chart an international course to mitigate global warming and deal with its impacts.\nThe Kyoto Protocol was always intended to be a first step in moving toward reducing global accumulations of greenhouse gases in the atmosphere. Negotiators recognized that the goals of the Protocol, even if met by all the parties, would not produce the stabilization of atmospheric greenhouse gases posited as the goal of the UNFCCC. The Protocol set forth a timetable for reviewing progress of actions undertaken to meet the Protocol's goals and to consider \"next steps.\" It has been generally anticipated that next steps after 2012 would include measures to be taken by both developed and developing countries. Throughout the process preceding the Bali meeting, developing countries had been unwilling to make binding commitments on greenhouse gas limitations or management.\nThe Kyoto Protocol commitment period begins in 2008 and runs through 2012; it was widely expected when the Protocol was negotiated that by 2008, next steps for the post-2012 period would be either decided or under active negotiation. However, the challenge at the COP/MOP meeting in Bali and the negotiations to follow remains how to find agreement on the nature of commitments, if any, that would be acceptable to all the major players—including Kyoto Protocol parties with existing obligations, developing countries that are major GHG emitters, and the United States, whose role is regarded as critical by all potential participants in the post-2012 period.", "The outcome of negotiations at the Bali COP/MOP was expected to be, at best, what was termed a \"road map\" for future negotiations. It was agreed by all parties that negotiations need to be completed by the end of 2009. Some observers have noted that this is a very tight time frame, in that many parties are aware that the current U.S. administration continues to reject mandatory greenhouse gas emissions reductions, and they expect that further progress on mandatory GHG limitations cannot be made unless a new administration in 2009 is willing to participate. Further, it appears unlikely that major developing—and developed—countries will be willing to make legally binding commitments in the absence of such a commitment by the United States.\nAt a preliminary meeting leading up to the December COP/MOP, four key elements were outlined as the focus for a \"Bali road map\": 1) mitigation of climate change; 2) adaptation to impacts of climate change; 3) financial assistance issues; and 4) technology development and transfer. While future negotiations will likely grapple with the effort to obtain some form of legally binding, mandatory commitments from all parties, the recognition of differing national circumstances and differing abilities of nations to take on various types of commitments, will continue to be major elements in the discussions.\nWith this context, it was no surprise that negotiations in Bali, Indonesia, in December 2007 were highly contentious, and extended a day beyond the original ending date of December 14 in order to reach consensus on what is termed the \"Bali Action Plan.\" However, despite some compromises, participants generally lauded the final agreement as one that sets a negotiating framework in place, and includes developed and developing countries in the negotiations on \"considerations\" for a final agreement that would include mitigation measures to address greenhouse gas emissions, adaptation measures, financial support for developing countries, and technology transfer issues.\nKey elements and issues of the Bali Action Plan concerning mitigation include:\n— Need for \" deep cuts in global emissions \" : the decision at Bali recognized \"that deep cuts in global emissions will be required to achieve the ultimate objective of the Convention [avoiding dangerous climate change] and emphasiz[ed] the urgency to address climate change as indicated in the Fourth Assessment Report\" of the IPCC. Some developed countries, notably EU members, had argued that specific goals should be articulated in terms of atmospheric concentrations of GHG that should not be exceeded, but this was opposed by others, including the United States, and as a compromise, the limits discussed by the IPCC were referenced in general, with a footnote citation to the specific numbers.\n— Negotiations process: A two-track negotiating process was launched: (1) an Ad hoc Working Group on Long-Term Cooperative Action was established as a subsidiary body under the UNFCCC to conduct the process of negotiating agreement by 2009 on measures to be undertaken by all parties to the Convention—developing and developed. This was regarded as a breakthrough because it established negotiations (not just, as previously, \"dialogue\") that would include developing countries and would address mitigation measures, as well as the other items listed for consideration; and (2) the Ad hoc Working Group under the Protocol will continue to consider action by developed countries to succeed the 2012 conclusion of the Kyoto Protocol (no explicit reference to this AWG was made in the Bali decision document, thus it simply continues).\n—Long-term cooperative action and differentiated responsibilities: A shared vision for cooperative action was agreed on, \"including a long-term global goal for emission reductions, to achieve the ultimate objective of the Convention, in accordance with the provisions and principles of the Convention, in particular the principle of common but differentiated responsibilities and respective capabilities, and taking into account social and economic conditions and other relevant factors.\"\n— Mitigation action: The actions to be considered for/by developing country Parties in the negotiations under the Bali Action Plan proved to be one of the most controversial points, and almost led to breakdown of negotiations on the final day in Bali. The document outlining the Plan contains two separate paragraphs for mitigation considerations—(i) for developed country considerations, and (ii) for developing countries. Initially, both paragraphs stated that \"Enhanced national/international action on mitigation of climate change\" would include consideration of: \"Measurable, reportable and verifiable nationally appropriate mitigation actions\" – by both developed and developing parties. Some developing countries objected that this language was not what had been agreed to, and a reversal of clauses in the language of paragraph (ii) regarding actions by developing countries was proposed by India. This was opposed by the United States, nearly causing the breakdown in negotiations. The phrase as adopted after other countries loudly booed the United States over its objection, and after several developing countries stated that the change in language did not change their agreement to consider mitigation actions, is as follows:\n[consideration of mitigation actions that would include:] (ii) Nationally appropriate mitigation actions by developing country Parties in the context of sustainable development, supported and enabled by technology, financing and capacity building, in a measurable, reportable and verifiable manner;\nThose supporting this language argued that the financing, technology transfer and capacity building actions by developed countries should also be measurable, reportable, and verifiable. As the language was debated in the final plenary session, some of the developing countries reassured participants that they had made a commitment to consider mitigation actions in the negotiations that would follow. However, the United States was concerned that \"measurable, reportable and verifiable\" in the adopted language appears to apply mainly or only to the financing, technology and related actions, and its applicability to mitigation actions by developing countries is unclear. The language as adopted does appear ambiguous on this point. However, this language, like the entire decision document, applies only to the framework for future negotiations, and those negotiations can themselves deal with any ambiguities and with concerns that arise as the negotiations proceed.\n—Emissions from deforestation and forest degradation: The decision to include reducing emissions from deforestation and forest degradation among the considerations in the negotiations to follow Bali is widely regarded as a major positive step by many participants in the process, opening the door to discussions of incentives for developing countries to reduce and avoid deforestation. The decision states that mitigation considerations in the negotiations should include \"(iii) Policy approaches and positive incentives on issues relating to reducing emissions from deforestation and forest degradation in developing countries; and the role of conservation, sustainable management of forests and enhancement of forest carbon stocks in developing countries.\"\n—Other Major Elements in the Action Plan: Adaptation considerations were also listed among considerations for negotiations, including international support for adaptation actions; risk management and risk reduction strategies; disaster reduction strategies and means to address loss and damages associated with climate change impacts in developing countries; and ways to strengthen the role of the Convention in encouraging multilateral bodies and all sectors of society to support adaptation activities.\nConsiderations for ways to improve access and provide support concerning technology development are also included, as well as enhanced action on provision of financial resources and investments to spur both mitigation and adaptation activities.\nThe decision mandates that the work of the Ad Hoc Working Group on Long-term Cooperative Action under the UNFCCC is to complete its work in 2009 and present the outcome of its work to the 15 th COP/MOP, which is due to meet in Copenhagen, Denmark, November 30 to December 11, 2009. No statement is included concerning the Ad Hoc Working Group under the Kyoto Protocol, but many observers expect that at some point, the two working groups will find a way to connect their considerations. The question of making this linkage has not been directly addressed in negotiations to date, but will be important if a comprehensive agreement is to be achieved.\nThe first sessions of the UNFCCC working groups met March 31 – April 4, 2008 in Bangkok, Thailand. A broad array of work was agreed upon, including a series of eight workshops to discuss specific issues such as sector approaches. It was also agreed that the AWGLCA will complete its work program for 2009 no later than at its fourth session in December 2008. Discussions in Bangkok involved a continuation of the variety of approaches taken by countries in the past, signaling the challenges faced by negotiators, but ended on a generally positive note, according to reports from those attending. The next workgroup meetings in 2008 are Bonn, Germany, June 2 - 13, and Accra, Ghana, August 21 - 27. The two Working Groups will meet concurrently with the COP-14/MOP-4 meeting in Poznan, Poland, December 1 - 12, 2008.", "As parties to the Kyoto Protocol contemplate future commitments in the post-2012 period, the question of whether existing commitments are likely to be met is important. This section reviews the status of the parties to the Protocol in relation to their existing commitment and current GHG emissions. Many are facing major challenges to achieving emissions reductions, given the increase in emissions they have had in recent years.", "The Kyoto Protocol mandates compliance over a five-year averaging period—2008 to 2012. Thus, it is an uncertain business attempting to forecast what countries will be achieving throughout the entire compliance period. Compliance with the Kyoto Protocol is focused on Europe (particularly the European Union (EU) and Russia), New Zealand, Canada and Japan. These countries constitute the vast majority of Annex 1 signatories to the Kyoto Protocol.\nThe most comprehensive effort at compliance has been in Europe. For the EU, the situation puts considerable pressure on the European Commission's (EC) current review of Member countries' National Allocation Plans for the Kyoto commitment period. In October 2007, the EC completed its review of the 27 Members' proposed plans and at least conditionally approved all of them. As noted earlier, the focus of the EU's compliance effort is the Emissions Trading Scheme (ETS) that is completing a three-year trial \"learning by doing\" period in preparation for Kyoto compliance. After a rocky start resulting primarily from data shortcomings, several positives have emerged from the \"learning by doing\" exercise that may assist the ETS in making the Kyoto compliance phase run more smoothly, including (1) greatly improving emissions data, (2) encouraging development of the Kyoto Protocol's project-based mechanisms—Clean Development Mechanism (CDM) and Joint Implementation (JI), and (3) influencing corporate behavior to begin pricing in the value of allowances in decision-making, particularly in the electric utility sector. However, several issues that arose during the trial phase remain contentious as the ETS moves into its Kyoto phase, including allocation schemes, shutdown credits and new entrant reserves, and others. In addition, the expansion of the EU and the implementation of the directives linking the ETS to the Kyoto Protocol project-based mechanisms created new issues to which the EC has had to respond.\nThe EU has consistently stated that it will meet its commitments under the Kyoto Protocol and is currently developing targets for the post-2012 period. In 2006, the European Environmental Agency (EEA)projected the 15 EU Members that had jointly agreed to reduce GHGs by 8% below 1990 levels during the Kyoto compliance period would meet their obligation as a whole, although seven of those countries would not meet their individual obligations. The status of EU countries as estimated by the EEA is shown in Table 1 . As shown, the EEA estimated that all 10 of the new Member countries with obligations under the treaty would meet them. The EEA also estimated that non-EU countries Iceland and Switzerland would meet their obligations, while Liechtenstein and Norway would not. Interestingly, in October 2007, the EC announced agreement on linking the ETS with emission trading systems in Norway, Iceland, and Liechtenstein. The other major European signatory, the Russian Federation, is anticipated to meet its obligations under the treaty.\nOutside Europe, the primary Kyoto signatories are New Zealand, Canada, and Japan. In September 2007, the New Zealand government decided to phase in an emission trading scheme beginning in 2008 (last stage beginning in 2013) to assist New Zealand in complying with its Kyoto obligations. However, the Government's most recent analysis estimates the country will not comply with its Kyoto obligations, although that projection only reflects policies adopted as of April 2007. In contrast, Canada has simply stated that it cannot meet its Kyoto obligations and the government has adopted alternative goals. Finally, Japan is anticipated to have difficulties meeting its Kyoto obligations, and has been developing strategies to acquire substantial credits from the Kyoto flexibility mechanisms (JI and CDM) in an attempt to bridge the expected gap between Japanese emissions and Japan's Kyoto target.\nBecause of the flexibility mechanisms discussed above, potential compliance with Kyoto is not necessarily threatened by emissions growth in some countries, since such nations can purchase emissions credits to offset some of their emissions increases. Indeed, current analyses of credits available from economies in transition (mostly eastern European countries) indicate that sufficient surplus credits will exist in such countries to cover the deficit created by emissions growth in other countries. Specifically, as indicated by Figure 1 , surplus credits are anticipated in Russia, Ukraine, and other eastern European countries—sufficient surplus credits for other countries anticipated to have deficits (such as parts of the EU, Japan, and New Zealand) to purchase them in order to cover their compliance requirements.\nThis long position with respect to credits does not include anticipated CERs and ERUs from CDM and JI projects. As indicated by Figure 2 , the potential for additional credits from these sources is substantial, particularly from China. Of course, there is a range of risk with respect to these sources (including the possibility that any given project may not be built or may not be certified as valid for issuing CERs or ERUs), but indications are that additional credits will be available from these sources.\nThere are some potential potholes on the road to compliance. Perhaps the most important is the requirement that credits gained through emissions trading and joint implementation be \"supplemental to domestic actions.\" This requirement under Article 17 has been subject to extensive discussion and interpretation. Resisting efforts by the EU to place a quantitative limit on the procurement of credit via these mechanisms, the Conference of Parties decided to put no quantitative limit on such mechanisms, but that \"the use of the mechanism shall be supplemental to domestic action and domestic action shall thus constitute a significant element of the effort made by each party.\" No means of determining the significance of domestic actions has been finalized. As noted, some countries, such as Japan, are anticipated to use the mechanisms substantially in meeting their requirements.\nAnother major issue to be resolved is the volatility of the credit markets at the current time. Credit prices for the ETS during its \"learning by doing\" phase have ranged from less than 1 euro a ton to about 30 euro a ton—currently the price is less than 1 euro. Such volatility makes planning, implementation, and participation in emissions reduction programs difficult.", "The United States took an active role in the negotiations that shaped the 1997 Kyoto Protocol. It signed the Protocol in 1998, but President Clinton did not submit it to the Senate for approval, citing the Byrd-Hagel resolution, S.Res. 98 , that passed unanimously just prior to the completion of the Protocol in Kyoto. This non-binding resolution expressed the sense of the Senate that it would not support a treaty that did not include obligations for developing countries, or that would harm the U.S. economy.\nIn March 2001, President George W. Bush rejected the Kyoto Protocol, and the United States has not formally participated in further negotiations on the Protocol. Meetings to negotiate details and procedures of the Kyoto Protocol's rules occurred annually in conjunction with the conference of parties (COP) to the UNFCCC. The United States has attended these meetings and has participated in discussions or negotiations pertaining only to the UNFCCC; it also has been active behind the scenes in discussions of Kyoto Protocol issues, but has not formally participated. Regaining U.S. participation and ratification of the Kyoto Protocol remains a major goal for parties to the Kyoto Protocol, along with engaging major developing country participation, since meaningful reduction in global greenhouse gas emissions would depend on reductions in emissions by the largest emitters.\nIn February 2002, President Bush announced a U.S. policy of reducing the net \"greenhouse gas intensity\" of the U.S. economy by 18% over the next 10 years. Greenhouse gas intensity measures the ratio of greenhouse gas emissions to economic output. GHG intensity has been declining in the United States, and the 18% reduction goal compares to a projected \"business as usual\" decline in intensity of 14% for the 10-year period. According to some, the 18% goal would not achieve reductions of greenhouse gases significantly more than the existing trend.\nThe Administration stated that the goal, to be met through voluntary action, is to achieve efficiency improvements that would reduce the 183 metric tons of emissions per million dollars of gross domestic product (GDP) expected under \"business as usual\" to 151 metric tons in 2012. The plan noted that \"if, in 2012, we find that we are not on track toward meeting our goal, and sound science justifies further policy action, the United States will respond with additional measures that may include a broad, market-based program\" and other incentives and voluntary measures to accelerate technology development.\nOn April 16, 2008, President Bush delivered a statement in advance of the Major Economies Meeting in Paris (see below) in which he announced \"a new national goal to stop the growth in U.S. greenhouse gas emissions by 2025.\"\nU.S. actions related to climate change include extensive scientific and research programs , and continuing international activities to cooperate on a bilateral basis or through other international forums to support voluntary action.\nAmong the most prominent international U.S. activities have been the initiative taken in the Asia-Pacific Partnership on Clean Development and Climate, and the initiative by President Bush to convene a series of Major Economies Meetings on Energy Security and Environment, that began in September 2007, including the largest greenhouse-gas-emitting countries—developed and developing—to discuss how to deal with climate change. These are discussed below.", "On July 27, 2005, the United States announced formation of a six-nation Asia-Pacific Partnership on Clean Development and Climate (commonly denoted by the acronym 'APP'), which would work on cooperatively reducing greenhouse gas intensity of their economies. This partnership agreement included three of the world's largest emitters of greenhouse gases: the United States, China, and India, plus Japan, Australia, and South Korea. Of the three developed country nations in the partnership—the United States, Australia, and Japan—only Japan has ratified the Kyoto Protocol.\nThe participants described the focus of the partnership as technology development and reduction of greenhouse gas intensity, on a voluntary basis. No specific targets were announced. The members of the partnership indicated that their goal was to \"complement, but not replace the Kyoto Protocol.\" However, concerns have been raised by some observers as to whether this partnership and its approach would in fact reinforce the resistance of the two largest developing country greenhouse gas emitters—China and India—to taking on mandatory emissions commitments in the next phase of the Kyoto Protocol.\nThe purposes identified by partnership members include to \"Create a voluntary, non-legally binding framework for international cooperation to facilitate the development, diffusion, deployment, and transfer of existing, emerging and longer-term cost-effective, cleaner, more efficient technologies and practices among the Partners through concrete and substantial cooperation so as to achieve practical results.\"\nTask forces focused on eight industrial or business sectors were established to review the status of their sectors with regard to clean development and climate, to identify cost and performance objectives and realistic goals, and report on recommended actions within their sectors. The eight Task Forces are: (1) Cleaner Fossil Energy, (2) Renewable Energy and Distributed Generation, (3) Power Generation and Transmission, (4) Steel, (5) Aluminum, (6) Cement, (7) Coal Mining, and (8) Buildings and Construction. The task force reports, termed Action Plans, are now complete and can be accessed on the partnership website.\nThe Executive Summary of the Task Force Action Plans describes the projects to be undertaken, which include sectoral assessments, identifying best practices, capacity building, and technology research and demonstration. These activities are described as \"a significant first step toward a more comprehensive set of actions to address clean development and climate goals.\nThe remaining questions include the degree to which funding and investment will be forthcoming for the work plan goals. Also unclear is the degree to which the developing country partners will undertake activities in addition to those receiving outside funding. Another question—critical to the future of the Kyoto Protocol, and raised initially when the partnership was first announced—is whether the two largest developing country emitters of greenhouse gases, China and India, will see this parallel effort as indeed complementary to the Kyoto Protocol, or whether they will continue to resist binding emissions reductions in the next commitment period of the Kyoto Prtocol in favor of the non-binding, voluntary approach espoused by the Asia-Pacific Partnership, with greenhouse gas intensity reduction as their focus.", "Just prior to the G-8 meeting, President Bush announced May 31, 2007, that the United States would convene a meeting in Washington in late September of \"major economies\"—those that are \"major emitters\" of GHG—on \"Energy Security and Climate Change.\" He indicated this would begin a series of meetings, starting in September, to support \"an effort to develop a new Post-2012 framework on climate change by the end of 2008.\" Some observers argued that this initiative could undercut the Kyoto Protocol negotiations, but others seemed more positive in hoping that all efforts toward dealing with climate change, especially when they include major emitters like India and China, can prove useful.\nA White House fact sheet indicated that this proposal \"breaks new ground in advancing areas of common interest between developed countries and the major emerging economies\" and indicated that this effort \"will build on and advance U.S. relations with the Asia-Pacific Partnership on Clean Development and Climate and other technology and bilateral partnerships.\"\nIn early August 2007, President Bush announced that the first meeting of this initiative, held September 27-28, would include invitations to the European Union (the current EU President and European Commission) plus France, Germany, Italy, and the United Kingdom; and Japan, China, Canada, India, Brazil, South Korea, Mexico, Russia, Australia, Indonesia, South Africa, and the United Nations. In his letter of invitation to heads of governments of the invited nations, President Bush noted that he was \"... pleased to join the other G-8 leaders in June in recognizing the vital need for the major economies to work together to achieve the common objectives of reducing global greenhouse gas emissions, increasing energy security and efficiency, and sustaining economic growth.\"\nNoting that the G-8 leaders had welcomed his proposed series of meetings, he continued: \"The United States is committed to collaborating with other major economies to agree on a detailed contribution for a new global framework by the end of 2008, which would contribute to a global agreement under the U.N. Framework Convention on Climate Change by 2009.\"\nIt was a matter of concern among G-8 nations prior to the G-8 meeting in June 2007 that this initiative could serve to undermine both the G-8 discussions on climate, and the upcoming negotiations at the COP-13/MOP-3 meeting in Bali, Indonesia. However, both the outcome of the G-8 meeting in June (discussed below) and the final statements inviting participants to the September meeting emphasized the integration of these high-level dialogues into a constructive contribution to the UNFCCC negotiations.\nAlthough some attendees had expressed their concerns that this initiative could undercut the Kyoto Protocol negotiations, all attendees welcomed the acknowledgment by the United States that climate change is a major global problem, and the endorsement by the United States of the U.N. process as the major forum for negotiating international action on climate change. The U.S. summary of the September 27-28, 2007, Major Economies Meeting on Energy Security and Climate Change stated, \"Discussion reflected a common understanding that any long term goal is aspirational, and that it should not be used as a basis for burden sharing.\" This continuing rejection of mandatory limits in favor of \"aspirational goals\" was a disappointment to those (in particular, the European participants) who hoped for a breakthrough in the U.S. approach. Follow-on meetings were held in late January, in Honolulu, Hawaii, and in mid-April in Paris, France.", "In addition to the UNFCCC and Kyoto Protocol processes, and the initiatives by the United States discussed above, several major international meetings focused on climate change took place in 2007.", "On April 17, 2007, the United Nations Security Council held its first-ever debate on the relationship among climate change, energy, peace, and security. The meeting was convened by the United Kingdom, in its capacity as President of the Security Council for April. Some 50 delegations spoke at the meeting, some objecting that climate change was better handled by ongoing U.N. efforts (such as the UNFCCC), but others endorsing the need to deal with climate change as a security issue. Secretary General Ban Ki-moon has indicated that he places a high priority on dealing with climate change as part of the United Nations agenda.", "The Leaders of the \"G-8\" nations—the United States, Canada, France, Germany, Italy, Japan, Russia and the United Kingdom—met June 6-8, 2007, in Germany to discuss wide-ranging issues, with climate change high on the agenda. The outcome of this meeting was widely regarded as a key indicator of how successful negotiations on a post-Kyoto framework could be. In preliminary discussions on the outcome of the meeting, the European nations had encountered strong resistance by the United States to the German Chancellor's proposed framework, which included a 50% reduction in greenhouse gas (GHG) emissions by 2050, limiting global warming to a rise of 2 degrees Celsius (3.6 degrees Fahrenheit), and establishing a global GHG trading market. In the week preceding this meeting, President Bush announced a different approach to include major GHG emitting developing and developed countries in a process aimed at voluntary measures (discussed above).\nThe final declaration of the G-8 Summit on June 7 was widely described as a \"compromise\" and as a \"step in the right direction\" by the United States and the G-8 leaders. The Summit Declaration section on climate change stated that the G-8 nations are \"committed to taking strong and early action to tackle climate change in order to stabilize greenhouse gas concentrations...\" at levels that would avoid dangerous interference with the climate system. The declaration stated that the EU, Canadian, and Japanese decisions that include halving global emissions by 2050 would be seriously considered. It welcomed the \"wide range\" of activities underway in industrialized and developing countries and noted the need to address not only climate change but also energy security, economic growth, and sustainable development objectives.\nThe statement reiterated the UNFCCC principle of common but differentiated responsibilities and capabilities of nations and stated, \"We recognise however, that the efforts of developed economies will not be sufficient and that new approaches for contributions by other countries are needed.\" It further acknowledged that \"the UN climate process is the appropriate forum for negotiating future global action on climate change.\" The statement noted that the G-8 members had met with the representatives of Brazil, China, India, Mexico, and South Africa, and welcomed the offer of the United States to host a meeting later this year to continue engaging \"these and other major energy consuming and greenhouse gas emitting countries to consider the necessary components for successfully combating climate change.\"", "Reflecting the high priority for climate change expressed by U.N. Secretary-General Ban Ki-moon, a high-level heads of state and ministerial meeting on climate change was held at the U.N. General Assembly meeting on September 24, 2007, at U.N. Headquarters in New York. The meeting consisted of statements by many members of the General Assembly on the importance of dealing with climate change. President Bush did not address this meeting, but attended a dinner following the session." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 3, 2, 2, 2, 1, 2, 1, 2, 1, 1, 1, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full h1_full", "h3_title", "", "h3_full", "", "", "", "", "", "", "", "h3_full h0_title", "h0_full h3_full", "", "", "h1_full", "", "h0_full h2_full", "h0_full", "", "", "" ] }

{ "question": [ "What concern has emerged as an important policy issue?", "What reports gave merit to those concerns?", "What measures were taken in response to the growing concern over climate change?", "What other steps are taken to continue to work on these issues?", "What was the first treaty to address climate change and what does it establish?", "How did the U.S. respond to this treaty?", "How was this requirement remedied?", "What did the U.S. do in response to the Protocol?", "What is the result of the Kyoto Protocol?", "What have major governments done over the past year to deal with climate change?", "What has the U.S. done in response to these?", "How many parties are listed as part of the Kyoto Protocol?", "What major nation announced its ratification at the December meeting?", "What are the major challenges on agreements?" ], "summary": [ "Concerns over climate change, often termed \"global warming,\" have emerged both in the United States and internationally as major policy issues.", "Reports in 2007 by the United Nations Intergovernmental Panel on Climate Change (IPCC) provided scientific underpinnings for these concerns, and the number of proposals and international meetings devoted to these issues has grown, as discussed in this report.", "In December 2007, the meeting of parties to the United Nations Framework Convention on Climate Change (UNFCCC) convened in Bali, Indonesia, and agreed on the \"Bali Action Plan\" to guide negotiations over the next two years, with the goal of formulating by 2009 a decision that would identify the next round of commitments by the nations of the world to address climate change.", "Several \"Working Group\" meetings are scheduled to work on these issues during 2008, beginning with a meeting in Bangkok, Thailand, in April that formulated a work plan for negotiations.", "The first treaty to address climate change, the UNFCCC was completed and opened for signature in 1992. It includes voluntary commitments to establish national action plans for measures that would reduce greenhouse gas emissions.", "The United States was one of the first nations to sign and ratify this treaty, and it entered into force in 1994. However, it was soon concluded by parties to the treaty that mandatory reductions in emissions of the six major greenhouse gases (of which carbon dioxide, mainly from burning of fossil fuels, is the most prevalent) would be required.", "The resulting Kyoto Protocol, which was completed in 1997 and entered into force in February 2005, committed industrialized nations that ratify it to specified, legally binding reductions in emissions of the six major greenhouse gases.", "The United States has not ratified the Protocol, and thus is not bound by its provisions. In March 2001, the Bush Administration rejected the Kyoto Protocol, and subsequently announced a U.S. policy for climate change that relies on voluntary actions to reduce the \"greenhouse gas intensity\" (ratio of emissions to economic output) of the U.S. economy by 18% over the next 10 years.", "Under the Kyoto Protocol, the collective commitments of the industrialized nations are to reduce the Parties' emissions by at least 5% below their 1990 levels, averaged over the \"commitment period\" 2008 to 2012.", "Over the past year, several high-level meetings have focused on the need to deal with climate change, including the G-8 meeting in June 2007 and meetings at the United Nations.", "President Bush announced on May 31, 2007, that the United States would convene a meeting of major economies to begin a series of meetings in Washington, D.C. through 2008 to find a voluntary framework for dealing with energy security and climate change.", "As of November 2007, the UNFCCC Secretariat listed 174 nations and the European Union as parties to the Kyoto Protocol.", "Australia announced its ratification at the December meeting in Bali. Annual meetings of the parties are to continue, using the Bali \"roadmap\" agreed on in December 2007.", "Major challenges involve finding agreement on the nature of legally binding commitments, if any, that would prove acceptable to all major players: current parties, developing countries that are major emitters, and the United States." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 1, -1, -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "Secret Service has Processes to Vet Individuals Based on Their Expected Proximity to the President", "DOD and the Secret Service Provide Secure Areas for the Handling of Classified Information When the President Travels to Mar-a-Lago", "Regulations and Processes Governing Secret Service and DOD Expenditures on Employee Per Diem Expenses for Travel and Operational Space in Support of the President", "Federal Regulations Govern Agencies’ Policies for Paying Or Reimbursing Employees’ Official Duty Travel Expenses", "The Secret Service Has a Standard Process for Overseeing Costs for Lodging, Meals and Incidental Expenses, and Operational Space during Presidential Travel", "DOD Has a Standard Process to Oversee Costs for Lodging, Meals and Incidental Expenses, and Operational Space during Presidential Travel To Mar- A-Lago", "Payments Received by the U.S. Treasury Department from The Trump Organization through Treasury’s Donation Processes", "Agency Comments and Our Evaluation", "Appendix I: Comments from the Department of Homeland Security", "Appendix II: GAO Contacts and Staff Acknowledgments", "Staff Acknowledgments:" ], "paragraphs": [ "The Secret Service has processes to vet individuals differently depending on the person’s expected proximity to the President, using a combination of physical screening and background checks, as illustrated in figure 1.\nAccording to Secret Service officials, physical screening includes the use of equipment such as wands and magnetometers to secure the property. Background checks assess in part whether an individual has a history of criminal activity. In some cases, enhanced background checks identify other types of threats.\nThe Secret Service develops and executes a security plan to ensure that the outer, middle, and inner layers at the travel location are secure. Officials from the Secret Service confirmed that agency policies aim to provide comprehensive planning guidance for their agents’ activities but are not meant to be all inclusive.\nOuter Layer: The Secret Service uses physical screening measures to establish a layer of security around the Mar-a-Lago property. According to Secret Service officials, state and local law enforcement and the U.S. Coast Guard may monitor entry onto the property or perform visual checks of individuals entering the property and surrounding waterways. Depending on where the President is, guests may be required to pass through a physical security checkpoint that employs magnetometers, wands, and visual checks to assess physical threats.\nMiddle Layer: Officials from the Secret Service said that they use physical screening measures for individuals and any rooms that the President may access during his visit. Officials told us that if they are notified of the President’s planned arrival to a specific room, they will secure that room.\nInner Layer: In advance of the President’s arrival, the Secret Service has a process requiring vetting of individuals who are expected to be within close proximity to the President for a planned purpose or in certain secure areas. According to Secret Service officials, individuals who need access to secure areas but who are not expected to interact directly with the President, such as wait staff and other workers, are to undergo a background check in addition to physical screening. Individuals who are expected to meet the President are to undergo a background check and an enhanced background check. Officials from the Secret Service said that they are responsible for collecting the findings from these checks and making recommendations to the Executive Office of the President on whether individuals with derogatory findings should be allowed to access a space. According to officials from the Secret Service, staff at Mar-a-Lago routinely undergo background checks.\nIn order to conduct the background check, the Secret Service is to use personally identifiable information for each individual, and those Individuals’ names may be checked against indexes maintained by the Secret Service and other federal, state, and local law enforcement organizations. The Secret Service’s guidance notes that submission of the requested information to run a background check is based on individuals voluntarily providing the needed information. In order to conduct an enhanced background check, the Secret Service collaborates with the Federal Bureau of Investigation and other federal agency partners. According to officials from the Secret Service, the Executive Office of the President is responsible for identifying individuals who are expected to meet with the President and providing the Secret Service with the names and the personally identifiable information needed to complete these checks.\nAccording to Secret Service guidance, White House staff is expected to submit all names to the Secret Service at least 72 hours in advance of the President’s arrival. Advance agents are also responsible for setting deadlines for completing background checks. Officials from the Secret Service said that, based on the information received from these checks, the Secret Service will make a recommendation to the Executive Office of the President on whether an individual should be granted access to the President. According to these officials, the Executive Office of the President ultimately determines whether or not an individual will have access. However, the Secret Service is responsible for ensuring that the area is safe and that the individual is physically screened.", "DOD’s White House Communications Agency and the Secret Service each have specific responsibilities for establishing secure communications and secure areas for handling classified information when the President travels to domestic locations, such as Mar-a-Lago.\nDOD’s White House Communications Agency: This organization is an information technology unit within DOD that supports the President and his staff during presidential trips. This organization’s mission is to provide information services to the President, Vice President, National Security Staff, Secret Service, and others when directed. According to agency guidance and officials, the White House Communications Agency is responsible for installing secure communications equipment that enables the exchange of classified information in areas that may be used by these entities.\nSecret Service: According to officials from the Secret Service, they send an advance team that coordinates with the White House Communications Agency to set up a conference center for the President where classified information may be exchanged, among other things. These officials stated that they provide security at the entrance of this conference center and perform security sweeps to ensure that it is safe and secure.\nDOD and the Secret Service coordinate to establish and secure several areas that are available for handling classified information when the President travels to locations such as Mar-a-Lago, as shown in figure 2. These areas include a conference center, spaces used by staff of the National Security Council and Executive Office of the President, and presidential transportation vehicles. Details associated with these areas and facilities are sensitive and have been omitted from this report.", "The Secret Service and DOD are subject to regulations governing reimbursements to employees for official travel. Processes exist to review these travel-related expenses when personnel from these agencies travel. These processes are the same when personnel accompany the President to Mar-a-Lago.", "Two regulations implement statutory requirements and executive branch policies for travel, allowing agencies to pay for or reimburse their employees’ per diem expenses (lodging, meals and incidental expenses) and other travel-related expenses:\nThe Federal Travel Regulation (FTR), issued by the General Services Administration applies to the Secret Service’s personnel.\nThe Joint Travel Regulations (JTR), issued by the Department of Defense apply to DOD personnel.\nBoth regulations allow agencies to pay for employees’ daily expenses when they are traveling within the continental United States, based on allowances set by the General Services Administration for the applicable location and date (per diem rates) or the actual expense of travel. Under the Federal Travel Regulation, the maximum amount that a civilian employee may be reimbursed is 300 percent of the applicable per diem rate. The Joint Travel Regulations allow uniformed service members to be reimbursed up to 300 percent of the per diem rate when they are traveling in the continental United States, but they can be reimbursed more than 300 percent of the per diem rate for lodging when traveling outside the continental United States.", "Officials from the Secret Service stated that they apply the same cost oversight processes for all presidential travel. Expenses for lodging and operational space are centrally billed to the agency, and employee meals and incidental expenses are reimbursed to the traveler. In accordance with policy, the Secret Service tries to acquire lodging at the General Services Administration’s per diem lodging rate and must submit a waiver request for any room that exceeds this designated rate by any amount. The Secret Service field office closest to the travel destination is responsible for arranging for these spaces, negotiating rates, and if necessary submitting a waiver request to officials in the Secret Service’s Logistics Resource Center. The Logistics Resource Center is to review the waiver request, determine whether a more cost effective method exists to meet the need, and approve or reject the request.\nIn some cases, the Secret Service may not be able to acquire rooms at the per diem lodging rate, or agents may need rooms for operational purposes that exceed 300 percent of the per diem rate, which is more than is allowed for lodging under the Federal Travel Regulation. For example, the Secret Service may use a room for operational purposes or reserve rooms adjacent to the President to better protect him. In addition, to meet operational demands, the Secret Service may require a certain number of agents to stay at the hotel in which the President is staying, so that they are within a certain proximity of the President at all times. Furthermore, officials from the Secret Service said that members of the Secret Service canine teams must stay at hotels that allow animals, and rooms at these hotels may exceed the General Services Administration lodging rate.\nThe authorities the Secret Service has relied on to pay for hotel rooms needed to meet its operational requirements do not limit how much the agency can pay. Further, Congress passed a law in May of 2017 excepting the Secret Service from regulatory caps on room rentals, regardless of room purpose. Nevertheless, consistent with the Secret Service waiver process, personnel are still required to submit waiver requests for operational spaces to justify the need to book rooms during the President’s trips to Mar-a-Lago at prices higher than the General Service Administration lodging rates. We confirmed that a blanket waiver request was submitted and approved for all rooms at Mar-a-Lago that exceeded the General Services Administration per diem lodging rate during the President’s trips to Mar-a-Lago that are covered by this review. Additionally, we reviewed Secret Service documentation and confirmed that Secret Service personnel did not exceed the 300 percent threshold for lodging.\nFor meals and incidental expenses, the Secret Service’s employees who are on official duty are to submit a claim for reimbursement electronically or by paper and receipts, as applicable, at the conclusion of the trip. Approving officials are to approve (or deny) expenses, and the Secret Service’s Financial Management Division authorizes reimbursement for approved travel.", "DOD personnel use the same processes for travel to Mar-a-Lago as they do for other Presidential trips to oversee costs for lodging, meals, and incidental expenses. According to officials from DOD’s Defense Travel Management Office, their office establishes travel policy that applies to the four organizations that travel in support of the President’s trips. DOD personnel use the Defense Travel System to submit travel documents, including vouchers and receipts, as applicable. According to officials, lodging may be booked and reimbursed on an individual basis or centrally billed if a block of rooms is needed over the same period. Meals and incidental expenses are reimbursed to the traveler. Like Secret Service’s personnel, DOD personnel must obtain approval from an authorizing official prior to the trip to exceed the General Services Administration per diem lodging rate, consistent with the Federal Travel Regulation and Joint Travel Regulations. According to officials from the Defense Travel Management Office, DOD typically would not reimburse expenses above the approved lodging rate if lodging at the approved rate was available within the region. However, officials from the Defense Finance and Accounting Service indicated that presidential trips may require such a deviation. These approvals are to be tracked in the Defense Travel System.\nThe White House Military Office, which includes the White House Communications Agency, also sends personnel with the President when he travels. White House Communications Agency officials told us that its lodging and operational space for these personnel are typically coordinated by the White House Travel Office and that DOD personnel pay for the associated costs and seek reimbursement from DOD after the trip is complete.\nAccording to officials from the White House Communications Agency, some personnel are required to remain at, or near, the Mar-a-Lago property. If they are not required to stay at or near the property, they will try to obtain lodging at hotels in the area at the General Services Administration’s per diem rate for lodging. DOD officials told us that according to the Joint Travel Regulations, DOD is not authorized to pay or reimburse daily expenses above the 300 percent ceiling. In connection with the President’s travel to Mar-a-Lago between February 3, 2017 and March 5, 2017, DOD personnel exceeded the General Services Administration per diem rate but did not exceed the 300 percent threshold.\nAccording to officials from the Defense Travel Management Office, operational space used for official business is governed by the Federal Acquisition Regulation. White House Communications Agency officials told us that they have generally used space near the Mar-a-Lago property but leased property, effective September 2017, near Mar-a-Lago to reduce the cost of supporting the President’s trips to the property.", "Treasury has regular processes for receiving payments designated as gifts to the United States and gifts to reduce the public debt. Treasury officials stated that any payments received from The Trump Organization or the President that are designated as gifts would be handled using these processes. Under federal law, Treasury may receive general gifts to the U.S. Government and may also receive gifts to reduce the public debt. Treasury has developed processes to accept these types of payments, as shown in figure 3.\nTreasury officials said there are three accounts available to receive payments as gifts—a general gift account, a general fund receipts account, and an account for gifts to reduce the public debt. Any of these accounts could receive payments designated as gifts by the President or The Trump Organization. Treasury officials told us they would deposit such payments into the account for gifts to the U.S. Government unless the payment source specified that the funds should be used to reduce the public debt.\nTreasury received one payment from The Trump Organization, for $151,470 that was submitted through Treasury’s processes on February 22, 2018. In May 2017, The Trump Organization issued a policy addressing profits generated from foreign government patronage at its businesses. The Trump Organization’s policy states that it will make a single lump-sum payment annually after the end of its fiscal year, which ends on December 31st. We did not identify any other payments that Treasury received from The Trump Organization or the President between January 21, 2017, and August 1, 2018. In September 2018, an attorney for The Trump Organization confirmed that the organization had not made any payments since February 22, 2018.", "We provided copies of this draft report to DOD, DHS, the Department of Justice, the General Services Administration, the Department of Treasury, and the Executive Office of the President for comment. We also provided a section to the Trump Organization for comment. DHS provided written comments, which are reprinted in their entirety in appendix I. DHS, DOD, the Department of Treasury and the Department of Justice also provided technical comments, which we incorporated into this report as appropriate. The Executive Office of the President and the Trump Organization provided no comments.\nAs agreed with your offices, unless you publicly release this report earlier, we will not issue the report until 30 days from the report date. At that time, we will also provide copies to the Secretary of Defense, the Director of the Secret Service, the Secretary of Homeland Security, the Attorney General, the Director of the Federal Bureau of Investigation, the Administrator of the General Services Administration, and the Secretary of the Treasury. In addition, this report will be available at no charge on the GAO website at www.gao.gov.\nIf you or your staff have any questions about this report, please contact Joseph (Joe) Kirschbaum at (202) 512-9971 or at KirschbaumJ@gao.gov or Diana Maurer at (202) 512-9627 or at MaurerD@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in Appendix II.", "", "", "In addition to the contacts named above, Gina R. Hoffman, Assistant Director; Joseph P. Cruz, Assistant Director; Tracy Barnes, Nicholas Benne, Jennifer Kamara, Joanne Landesman, Amie Lesser, Thomas Lombardi, Carol Petersen, Michael Silver, Janet Temko-Blinder, Christopher Turner, Kayli Westling, and Alex Winograd made key contributions to this report." ], "depth": [ 1, 1, 1, 2, 2, 2, 1, 1, 1, 1, 2 ], "alignment": [ "h0_full", "h3_full h4_full h1_full", "h4_full h2_full", "", "h2_full", "h4_full h2_full", "", "h3_full", "", "", "" ] }

{ "question": [ "Why does the Secret Service vet individuals differently?", "What happens during the vetting process?", "What happens to individuals in Mar-a-Lago who are not expected to meet with the President?", "What happens to individuals who do access areas where the President will be present?", "What do the DOD and the Secret Service coordinate to handle?", "What are these areas?", "Can these details be accessed?", "How do the Secret Service and the DOD handle travel reimbursements?", "What must they do to get their travel-related expenses reviewed?", "What happens if their travel plans are not feasible?", "What if the travel costs exceed the maximum amount?", "What was GAO asked to review?", "What does this report provide information on?", "How has this report been modified from its original state?", "What did GAO do to get information for the report?", "What other information did GAO get for the report?", "What has the Executive Office of the President said about its role in assisting DOD and the Secret Service?" ], "summary": [ "The U.S. Secret Service (Secret Service) vets individuals differently depending on the person's expected proximity to the President when he travels, including during his visits to Mar-a-Lago.", "According to Secret Service officials, vetting may include using physical screening (measures to detect physical threats to the president and secure the property) and background checks intended to identify individuals who have prior criminal activity or present other types of threats.", "Individuals at Mar-a-Lago who are not expected to meet with the President or enter spaces the President may visit pass through an outer layer of security consisting of physical screening checkpoints surrounding the property.", "The Secret Service physically screens all individuals who will access areas where the President will be present, such as a dining room. According to Secret Service officials, individuals who have a meeting with the President generally undergo both physical screening and enhanced background checks.", "The Department of Defense (DOD) and the Secret Service coordinate to establish and secure several areas that are suitable for handling classified information when the President travels to Mar-a-Lago.", "These areas include a conference center, spaces used by staff of the National Security Council and the Executive Office of the President, and presidential transportation vehicles.", "Details associated with these areas and facilities are sensitive and have been omitted from this report.", "The Secret Service and DOD are subject to regulations that govern the reimbursement of employees for official travel expenses.", "Both organizations have processes to review these travel-related expenses when their personnel travel with the President and try to acquire lodging at the General Services Administration's per diem lodging rate.", "When the Secret Service is not able to acquire rooms at the per diem lodging rate, including when it needs rooms for operational purposes that exceed 300 percent of the per diem rate (a threshold set by the General Services Administration), employees must submit a waiver request.", "DOD personnel must also obtain approval when costs exceed the General Services Administration's lodging rate. Our review of DOD vouchers and Secret Service documentation confirmed that personnel did not exceed the 300 percent threshold for lodging during the Mar-a-Lago trips examined in this review.", "GAO was asked to review the establishment of secure areas for use by the President at Mar-a-Lago.", "This report provides information on, among other things, (1) vetting of individuals expected to be near the President; (2) efforts to establish secure areas for handling classified information; and (3) regulations and processes for agency expenditures on employees who travel with the President.", "This is a public version of a sensitive report that GAO issued in October 2018.", "GAO analyzed laws, regulations, policies, and procedures; reviewed agreements between federal agencies and trip after-action reports; and interviewed DOD and Secret Service officials.", "GAO also reviewed vouchers from the four presidential trips to Mar-a-Lago from February 3, 2017 through March 5, 2017.GAO also reviewed documentation and descriptions of specific security practices with DOD and Secret Service officials.", "The Executive Office of the President has not responded to requests regarding its role in assisting DOD and the Secret Service in carrying out their responsibilities." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, 0, -1, 0, -1, 2, -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 5, 5, 5, 5, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "", "Background", "Regular, or \"Old,\" Philippine Scouts", "Commonwealth Army of the Philippines", "Recognized Guerrilla Forces", "New Philippine Scouts", "Rescission Acts of 1946", "First Supplemental Surplus Appropriation Rescission Act (P.L. 79-301)", "Second Supplemental Surplus Appropriation Rescission Act (P.L. 79-391)", "Legislative Intent of the Rescission Acts", "Benefit Changes, 1946-1998", "Health Care Benefits", "P.L. 80-865", "P.L. 82-311", "P.L. 83-421", "P.L. 85-461", "P.L. 88-40", "P.L. 89-612", "Veterans Health Care Expansion Act of 1973 (P.L. 93-82)", "Veterans' Health Care, Training, and Small Business Loan Act of 1981 (P.L. 97-72)", "Non-Health Care Benefits", "P.L. 82-21", "P.L. 89-613", "P.L. 89-641", "Benefit Changes Since 1998", "Foster Care Independence Act of 1999 (P.L. 106-169)", "The Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 2001 (P.L. 106-377)", "The Veterans Benefits and Health Care Improvement Act of 2000 (P.L. 106-419)", "The Veterans Health Care, Capital Asset, and Business Improvement Act of 2003 (P.L. 108-170)", "The Veterans Benefits Act of 2003 (P.L. 108-183)", "Legislation in the 110th Congress", "Legislation in the 111th Congress" ], "paragraphs": [ "", "The Philippine Islands became a U.S. possession in 1898, when they were ceded from Spain following the Spanish-American War (1898-1902). In 1934, Congress passed the Philippine Independence Act (Tydings-McDuffie Act, P.L. 73-127), which set a 10-year timetable for the eventual independence of the Philippines and in the interim established a Commonwealth of the Philippines vested with certain powers over its internal affairs. In 1935, the Philippine Constitution was adopted and the first President of the Philippines was elected. The granting of full independence was ultimately delayed until 1946 because of the Japanese occupation of the Islands from 1942-1945.\nAmong other things, P.L. 73-127 reserved to the United States the power to maintain military bases and armed forces in the Philippines and, upon order of the President of the United States, the right to call into the service of the U.S. Armed Forces all military forces organized by the Philippine government. On July 26, 1941, President Franklin D. Roosevelt issued an executive order inducting all military forces of the Commonwealth of the Philippines under the command of a newly created command structure called the United States Armed Forces of the Far East (USAFFE). These units remained under USAFFE command through the duration of World War II (WWII), until authority over them was returned to the Commonwealth at the time of independence.\nFrom time to time since 1946, Congress has passed laws providing, and in some instances repealing, benefits to Filipino veterans. This report, which will be updated as legislative events warrant, provides an overview of major Filipino veterans legislation enacted by Congress since 1946. The report begins by defining the specific groups of Filipino nationals who served under the command of the United States, outlines the Rescission Acts of 1946, the changes to benefits for Filipino veterans since 1946, and recent legislative proposals.\nTable 1 , at the end of this report, shows the current benefits for Filipino veterans and survivors.", "These were soldiers who enlisted as Philippine Scouts prior to October 6, 1945. They were members of a small, regular component of the U.S. Army that was considered to be in regular active service. The Regular Philippine Scouts were part of the U.S. Army throughout their existence, and are entitled to all benefits administered by the Department of Veterans Affairs (VA) by the same criteria that apply to any veteran of U.S. military service.", "These soldiers enlisted in the organized military forces of the Government of the Philippines under the provisions of the Philippine Independence Act of 1934. They served before July 1, 1946, while such forces were in the service of the U.S. Armed Forces pursuant to the military order of the President of the United States dated July 26, 1941.", "These were individuals who served in resistance units recognized by, and cooperating with, the U.S. Armed Forces during the period April 20, 1942, to June 20, 1946. They served primarily during the Japanese occupation of the Islands. Following reoccupation of the Islands by the U.S. Armed Forces, they became a recognized part of the Commonwealth Army of the Philippines by order of the President of the Philippines.", "These were Philippine citizens who served with the U.S. Armed Forces with the consent of the Philippine government between October 6, 1945, and June 30, 1947, and who were discharged from such service under conditions other than dishonorable. Since these scouts were recruited as a result of the Armed Forces Voluntary Recruitment Act of 1945 (P.L. 79-190), they are referred to as \"New\" Scouts.", "In 1946, Congress passed the first Supplemental Surplus Appropriation Rescission Act (P.L. 79-301) and the second Supplemental Surplus Appropriation Rescission Act (P.L. 79-391), which came to be commonly known as the \"Rescission Acts of 1946.\" It should be noted that the Rescission Acts of 1946 applied only to Filipino veterans who were members of the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, or the New Philippine Scouts. Veterans who served as Regular, or \"Old,\" Philippine Scouts were categorized as U.S. veterans. They were, and remain, generally entitled to all veterans' benefits for which any other U.S. veteran is eligible.", "Enacted on February 18, 1946, P.L. 79-301 authorized a $200 million appropriation to the Commonwealth Army of the Philippines with a provision limiting benefits for these veterans to: (1) compensation for service-connected disabilities or death; and (2) National Service Life Insurance contracts already in force. Furthermore, this provision included bill language stating that\nService before July 1, 1946, in the organized military forces of the government of the Commonwealth of the Philippines while such forces were in the service of the Armed Forces of the United States pursuant to the military order of the President, dated July 26, 1941 ... shall not be deemed to have been active military, naval or air service for the purposes of any law of the United States conferring rights, privileges, or benefits upon any person by reason of the service of such person or the service of any other person in the Armed Forces.\nBecause of differences between economic conditions and living standards in the United States and the Philippines, P.L. 79-301 also provided that any benefits paid to Commonwealth Army veterans would be paid at the rate of one Philippine peso to each dollar for a veteran who was a member of the U.S. Armed Forces, with the assumption that one peso would obtain for Philippine veterans in the Philippine economy the equivalent of $1 of goods and services for American veterans in the American economy. Prior to the enactment of P.L. 79-301, Commonwealth Army veterans were determined by the then Veterans' Administration to be eligible for U.S. veterans' benefits.", "Enacted on May 27, 1946, P.L. 79-391 provided that service in the Philippine Scouts (the New Philippine Scouts) under Section 14 of the Armed Forces Voluntary Recruitment Act of 1945 (P.L. 79-190) shall not be deemed to have been active military or air service for the purpose of any laws administered by the Veterans' Administration.", "There is little background information on the intent of Congress in passing the first Rescission Act, as it affects veterans of the Commonwealth Army. However, statements made by Senator Carl Hayden during hearings on the second Rescission Act, which affected New Philippine Scouts, provide some indication of legislative intent in the passage of the first Rescission Act, and to the subsequent passage of the second Rescission Act. Furthermore, other events at the time may provide some context in which the Rescission Acts were considered.\nAt the end of World War II, when Congress was considering a $200 million appropriation for the support of the Philippine Army, Senator Carl Hayden of the Senate Committee on Appropriations sent a letter to General Omar Bradley, then Director of the Veterans' Administration, requesting information concerning the status of the Filipino servicemen and the potential cost of their veterans benefits. In his response to the committee, General Bradley indicated that the total cost of paying veterans' benefits to members of the Philippine Commonwealth Army and their dependents, under then existing veterans' laws, would amount in the long run (75 years) to about $3 billion. It seems clear from Senator Hayden's statements that the passage of the first Rescission Act was meant to balance competing financial interests by providing some benefits, such as pensions for service-connected disability or death, while at the same time reducing the U.S. liability for future benefits. To accomplish this, Senator Hayden, Senator Russell and Senator Brooks included language by way of an amendment to the first Rescission bill stating that service by members of the Commonwealth Army was not considered active military, naval, or air service in the U.S. Armed Forces. Furthermore, hearings on the second Rescission Act also clearly indicate that it was Congress's intent to limit wartime benefits given to New Philippine Scouts:\nBecause neither the President nor the Congress has declared an end to the war, a [New] Philippine Scout upon separation from service would be entitled to the same benefits as an American soldier who served in time of war. Unless this amendment [to the second Rescission Act] is adopted, a [New Philippine] Scout would be entitled to claim every advantage provided for the G.I. bill of rights such as loans, education, unemployment compensation, hospitalization, domiciliary care and other benefits provided by the laws administered by the Veterans' Administration. Because hostilities have actually ceased, the amendment makes it perfectly clear that these wartime benefits do not apply and that the 50,000 men now authorized to be enlisted in the [New] Philippine Scouts will be entitled only to pensions resulting from service-connected disability or service-connected death.\nIn addition, the passage of the Rescission Acts may have been influenced by other bills under consideration by Congress at that time. In 1946, Congress passed the Philippine Rehabilitation Act (P.L. 79-370) and the Philippine Trade Act (P.L. 79-371). The terms of the Rehabilitation Act required the United States to pay claims for rehabilitation of the Philippines and war damage claims up to $620 million. Of this sum, $220 million was allocated for repair of public property. The remaining $400 million was allocated for war damage claims of individuals and associations. The Philippine Trade Act provided for free trade between the United States and the Philippines until July 3, 1954. These bills under consideration at the time would have provided economic stability to the newly emerging nation. According to Senator Hayden:\nAs I see it, the best thing the American government can do is to help the Filipino people to help themselves. Where there was a choice between expenditures for the rehabilitation of the economy of the Philippine Islands and payments in cash to Filipino veterans, I am sure it is better to spend any equal sum of money, for example, on improving the roads and port facilities. What the Filipino veteran needs is steady employment rather than to depend for his living upon a monthly payment sent from the United States.\nTherefore, it seems clear that Congress considered the Rescission Acts in the context of providing for the comprehensive economic development of the soon to be sovereign Republic of the Philippines.", "", "", "Enacted on July 1, 1948, P.L. 80-865 authorized aid not to exceed $22.5 million for the construction and equipping of a hospital in the Philippines to provide care for Commonwealth Army veterans and Recognized Guerrilla Forces. P.L. 80-865 also authorized $3.3 million annually for a five-year grant program to reimburse the Republic of the Philippines for the care and treatment of service-connected conditions of those veterans. In 1951, plans for a new hospital were completed, and construction of a new hospital began in 1953. Work was completed at a total cost of $9.4 million, and the hospital was dedicated on November 20, 1955. This facility came to be known as the Veterans Memorial Medical Center (VMMC), and the facility was turned over to the Philippine government. The hospital is now organized under the Philippine Department of National Defense.", "Enacted on April 9, 1952, P.L. 82-311 authorized the President to transfer the United States Army Provisional Philippine Scout Hospital at Fort McKinley, Philippines, including all the equipment contained in the hospital, to the Republic of the Philippines. P.L. 82-311 also authorized a five-year grant program to reimburse the Republic of the Philippines for the medical care of Regular Philippine Scouts undergoing treatment at the United States Army Provisional Philippine Scout Hospital.", "Enacted on June 18, 1954, P.L. 83-421 extended the five-year grant program for an additional five years, through June 30, 1958, and authorized payments of $3 million for the first year, and then payments decreasing by $500,000 each year. No change was made to the provision stating that funds could be used for either medical care on a contract basis or for hospital operations.", "The VMMC was originally intended to provide care for service-connected conditions only. However, P.L. 85-461 enacted on June 18, 1958, expanded its use to include veterans of any war for any nonservice-connected disability if such veterans were unable to defray the expenses of necessary hospital care. The VA was authorized to pay for such care on a contract basis. P.L. 85-461 also authorized the President, with the concurrence of the Republic of the Philippines, to modify the agreement between the United States and the Philippines with respect to hospital and medical care for Commonwealth Army veterans, and Recognized Guerrilla Forces. The law stated that in lieu of any grants made after July 1, 1958, the VA may enter into a contract with the VMMC under which the United States would pay for hospital care in the Republic of the Philippines for Commonwealth Army veterans and Recognized Guerrilla Forces determined by the VA to need such hospital care for service-connected disabilities. P.L. 85-461 also required that the contract must be entered into before July 1, 1958, would be for a period of not more than five consecutive fiscal years beginning July 1, 1958, and shall provide for payments for such hospital care at a per diem rate to be jointly determined for each fiscal year by the two governments to be fair and reasonable.\nP.L. 85-461 also authorized the Republic of the Philippines to use at their discretion beds, equipment, and other facilities of the VMMC at Manila, not required for hospital care of Commonwealth Army veterans with service-connected disabilities, for the care of other persons.", "Enacted on June 13, 1963, P.L. 88-40 extended the grant program for another five years, through June 30, 1968. Under provisions of P.L. 88-40, costs for any one fiscal year were not to exceed $500,000.", "Enacted on September 30, 1966, P.L. 89-612 expanded the grant program to include hospital care at the VMMC for Commonwealth Army veterans, determined by the VA to need such care for nonservice-connected disabilities if they were unable to defray the expenses of such care. P.L. 89-612 also authorized the provision of hospital care to New Philippine Scouts for service-connected disabilities, and for nonservice-connected conditions if they were enlisted before July 4, 1946, the date of Philippine independence. P.L. 89-612 also authorized $500,000 for replacing and upgrading equipment and for restoring the physical plant of the hospital. P.L. 89-612 also provided an annual appropriation of $100,000 for six years, beginning in 1967, for grants to the VMMC for medical research and training of health service personnel.", "Enacted on August 1, 1973, P.L. 93-82 authorized nursing home care for eligible Commonwealth Army veterans and New Philippine Scouts. P.L. 93-82 also provided that available beds, equipment, and other facilities at the VMMC could be made available, at the discretion of the Republic of the Philippines, for other persons, subject to: (1) priority of admissions and hospitalizations given to Commonwealth Army veterans or New Philippine scouts needing hospital care for service-connected conditions; and (2) the use of available facilities on a contract basis for hospital care or medical services for persons eligible to receive care from the VA. P.L. 93-82 also authorized funding of up to $2 million annually for medical care, and provided for annual grants of up to $50,000 for education and training of health service personnel at the VMMC, and of up to $50,000 for replacing and upgrading equipment and maintaining the physical plant.", "Enacted on November 3, 1981, P.L. 97-72 made substantial changes to then existing law. P.L. 97-72 amended section 632 [now 1732] of Title 38 \"to make it explicitly clear that it is the position of the United States that the primary responsibility for providing medical care and treatment for Commonwealth Army veterans and New Philippine Scouts rests with the Republic of the Philippines.\" The committee report accompanying P.L. 97-72 stated the long-standing position of Congress with regard to health care for Filipino veterans:\nThere is little doubt that in 1948 when Congress enacted P.L. 80-865, authorizing a 5-year grant program to provide medical benefits to Filipino veterans with service-connected illnesses, including the authorization for constructing and equipping a hospital in Luzon, it intended that this program be temporary and that the Philippine government would eventually assume responsibility for funding the program and operations of the hospital.... These grants were renewed for an additional 5 years in 1954, but on a decreasing annual scale of payments (P.L. 83-421). The Committee report on this bill stated that progressively reducing these grants over five years was to make clear the intent of Congress that the Philippine government would be expected to gradually assume full responsibility for the hospital.... However, because of the moral obligation of the United States to provide care for Filipino veterans and the concern that the Philippine government would not be able to maintain a high standard of medical care to these veterans if assistance by the United States were withheld, this program was extended in 5-year increments through [FY] 1978. P.L. 89-612, enacted in September 1966, expanded the program to include medical care for nonservice-connected disabilities if the veteran were unable to defray the expense of medical care and included New Philippine Scouts in the coverage.\nFurthermore, P.L. 97-72 gave the VA the authority to contract for the care and treatment of U.S. veterans in the VMMC, and to provide grant authority of $500,000 per year for a period of five years for making grants to the VMMC to assist in the replacement and upgrading of equipment and the rehabilitation of the physical plant and facilities of the center.\nThe grant program was further authorized by making amendments to the grant amount and the time frame for entering into contracts by the following acts:\nP.L. 100-687 , enacted on November 18, 1988; Department of Veterans Affairs Health-Care Personnel Act of 1991 ( P.L. 102-40 ), enacted on May 7, 1991; Veterans' Benefits Improvement Act of 1991 ( P.L. 102-86 ), enacted on August 14, 1991; and Veterans Health Care Act of 1992 ( P.L. 102-585 ), enacted on November 4, 1992.\nIn 1993, the VA discontinued referrals of U.S. veterans to the VMMC, because the VA determined that the VMMC was not providing a reasonable standard of care. Until this time, the VMMC had been the primary contract hospital for the VA in the Philippines. Because of this change in the referral process, the grant-in-aid funding for the VMMC was last authorized by P.L. 102-585 through September 30, 1994, and the program was allowed to expire. However, Congress continued to appropriate funds for the program through September 30, 1996. During a tour of the VMMC in May 2006, the VA Secretary announced that \"the VMMC will receive a grant of $500,000, or approximately 25.5 million pesos, from the U.S. government to help the institution purchase additional equipment and materials for the treatment of Filipino veterans.\" The VA currently provides grants of equipment under the authority of 38 U.S.C. §1731.", "", "Enacted on April 25, 1951, P.L. 82-21 authorized funeral and burial benefits, including burial flags, for Commonwealth Army veterans residing in the Philippines (at half the rate of U.S. veterans). These benefits were not extended to New Philippine Scouts.", "Enacted on September 30, 1966, P.L. 89-613 extended dependents' and survivors' education assistance to include children of Commonwealth Army veterans and New Philippine Scouts. These benefits were made payable at half the rate of the benefits for children of U.S. veterans.", "As a result of a Joint Republic of the Philippines-U.S. Commission study of Philippine veterans' problems, P.L. 89-641, enacted on October 11, 1966 changed how benefits were to be computed by providing for the payment of benefits in pesos based on pesos being equal in value to U.S. 50 cents for each U.S. dollar authorized. In 1978, testifying before the Senate Committee on Appropriations, the General Accounting Office (now the Government Accountability Office) stated that\n[T]he intent of the 1966 law was apparently to restore Philippines beneficiaries to approximately their situation in 1946, taking into account the changes occurring in the economies and living standards in the Philippines and the U.S. since 1946. Since the law was enacted, however, legislative increases and devaluations of the peso have provided Filipino veterans with undue increases in benefits and has resulted in Filipino veterans achieving much higher levels of benefits than their counterparts in the U.S.", "", "Enacted on December 12, 1999, P.L. 106-169 expanded U.S. income-based benefits to certain World War II veterans, including Filipino veterans, who served in the organized military forces of the Philippines while those forces were in the service of the U.S. Armed Forces. Until the enactment of this act, recipients of Supplemental Security Income (SSI) were generally required to reside in the United States to maintain their eligibility. This law enabled eligible Filipino veterans to return to the Philippines and retain 75% of their SSI benefits.", "Enacted on October 27, 2000, P.L. 106-477 changed the rate of compensation payments to veterans of the Commonwealth Army of the Philippines and veterans of Recognized Guerrilla Forces who lawfully reside in the United States. P.L. 106-377 also authorized the VA to provide hospital care, medical services, and nursing home care to these two veterans groups, similar to care and services available to U.S veterans. In order to receive these benefits, they were required to be legal permanent residents of the United States and be receiving VA disability compensation. P.L. 106-377 , also authorized outpatient care at the Manila VA Outpatient Clinic to service-connected U.S. veterans for their nonservice-connected disabilities. Prior to the enactment of P.L. 106-377 , the VA was limited to providing outpatient treatment for U.S. veterans in the Philippines only for their service-connected conditions.", "Enacted on November 1, 2000, P.L. 106-419 changed the amount of monetary burial benefits that the VA will pay to survivors of veterans of the Philippine Commonwealth Army and Recognized Guerrilla Forces who lawfully reside in the United States at the time of death.", "Enacted on December 6, 2003, P.L. 108-170 authorized the VA to provide hospital care, nursing home care, and outpatient medical services to Filipino Commonwealth Army veterans, veterans of Recognized Guerrilla Forces, and New Philippine Scouts. Currently, these groups of veterans are eligible for hospital care, nursing home care, and outpatient medical services within the United States.", "Enacted on December 16, 2003, P.L. 108-183 added service in the New Philippine Scouts as qualifying service for payment of disability compensation, dependency, and indemnity compensation (DIC) and monetary burial benefits at the full-dollar rate, and provided for payment of DIC at the full-dollar rate to survivors of veterans of the Philippine Commonwealth Army and Recognized Guerrilla Forces who lawfully reside in the United States.\nIt should be noted that veterans of the U.S. Armed Forces have the same entitlement to monetary benefits in the Philippines that they would have in the United States, with the exception of home loans and related programs, which are not available in the Philippines.\nTable 1 provides a summary of benefits currently available to Filipino veterans and survivors by category of service (Regular Philippine Scouts, Commonwealth Army of the Philippines, Recognized Guerilla Forces, and New Philippine Scouts).", "H.R. 760 and S. 57 would have eliminated the distinction between the Regular or \"Old\" Philippine Scouts and the other three groups of veterans—Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts—making them all fully eligible for VA benefits similar to those received by U.S. veterans. H.R. 760 was reported out of committee. S. 66 would have required the Secretary of the Army to validate claims by Filipinos that they performed military service in the Philippine Islands during World War II that would qualify them for benefits under U.S. law and issue a certificate of service.\nS. 1315 , as passed by the Senate, incorporated provisions from S. 57 . S. 1315 would have altered current law to deem certain service with Philippine forces during World War II as active service and establish rates for the Improved Pension and the Death Pension for veterans who served with the Philippine forces and their survivors living outside the United States. Under the provisions of S. 1315 , single Filipino veterans living outside the United States would receive $3,600 a year, married veterans would receive $4,500 a year, and veterans' survivors would receive $2,400 a year. However, under the bill, veterans living outside the United States who are eligible for, or receiving, the Social Security benefit for World War II veterans living overseas would not be not eligible for the new Improved Pension rates. The bill also would not have applied the current income or net worth limitations for the Improved Pension and the Death Pension for veterans who served with the Philippine forces and their survivors living outside the United States. In addition, the bill would not have required any veteran who served with the Philippine forces or their survivors receiving other federal benefits at the time of enactment to apply for the Improved Pension or the Death Pension if receiving the new benefits would have made them ineligible for their other federal benefits or reduced the amount of their other federal benefits. S. 1315 provided that disability compensation (for service-connected disabilities) would be paid to all recipients at the same rate regardless of residence, while maintaining the general payment rate of 50 cents per dollar for other benefits to Filipino veterans and survivors living outside the United States. On September 22, 2008, the House passed an amended version of S. 1315 that did not contain the Filipino benefit provisions.\nH.R. 6897 , as passed by the House on September 23, 2008, would have provided a one-time payment to Filipino veterans who served in the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts. The payment would be $15,000 for U.S. citizens and $9,000 for non-U.S citizens. Payments are made from the Filipino Veterans Equity Compensation Fund and are subject to funds being available (appropriated). P.L. 110-329 appropriated $198 million for the Filipino Veterans Equity Compensation Fund.", "The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) authorizes a one-time payment from the Filipino Veterans Equity Compensation Fund to Filipino veterans who served in the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts. The one-time payment is $15,000 for U.S. citizens and $9,000 for non-U.S citizens. Filipino veterans currently receiving benefits will continue to receive those benefits. The one-time payment does not impact eligibility for federally assisted programs. The one-time payment is considered a settlement for all future claims for benefits based on service in the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts. The exception is that a veteran may receive benefits that the veteran would have been eligible for based on the laws in effect on the day before enactment (September 17, 2009)." ], "depth": [ 0, 1, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 3, 3, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 1, 2, 2, 2, 2, 2, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_full", "" ] }

{ "question": [ "Why does the U.S. have a relationship with the Philippines?", "Are the Islands still a part of the U.S.?", "How have Filipinos contributed with the U.S. Armed Forces?", "What do veterans in the Philippines not have access to?", "What has Congress done to give these veterans similar benefits to those received by U.S. veterans?", "What are four groups of Fillipino nationals who served under the command of the United States?", "What does this report details?", "What will cause this report to be updated?" ], "summary": [ "The United States has had a continuous relationship with the Philippine Islands since 1898, when they were acquired by the United States as a result of the Spanish-American War.", "The Islands remained a possession of the United States until 1946.", "Filipinos have served in, and with, the U.S. Armed Forces since the Spanish-American War, and especially during World War II.", "However, not all veterans' benefits are available to veterans of the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts.", "In the 110th Congress, two measures, H.R. 760 and S. 57, have been introduced that would eliminate the distinction between the Regular, or \"Old,\" Philippine Scouts and the other three groups of veterans—the Commonwealth Army of the Philippines, Recognized Guerrilla Forces, and New Philippine Scouts—making them all fully eligible for veterans' benefits similar to those received by U.S. veterans.", "This report defines the four specific groups (Regular Philippine Scouts, Commonwealth Army of the Philippines, Recognized Guerilla Forces, and New Philippine Scouts) of Filipino nationals who served under the command of the United States, outlines the Rescission Acts of 1946, benefit changes since 1946, current benefits for Filipino veterans by group, and recent legislative proposals and legislation, including the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5).", "This report defines the four specific groups (Regular Philippine Scouts, Commonwealth Army of the Philippines, Recognized Guerilla Forces, and New Philippine Scouts) of Filipino nationals who served under the command of the United States, outlines the Rescission Acts of 1946, benefit changes since 1946, current benefits for Filipino veterans by group, and recent legislative proposals and legislation, including the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5).", "It will be updated as legislative events warrant." ], "parent_pair_index": [ -1, 0, -1, -1, 0, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Coverage, Duration, and Rate", "Coverage", "Duration", "Rate", "The CR and the Statutory Discretionary Spending Limits", "Background", "FY2018", "Agency, Account, and Program-Specific Provisions", "Agriculture, Rural Development, Food and Drug Administration, and Related Agencies", "Section 116—Commodity Assistance Program11", "Section 117—Section 3213", "Other Related Issues14", "Commerce, Justice, Science, and Related Agencies", "Section 118—Bureau of the Census15", "Department of Defense", "Section 102—Prohibition on 'New Starts' and Increasing Production Rates16", "Section 119—Authorization Extension17", "Energy and Water Development and Related Agencies", "Section 120—Uranium Enrichment Decontamination and Decommissioning Fund18", "Section 121—Bureau of Reclamation19", "Section 122—Power Marketing Administrations20", "Financial Services and General Government", "Section 123—District of Columbia Local Funds22", "Section 124—Presidential Transition Funding", "Department of Homeland Security", "Section 125—Modification of Rate for Title I Components to Address Working Capital Fund Changes24", "Section 126—Apportionment of Personnel Funding for Four DHS Operational Components26", "Section 127—Department of Homeland Security Special Procurement Authority27", "Section 128—Expedited Hiring Authority for U.S. Coast Guard Acquisition Workforce28", "Section 129—Disaster Relief Fund Apportionment31", "Section 130—Extension of the National Flood Insurance Program33", "Department of the Interior, Environment and Related Agencies", "Section 101(a)(7)—Transfer of FLAME Wildfire Suppression Funds35", "Section 124(e)—National Park Service, Operation of the National Park System39", "Section 131—Recreation Fee Authority Extension41", "Section 132—Dwight D. Eisenhower Memorial44", "Section 133—Environmental Protection Agency—Water Infrastructure Finance and Innovation Program Account46", "Section 134—Environmental Protection Agency—Pesticide Fee Collection Authorities50", "Departments of Labor, Health and Human Services, and Education, and Related Agencies", "Section 135—National Advisory Committee on Institutional Quality and Integrity55", "Section 136—Head Start58", "Section 137—Unemployment Insurance (UI) State Consortia59", "Section 138—NIH Indirect Costs61", "Section 139—State Children's Health Insurance Program (CHIP)64", "Other Related Issues", "Prevention and Public Health Fund Transfers71", "NIH Innovation Account72", "Account for the State Response to the Opioid Abuse Crisis73", "Legislative Branch", "Section 140—Amounts Available for Senate Cybersecurity Capabilities75", "Military Construction and Veterans Affairs, and Related Agencies", "Section 141—Rescission and Reappropriation76", "Other Related Issues78", "Transportation, Housing and Urban Development, and Related Agencies", "Section 142—Extension of Mark-to-Market Program80" ], "paragraphs": [ "", "Congress uses an annual appropriations process to fund discretionary spending, which supports the projects and activities of most federal government agencies. This process anticipates the enactment of 12 regular appropriations bills each fiscal year. If regular appropriations are not enacted prior to the start of the fiscal year (October 1), continuing appropriations may be used to provide temporary funding until the annual appropriations process can be concluded. Continuing appropriations acts are often referred to as \"continuing resolutions,\" or \"CRs,\" because they are typically enacted in the form of a joint resolution. CRs may be enacted for a period of days, weeks, or months. If any of the 12 regular appropriations bills are not enacted by the time that the first CR for a fiscal year expires, further extensions of that CR might be enacted until all regular appropriations bills have been completed or the fiscal year ends.\nNone of the FY2018 regular appropriations bills was enacted prior to the enactment of H.R. 601 , a temporary CR. The measure provides continuing appropriations for projects and activities covered by all 12 of the regular annual appropriations bills from the beginning of the fiscal year, October 1, 2017, through December 8, 2017 (Division D). The measure also included separate divisions that establish a program to provide foreign assistance concerning basic education (Division A—Reinforcing Education Accountability in Development Act), supplemental appropriations for disaster relief requirements for FY2017 (Division B), and a temporary suspension of the public debt limit (Division C). On September 8, 2017, the President signed H.R. 601 into law ( P.L. 115-56 ).\nThis report provides an analysis of the continuing appropriations provisions in H.R. 601 . The first two sections summarize the overall funding provided (\"Coverage, Duration, and Rate\") and budget enforcement issues associated with the statutory discretionary spending limits (\"The CR and the Statutory Discretionary Spending Limits\"). The third section of this report provides short summaries of the provisions in this CR that are agency-, account-, or program-specific. These summaries are organized by appropriations act title. In some instances, additional information about those appropriations and how they operate under a CR is provided.\nFor general information on the content of CRs and historical data on CRs enacted between FY1977 and FY2016, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices , by [author name scrubbed] and [author name scrubbed].", "This section of the report discusses the three components of a CR that generally establish the purpose, duration, and amount of funds provided by the act:\n1. A CR's \"coverage\" relates to the purposes for which funds are provided. The projects and activities funded by a CR are typically specified with reference to regular (and, occasionally, supplemental) appropriations acts from the previous fiscal year. When a CR refers to one of those appropriations acts and provides funds for the projects and activities included in such an act, the CR is often referred to as \"covering\" that act. 2. The \"duration\" of a CR refers to the period of time for which budget authority is provided for covered activities. 3. CRs usually fund projects and activities using a \"rate for operations\" or \"funding rate\" to provide budget authority at a restricted level but do not prescribe a specified dollar amount. The funding rate for a project or activity is based on the total amount of budget authority that would be available annually for that project or activity under the referenced appropriations acts and is pro-rated based on the fraction of a year for which the CR is in effect.", "Division D covers all 12 of the regular annual appropriations bills by providing continuing budget authority for projects and activities funded in FY2017 by that fiscal year's regular appropriations acts—as specified in Section 101 of P.L. 115-56 , this includes primarily Divisions A-K of the FY2017 Consolidated Appropriations Act ( P.L. 115-31 ) for 11 of the 12 regular bills and Division A of P.L. 114-223 for the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, as well as some additional specified measures and provisions.\nStatutory limits on discretionary spending are in effect for FY2018 as established by the Budget Control Act of 2011 (BCA; P.L. 112-25 ). The CR includes both budget authority that is subject to those limits and also budget authority that is effectively exempt from those limits—including that designated or otherwise provided as \"Overseas Contingency Operations/Global War on Terrorism\" (OCO/GWOT), \"continuing disability reviews and redeterminations,\" \"disaster relief,\" and \"emergency requirements.\"\nBudget authority is provided by the CR under the same terms and conditions as the referenced FY2017 appropriations acts. Effectively, this requirement extends many of the provisions in the FY2017 acts that stipulated or limited agency authorities during FY2017. In addition, in general none of the funds are to be used to initiate or resume an activity for which budget authority was not available in FY2017. A goal of these and similar provisions in other CRs, as well as many of the other provisions discussed in the sections below, is to protect Congress's constitutional authority to provide annual funding in the manner it chooses in whatever final appropriations measures are enacted.", "Section 106 provides that funding in the CR is effective October 1, 2017, through December 8, 2017—about the first 10 weeks of the fiscal year. The CR provides that, in general, budget authority for some or all projects and activities could be superseded by the enactment of the applicable regular appropriations act or another CR prior to or on December 8. For projects and activities funded in the CR that a subsequent appropriations act does not fund, budget authority would immediately cease upon such enactment, even if prior to December 8.", "The CR provides budget authority for projects and activities funded in FY2017 appropriations acts at a rate based on the amount of funding provided in those acts for the duration of the CR (through December 8). The rate is based on the net of all funding provisions applicable to FY2017, including those that had the effect of reducing budget authority. For entitlement and other mandatory spending that is funded through appropriations acts, Section 111 provides funding to maintain program levels under current law.\nMost projects and activities funded in the CR are subject to an across-the-board decrease in Section 101(b) that would reduce the rate by 0.6791% below the level of FY2017 funding. Under Section 114, this decrease does not apply to appropriations designated or otherwise provided as OCO/GWOT, disaster relief, and emergency requirements. This decrease does apply, however, to advance appropriations enacted in previous fiscal years that first become available in FY2018.", "", "Appropriations for FY2018 are subject to statutory discretionary spending limits on categories of spending designated as \"defense\" and \"nondefense\" spending pursuant to the BCA. The defense category includes all discretionary spending under budget function 050 (defense); the nondefense category includes discretionary spending in the other budget functions. If discretionary spending is enacted in excess of a statutory limit in either category, the BCA requires the level of spending to be brought into conformance through \"sequestration,\" which involves primarily across-the-board cuts to non-exempt spending in the category of the limit that was breached (i.e., defense or nondefense). The Office of Management and Budget (OMB) provides a preview report at the beginning of the calendar year calculating any adjustments to the existing statutory spending limits. For FY2018 the adjusted discretionary spending caps are $549.057 billion for defense and $515.749 billion for nondefense. Once discretionary spending is enacted, OMB evaluates that spending relative to the spending limits and determines whether sequestration is necessary. For FY2018 discretionary spending, the first such evaluation (and any necessary enforcement) is to occur within 15 calendar days after the 2017 congressional session adjourns sine die . For any FY2018 discretionary spending that becomes law after the session ends, the OMB evaluation and any enforcement of the limits would occur 15 days after enactment.", "The Congressional Budget Office (CBO) estimates the budgetary effects of interim CRs on an \"annualized\" basis, meaning that those effects are measured as if the CR were providing budget authority for an entire fiscal year. According to CBO, the annualized amount for discretionary budget authority for regular appropriations subject to the BCA limits (including projects and activities funded at the rate for operations and anomalies) is $551.489 billion for defense and $518.109 for nondefense. Although the estimate of the annualized amount for each category exceeds the statutory spending limit, a sequester order would not yet be required. As noted by CBO, the authority to determine whether a sequestration is required—and, if so, how to make the necessary cuts in budget authority—rests with OMB. In addition, because the earliest that the statutory discretionary spending limits could be enforced by a sequester is 15 days after the end of the congressional session, and the CR expires on December 8, 2017, these amounts can be adjusted prior to that time by further appropriations legislation for FY2018.\nWhen spending effectively not subject to those limits—because it was designated or otherwise provided as OCO/GWOT, disaster relief, emergency requirement, or a program integrity adjustment—is included, CBO estimates total annualized budget authority in the CR of $1,183.058 billion.", "In addition to the general provisions that establish the coverage, duration, and rate, CRs typically include provisions that are specific to certain agencies, accounts, or programs. These provisions are generally of two types. First, certain provisions designate exceptions to the formula and purpose for which any referenced funding is extended. These are often referred to as \"anomalies.\" The purpose of anomalies is to preserve Congress's constitutional prerogative to provide appropriations in the manner it sees fit, even in instances when only short-term funding is provided. Second, certain provisions may have the effect of creating new law or changing existing law. Most typically, these provisions are used to renew expiring provisions of law or extend the scope of certain existing statutory requirements to the funds provided in the CR. Substantive provisions that establish major new policies have also been included on occasion. Unless otherwise indicated, such provisions are temporary in nature and expire when the CR sunsets.\nThese anomalies and provisions that change law may be included at the request of the President. Congress could accept, reject, or modify such proposals in the course of drafting and considering appropriations measures that provide continuing appropriations. In addition, Congress may identify or initiate any other anomalies and provisions changing law that they wish to be included in the CR.\nThis section of the report summarizes provisions in this CR that are agency-, account-, or program-specific, alphabetically organized by appropriations act title for 11 of the 12 regular appropriations acts covered in Section 101. (There are no anomalies concerning items funded in the State Foreign Operations, and Related Programs Appropriations Act.) The summaries generally provide brief explanations of the provisions. In some cases they include additional information, such as whether a provision was requested by the President or included in prior year CRs. For additional information on specific provisions in the CR, contact the CRS appropriations experts listed in Table 1 at the end of the report.", "", "For the duration of the CR, Section 116 increases funding for the Commodity Supplemental Food Program, a domestic food assistance program that predominantly serves the low-income elderly. Instead of basing funding for the program on the FY2017 funding level ($236.1 million), this CR provision would use a base of approximately $238.1 million. This anomaly is typically included to maintain current caseload and participation while accounting for increased food costs.", "This section makes a technical correction for the computation of a rescission to Section 32 funds in light of the availability that is allowed for carryover funds, especially for disaster payments that are at the discretion of the Secretary of Agriculture.", "In addition to extending the funding levels provided in Division A of P.L. 115-31 , the CR explicitly extends $20 million for the FDA Innovation Account that was made available by the second CR of FY2017 ( P.L. 114-254 , Division A, Section 193), pursuant to the 21 st Century Cures Act ( P.L. 114-255 ), which established the account.\nThe FY2018 CR continues $29 million of funding for the Emergency Conservation Program that was in Division A of P.L. 115-31 (Section 714). However, the CR does not extend the disaster funding for agricultural land rehabilitation programs that was provided in the second CR of FY2017 ( P.L. 114-254 ).", "", "This section allows the Census Bureau to draw on money from the Periodic Censuses and Programs account—which includes the decennial census and other major programs such as the economic census, the census of governments, and intercensal demographic estimates, together with geographic and data-processing support—at the rate necessary to maintain the 2020 census schedule.", "", "Section 102 is similar to provisions typically included in CRs in previous years. It prohibits the Department of Defense from funding either so-called new starts—that is, procurement or research and development of a major program for which funding was not provided in FY2017—or acceleration of rate of production for any major program for which FY2017 procurement funding was provided.", "This section would extend the authorization (that would otherwise have expired at the end of FY2017) for the Office of Security Cooperation with Iraq, originally established by Section 1215(f)(1) of P.L. 112-81 , the FY2012 National Defense Authorization Act. This extension would apply until the earlier of the end date for this CR or the date of enactment of a new authorization for military activities of the Department of Defense.", "", "Section 120 would authorize the Department of Energy (DOE) to apportion funding for the Uranium Enrichment Decontamination and Decommissioning Fund through December 8, 2017, up to the rate for operations that would be necessary to avoid disruption of continuing projects or activities. This account primarily funds the decommissioning and environmental remediation of three federal uranium enrichment facilities in Kentucky, Ohio, and Tennessee administered by the DOE Office of Environmental Management. DOE would be required to notify the House and Senate appropriations committees within three days after each use of this authority. This provision is similar to provisions included in CRs for previous fiscal years.", "Section 121 would extend the authority for the Reclamation States Emergency Drought Relief Act ( P.L. 102-250 , 43 U.S.C. 2201 et seq.) from the end of FY2017 to the date of the CR's expiration. This authority allows the Bureau of Reclamation to undertake activities that minimize or mitigate drought damages or losses within the 17 Reclamation States (including tribes within those states) and Hawaii. Authorized activities include, among other things, authority for construction to alleviate the adverse impacts of drought (typically in the form of drilling private wells), acquisition of water for specified purposes, and preparation of drought contingency plans with state and local entities.", "Section 122 would provide for the crediting of offsetting collections by three of DOE's Power Marketing Administrations at alternative rates than would otherwise be provided for pursuant to rates based on FY2017 enacted appropriations. This language is to account for annual variation in these collections.", "", "This section grants congressional approval of the District of Columbia general fund and capital budgets for FY2018 through December 8, 2017, consistent with the requirements of the District of Columbia home rule act ( P.L. 93-198 ), which requires congressional approval of the District's budget. Section 123 grants the District the authority to expend locally raised funds only for those programs and activities that received funding the previous year under the District of Columbia Appropriations Act, 2017 (Title IV of P.L. 115-31 , Division E). District officials may expend locally raised funds at the rate set forth under ''Part A—Summary of Expenses'' as included in the Fiscal Year 2018 Local Budget Act of 2017 (D.C. Act 22-99).", "These provisions change the basis for calculating the rate of operations under Section 101 for several accounts. Section 124(a) specified that the basis for the rate of operations for FY2018 for General Services Administration—Allowances and Office Staff for Former Presidents be based on $4.754 million.\nThe rate for FY2018 for two other accounts is to be based on a reduction of the actual amount provided for FY2017 by a specified amount corresponding to the amount that was appropriated for expenses related to the presidential inauguration and transition.\nSection 124(c) specifies that the rate be based on $14.900 million rather than $34.895 million for District of Columbia—Federal Payment for Emergency Planning and Security Costs in the District of Columbia; and Section 124(d) specifies that the rate be based on $375,784 million rather than $380,634 million for National Archives and Records Administration—Operating Expenses.\nIn addition, Section 124(b) specifies that no funds in the CR are provided for\nGeneral Services Administration—Expenses, Presidential Transition; and Executive Office of the President and Funds Appropriated to the President—Presidential Transition Administrative Support.\nSee also Section 124(e) of P.L. 115-56 for treatment of FY2017 National Park Service appropriations associated with the presidential inauguration.", "", "This section allows apportionment of funds for the Office of the Secretary and Executive Management, Management Directorate, and Intelligence, Analysis, and Operations Coordination to be apportioned at a higher rate. The Trump Administration's budget request for FY2018 had envisioned shifting the costs for certain shared functions from the Department of Homeland Security (DHS) Working Capital Fund to the budget of these particular components.\nIn its request for this section, the Administration indicated that without this section, funds would be provided in the FY2017 structure at the FY2017 rate, and manual accounting adjustments would have to be made if this transfer of functions were allowed to go ahead in the FY2018 annual appropriations for DHS.", "This section is similar to provisions from past years' CRs for U.S. Customs and Border Protection (CBP) and allows DHS to adjust the apportionment of FY2018 funds in order to maintain the staffing levels for four operational components of DHS at the level they were at the end of FY2017.\nThe Administration requested this flexibility for CBP and U.S. Immigration and Customs Enforcement. As in Section 163 of P.L. 114-254 , the second CR for FY2017, Congress broadened the reach of the provision to include the Transportation Security Administration and the U.S. Secret Service. Two key differences in this provision from this last appearance is that in this CR, it is solely for personnel costs to maintain staffing levels, not for other operational expenses, and it does not describe any specific purposes for which the funding is provided.", "This section extends special procurement authorities for research and development activities at DHS, known as \"other transaction authority.\" Similar provisions have previously been included in CRs covering DHS, including, most recently, Section 132 of the FY2017 CR ( P.L. 114-223 ).", "This section extends through the term of the CR special authority for the Commandant of the Coast Guard to designate any of the Coast Guard's acquisition positions as having a critical hiring need and thus provides for the use of special expedited hiring authorities to fill those positions. This specific authority was granted in Section 404 of P.L. 111-281 , the Coast Guard Authorization Act of 2010, and extended by later legislation through FY2017.\nWhile the Administration did not specifically request this extension, it specifically indicated that it had no objection to its inclusion.", "This section will allow funding provided by the CR for the Federal Emergency Management Agency's Disaster Relief Fund to be used at a faster rate than would have otherwise been allowed under the CR. While this provision was not included in the Administration's list of proposed anomalies, the director of OMB expressed the Administration's support for such a provision as a part of its request for supplemental appropriations submitted in the wake of Hurricane Harvey.", "This section extends the authorization of two parts of the National Flood Insurance Program (NFIP), which had been set to expire at the end of FY2017, through the term of the CR: Section 1309(a), which provides a borrowing limit for the NFIP of $30.425 billion, and Section 1319, which provides the authority to execute new flood insurance contracts. This provision does not increase the borrowing limit for the NFIP: It maintains its current limit.", "", "This provision authorizes the Department of Agriculture (through the Forest Service) and the Department of the Interior (DOI) to transfer funds from their respective FLAME accounts to repay funds previously transferred from other accounts and used for wildfire suppression purposes. The Forest Service and DOI FLAME accounts were established by the Federal Land Assistance, Management, and Enhancement Act to be a source of reserve funds for emergency wildfire suppression purposes. Previously, FLAME funds were available to be transferred only to the respective Forest Service and DOI Wildland Fire Management (WFM) accounts and used for wildfire suppression operations upon a Secretarial Declaration and in specific circumstances. Section 101(a)(7) expands the authority to allow FLAME funds in the CR to be transferred to any Forest Service or DOI account if funds from that account were previously used to pay for suppression operations—called \"fire borrowing.\" Such fire borrowing occurs when WFM and FLAME suppression funds are depleted. The appropriations to the FLAME accounts are designated as emergency spending under Section 114(b) of the CR and, thus, are not subject to the 0.6791% across-the-board reduction.", "This provision reduces by $4.2 million the basis for calculating the rate of operations under Section 101 for the National Park Service's (NPS) Operation of the National Park System budget account. The total FY2017 appropriation for this NPS account is treated as though it were $2.421 billion, as compared with the actual appropriation of $2.425 billion. The amount of the reduction is corresponds to the amount that was appropriated in FY2017 for expenses related to the presidential inauguration.\nSee also Section 124(a)-(d) of P.L. 115-56 for treatment of other FY2017 appropriations associated with the presidential transition.", "This provision extends, through September 30, 2019, the authority in the Federal Lands Recreation Enhancement Act for five agencies to establish, collect, and retain recreation fees on federal recreational lands and waters. The five agencies are the Bureau of Land Management, Bureau of Reclamation, Fish and Wildlife Service, and National Park Service in the Department of the Interior and the Forest Service in the Department of Agriculture. In FY2016, the agencies collected approximately $377 million in recreation fees under the program. Each agency can retain and spend the collected fees without further appropriation. Most of the monies are retained at the site where collected for on-site improvements to benefit visitors. Without this extension, the authority of the agencies would expire on September 30, 2018.", "Section 132 relates to the Dwight D. Eisenhower Memorial Commission and the Dwight D. Eisenhower Memorial. It extends, through the end of the CR (December 8, 2017), the Eisenhower Memorial Commission's authorization to establish a \"permanent\" memorial to President Eisenhower in the District of Columbia. Without the extension, the commission's authority to establish the Eisenhower Memorial would have expired on September 30, 2017.", "Section 133 provides an additional $3.0 million to the Environmental Protection Agency (EPA) for administrative expenses of issuing direct loans and guaranteed loans for water infrastructure projects as authorized under the Water Infrastructure Finance and Innovation Act (WIFIA) of 2014. These additional funds are provided \"notwithstanding section 5033\" of WIFIA, which specifies a cap on administrative costs.", "Through the duration of the CR, Section 134 extends the authority for EPA to collect and use two categories of fees under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA). Pursuant to the Pesticide Registration Improvement Extension Act of 2012 (PRIA 3), EPA's authority to collect pesticide maintenance fees from registrants under FIFRA expires at the end of FY2017; the authority to collect pesticide registration service fees begins to phase out at the end of FY2017. Section 134 also extends the PRIA 3 prohibition on EPA collection of fees from any person seeking that the agency establish, or grant an exemption from, a pesticide tolerance (i.e., maximum residue levels on food or feed) under the Federal Food, Drug, and Cosmetic Act.", "", "Section 135 extends the duration of the National Advisory Committee on Institutional Quality and Integrity (NACIQI) through December 8, 2017. NACIQI is a committee tasked with assessing the process of accreditation in higher education and the institutional eligibility and certification of institutions of higher education to participate in federal student aid programs authorized under Title IV of the Higher Education Act of 1965 (HEA). Section 114(f) of the HEA provides that NACIQI shall terminate on September 30, 2017.\nSection 422 of the General Education Provisions Act (GEPA) generally provides an automatic one-year extension of the authorization of appropriations for, or the duration of, programs administered by the Department of Education. This automatic extension would occur only if Congress and the President—in the regular session that ends prior to the beginning of the terminal fiscal year of authorization or duration of an applicable program—do not enact legislation extending the program. GEPA Section 422 also explicitly states that the automatic one-year extension does not apply to the authorization of appropriations for, or the duration of, committees that are required by statute to terminate on a specific date. Thus, the automatic one-year extension does not apply to NACIQI, and NACIQI would have terminated on September 30, 2017, had it not been extended.", "Section 136 ensures that the $80 million in cost-of-living adjustments provided to Head Start and Early Head Start grantees in FY2017 is included in the formula for each grantee's \"base grant\" for FY2018. This allows grantees to maintain program enhancements (e.g., salary increases) that had been supported by these funds in the previous year, consistent with common practice. The Head Start Act defines a base grant as the \"amount of permanent ongoing funding\" provided to Head Start agencies for a given fiscal year.", "Section 137 extends the period during which certain funds, obligated in FY2011 through FY2014 to consortia of state workforce agencies that administer Unemployment Insurance (UI), may be expended. These funds support information technology upgrades to improve state administration of UI benefits. Previously, authority was provided to expend these UI state consortia funds for six fiscal years after the fiscal year of obligation. This section extends that period one additional year (for a total of seven fiscal years after the fiscal year of obligation).", "Section 138 directs the National Institutes of Health (NIH) to continue reimbursing research universities and institutions for indirect costs (facilities and administrative, or F&A, costs) according to the rules and procedures in place during the third quarter of FY2017. It also prohibits funds appropriated in the CR from being used to develop or implement any further limitations of F&A cost reimbursements. Over the last 10 years, NIH data indicates that direct costs (project-specific expenses) have averaged about 72% of the total grant award, while indirect costs have averaged about 28%. The FY2018 Trump Administration budget request proposed capping the indirect cost rate for NIH grants at 10%.", "Section 139(a) would make the funding deposited in the State Children's Health Insurance Program's (CHIP) Child Enrollment Contingency Fund prior to the beginning of FY2018—and income derived from investment of those funds—unavailable for obligation. Section 139(b) would rescind $2.7 billion of mandatory spending from amounts previously appropriated for FY2017 CHIP allotments to states. Funds for FY2017 had previously been appropriated by Sections 301(a) and 301(b)(3) of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). First, Section 301(a) of MACRA provided two semi-annual appropriations of $2.85 billion for the first and second halves of FY2017, respectively. Second, Section 301(b)(3) of MACRA appropriated an additional $14.7 billion for the first half of FY2017, and this funding remains available until expended. Section 139(b) rescinds $2.7 billion in unobligated national allotments from the additional appropriation in Section 301(b)(3) of MACRA. Previously, multiple appropriations laws rescinded a total of $42.8 billion from FY2011 through FY2017 from the CHIP Program, including CHIP performance bonus payments fund, the Child Enrollment Contingency Fund, and unobligated national allotments.", "While Section 101(a)(8) generally continues funding for programs funded in the Departments of Labor, Health and Human Services, and Education appropriations act through a formula based on the FY2017 omnibus ( P.L. 115-31 ), there are three exceptions to that formula that effectively continue certain funding instructions or additional appropriations that were enacted in the second FY2017 CR ( P.L. 114-254 ).\nIn the cases of the NIH Innovation Account and the Account for the State Response to the Opioid Abuse Crisis, the rate for operations for these additional appropriations is subject to the across-the-board reduction of 0.6791%. In addition, the amounts appropriated to these accounts are to be subtracted from any cost estimates provided for purposes of budget controls.", "Section 101(a)(8) applies FY2016 requirements to the transfer of funds previously appropriated to the Prevention and Public Health Fund (PPHF) (see Section 171, P.L. 114-254 ). Specifically, the Secretary of the Department of Health and Human Services (HHS) is required, within 10 days of enactment, to transfer PPHF funds for FY2018 to HHS agencies in the same amounts as per the comparable transfer of FY2016 appropriations, except that the amount transferred to the Centers for Disease Control and Prevention shall be $1 million less than the amount transferred for FY2016.", "Section 101(a)(8) appropriates FY2018 funds in the NIH Innovation Account. Under the terms of Section 1001 of the 21 st Century Cures Act ( P.L. 114-255 ), the funds in this account must be appropriated in order to be available for expenditure. However, instead of specifying a rate for operations based on the amount in the account for FY2018 ($496 million), the FY2018 CR specifies a rate for operations based on the FY2017 appropriation ($352 million) provided in the second FY2017 CR (Section 194).\nThe purpose of the NIH Innovation Account is to create a funding mechanism for four NIH Innovation Projects authorized by the Cures Act:\n1. The Precision Medicine Initiative ($40 million for FY2017); 2. The Brain Research through Advancing Innovative Neurotechnologies Initiative ($10 million for FY2017); 3. Cancer research ($300 million for FY2017); and 4. Regenerative medicine using adult stem cells ($2 million for FY2017).\nThe NIH director may transfer these amounts from the NIH Innovation account to other NIH accounts but only for the purposes specified in the Cures Act. If the NIH director determines that the funds for any of the four Innovation Projects are not necessary, the amounts may be transferred back to the NIH Innovation account. This transfer authority is in addition to other transfer authorities provided by law.", "Section 101(a)(8) appropriates FY2018 funds in an account created by the 21 st Century Cures Act to support grants to states \"for the purpose of addressing the opioid abuse crisis.\" Under the terms of Section 1003 of the 21 st Century Cures Act, the funds in this account must be appropriated in order to be available for expenditure. The rate for operations for the account in the FY2018 CR is based on the FY2017 appropriation ($500 million) provided in the second FY2017 CR (Section 195).", "", "This section allows for amounts made available for salaries for employees in the Office of the Senate Sergeant at Arms and Doorkeeper to be apportioned at rates necessary to maintain current Senate cybersecurity capabilities. In general, 2 U.S.C. §4577 prohibits spending more than one-quarter of the total amount available for employees covered by this line-item in the first quarter of a fiscal year.", "", "This section would rescind unobligated funds that were provided for the Department of Veterans Affairs (VA) Major Construction account in the Disaster Relief Appropriations Act, 2013 ( P.L. 113-2 ), for costs associated with Hurricane Sandy. These rescinded funds would be reappropriated to the VA Major Construction account and would be available until September 30, 2022. These funds would be in addition to the FY2017 level of funding for the VA Major Construction account and the funding provided in the CR for FY2018 for the same account.", "Section 101(a)(10) of the CR would fund some accounts of the VA for FY2018 though a formula using the FY2017 level of appropriations provided in the Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017 (Division A of the Continuing Appropriations and Military Construction, Veterans Affairs, and Related Agencies Appropriations Act, 2017, and Zika Response and Preparedness Act; P.L. 114-223 ), minus an across-the-board rescission of 0.6791%. The Medical Community Care account, and the Medical Services account's additional $50 million that was provided in the Military Construction and Veterans Affairs—Additional Appropriations Act, 2017 (Division L of P.L. 115-3 ), available until September 30, 2018, would not be included in the funding rate of operations under the CR for FY2018.\nThe VA is funded through a combination of budget year and advance appropriations. Currently seven accounts are funded as advance appropriations: (1) compensation and pensions, (2) readjustment benefits, (3) insurance and indemnities, (4) medical services, (5) medical community care, (6) medical support and compliance, and (7) medical facilities. P.L. 114-223 provided $170.32 billion in advance appropriations for these seven accounts for FY2018, which would be available on October 1, 2017.", "", "Section 142 extends authorization for the Department of Housing and Urban Development's (HUD) Mark-to-Market program for the duration of the CR. Through the program, which was created in 1997, HUD may renew expiring project-based Section 8 rental assistance contracts and take other steps to preserve the long-term affordability of properties receiving HUD rental assistance. The original statutory authorization for the program had a repeal date of October 1, 2001, but that date has been extended by Congress several times. Most recently, the FY2015 Consolidated and Further Continuing Appropriations Act ( P.L. 113-235 ) extended it through October 1, 2017. The President's FY2018 budget request and both the House and Senate committee-passed FY2018 HUD appropriations bills all included an extension of the program.\nTable 1. Selected CRS Appropriations Experts" ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 2, 1, 2, 3, 3, 3, 2, 3, 2, 3, 3, 2, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 2, 3, 3, 3, 3, 3, 3, 4, 4, 4, 2, 3, 2, 3, 3, 2, 3 ], "alignment": [ "h0_title h1_title", "h0_full", "h0_title h1_full", "h0_full", "", "", "", "", "", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "h1_full" ] }

{ "question": [ "Why was Division D of H.R. 601 was termed a \"continuing resolution\"?", "What does the CR cover?", "What do the provisions give?", "What else does it include?", "What do CRs include?", "What kinds of provisions are included?", "Which provisions does the CR include?" ], "summary": [ "Division D of H.R. 601 was termed a \"continuing resolution\" (CR) because it provided temporary authority for federal agencies and programs to continue spending in FY2018 in the same manner as a separately enacted CR.", "It provides temporary funding for the programs and activities covered by all 12 of the regular appropriations bills, since none of them had been enacted previously.", "These provisions provide continuing budget authority for projects and activities funded in FY2017 by that fiscal year's regular appropriations acts, with some exceptions.", "It includes both budget authority that is subject to the statutory discretionary spending limits on defense and nondefense spending and also budget authority that is effectively exempt from those limits, such as that designated as for \"Overseas Contingency Operations/Global War on Terrorism.\"", "CRs usually include provisions that are specific to certain agencies, accounts, or programs.", "These include provisions that designate exceptions to the formula and purpose for which any referenced funding is extended (referred to as \"anomalies\") as well as provisions that have the effect of creating new law or changing existing law (often used to renew expiring provisions of law).", "The CR includes a number of such provisions, each of which is briefly summarized in this report. CRS appropriations process experts for each of these provisions are listed in Table 1." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 5, 5, 5 ] }

{ "title": [ "", "General Principles", "Internal Federalism Limitations on Congress's Powers", "Spending Clause", "Commerce Clause", "Regulating the Channels of Interstate Commerce", "Protecting the Instrumentalities, Persons, or Things in Interstate Commerce", "Regulating Activities that Substantially Affect Interstate Commerce", "Regulating Inactivity", "Treaty Power", "Congress's Powers Under the Civil War Amendments", "The State Action Requirement", "\"Congruence and Proportionality\" for Remedial Legislation", "Necessary and Proper Clause", "External Federalism Limitations on Congress's Powers", "The \"Anti-Commandeering\" Doctrine", "Limits on the Spending Power", "Clear Notice", "Relatedness", "Independent Constitutional Bar", "The \"Anti-Coercion\" Doctrine", "The Eleventh Amendment and State Sovereign Immunity", "Equal Sovereignty Doctrine" ], "paragraphs": [ "T he Constitution establishes a \"system of dual sovereignty between the States and the Federal Government,\" with each state having its \"own government,\" \"endowed with all the functions essential to separate and independent existence.\" As the Supreme Court has recognized, states \"possess sovereignty concurrent with that of the Federal Government, subject only to limitations imposed by the Supremacy Clause,\" the provision of the Constitution that makes federal law the \"supreme Law of the Land\" and prohibits states from contravening lawful enactments of Congress. Although the Supremacy Clause grants Congress a degree of authority to \"impose its will on the States,\" the federal government may not exceed \"the powers granted it under the Constitution.\" The Constitution only endows the federal government with a \"limited\" and \"defined\" set of enumerated powers, while reserving most other powers to the states. As a consequence, \"States retain broad autonomy in structuring their governments and pursuing legislative objectives.\"\nThe various principles that delineate the proper boundaries between the powers of the federal and state governments are collectively known as \"federalism,\" a doctrine based on the Framers' conclusion that allocating \"powers between the National Government and the States enhances freedom, first by protecting the integrity of the governments themselves, and second by protecting the people, from whom all governmental powers are derived.\" Federalism has informed modern understandings of the limits on Congress's authority in a number of areas. For instance, the Supreme Court has identified limits on Congress's enumerated powers, such as its power to regulate interstate commerce under Article I, Section 8 of the Constitution. The Court has also recognized other federalism-based doctrines that constrain Congress's power, such as the anti-commandeering doctrine—that is, the prohibition against the national government demanding that a state use its own governmental system to implement federal commands.\nBecause the various jurisprudential developments that limit the power of the federal government are important considerations whenever Congress legislates, federalism is a \"closely watched\" and \"ever-present\" issue for Congress. This report thus provides a broad overview of the various legal doctrines that inform the boundaries of Congress's authority vis-à-vis the states under the Constitution. The report begins by addressing several general principles that undergird modern legal debates over federalism. The report then discusses \"internal\" limitations on Congress's exercise of several of its enumerated powers, including its spending and commerce powers, its authority to enact certain types of legislation to implement international treaties, its enforcement authority under the Civil War Amendments, and its powers under the Necessary and Proper Clause. The report concludes by discussing several \"external\" federalism-based limitations on Congress's powers, such as the anti-commandeering, anti-coercion, state sovereign immunity, and equal sovereignty doctrines.", "The Constitution imposes two broad limitations on the powers of Congress. First, the concept of enumerated powers creates what is often referred to as an \"internal limit\" on Congress's powers —that is, Congress's powers are restricted by and to the terms of their express grant. To illustrate, as one commentator has noted, while Congress can exercise its power over federal enclaves to prescribe a fire code for the District of Columbia, the terms of that power are internally limited by the terms of the Enclave Clause; thus, Congress could not, for example, invoke the Enclave Clause to write a fire code for the State of Delaware. Second, beyond the internal limits on Congress's powers, the Constitution also imposes \"external\" constraints on congressional action—that is, affirmative prohibitions found elsewhere in the text or structure of the document. In other words, even if Congress is acting consistent with the terms of an enumerated power—say, by prescribing a fire code for the District of Columbia pursuant to the Enclave Clause—external limits on that power would necessarily prohibit Congress from inserting certain terms into that code—such as by withholding fire protection from individuals of a particular race in contravention of the equal protection component of the Fifth Amendment's Due Process Clause.\nAs relevant here, the Supreme Court's federalism jurisprudence sets forth both internal and external constraints on Congress's power vis-à-vis the states. The internal federalism-based limitations on Congress's powers are \"embedded within the clauses that grant enumerated powers to the national government,\" such as Article I's Commerce Clause or the Fourteenth Amendment's Enforcement Clause. The external federalism-based constraints on Congress's powers generally arise from the Tenth Amendment or structural features of the Constitution, which recognize that, as part of the \"constitutional design,\" \"both the National and State Governments have elements of sovereignty the other is bound to respect.\"\nBefore discussing the various internal and external federalism-based limits on Congress's powers, it is important, as a threshold matter, to note how these limitations are enforced. In the modern era, there have been two \"competing conceptions of federalism.\" Exemplifying one viewpoint is the Court's 1985 decision in Garcia v. San Antonio Metropolitan Transit Authority , which held that the Constitution does not insulate state governments from the reach of generally applicable laws enacted pursuant to Congress' power under the Commerce Clause. In so holding, the Court concluded that the \"principal and basic limit\" on Congress's powers vis-à-vis the states is \"the built-in restraints that our system provides through state participation in federal governmental action.\" Put another way, the Garcia Court concluded that the \"political processes\" (i.e., Congress's and the President's discretion), and not the Court, would be the primary means to enforce the federalism-based limits on Congress's powers. However, the political process conception of federalism embraced in Garcia has largely been supplanted in more recent years with the view that the judiciary must safeguard state governments from federal overreach. For instance, in 1995, the Court in United States v. Lopez struck down a federal law that forbade possessing a gun within 1,000 feet of a school, holding that the law exceeded Congress's powers under the Commerce Clause. In concluding as such, the Lopez Court described the federalism-based limitations on Congress's commerce power as limits that '\"the Court has ample power' to enforce.\" Nonetheless, while the modern Court has recognized that the judiciary can police the limits of Congress's powers vis-à-vis the states, as Justice Kennedy noted in his concurrence in Lopez , the political branches continue to have a central role in recognizing the limits on Congress's powers to enact legislation that potentially intrude on areas reserved to state governments. Specifically, Justice Kennedy noted the following:\nWhatever the judicial role, it is axiomatic that Congress does have substantial discretion and control over the federal balance. For these reasons, it would be mistaken and mischievous for the political branches to forget that the sworn obligation to preserve and protect the Constitution in maintaining the federal balance is their own in the first and primary instance. . . . The political branches of the Government must fulfill this grave constitutional obligation if democratic liberty and the federalism that secures it are to endure.\nAs a result, the federalism-based limits on Congress's power discussed in the remainder of this report are not only significant considerations for Congress to ensure that a court does not invalidate legislation on federalism grounds; in addition, the doctrine of federalism may be an important background principle for legislators to consider to help ensure that the political process respects state sovereign interests.", "The Constitution confers certain enumerated powers upon Congress, many of which are beyond the scope of this report. However, some of Congress's powers—namely, its powers under the Spending Clause, the Commerce Clause, the Treaty Power, the Civil War Amendments, the Necessary and Proper Clause, and—are particularly relevant to defining the appropriate allocation of power between the federal government and the states. The following subsections of the report accordingly discuss internal limitations the Constitution imposes on Congress's exercise of those particular powers.", "One source of congressional authority to enact legislation that may potentially impact the powers of the states is the Spending Clause, which empowers Congress to \"lay and collect Taxes, Duties, Imposts, and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.\" The breadth of Congress's Spending Clause authority, along with the question of whether the Clause imposed any internal limitations on Congress's authority, were the subject of much debate for the first 150 years of the nation's history. The debate over the meaning of the Spending Clause centered on two Framers of the Constitution: James Madison and Alexander Hamilton. Madison, fearing the potential scope of Congress's power, argued for a more limited view of Congress's power under the Spending Clause, contending that Congress's power to spend money for the \"general welfare\" was restricted to expenditures under the enumerated powers in Article I, Section 8 of the Constitution. In contrast, Hamilton viewed the Spending Clause as conferring an independent power for Congress to raise and spend money to promote the national welfare.\nThe Supreme Court resolved the debate over the scope of the spending power in the 1936 case of United States v. Butler , in which the Court concluded that the Hamiltonian interpretation of the Clause was \"the correct one.\" Specifically, the Court held that the \"confines\" on the Spending Clause are \"not limited by the direct grants of legislative power found in\" the remainder of Article I, Section 8 of the Constitution. The Court then reaffirmed Butler 's holding regarding the spending power in two subsequent decisions that upheld the Social Security Act of 1935's unemployment insurance and pension system. The Court has not reversed course on its adoption of the Hamiltonian view of the Spending Clause, with the result that Congress may attain certain \"objectives not thought to be within Article I's 'enumerated legislative fields,' . . . through the use of the spending power.\"\nThat said, even though Butler adopted a relatively broad view of the spending power, that decision nonetheless acknowledged that Congress's power under the Spending Clause is \"not unlimited.\" In several cases following Butler , the Court has articulated restraints on Congress's spending power derived from both the text of the Spending Clause and from principles \"emanating from the very structure of our system of governance.\" The central internal limitation on Congress's spending power is that the power must be exercised in pursuit of the \"general Welfare.\" While one might reasonably interpret this limitation to prohibit Congress from using its spending power to aid \"particular\" groups as opposed to the public as a whole, in practice the \"general welfare\" limitation on the Spending Clause is quite minimal. As the Supreme Court has held, in \"considering whether a particular expenditure is intended to serve general public purposes, courts should defer substantially to the judgment of Congress.\" Only where Congress has made a decision that is \"clearly wrong, a display of arbitrary power, not an exercise of judgment\" will a court strike down Spending Clause legislation for failing to promote the general welfare. Moreover, the Court has noted that the \"concept of the general welfare\" is not static, meaning Congress has discretion to determine and expand on what constitutes the general welfare. As a result, since Butler and its progeny, the Supreme Court \"has never held that a federal expenditure was not 'for the general welfare.'\"\nConsequently, the most significant limitations upon the exercise of the spending power are \"found elsewhere in the Constitution.\" These external limitations on the Spending Clause are particularly important when Congress attempts to influence the policy objectives of the states by imposing conditions on the provision of federal funds. These external limitations on the scope of the spending power—which generally all derive from understandings of the Tenth Amendment—are discussed below.", "Perhaps the most consequential of Congress's enumerated powers is the Commerce Clause, which grants Congress the power \"[t]o regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes\" and thereby authorizes Congress to regulate a wide range of economic and social activities. The Supreme Court's views on the breadth of Congress's commerce powers have vacillated throughout the nation's history. During the Progressive Era, the Court embraced a relatively narrow view of the Commerce Clause, holding that Congress lacked the constitutional authority to regulate subjects like manufacturing or child labor. Beginning in 1937 until nearly the end of the 20th Century, by contrast, the Court adopted a nearly boundless view of the Commerce Clause, going so far in the 1942 case of Wickard v. Filburn to hold that Congress may validly regulate virtually any activity as long as the legislature rationally believes that the activity, in the aggregate, has a non-trivial effect on commerce. The Wickard Court maintained that conflicts over the scope of Congress's commerce power were best \"left under our system to resolution by Congress\" rather than the courts. In response to this shift in the Court's Commerce Clause jurisprudence, Congress invoked its commerce powers as the constitutional basis for federal legislation on a wide variety of subjects throughout the 20th Century, including criminal, civil rights, and environmental statutes. Beginning in the mid-1990s, however, a majority of the Court concluded in various rulings that certain federal legislation exceeded Congress's commerce power.", "The Supreme Court's 1995 opinion in United States v. Lopez sets forth the modern test for determining whether a federal statute exceeds the scope of Congress's Commerce Clause authority. The Court held in Lopez that there are \"three broad categories of activity that Congress may regulate under its commerce power.\" First, Congress may regulate the \"channels of interstate commerce.\" Under this category, Congress is permitted to regulate not only the traditional \"channels\" of commerce, such as the nation's highways, railroads, navigable waterways, or airspace, but also the movement of goods flowing across state lines through such channels. Congress's authority to regulate the channels of interstate commerce is not confined to activities that have an economic purpose; instead, Congress is \"free to exclude from the commerce articles whose use in the states for which they are destined it may conceive to be injurious to the public health, morals or welfare.\" Applying this principle, the Court has upheld Congress's authority to prohibit the interstate shipment of stolen goods or kidnapped persons; the interstate shipment of goods produced without minimum-wage and maximum-hour protections; the interstate transportation of a woman or girl for prostitution; and the interstate mailing or transportation of lottery tickets. Significantly, however, the Court has also held that Congress may generally only \"regulate interstate transportation itself\" pursuant to this aspect of its Commerce Clause authority; Congress generally may not regulate \"manufacture before shipment or use after shipment.\"", "Second, \"Congress is empowered to regulate and protect the instrumentalities of interstate commerce, or persons or things in interstate commerce.\" The instrumentalities of interstate commerce refer to the means of interstate commerce, such as an airplane or a train, whereas the \"persons or things in interstate commerce\" refer to the persons or things transported by the instrumentalities among the states. Significantly, the Supreme Court has recognized that Congress possesses the authority to address threats to the instrumentalities of commerce or to persons or things in commerce even if those threats \"come only from intra state activities.\" The Court has therefore held that Congress may validly criminalize the destruction of an aircraft that was used in interstate commerce or the theft of goods moving interstate. The Supreme Court has likewise upheld the regulation of intrastate railroad rates where the regulation was necessary to prevent \"common instrumentalities of interstate and intrastate commercial intercourse from being used in their intrastate operations to the injury of interstate commerce.\" The Court has similarly upheld federal legislation prohibiting the theft of goods from shipwrecked vessels. Critically, however, this aspect of Congress's commerce power extends only to the protection of the instrumentalities or persons or things being moved in interstate commerce and \"not all people and things that have ever moved across state lines.\"", "Finally, Congress possesses the constitutional authority to regulate \"activities that substantially affect interstate commerce.\" This category, which one court described as the \"most unsettled\" and \"most frequently disputed\" of the three Lopez categories, authorizes Congress to \"regulate purely local activities\" as long as they are \"part of an economic 'class of activities' that have a substantial effect on interstate commerce.\" In this vein, the Court has stressed that the underlying test for whether Congress has authority to regulate intrastate economic activity is a \"modest\" one, wherein a \"rational basis\" needs to exist for Congress's conclusion that the activities in question, taken in the aggregate, would substantially affect interstate commerce. At the same time, however, the Court has explained that Congress may not regulate purely intrastate activity that is not clearly connected to any larger regulation of economic activity; nor may Congress pass a federal law that lacks any jurisdictional element to tie the activity being regulated to interstate commerce. To determine whether an activity has a \"substantial effect\" on interstate commerce, courts generally consider four non-dispositive factors:\n1. whether the activity itself \"has anything to do with commerce or any sort of economic enterprise, however broadly one might define those terms\"; 2. \"whether the statute in question contains an express jurisdictional element\"; 3. \"whether there are express congressional findings or legislative history regarding the effects upon interstate commerce of the regulated activity\"; and 4. \"whether the relationship between the regulated activity and interstate commerce is too attenuated to be regarded as substantial.\"\nThe Supreme Court, applying these factors, has periodically ruled that Congress may not invoke the Commerce Clause to regulate certain purely intrastate non-economic activities. In United States v. Lopez , for instance, the Court invalidated a law prohibiting the possession of a gun near a school zone on the ground that the law (1) regulated purely non-economic activity; (2) lacked any jurisdictional element related to interstate commerce; (3) was unsupported by any congressional findings concerning interstate commercial activity; and (4) could only be viewed as regulating activity affecting commerce if the Court were to \"pile inference upon inference.\" Similarly, in United States v. Morrison , the Court struck down legislation creating a federal civil remedy for the victims of gender-motivated violence despite the existence of \"numerous\" congressional findings concluding that gender-motivated crimes had an effect on interstate commerce. The Morrison Court, noting the lack of a jurisdictional element in the law at issue, instead concluded that Congress may \"not regulate noneconomic, violent criminal conduct based solely on that conduct's aggregate effect on interstate commerce.\"\nBy contrast, the Court has generally upheld legislation regulating economic activity—that is, activity pertaining to the \"production, distribution, and consumption of commodities\" —that \"substantially affects interstate commerce.\" For example, in Gonzales v. Raich , the Court upheld the application of the federal Controlled Substances Act to the cultivation of marijuana for personal, entirely intrastate medical use under the Commerce Clause, on the grounds that the \"failure to regulate that class of activity would undercut the regulation of the interstate market\" in marijuana.", "The litigation over the Patient Protection and Affordable Care Act (ACA) resulted in a majority of the Court agreeing on another discrete limitation on Congress's commerce powers in the case of National Federation of Independent Business ( NFIB ) v. Sebelius —namely, that the Commerce Clause cannot compel individuals to engage in commercial activity. Among other issues, NFIB concerned whether the Commerce Clause authorized Congress to require \"most Americans to maintain 'minimum essential' health care coverage.\" Writing for himself, Chief Justice Roberts interpreted this \"individual mandate\" provision of the ACA to require \"individuals not engaged in commerce to purchase an unwanted product.\" Noting that the Court's Commerce Clause jurisprudence presupposed that the power \"reach[ed] 'activity,'\" the Chief Justice concluded that the Commerce Clause did not empower Congress \"to regulate individuals precisely because they are doing nothing,\" warning that such an interpretation would \"open a new and potentially vast domain to congressional authority.\" In so concluding, Chief Justice Roberts rejected the government's argument that there were \"no temporal limitations in the Commerce Clause,\" allowing Congress to regulate individuals who would one day enter the market. While the Chief Justice, joined by four other members of the Court, upheld the individual mandate under Congress's power to \"lay and collect taxes,\" the four dissenters in NFIB largely echoed Chief Justice Roberts's view of the Commerce Clause, concluding that \"[i]f Congress can reach out and command even those furthest removed from an interstate market to participate in the market, then the Commerce Clause becomes a font of unlimited power.\"\nBecause no single opinion in NFIB enjoyed a majority of five Justices, it is uncertain whether the Chief Justice's and the dissenters' conclusions regarding the Commerce Clause constitute binding precedent. In any event, however, lower courts following NFIB have very rarely invalidated Commerce Clause legislation on \"inactivity\" grounds, largely because much of what Congress regulates can be described as a form of \"activity.\" For instance, in rejecting a challenge to another provision of the ACA—namely, the \"employer mandate,\" which requires certain employers to offer a minimum level of health insurance coverage to their employees and dependents—the Fourth Circuit distinguished the employer mandate from the individual mandate. Specifically, the appellate court concluded that, unlike the individual mandate, the employer mandate does not \"create commerce to regulate it\" because employers, \"by their very nature,\" are already \"engaged in economic activity.\" The Fourth Circuit thus held that the employer mandate does not compel employers \"to become active in commerce,\" but rather \"merely 'regulate[s] existing commercial activity.'\"\nOutside of the context of the ACA, Commerce Clause challenges predicated on NFIB 's inactivity principle have likewise been largely unsuccessful. For instance, in United States v. Roszkowski, the First Circuit rejected the argument that 18 U.S.C. § 922(g), a law that forbids convicted felons from possessing a firearm \"in or affecting commerce,\" exceeded Congress's commerce powers under the logic of NFIB 's Commerce Clause holding. Specifically, the First Circuit concluded that Section 922(g) was in \"stark contrast to the individual mandate\" at issue in NFIB , in that the former statute did not compel individuals to become active in commerce, but instead prohibited \"affirmative conduct that has an undeniable connection to interstate commerce.\" In another context, the Second Circuit, in United States v. Robbins , held that the Sex Offender Registration and Notification Act (SORNA) did not impermissibly regulate non-economic inactivity by making it a crime for a sex offender to travel in interstate commerce and knowingly fail to update his offender registration. The Robbins court reasoned that unlike those subject to the individual mandate under the ACA, \"sex offenders who are subjected to SORNA's requirements have all, in a sense, 'opted in' to the regulated group through their prior criminal activity.\" As a consequence, lower courts have not interpreted NFIB 's limitation on the scope of Congress's commerce power to impose a considerable limitation on Congress's regulatory authority.", "At least since the Supreme Court's 1920 ruling in Missouri v. Holland , courts have recognized that Congress has considerable power, even beyond the scope of its enumerated powers under Article I, when legislating to implement a treaty ratified pursuant to Article II, Section 2 of the Constitution. In Holland , the Supreme Court upheld a federal law regulating the killing of migratory birds that had been adopted pursuant to a treaty between the United States and Great Britain, even though a lower court had concluded that a similar statute enacted in the absence of a treaty was beyond the scope of Congress's enumerated powers and therefore unconstitutional on Tenth Amendment grounds. As the Court explained, to evaluate the statute's constitutionality, it was\nnot enough to refer to the Tenth Amendment, reserving the powers not delegated to the United States, because by Article II, § 2, the power to make treaties is delegated expressly, and by Article VI treaties made under the authority of the United States, along with the Constitution and laws of the United States made in pursuance thereof, are declared the supreme law of the land.\nThe Holland Court thus concluded that as long as the treaty was valid, there could \"be no dispute about the validity of the statute . . . as a necessary and proper means to execute the powers of Government.\" Holland therefore stands for the proposition that Congress generally has the power to enact legislation to implement a treaty even where it would lack such power in the treaty's absence. However, the complete extent to which Congress may intrude upon traditional state authority through treaty-implementing legislation remains unclear, and some scholars have suggested that there is reason to believe that Congress could not enact legislation that infringed upon the essential character of U.S. states, such as through legislation that commandeered state executive and legislative authorities.\nNotably, the petitioner in Bond v. United States asked the Court to reconsider the extent to which the Tenth Amendment constrains Congress's ability to enact treaty-implementing legislation. The petitioner in Bond had been convicted under the Chemical Weapons Convention Implementation Act of 1998 (CWCIA) for attempting to poison her husband's paramour with toxic chemicals. She argued that the act, as applied to her, impermissibly intruded upon matters falling under traditional state authority, and that Congress may not act beyond the scope of its enumerated powers to implement a treaty. However, the Court ultimately opted not to revisit its earlier statement in Missouri v. Holland regarding the scope of the treaty power, or provide any clear signal as to whether it agreed with the earlier Court's characterization. Over a separate opinion for three Justices that would have held that the scope of Congress's power to implement a treaty does not extend beyond its enumerated authority, the Court declined to reach the constitutional issue. The Court instead determined that the criminal provisions of the CWCIA should \"be read consistent with the principles of federalism inherent in our constitutional structure,\" and therefore should not be interpreted to cover the petitioner's conduct. Holland remains good law; however, Bond makes clear that, irrespective of related treaties, statutes must be interpreted consistent with the understanding that \"Congress normally preserves the constitutional balance between the National Government and the States.\"", "The Thirteenth, Fourteenth, and Fifteenth Amendments to the Constitution—referred to collectively as the \"Civil War Amendments\" or \"Reconstruction Amendments\" —grant Congress additional powers beyond those set forth in the original Constitution. The United States ratified each of these Amendments after the Civil War to end slavery and secure equal rights for former slaves. Thus, the Thirteenth Amendment prohibits slavery and involuntary servitude within the United States. The Fourteenth Amendment, among other things, provides that no state shall \"deprive any person of life, liberty, or property, without due process of law\" or \"deny to any person within its jurisdiction the equal protection of the laws.\" Finally, the Fifteenth Amendment guarantees that the right to vote \"shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude.\" The Civil War Amendments significantly altered the balance of power between the states and the federal government by limiting state authority and granting Congress new powers to \"secure to all persons the enjoyment of perfect equality of civil rights and the equal protection of the laws against State denial or invasion.\"\nEach of the Civil War Amendments gives Congress the \"power to enforce\" its provisions \"by appropriate legislation.\" Congress's power to enforce the Civil War Amendments goes beyond legislation that simply prohibits unconstitutional conduct; rather, Congress may legislate prophylactically to deter or remedy constitutional violations \"even if in the process it prohibits conduct which is not itself unconstitutional.\" For example, to enforce the Thirteenth Amendment's prohibition on slavery, Congress possesses constitutional authority to eliminate the \"badges and the incidents of slavery,\" such as by banning racial discrimination in the sale of real property. Similarly, to enforce the Fifteenth Amendment's prohibition on racially discriminatory voting restrictions, Congress may ban the use of literacy tests in state and national elections, even though literacy tests are not themselves always unconstitutional.\nAlthough Congress's power under the Civil War Amendments is broad, \"it is not unlimited.\" In particular, the Supreme Court has recognized two major limitations to Congress's power under the Fourteenth Amendment. First, Congress may legislate only against \"state action\"; it may not rely on the Fourteenth Amendment to regulate the conduct of private (i.e., non-state) actors. Second, Congress may legislate only \"remedially\" under the Fourteenth Amendment; it may not change the substantive scope of the rights guaranteed. In other words, enforcement legislation must be \"targeted at 'conduct transgressing the Fourteenth Amendment's substantive provisions,'\" such that there is \"a congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end.\"", "The first limitation—the \"state action requirement\"—derives from the text of Section One of the Fourteenth Amendment, which explicitly proscribes only certain actions undertaken by \"State[s].\" The Supreme Court has interpreted this language to mean that Congress may only legislate to combat discrimination by or through state governments; it may not rely on the Fourteenth Amendment to regulate \"merely private conduct, however discriminatory or wrongful.\" The state action requirement thus \"preserves an area of individual freedom by limiting the reach of federal law and federal judicial power.\" It also avoids imposing liability on state agencies and officials \"for conduct for which they cannot fairly be blamed.\"\nFor example, in the 1883 Civil Rights Cases , the Supreme Court concluded that Congress had no authority under the Fourteenth Amendment to prohibit racial discrimination in places of public accommodation (such as inns, theaters, and railroads) because such laws targeted discrimination by private citizens. Much more recently, the Supreme Court reaffirmed the state action requirement in United States v. Morrison , holding that Congress could not create a federal remedy for victims of gender-motivated violence because the law \"is directed not at any State or state actor, but at individuals who have committed criminal acts motivated by gender bias.\"\nConduct by ostensibly private actors will be deemed to be a state action only if \"there is such a 'close nexus between the State and the challenged action' that seemingly private behavior 'may be fairly treated as that of the State itself.'\" Such a close nexus requires that (1) \"the claimed constitutional deprivation . . . resulted from the exercise of a right or privilege having its source in state authority\"; and (2) \"the party charged with the deprivation must be a person who may fairly be said to be a state actor.\" For example, if a private citizen is a \"willful participant in joint activity with the State or its agents\" he may be held to account under the Fourteenth Amendment as if he were a state official. Whether an individual may fairly be said to be a state actor is a \"necessarily fact-bound inquiry.\" Significantly, however, discriminatory state legislation or conduct by individual state officials acting in their official capacity will satisfy the state action requirement.", "The second major limitation on Congress's Fourteenth Amendment power is that enforcement legislation must be \"remedial\" in nature. Congress is not limited to legislating against actual constitutional violations; it may go further \"to remedy and to deter violation of [constitutional rights] by prohibiting a somewhat broader swath of conduct, including that which is not itself forbidden\" by the Fourteenth Amendment. Nonetheless, Congress can only enforce the rights guaranteed by the Amendment; it may not alter the substantive scope of the rights themselves.\nIn the landmark case City of Boerne v. Flores , the Supreme Court crafted a test to determine when legislation to enforce the Fourteenth Amendment sweeps so broadly as to be unconstitutional. Boerne addressed the constitutionality of the Religious Freedom Restoration Act (RFRA) as it applied to the states. RFRA prohibited governments from substantially burdening any person's exercise of religion unless it was \"in furtherance of a compelling governmental interest\" and used \"the least restrictive means\" of furthering that interest. Congress enacted RFRA in response to an earlier Supreme Court decision, Employment Division v. Smith , which held that neutral, generally applicable state laws were not subject to heightened scrutiny under the First Amendment, even when such laws were applied to religiously motivated practices. Thus, in Smith , Oregon could enforce its general criminal prohibition on peyote use against the sacramental use of that drug in Native American churches without running afoul of the First Amendment. Through RFRA, Congress attempted to invoke its Fourteenth Amendment powers to establish a stricter test for religious liberty claims than the legal standard articulated by the Smith Court. However, Boerne held that RFRA exceeded Congress's power because Congress could not \"decree the substance of the Fourteenth Amendment's restrictions on the States.\" Although Congress can act to \"remedy or prevent unconstitutional actions,\" the Supreme Court explained that \"a congruence and proportionality between the injury to be prevented or remedied and the means adopted to that end\" must exist. The Court concluded that RFRA failed the proportionality requirement because the legislative record lacked \"examples of modern instances of generally applicable laws passed because of religious bigotry,\" and the statute's sweeping coverage threatened general state laws \"of almost every description and regardless of subject matter.\"\nCourts applying Boerne 's \"congruence and proportionality\" test typically utilize a three-step approach. First, the court \"identif[ies] with some precision the scope of the constitutional right\" that the legislation is intended to remedy. Second, the court examines \"whether Congress identified a history and pattern of unconstitutional [violations] by the States\" with respect to the constitutional right at issue. Finally, the court compares the scope of the law to the history of violations to determine if the legislation is \"so out of proportion to a supposed remedial or preventive object that it cannot be understood as responsive to, or designed to prevent, unconstitutional behavior.\"\nNearly all of the Supreme Court decisions applying Boerne arise in the context of congressional attempts to abrogate state immunity to suit under the Eleventh Amendment. As discussed in more detail below, states generally cannot be sued unless Congress validly revokes their Eleventh Amendment immunity. Moreover, Congress cannot use its Article I powers, such as its Commerce Clause power, to abrogate the states' Eleventh Amendment immunity. Instead, Congress must often rely on its enforcement power under the Fourteenth Amendment if it seeks to pass legislation that subjects states to suit in federal court.\nThe decisions applying Boerne to purported abrogations of Eleventh Amendment immunity have sharply divided the Supreme Court. As a result, it can be difficult to predict how the Court will rule in any particular case, and the decisions can be highly fact-bound. For example, in the context of the Americans with Disability Act (ADA), the Court has held that Congress cannot abrogate state immunity with respect to Title I of the ADA (which prohibits disability discrimination in employment), but that it can abrogate state immunity with respect to some applications of Title II of the ADA (which prohibits disability discrimination in the provision of public services). In the context of the Family Medical Leave Act (FMLA), the Court has held that Congress may validly abrogate state immunity with respect to FMLA's guarantee of leave for an employee to take care of ill family members (the \"family-care\" provisions), but not with respect to FMLA's guarantee of leave when the employee herself is sick (the \"self-care\" provisions).\nGenerally speaking, these cases often turn on whether the legislative record demonstrates a history or pattern of state violations of the constitutional right at issue. For example, in Tennessee v. Lane , the Supreme Court found that the legislative record showed a pattern of \"unconstitutional discrimination against persons with disabilities in the provision of public services\" that justified congressional abrogation of state immunity with respect to Title II of the ADA. In contrast, in Board of Trustees of the University of Alabama v. Garrett , the Court struck down legislation that applied the ADA to state government employment decisions based (in part) on its finding that there was no \"history and pattern of unconstitutional employment discrimination by the States against the disabled.\"\nAnother important consideration concerning Congress's power under the Fourteenth Amendment is the particular constitutional right at issue. Courts have tended to be more deferential to uses of Congress's Fourteenth Amendment power when the violations involve a suspect classification (such as race or sex) or a fundamental right. For example, one reason that the Supreme Court found a valid abrogation with respect to FMLA's family-care leave provisions was that the legislation was designed to combat sex discrimination in the workplace, and courts typically subject distinctions based on sex to heightened scrutiny. In contrast, the Court found a purported abrogation invalid with respect to the ADA's employment disability discrimination provisions in part because disability classifications are subject only to rational-basis review. The Court subsequently limited that holding with respect to Title II of the ADA, however, largely because the particular variety of disability discrimination at issue—denial of courthouse access—involved not just discrimination but also the fundamental right of due process of law.\nCourts applying the Boerne test also evaluate the breadth of the congressional remedy in relation to the severity of the constitutional violation that Congress seeks to prevent. Thus, in Tennessee v. Lane , the Court held that there was a valid abrogation of immunity in part because Congress chose a \"limited\" remedy of affording reasonable accommodations to the disabled. In contrast, Boerne itself found that RFRA lacked congruence and proportionality because the Act would subject states to \"the most demanding test known to constitutional law\" even when the conduct at issue did not violate the Constitution.\nSignificantly, however, a court need only assess whether a challenged statute satisfies the congruence and proportionality test if the legislation is \"prophylactic\"; that is, if it purports to regulate conduct beyond actual violations of the Fourteenth Amendment. To the extent that Congress merely creates a cause of action for activity that \"actually violates the Fourteenth Amendment,\" Congress may abrogate state sovereign immunity without a showing of congruence and proportionality.\nAs a practical matter, there are two main steps that legislators can take to decrease the likelihood that a court will conclude that a given piece of legislation exceeds Congress's Fourteenth Amendment power and is therefore invalid. First, Congress can develop a substantial legislative record that demonstrates a \"history and pattern\" of constitutional violations justifying the remedial legislation. Congress will have more leeway to craft a legislative remedy when the history of constitutional violations is severe, implicates a fundamental right, or involves a suspect classification. Second, Congress could ensure that its remedy is \"drawn in narrow terms to address or prevent\" those constitutional violations. Although Congress has power to regulate conduct that does not itself violate the Fourteenth Amendment, it arguably should avoid sweeping too broadly in crafting a remedy.", "Supplementing Congress's enumerated powers is the Necessary and Proper Clause, which grants Congress the power to \"make all Laws which shall be necessary and proper for carrying into Execution the\" powers enumerated in Article I of the Constitution, as well as \"all other Powers vested by the Constitution in the Government of the United States, or in any Department or Officer thereof.\" The Necessary and Proper Clause is typically understood not as an independent grant of congressional power, but as an extension of all the other powers vested in the federal government, especially Congress's enumerated Article I powers. Thus, explicitly or implicitly, when a court addresses the outer limits of Congress's power under, for example, the Commerce Clause, it necessarily considers the challenged statute's validity under the Necessary and Proper Clause, as well. In a few cases, however, the Supreme Court has analyzed Congress's power under the Necessary and Proper Clause independently from any specific enumerated power. Typically, these cases involve either multiple enumerated powers, or congressional actions that are many steps removed from the exercise of the underlying enumerated federal power. Because the extent of the Necessary and Proper Clause defines the outer reaches of Congress's legislative power, these cases delineate the boundary between the authority of the federal government and those areas reserved to the states.\nThe Supreme Court's 1819 opinion in McCulloch v. Maryland provides the canonical interpretation of the Necessary and Proper Clause. McCulloch resolved the then-controversial issue of whether Congress had the power to incorporate a national bank. Because the enumerated powers of Article I do not explicitly include the power to establish a bank, McCulloch addressed whether creating a national bank was a necessary and proper means of effectuating Congress's powers \"to lay and collect taxes; to borrow money; to regulate commerce; to declare and conduct a war; and to raise and support armies and navies.\" The decision thus hinged on how broadly to construe the Necessary and Proper Clause. The McCulloch Court emphatically rejected the argument that Congress's powers under the Clause are limited to those that are \"indispensibl[e]\" or \"absolutely\" necessary. Rather, the Court held that \"necessary\" was better understood to mean \"conducive to\" or \"needful.\" As the Court concluded: \"Let the end be legitimate, let it be within the scope of the constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the constitution, are constitutional.\"\nMany federal laws rest on the foundation established by McCulloch 's broad interpretation of the Necessary and Proper Clause. For example, \"the Necessary and Proper Clause provides the constitutional authority for most federal criminal statutes.\" The Constitution expressly empowers Congress to punish only four crimes: counterfeiting, piracies, offenses against the law of nations, and treason. The remainder of the federal criminal code—including prohibitions on tax evasion, racketeering, mail fraud, drug possession, and other crimes —rests on a determination that criminalization is necessary to effectuate congressional power to regulate interstate commerce, collect taxes, establish post offices, spend for the general welfare, or some other enumerated power.\nSince McCulloch , the Supreme Court has continued to follow an expansive interpretation of the Necessary and Proper Clause, holding that the Clause permits any federal legislation that is \"convenient\" or \"useful\" to the exercise of federal power and is thereby \"rationally related to the implementation of a constitutionally enumerated power.\" The leading modern case interpreting the Clause is United States v. Comstock , which concerned a law that provided for indefinite civil commitment of certain persons in federal custody who were shown to be \"sexually dangerous\" and accordingly authorized detention of such prisoners even after they had served their sentences. The difficulty with the law, as a matter of congressional power, was that the offenders' sexual dangerousness did not have an explicit tie to any enumerated federal power. Moreover, the Court's 2000 decision in United States v. Morrison foreclosed the argument that Congress could regulate general sexual violence pursuant to the Commerce Clause. Comstock nonetheless upheld the civil commitment provision under the Necessary and Proper Clause. Writing for the majority, Justice Breyer held that whichever enumerated power justified the prisoner's crime of conviction also permitted Congress \"to provide appropriately for those imprisoned, and to maintain the security of those who are not imprisoned but who may be affected by the federal imprisonment of others,\" including through post-sentence civil commitment. The Court concluded that the following five factors rendered the challenged law a valid exercise of Congress's Necessary and Proper Clause authority:\n(1) the breadth of the Necessary and Proper Clause, (2) the long history of federal involvement in this arena, (3) the sound reasons for the statute's enactment in light of the Government's custodial interest in safeguarding the public from dangers posed by those in federal custody, (4) the statute's accommodation of state interests, and (5) the statute's narrow scope.\nA few years later, the Supreme Court reaffirmed Comstock 's broad reading of the Necessary and Proper Clause in United States v. Kebodeaux . Kebodeaux concerned another federal regulation of sex offenders: namely, the registration requirements of the 2006 Sex Offender Registration and Notification Act (SORNA). Anthony Kebodeaux, a member of the U.S. Air Force, was convicted by a court martial of a sex crime in 1999; he served a three-month sentence and received a bad conduct discharge. In 2007, Kebodeaux was convicted of violating SORNA when he moved from El Paso to San Antonio but failed to update his registration. Although Congress had not enacted SORNA until well after Kebodeaux's court martial and discharge, the Supreme Court upheld SORNA's application to Kebodeaux as necessary and proper to Congress's power to \"make Rules for the . . . Regulation of the land and naval Forces.\" Key to that conclusion was the Court's finding that Kebodeaux's release from federal custody was not \"unconditional\" because he was subject to an earlier federal statute, the Wetterling Act, which imposed \"very similar\" registration requirements to those of SORNA. The Court explained that, as applied to Kebodeaux, the Wetterling Act was necessary and proper to Congress's power to regulate the military because it was imposed as part of Kebodeaux's original punishment by the court martial. The Court thus framed the case as presenting a narrow question of whether Congress could later \"modify\" those registration requirements through SORNA. Applying the five Comstock factors discussed above, the Court found that the breadth of the Necessary and Proper Clause and the reasonableness of Congress's registration requirements justified SORNA's application to Kebodeaux.\nThough Comstock and Kebodeaux embrace a broad understanding of the Necessary and Proper Clause, Congress's powers under this provision are not unlimited. For example, as discussed above with respect to the Commerce Clause, a majority of the Supreme Court has concluded that federal laws forbidding gun possession near schools, creating a civil remedy for victims of gender-motivated violence, and compelling the purchase of health insurance are not necessary and proper to the exercise of Congress's power to regulate interstate commerce. Nevertheless, following Comstock and Kebodeaux , lower courts have been deferential to Congress's power under the Necessary and Proper Clause. Many of the reported cases address various as-applied challenges to SORNA; the courts of appeals have repeatedly rejected such challenges, even when the defendant \"neither served in the military, nor committed an offense or lived on federal property, nor moved within interstate or foreign commerce.\" Courts have likewise relied on the Necessary and Proper Clause to uphold Congress's power to criminalize hostage taking; exercise supplemental jurisdiction over state law claims; criminalize theft from organizations receiving federal funds; criminalize bribery of state and local officials receiving federal funds; establish military commissions to try conspiracy to commit war crimes; and criminalize sexual abuse in federal prisons.", "In addition to the \"internal\" limitations on Congress's powers discussed above, the Supreme Court has recognized a variety of federalism doctrines that affirmatively prohibit Congress from taking certain actions even if Congress would otherwise be authorized to act pursuant to one of its enumerated powers. This section of the report accordingly discusses these \"external\" limitations on Congress's authority. First, the report discusses the \"anti-commandeering\" doctrine, before addressing the limitations on Congress's authority under the Spending Clause. The report then discusses the Eleventh Amendment and state sovereign immunity, before concluding with a review of the equal sovereignty doctrine the Supreme Court recognized in its 2013 decision in Shelby County v. Holder .", "The \"anti-commandeering\" doctrine generally prohibits the federal government from requiring states and localities to adopt or enforce federal policies. The Supreme Court has explained that this principle derives from the \"fundamental structur[e]\" of the Constitution, which \"withholds from Congress the power to issue orders directly to the States\" and reserves all legislative power not granted to Congress to the states via the Tenth Amendment.\nThe anti-commandeering doctrine has its origins in the Court's 1992 decision in New York v. United States , which struck down a provision of a federal statute that required states to either (1) regulate low-level radioactive waste generated within their borders according to the instructions of Congress, or (2) take title to and possession of such waste. In striking down the provision, the Court reasoned that in light of the absence of an enumerated constitutional power to issue commands to state governments and the Tenth Amendment's reservation of state sovereignty, Congress may not \"commandeer\" or \"conscript\" state governments into implementing federal policies by \"directly compelling them to enact and enforce a federal regulatory program.\" The Court explained that this limitation on Congress's authority \"follows from an understanding of the fundamental purpose served by our Government's federal structure\" to \"secure[] to citizens the liberties that derive from the diffusion of sovereign power.\" The Court also reasoned that the anti-commandeering doctrine is necessary to ensure political accountability because \"[w]here the Federal Government directs the States to regulate, it may be state officials who will bear the brunt of public disapproval, while the federal officials who devised the regulatory program may remain insulated from the electoral ramifications of their decision.\"\nThe Court again applied the anti-commandeering doctrine five years later in Printz v. United States . In Printz , the Court struck down a provision of the Brady Handgun Violence Prevention Act that required state law enforcement officers to perform background checks on prospective gun purchasers. In striking down the challenged provision, the Court concluded that Congress cannot require states to enforce or implement federal policies, even where the relevant federal legislation merely requires state officials to perform \"discrete, ministerial tasks.\" As in New York , the Court explained that this principle follows from the Constitution's \"structural protections of liberty,\" and that a contrary rule would diminish the political accountability of government officials. The Court also gestured toward a related but separate rationale for the anti-commandeering doctrine, reasoning that allowing Congress to \"forc[e] state governments to absorb the financial burden of implementing a federal regulatory program\" would permit federal officials to \"take credit for 'solving' problems without having to ask their constituents to pay for the solutions with higher federal taxes.\"\nNevertheless, the Supreme Court has explained that the anti-commandeering doctrine recognized in New York and Printz has important limits. First, the Court has explained that the doctrine \"does not apply when Congress evenhandedly regulates an activity in which both States and private actors engage.\" The Court invoked this \"exception\" to the anti-commandeering doctrine in Reno v. Condon , where it rejected a Tenth Amendment challenge to a federal law that restricted the states' ability to disclose personal information contained in the records of their motor vehicle departments (DMVs). The Court upheld the challenged law—which also restricted the ability of private actors to disclose personal information they obtained from state DMVs—because the law \"regulate[d] the States as the owners of\" databases, but did not impinge states' \"sovereign capacity to regulate their own citizens\" by requiring the states to enact specific regulations or assist in the enforcement of federal statutes regulating private individuals.\nSecond, the anti-commandeering doctrine does not prohibit Congress from requiring state courts to enforce federal causes of action. The Court arrived at this conclusion in its 1947 decision in Testa v. Katt , where it held that Rhode Island courts were required to enforce the federal Emergency Price Control Act. The Act established a cause of action against persons who sold certain goods above a prescribed price ceiling and provided that state courts shared concurrent jurisdiction with federal courts to adjudicate claims brought under the Act. In Testa , the Court rejected the argument that Rhode Island courts were not required to enforce the Act because they were not required to enforce the statutes of other sovereigns, explaining that under the Supremacy Clause, \"the policy of the federal Act is the prevailing policy in every state.\" Accordingly, while the anti-commandeering doctrine prohibits Congress from conscripting state legislatures and executive officials to adopt or enforce federal policy, it does not prevent Congress from requiring state courts to enforce federal causes of action.\nThird, the Supreme Court has \"long recognized\" that Congress can displace (or \"preempt\") otherwise valid but conflicting state laws under the Constitution's Supremacy Clause so long as it does so pursuant to its enumerated powers. The Court has held that Congress's power to preempt state law includes the power \"to offer States the choice of regulating . . . according to federal standards or having state law pre-empted by federal regulation.\" As discussed below, these sorts of \"conditional preemption\" schemes are a ubiquitous feature of what have been called \"cooperative federalism\" programs, and are particularly common in federal environmental law. The Court has held that conditional preemption schemes are permissible as long as they do not \"require the States to enforce federal law,\" even going so far as to hold that Congress may demand that states \"consider\" federal standards as a precondition to continued state regulation of a field so long as it does not require states to adopt federal standards.\nIn 2018, the Court considered the relationship between \"commandeering\" and preemption in Murphy v. NCAA . Murphy involved New Jersey's effort to legalize sports gambling and the federal Professional and Amateur Sports Protection Act of 1992 (PASPA), which made it unlawful for most states to (among other things) \"authorize by law\" sports gambling. In 2014, New Jersey enacted a statute partially repealing its prohibition on sports gambling, allowing gambling to occur at most casinos and racetracks in the state, but maintaining restrictions on (1) gambling at other locations, (2) gambling on New Jersey sporting events and collegiate teams, and (3) gambling by persons under the age of 21. The National Collegiate Athletic Association (NCAA) and other sports leagues (which PASPA empowered to bring civil actions to enjoin violations of the statute) challenged the New Jersey law as an \"authorization\" of sports gambling that violated PASPA. In response, New Jersey argued (among other things) that PASPA unconstitutionally commandeered state authority by prohibiting it from repealing its ban on sports gambling.\nThe Court sided with New Jersey and struck down PASPA's prohibition of state \"authorization\" of sports gambling under the anti-commandeering doctrine. The Court concluded that this provision in PASPA was unconstitutional because it \"unequivocally dictate[d] what a state legislature may and may not do,\" and accordingly placed states \"under the direct control of Congress.\" In arriving at this conclusion, the Court rejected the NCAA's argument that PASPA's \"anti-authorization\" provision represented a valid exercise of Congress's power to preempt state law. The Court rejected this argument on the grounds that \"valid preemption\" occurs only when federal law is \"best read as . . . regulat[ing] private actors,\" as opposed to state governments. According to the Court, a federal statute is \"best read as . . . regulat[ing] private actors\" when it \"imposes restrictions or confers rights on private actors,\" thereby preempting state laws that impose restrictions or confer rights that conflict with the federal statute. Because PASPA's \"anti-authorization\" provision did not \"confer any federal rights on private actors interested in conducting sports gambling operations\" or \"impose any federal restrictions on private actors,\" the Court concluded that it could not be interpreted \"as anything other than a direct command to the States,\" which the anti-commandeering doctrine forbids.", "While the anti-commandeering doctrine prohibits Congress from requiring states and localities to adopt or enforce federal policies, Congress retains the power to encourage states and localities to adopt or enforce federal policies by paying them to do so pursuant to its Spending Clause authority. However, the Supreme Court has held that this power to attach conditions to federal spending is not unlimited. As discussed above, the Court has held that based on the language of the Spending Clause, Congress's exercise of its Spending Power \"must be in pursuit of 'the general welfare.'\" The Court has also recognized the following four additional limitations on Congress's Spending Clause authority.", "First, the Court has held that if Congress intends to place conditions on the receipt of federal funds by states, it \"must do so unambiguously,\" thereby \"enabl[ing] the States to exercise their choice knowingly, cognizant of the consequences of their participation.\" The Court announced this limitation on Congress's Spending Clause authority in Pennhurst State School & Hospital v. Halderman , where it rejected the argument that states receiving federal funds under the Developmentally Disabled Assistance and Bill of Rights Act were required to abide by the statute's \"bill of rights\" for the developmentally disabled as a condition of accepting the funds. In the statute's \"bill of rights,\" Congress set forth a number of \"findings\" regarding the rights of the developmentally disabled, including findings that (1) developmentally disabled persons have \"a right to appropriate treatment, services, and habilitation for [their] disabilities,\" and (2) treatment for such disabilities \"should be provided in the setting that is least restrictive of the person's individual liberty.\" In Pennhurst , a developmentally disabled resident of a Pennsylvania hospital filed a lawsuit challenging his conditions of confinement, arguing that the hospital had violated its duty under the federal statute to provide him with the \"least restrictive\" treatment possible. The Supreme Court rejected this argument, concluding that the statute's \"bill of rights\" did not create substantive rights that states receiving federal funds were required to respect. In arriving at this conclusion, the Court explained that because \"legislation enacted pursuant to the spending power is much in the nature of a contract,\" Congress must provide clear notice of any conditions it attaches to federal grants so that states are able to accept those conditions \"voluntarily and knowingly.\" The Court concluded that Congress had not provided states with the required clear notice in the relevant statute because \"nothing in the Act or its legislative history\" suggested that Congress intended to condition funding on states' assumption of the \"high cost\" of compliance with the Act's \"bill of rights.\"\nThe Court arrived at a similar conclusion in its 2006 decision in Arlington Central School District Board of Education v. Murphy . Arlington Central involved a fee-shifting provision in the Individuals with Disabilities Education Act (IDEA), which provides federal funds to assist state and local agencies in educating children with disabilities and conditions such funding on compliance with certain requirements, including requirements related to litigation commenced to enforce the IDEA. The case required the Court to determine whether the IDEA's fee-shifting provision—which provides that courts \"may award reasonable attorneys' fees as part of the costs\" to parents who prevail in litigation brought under the IDEA—authorizes prevailing parents to recover fees for services rendered by experts in IDEA litigation. The Court held that the IDEA's fee-shifting provision did not authorize prevailing parents to recover expert fees from states and municipalities, reasoning that the provision did not provide states and localities with the required \"clear notice\" that acceptance of IDEA funding would result in potential liability for such fees.\nOne commentator has observed that lower courts have applied the \"clear notice\" requirement to conditional spending schemes \"with great frequency.\" According to this commentator, courts have interpreted the \"clear notice\" requirement as \"demanding that funding recipients receive three different types of notice before being held liable for violation of a funding condition: (a) notice of the remedy for violation of a funding condition, (b) notice of how the substantive rule imposed by that condition applies to particular facts, and (c) notice of the facts in a given case that violate that condition.\" Nevertheless, courts have held that where \"the plain language\" of a federal statute imposes a condition on the receipt of federal funds, the condition does not exceed the scope of Congress's Spending Clause authority under the \"clear notice\" doctrine. In Madison v. Virginia , for example, the Fourth Circuit rejected the argument that the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA) fails to provide \"clear notice\" that recipients of federal prison funds are required to abide by the statute's protections of religious liberty. The court rejected this argument because \"the plain language\" of RLUIPA—which (1) provides that \"[n]o government\" shall substantially burden prisoners' religious exercise absent a compelling governmental interest, (2) defines \"government\" as including states and their agencies and departments, and (3) provides that its religious liberty protections apply to any \"program[s] or activit[ies] that receive[] Federal financial assistance\"—gives states \"clear notice\" that they are required to abide by RLUIPA's religious liberty protections as a condition of receiving federal prison funds.", "Second, the Supreme Court's cases have also \"suggested (without significant elaboration) that conditions on federal grants might be illegitimate if they are unrelated to the federal interest in particular national projects or programs.\" The Court briefly discussed this limitation on Congress's Spending Clause authority in its 1987 decision in South Dakota v. Dole . In that case, the Court rejected a challenge to a federal statute that withheld five percent of federal highway funds otherwise allocable to states from those states that did not adopt a legal drinking age of at least 21 years. In outlining the limitations on Congress's Spending Clause authority, the Court acknowledged the \"relatedness\" requirement, but noted that South Dakota (the state challenging the condition) had not disputed the connection between the drinking-age condition and the purpose behind the federal highway funds. Because South Dakota had not challenged the drinking-age condition on \"relatedness\" grounds, the Court quickly disposed of the issue, concluding that the drinking-age condition was \"directly related to one of the main purposes for which highway funds are expended—safe interstate travel.\"\nWhile the Court acknowledged the \"relatedness\" limitation on Congress's Spending Clause authority in Dole , it has yet to overturn Spending Clause legislation on \"relatedness\" grounds. In examining lower court decisions applying the limitation, two commentators have noted that most lower courts have given the \"relatedness\" requirement \"only cursory attention,\" and \"have had little difficulty upholding a wide range of funding conditions without a clearly explained relationship to the underlying legislation.\"", "Third, the Supreme Court has explained that constitutional provisions other than the Spending Clause \"may provide an independent bar to the conditional grant of federal funds.\" To illustrate, in Dole , the Court considered whether the Twenty-First Amendment prohibited Congress from withholding federal funds from states that did not adopt the federally favored minimum drinking age. The State of South Dakota argued that (1) because the Twenty-First Amendment conditioned the legality of the transportation of alcoholic beverages on their status under state law, it prohibited the federal government from directly establishing a federal minimum drinking age; and (2) the Spending Clause should not be interpreted as allowing Congress to indirectly regulate matters that it is prohibited from regulating directly. The Court rejected this understanding of the \"independent constitutional bar\" limitation on Congress's Spending Clause authority, explaining that the limitation \"is not . . . a prohibition on the indirect achievement of objectives which Congress is not empowered to achieve directly.\" Rather, the Court concluded that the \"independent constitutional bar\" limitation \"stands for the unexceptionable proposition that\" Congress's Spending Clause \"power may not be used to induce the States to engage in activities that would themselves be unconstitutional,\" such as engaging in \"invidiously discriminatory state action\" or \"inflict[ing] . . . cruel and unusual punishment.\" Because South Dakota \"would not violate the constitutional rights of anyone\" were it to \"succumb to the blandishments offered by Congress and raise its drinking age to 21,\" the Court explained, conditioning federal funding on South Dakota's decision to raise its drinking age did not exceed the scope of Congress's Spending Clause authority.", "Finally, the Supreme Court has explained that just as Congress may not require states to adopt or enforce federal policy under the anti-commandeering doctrine, Congress may not attach conditions to the receipt of federal funding when \"the financial inducement\" offered by such funding is \"so coercive as to pass the point at which pressure turns into compulsion.\" The Court acknowledged this limitation on Congress's Spending Clause authority in Dole , where it rejected the argument that withholding the relevant federal highway funds from states that refused to adopt a federally favored drinking age qualified as overly \"coercive.\" In rejecting this argument, the Court concluded that because the challenged statute threatened non-compliant states with the loss of only five percent of their federal highway funds, it offered only \"relatively mild encouragement\" to states to adopt federal policy and accordingly represented a valid use of Congress's Spending Clause authority.\nIn the years following Dole , lower courts applying that decision rejected a number of \"coerciveness\" challenges to statutes attaching conditions to the receipt of federal funds. Commentators therefore generally assumed that the Court's identification of an \"anti-coercion\" limitation on Congress's Spending Clause authority did not in practice amount to a meaningful constraint on federal power. However, the Court upended this consensus in the NFIB case discussed above, where it held for the first (and to date only) time that a federal statute crossed the line separating permissible \"pressure\" from impermissible \"coercion.\" In addition to rejecting a constitutional challenge to the ACA's \"individual mandate,\" the Court also considered whether an ACA provision allowing the Secretary of Health and Human Services to withhold all Medicaid grants from states that refused to accept expanded Medicaid funding and comply with the conditions attached to it unconstitutionally coerced states into accepting federal policy. The Court ultimately concluded that this provision in the ACA violated the Tenth Amendment. In addressing the coerciveness issue, Chief Justice Roberts (who was joined by Justices Breyer and Kagan) explained that as in Dole , the challenged conditions did not govern the use of new funding provided to states, but instead represented a \"threat[] to terminate other significant independent grants\" already provided to states. Because the provision threatened to terminate other \"independent\" grants, the Chief Justice reasoned, it was \"properly viewed as a means of pressuring the States to accept policy changes,\" requiring the Court to evaluate whether it was overly coercive. Chief Justice Roberts explained that the provision was indeed overly coercive because the threat to withhold all of a state's Medicaid funding operated as a \"gun to the head\" that left states \"with no real option but to acquiesce in the Medicaid expansion.\" Specifically, the Chief Justice noted that while the federal funds at issue in Dole represented less than half of one percent of South Dakota's budget at the time, the relevant ACA provision threatened states with the loss of funds representing over ten percent of their budgets. Chief Justice Roberts concluded that a threat to withhold federal funds of this magnitude was an unacceptably coercive means of incentivizing states to adopt federal policy.\nLower courts are still working through the implications of the Court's \"anti-coercion\" decision in NFIB . In Mississippi Commission on Environmental Quality v. EPA , for instance, the D.C. Circuit rejected a \"coerciveness\" challenge to a provision in the Clean Air Act (CAA) allowing the Environmental Protection Agency (EPA) to prohibit the approval of federal funding for state transportation projects in areas that failed to attain compliance with national air quality standards. The court concluded that the provision was not unduly coercive because (1) like the statute upheld in Dole , but unlike the ACA provision struck down in NFIB , the relevant CAA provision did not threaten states with a loss of all federal funding for an existing program, but only with a loss of funding for transportation projects in certain geographic areas; (2) Texas (one of the states challenging the provision) failed to demonstrate that a significant number of its counties were non-compliant with national air quality standards and accordingly stood to lose funds; and (3) even if all of the relevant funds were withheld, those funds totaled less than four percent of Texas's budget. In light of these considerations, the court concluded that the challenged CAA provision was not unduly coercive because the loss of funding threatened by the provision did \"not even approach the over 10 percent of a State's overall budget at issue in NFIB .\" Although the Mississippi Commission court rejected a \"coerciveness\" challenge to the CAA, two observers have argued that the D.C. Circuit's decision is \"not likely to be the final word on the constitutionality of the CAA sanctions,\" as another CAA provision allows the EPA to withhold federal highway funding more broadly than the provision at issue in Mississippi Commission and may accordingly present a closer constitutional question.\nSome litigants and commentators have also argued that the anti-coercion doctrine should not be limited to cases where the federal government offers financial inducements to states and localities. These observers contend that other means of pressuring states and localities to adopt federal policies—in particular, certain conditional preemption schemes—pose the same risk of federal coercion as the ACA provision the Supreme Court struck down in NFIB . In West Virginia v. EPA , for instance, a coalition of 24 states offered an argument of this sort in challenging an EPA rule setting standards for carbon dioxide emissions from certain power plants, colloquially known as the \"Clean Power Plan\" (CPP). Among other things, the CPP requires states to submit plans to reduce carbon emissions from the relevant plants that meet certain federal standards. The CPP further provides that if states fail to submit adequate plans, the EPA will impose a federal plan implementing the relevant standards. In challenging these provisions in the CPP, the states argued that because the EPA lacks the authority to directly impose certain requirements that states would have the authority to impose in developing emission reduction plans (specifically, requirements concerning operational efficiency at individual plants), a federal plan implementing the CPP would necessarily involve federal rules that would result in the closure of all fossil-fuel fired power plants. According to the states, these rules would in turn require state regulators to facilitate the availability of other power sources (e.g., natural gas and renewable energy) to maintain functioning electric systems. The states contended that this \"threat[] to disrupt the electric systems of States that do not carry out federal policy\" violates the anti-coercion doctrine by leaving states \"with no real option but to acquiesce to federal demands.\"\nIn February 2016, the Supreme Court stayed the implementation of the CPP, potentially suggesting that a majority of the Court had concerns about its legality. However, after the Trump Administration assumed office, the EPA issued a proposal to repeal the CPP and is currently in the process of developing a rule to replace it, likely mooting the litigation over the lawfulness of the CPP.", "In addition to the aforementioned external constraints on Congress's power, the Eleventh Amendment to the United States Constitution—which states that \"the Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State\"—establishes additional limitations on the federal government's power vis-à-vis the states. Subject to certain exceptions discussed below, if a litigant initiates a lawsuit against a state against that state's wishes, the court must generally dismiss the case.\nThe Eleventh Amendment thereby implicates federalism by limiting the federal government's ability to regulate the states and thereby restricting Congress's authority to enact statutes that subject states to suit. In the seminal 1890 case Hans v. Louisiana , the Supreme Court affirmed the principle that states generally enjoy immunity from private suits arising under federal statutory or constitutional law. Because judicial adjudication is the primary means by which the federal government may enforce its legal mandates, and because the Eleventh Amendment insulates states from many types of lawsuits to enforce federal laws, the Eleventh Amendment imposes significant constraints on the national government's power vis-à-vis the states.\nThe Court has interpreted the Eleventh Amendment against the broader background principle, inherent in the Constitution's structure, that the states, as separate and independent sovereigns, enjoy immunity from suit. Thus, although the Supreme Court has \"sometimes referred to the States' immunity from suit as 'Eleventh Amendment immunity,'\" that phrase is \"something of a misnomer, for the sovereign immunity of the States neither derives from, nor is limited by, the terms of the Eleventh Amendment.\" As the Supreme Court has explained, \"each State is a sovereign entity in our federal system,\" and \"it is inherent in the nature of sovereignty not to be amenable to the suit of an individual without [the sovereign's] consent.\" According to the Supreme Court, state sovereign immunity \"serves two fundamental imperatives: safeguarding the dignity of the states and ensuring their financial solvency.\" As to the first of those two principles, the Court has stated that \"making one sovereign appear against its will in the courts of\" another sovereign—as would occur if a state were forced to litigate a case commenced against it in federal court—would impinge the former sovereign's dignity. The doctrine of state sovereign immunity accordingly \"confirms the sovereign status of the States by shielding them from suits by individuals absent their consent.\" With regards to the second principle, the Supreme Court has emphasized that \"the allocation of scarce resources among competing needs and interests lies at the heart of the political process.\" The Court has therefore reasoned that granting \"an unlimited congressional power to authorize suits\" for monetary damages against the states \"would pose a severe and notorious danger to the States and their resources\" and thereby afford \"Congress a power and a leverage over the States that is not contemplated by our constitutional design.\"\nBecause \"the Eleventh Amendment is but one particular exemplification of\" the broader principle of state sovereign immunity, the Supreme Court \"has repeatedly held that the sovereign immunity enjoyed by the States extends beyond the literal text of the Eleventh Amendment.\" For instance, even though the text of the Eleventh Amendment would appear to only prohibit federal courts from adjudicating lawsuits against states filed by citizens of another state or a foreign state, the Supreme Court has nonetheless \"extended the Amendment's applicability to suits by citizens against their own states.\" Additionally, even though the text of the Eleventh Amendment appears to only prohibit suits against the states themselves, courts have interpreted the Amendment to also preclude lawsuits against certain state officials and state agencies. Similarly, even though the text of the Eleventh Amendment only purports to limit the power of the federal courts, the Supreme Court has ruled that states also \"retain immunity from private suit in their own courts.\" According to the Court, \"an unlimited congressional power to authorize suits in state court to levy upon the treasuries of the States\" would undesirably give \"Congress a power and a leverage over the States that is not contemplated by our constitutional design.\" Relatedly, although the Eleventh Amendment's text only appears to constrain the \" Judicial power of the United States,\" the Supreme Court has ruled that the doctrine of state sovereign immunity generally prohibits federal administrative agencies from adjudicating disputes against nonconsenting states.\nThat is not to say, however, that states are categorically immune from suit. Even though courts have interpreted the Eleventh Amendment more broadly than its language would suggest in some ways, in other respects courts have interpreted the Eleventh Amendment more narrowly than its text would suggest. In other words, even though the Eleventh Amendment categorically states that the federal judicial power \"shall not be construed to extend to any suit . . . commenced or prosecuted against one of the United States,\" the Supreme Court has nonetheless recognized circumstances in which a court may validly adjudicate a lawsuit against a state. For one, the Supreme Court has recognized that \"nothing in [the Eleventh Amendment] or any other provision of the Constitution prevents or has ever been seriously supposed to prevent a State's being sued by the United States\" itself. Moreover, beyond the context of a suit by a federal entity against a state, a litigant generally may permissibly hale a state (or one of its officials or instrumentalities) into court in three instances.\nFirst, the Supreme Court has recognized \"that a State's sovereign immunity is 'a personal privilege which it may waive at pleasure.'\" Thus, a litigant may permissibly sue a state if that state has voluntarily \"allow[ed] a federal court to hear and decide a case commenced or prosecuted against it.\" Courts \"will find a waiver\" of a state's Eleventh Amendment immunity \"either if the State voluntarily invokes [the court's] jurisdiction, or else if the State makes a clear declaration that it intends to submit itself to [the court's] jurisdiction.\" Significantly, the state's \"consent to suit against it\" must \"be unequivocally expressed.\" The Supreme Court has therefore rejected the theory that a state may \"'impliedly' or 'constructively'\" waive its sovereign immunity by merely engaging in a field of interstate commerce that Congress has deemed fit to regulate. However, under limited circumstances, Congress can incentivize a state to subject itself to suit by \"requir[ing] a waiver of state sovereign immunity as a condition for receiving federal funds.\" To illustrate, because Congress has unambiguously required states to consent to suit under the IDEA as a condition of receiving federal funds, several courts have ruled that private plaintiffs may sue certain state educational departments and school boards under the IDEA if the state has accepted federal financial assistance.\nSecond, in limited contexts, Congress may directly abrogate the states' Eleventh Amendment immunity by statute. However,\nbecause abrogation of sovereign immunity upsets the fundamental constitutional balance between the Federal Government and the States, and because States are unable directly to remedy a judicial misapprehension of that abrogation, the [Supreme] Court has adopted a particularly strict standard to evaluate claims that Congress has abrogated the States' sovereign immunity.\nThus, Congress may not \"abrogate the States' constitutionally secured immunity from suit in federal court\" unless it has made its intention to do so \"unmistakably clear in the language of the statute.\" However, it is not enough for Congress to merely express an unequivocal intent to abrogate the states' Eleventh Amendment immunity; Congress must also \"act[] pursuant to a valid grant of constitutional authority\" when it seeks to authorize suits against a state in federal court. Critically, the Supreme Court has ruled that only a few of the constitutional grants of legislative power discussed above provide a valid means for Congress to abrogate a state's sovereign immunity. In other words, \"even when the Constitution vests in Congress complete lawmaking authority over a particular area, the Eleventh Amendment\" nevertheless generally \"prevents congressional authorization of suits by private parties against unconsenting States.\" For instance, with very limited exceptions, Congress typically cannot \"base its abrogation of the States' Eleventh Amendment immunity upon the powers enumerated in Article I\" of the Constitution, such as the Commerce Clause or the Copyright and Patent Clause. By contrast, however, \"Congress may authorize\" litigants to sue a state in federal court \"in the exercise of [Congress's] power to enforce the Fourteenth Amendment.\" As discussed above, the Fourteenth Amendment—which was \"adopted well after the adoption of the Eleventh Amendment and the ratification of the Constitution\"—\"alter[ed] the pre-existing balance between state and federal power\" by granting Congress the \"power to enforce, by appropriate legislation,\" constitutional provisions that expressly constrain the states. The Fourteenth Amendment therefore permits Congress to enact legislation that authorizes \"private suits against States or state officials which\" might be \"constitutionally impermissible in other contexts.\" Thus, for instance, the Supreme Court has concluded that Congress validly invoked the Fourteenth Amendment to abrogate the states' Eleventh Amendment immunity from certain employment discrimination claims under the Civil Rights Act. Significantly, however, Congress may only invoke the Fourteenth Amendment to abrogate a state's immunity if the statute abrogating that immunity qualifies as \"appropriate legislation\" within the meaning of Section 5 of the Fourteenth Amendment.\nFinally, notwithstanding the Eleventh Amendment, federal courts may generally adjudicate lawsuits against individual state officers in their official capacity so long as the plaintiff seeks only prospective injunctive or declaratory relief to remedy continuing violations of federal statutory or constitutional law, as opposed to monetary damages. Federal courts may entertain such lawsuits against state officials even though the state itself remains immune from suit. This doctrine is known as the Ex Parte Young exception to Eleventh Amendment immunity, after the seminal Supreme Court case in which the doctrine originated. Ex Parte Young \"is based on the notion, often referred to as 'a fiction,' that a State officer who\" violates the U.S. Constitution or a federal statute \"is 'stripped of his official or representative character'\" for Eleventh Amendment purposes. As a result, a lawsuit against that officer effectively constitutes a suit against an individual rather than the state itself. The Supreme Court has justified this legal fiction on the ground that \"suits for declaratory or injunctive relief against state officers must . . . be permitted if the Constitution is to remain the supreme law of the land.\" Ex Parte Young thereby \"ensures that state officials do not employ the Eleventh Amendment as a means of avoiding compliance with federal law.\"\nThe Supreme Court has emphasized, however, that the Ex Parte Young exception \"is narrow.\" For one, Ex Parte Young applies only to suits against specific state officers in their official capacities; the doctrine \"has no application in suits against the States and their agencies, which are barred regardless of the relief sought.\" Additionally, a plaintiff cannot take advantage of the Ex Parte Young exception if he seeks any judicial remedy other than injunctive or declaratory relief. Thus, Ex Parte Young does not authorize courts to \"impose a liability which must be paid from public funds in the state treasury,\" such as monetary damages. Accordingly, \"relief that in essence serves to compensate a party injured in the past . . . is barred even when the state official is the named defendant.\" Relatedly, a plaintiff may only invoke Ex Parte Young if he seeks prospective rather than retrospective relief. In other words, Ex Parte Young permits a lawsuit against a state official only when \"the relief 'serves directly to bring an end to a present violation of federal law.'\" Finally, Ex Parte Young applies only where the plaintiff alleges that the defendant official is violating federal law; \"the Young exception does not apply when a suit seeks relief under state law.\"", "The final external constraint on Congress's authority vis-à-vis the states discussed in this report is the equal sovereignty doctrine, which is the \"fundamental principle\" that the \"Nation was and is a union of states, equal in power, dignity and authority.\" The equal sovereignty principle thereby limits Congress's ability to enact legislation that subjects different states to unequal burdens. This principle was mostly dormant until the Supreme Court's 2013 decision in Shelby County v. Holder , where the Court invoked the equal sovereignty doctrine to strike down a portion of the Voting Rights Act. Significantly, however, Shelby County does not conclusively resolve exactly when \"disparate treatment of states\" violates the equal sovereignty principle. As legal commentators have noted, however, many federal laws either explicitly or implicitly treat states differently, suggesting that the equal sovereignty principle applies in limited contexts. It is therefore important to examine the few cases in which the federal courts have applied the equal sovereignty doctrine to understand when a federal law cannot impose unequal burdens on the states.\nThe text of the Constitution expressly mandates equal treatment of states in only a few discrete provisions. For example, Article I, Section 8, clause 1 states that \"all Duties, Imposts and Excises shall be uniform throughout the United States.\" Similarly, although Congress possesses the constitutional authority to establish a \"Rule of Naturalization\" and \"Laws on the subject of Bankruptcies,\" the Constitution requires such laws to be \"uniform . . . throughout the United States.\" The Constitution further prohibits the federal government from granting any \"Preference . . . to the Ports of one State over those of Another.\" However, no provision of the Constitution explicitly requires Congress to treat each state equally as a general matter.\nNonetheless, the Court has, at times, recognized an implied principle requiring some measure of equal treatment since the 19th Century, especially with respect to the terms governing the admission of new states. For example, in the 1845 case Lessee of Pollard v. Hagan , which concerned the limits Congress could place over the sovereignty of the newly admitted State of Alabama, the Court held that Alabama was admitted into the union \"on an equal footing with the original states.\" The Court further explained that any condition on Alabama's entry limiting its \"municipal sovereignty\" would have been \"void and inoperative.\" Similarly, in Coyle v. Smith , the Court invalidated a provision in the act of Congress admitting the State of Oklahoma, requiring the capital of the State to \"temporarily be at the city of Guthrie and . . . not be changed therefrom [until 1913].\" The Court explained that the provision was unconstitutional because the power to locate the state capital was an \"essential[] and peculiar[] state power,\" and Congress could not place a new state \"upon a plane of inequality with its sister states\" by conditioning its entry on a reduction in its sovereignty. The Court concluded that any terms of admission into the \"Union\" that were inconsistent with a union \"of states, equal in power, dignity, and authority,\" would be invalid.\nThe Supreme Court extended the equal sovereignty principle in a pair of more recent cases, Northwest Austin Municipal Utility District No. One v. Holder and Shelby County v. Holder , in which the Court considered the continuing constitutionality of Sections 4 and 5 of the Voting Rights Act (VRA) of 1965. Section 4 of the VRA created a \"coverage formula\" identifying jurisdictions with a history of voter discrimination, and Section 5 required those jurisdictions to obtain prior approval or \"preclearance\" from the Department of Justice or a federal court for any change in voting procedures by proving that the change had neither \"the purpose [nor] the effect of denying or abridging the right to vote on account of race or color.\" As a result, jurisdictions covered by Section 4 were barred from making changes to their voting procedures without completing the preclearance process and were, therefore, subject to more stringent burdens than states excluded from the coverage formula. The Court first considered the constitutionality of this arrangement in the 1966 case South Carolina v. Katzenbach , and though the Court recognized that preclearance was an \"uncommon exercise of congressional power,\" the Court held that \"exceptional conditions\" in the form of states \"contriving new rules of various kinds for the sole purpose of perpetuating voting discrimination\" justified the procedure. In the years after the VRA's passage, Congress repeatedly reauthorized the Act (most recently in 2006), but it made no changes to Section 4's coverage formula after 1975.\nThe plaintiffs in Northwest Austin and Shelby County argued that because racial discrimination in voting had become less prevalent since 1975, there was no longer a constitutionally sufficient basis for treating certain states less favorably than others along the same dimensions that existed more than thirty years earlier. Although the Northwest Austin Court observed that the VRA \"raise[d] serious constitutional questions,\" it ultimately applied the doctrine of constitutional avoidance and declined to resolve the equal sovereignty questions raised in that case. Four years later, in Shelby County , the Court confronted these constitutional questions directly and ultimately invoked the equal sovereignty principle to strike down Section 4 of the VRA. As the Court had previously stated in Northwest Austin , distinctions between states \"can be justified in some cases,\" but \"a departure from the principle of equal sovereignty requires a showing that a statute's disparate geographic coverage is sufficiently related to the problem that it targets.\" Although the problem Congress was trying to solve in 1975 when it reauthorized the VRA was discrimination based on race in voting procedures, the Court determined that the coverage formula was no longer \"grounded in current conditions,\" but was instead \"based on 40-year-old facts having no logical relation to the present day.\" Based on its conclusion that Section 4's coverage formula was \"based on decades-old data and eradicated practices,\" the Court concluded that Congress had no rational reason to impose differential burdens on the states.\nSince Shelby County , only a handful of federal courts have considered equal sovereignty challenges outside of the voting rights context, and none has struck down a federal statute or action on those grounds. For example, in the case of NCAA v. Governor of New Jersey , the Third Circuit considered an equal sovereignty challenge to PASPA, the provisions of which are described in greater detail above. Although PASPA made it unlawful for states to \"sponsor, operate, advertise, promote, license, or authorize\" sports gambling, PASPA contained an exception for states which had legalized gambling \"at any time during the period beginning September 1, 1989, and ending October 2, 1991.\" As the Third Circuit recognized, although this exception was drafted without naming any particular state, its purpose was to permit Nevada to continue to license sports gambling. New Jersey challenged PASPA, in part, on the grounds that the exception for Nevada violated equal sovereignty. New Jersey argued that, after Shelby County , laws treating states differently can \"only survive if they are meant to remedy local evils in a manner that is sufficiently related to the problem it targets.\" New Jersey asserted that PASPA treated states differently by exempting Nevada, with no apparent justification tying the problem to the solution. However, the Third Circuit ultimately rejected New Jersey's equal sovereignty challenge. The court observed that the \"regulation of gambling via the Commerce Clause is . . . not of the same nature as the regulation of elections pursuant to the Reconstruction Amendments.\" In particular, the court observed that under typical regulation pursuant to the Commerce Clause, \"national solutions will necessarily affect states differently\" and that Shelby and Northwest Austin did not dictate a \"one-size-fits-all\" test for equal sovereignty in the Commerce Clause context. The court seemed to doubt that equal sovereignty had any effect at all outside the \"sensitive areas of state and local policymaking\" that were involved in Shelby County . Even assuming that the equal sovereignty doctrine did apply, the court had \"no trouble concluding that PAPSA passes muster\" because the purpose of PASPA was to stop the spread of sports gambling—in such a context, \"regulating states in which sports wagering already existed would have been irrational.\" However, as discussed above, the Supreme Court subsequently invalidated PASPA on other grounds.\nIn Mayhew v. Burwell , the First Circuit also considered the equal sovereignty doctrine's application outside the VRA context. In Mayhew , the State of Maine challenged a requirement in the American Recovery and Reinvestment Act of 2009 (ARRA) that offered stimulus funds to states that agreed to make no changes in their Medicaid coverage of low-income 18- to 20-year-olds. Maine, which at the time provided Medicaid coverage to 18- to 20-year-olds, accepted the funds, but in 2012 determined that it wanted to change its policy. Maine argued that the provision of ARRA locking its coverage policy in place violated equal sovereignty because it was unable to adopt a policy that other states had already adopted, resulting in \"disparate treatment.\" The First Circuit, like the Third Circuit, distinguished the VRA cases. The First Circuit concluded that ARRA, unlike the VRA's coverage formula, did not actually involve disparate treatment. The court explained that in the VRA cases, the formula defining the jurisdictions covered by the limitations had been admittedly \"reverse engineered\" to target certain jurisdictions, singling out particular states for disfavored treatment. By contrast, the rule in ARRA was applied uniformly: \"Congress came up with the criteria without regard to which states would be covered by their application.\" The First Circuit also determined, like the Third Circuit, that the equal sovereignty doctrine only applied in \"extraordinary situations,\" like the VRA, which involved a \"sensitive area of state and local policymaking.\" The ARRA's condition on Medicaid coverage, like PASPA's regulation of gambling, did not, in the appellate court's view, involve such an area. Finally, the First Circuit explained that, through the ARRA, Congress had sought to \"protect low-income individuals from losing public assistance in times of transition.\" According to the First Circuit, any differences that resulted across states were sufficiently related to that purpose to suffice for equal sovereignty purposes, when compared to the \"decades-old data and eradicated practices\" used to justify the VRA's coverage formula. The First Circuit therefore concluded that ARRA did not violate the Constitution. Thus, as NCAA and Mayhew reflect, lower courts have (at least to date) largely limited the application of the equal sovereignty doctrine to the voting rights context and have generally not invoked the doctrine to invalidate federal laws." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 3, 2, 2, 3, 3, 2, 1, 2, 2, 3, 3, 3, 3, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "h0_title h1_full", "", "h1_title", "", "", "h1_full", "", "h0_full h1_full", "h1_full", "", "", "h1_full", "h0_title h2_title h1_title", "h2_full", "h2_title h1_full", "", "", "", "h2_full", "h0_full h2_full", "" ] }

{ "question": [ "What does the U.S. Constitution establish about state and federal governments?", "What does the Constitution say about federal laws on state soverignty?", "What is the name given to the boundaries that govern federal and state governments?", "What does Federalism in the Constitution impose on the national government?", "What are the two central ways in which the Constitution imposes federalism-based limitations on Congress?", "What are certain powers that Congress has over states?", "What is an example of this?", "What part of the Constitution has afforded Congress with substantial authority to regulate interstate commerse?", "Why have a collection of constitutional amendments let Congress directly regulate states?", "How does the Constitution impose more limitations on Congress's powers?", "How has the Supreme Court enforced limitations on the national government commanding over states?", "In what other ways has the Supreme Court done this?", "What other limits have been placed on Congress by the Supreme Court?" ], "summary": [ "The U.S. Constitution establishes a system of dual sovereignty between the states and the federal government, with each state having its own government, endowed with all the functions essential to separate and independent existence.", "Although the Supremacy Clause of the Constitution designates \"the Laws of the United States\" as \"the supreme Law of the Land,\" other provisions of the Constitution—as well as legal principles undergirding those provisions—nonetheless prohibit the national government from enacting certain types of laws that impinge upon state sovereignty.", "The various principles that delineate the proper boundaries between the powers of the federal and state governments are collectively known as \"federalism.\"", "Federalism-based restrictions that the Constitution imposes on the national government's ability to enact legislation may inform Congress's work in any number of areas of law in which the states and the federal government dually operate.", "There are two central ways in which the Constitution imposes federalism-based limitations on Congress's powers. First, Congress's powers are restricted by and to the terms of express grants of power in the Constitution, which thereby establish internal constraints on the federal government's authority. The Constitution explicitly grants Congress a limited set of carefully defined enumerated powers, while reserving most other legislative powers to the states. As a result, Congress may not enact any legislation that exceeds the scope of its limited enumerated powers.", "That said, Congress's enumerated powers nevertheless do authorize the federal government to enact legislation that may significantly influence the scope of power exercised by the states.", "For instance, subject to certain restrictions, Congress may utilize its taxing and spending powers to encourage states to undertake certain types of actions that Congress might otherwise lack the constitutional authority to undertake on its own.", "Similarly, the Supreme Court has interpreted the Constitution's Commerce Clause to afford Congress substantial (but not unlimited) authority to regulate certain purely intrastate economic activities that substantially affect interstate commerce in the aggregate. Congress may also enact certain types of legislation in order to implement international treaties.", "Additionally, pursuant to a collection of constitutional amendments ratified shortly after the Civil War, Congress may directly regulate the states in limited respects in order to prevent states from depriving persons of certain procedural and substantive rights.", "In addition to the internal constraints on Congress's authority, the Constitution also imposes external limitations on Congress's powers vis-à-vis the states—that is, affirmative prohibitions on certain types of federal actions found elsewhere in the text or structure of the Constitution.", "The Supreme Court has recognized, for instance, that the national government may not commandeer the states' authority for its own purposes by forcing a state's legislature or executive to implement federal commands.", "Nor may Congress apply undue pressure to coerce states into taking actions they are otherwise disinclined to take. Furthermore, the principle of state sovereign immunity—which limits the circumstances in which a state may be forced to defend itself against a lawsuit against its will—imposes significant constraints on Congress's ability to subject states to suit.", "Finally, the Supreme Court has recognized limits to the extent to which Congress may subject some states to more onerous regulatory burdens than other states." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, 1, -1, -1, -1, -1, 1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 2 ] }

{ "title": [ "Background", "FDIC Relies on Computer Systems to Support Its Mission and Financial Reporting", "Cyber Threats Facing Federal Systems Continue to Evolve", "Federal Law and Guidance Provide a Framework for Protecting FDIC’s Federal Information and Systems", "FDIC Continues to Implement Controls, but Collective Weaknesses Require Management Attention", "Access Control Weaknesses Increased the Risk of Inappropriate Data Access", "Financial Systems Were Not Sufficiently Isolated", "FDIC Did Not Adequately Ensure Accountability for the Use of A Key Privileged Account", "Authorization Controls Were Improved, but More Consistent Implementation is Needed", "FDIC Did Not Employ Strong Encryption on Connections to Sensitive Mainframe Resources", "FDIC Did Not Scan All Servers for Vulnerabilities or Sufficiently Monitor Changes to Critical Files", "FDIC Did Not Fully Implement Configuration Management Controls", "FDIC Developed and Documented Elements of Its Corporate Information Security Program, but Shortcomings Still Existed", "FDIC Developed Many Security Policies, but A Key Procedure Was Lacking", "FDIC Assessed Security Controls, but Outsourced Service Providers Were Not Always Assessed Timely", "FDIC Resolved Many Previously Identified Weaknesses, but Key Weaknesses Remain", "Shortcomings Existed in FDIC’s Incident Response Process", "FDIC Did Not Complete Key Information Security Strategic Management Activities", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objective, Scope, and Methodology", "Appendix II: Comments from the Federal Deposit Insurance Corporation", "Appendix III: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments" ], "paragraphs": [ "FDIC was established by Congress to maintain the stability of and public confidence in the nation’s financial system by insuring deposits, examining and supervising financial institutions, and resolving troubled institutions. Congress created FDIC in 1933 in response to the thousands of bank failures that had occurred throughout the late 1920s and early 1930s.\nThe Bank Insurance Fund and the Savings Association Insurance Fund were established as FDIC responsibilities under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, which sought to reform, recapitalize, and consolidate the federal deposit insurance system. The Bank Insurance Fund and the Savings Association Insurance Fund merged into the Deposit Insurance Fund on February 8, 2006, as a result of the passage of the Federal Deposit Insurance Reform Act of 2005. As administrator of the Deposit Insurance Fund, FDIC insures the deposits of banks and savings associations (insured depository institutions). In cooperation with other federal and state agencies, the FDIC promotes the safety and soundness of insured depository institutions by identifying, monitoring, and addressing risks to the Deposit Insurance Fund.\nFDIC is also the administrator of the Federal Savings and Loan Insurance Corporation Resolution Fund. This fund was created to close out the business of the former Federal Savings and Loan Insurance Corporation and liquidate the assets and liabilities transferred from the former Resolution Trust Corporation.", "FDIC relies extensively on computerized systems to support its mission, including financial operations, and to store the sensitive information that it collects. The corporation uses local and wide area networks to interconnect its systems.\nTo support its financial management functions, FDIC uses, among other things, the following information technology (IT) resources: a corporate-wide system that functions as a unified set of financial and payroll systems that are managed and operated in an integrated fashion; a system to calculate and collect FDIC deposit insurance premiums and Financing Corporation interest amounts from insured institutions; a Web-based application that provides full functionality to support franchise marketing, asset marketing, and asset management; an application and Web portal to provide acquiring institutions with a secure method for submitting required data files to FDIC; computer programs used to derive the corporation’s estimate of losses from shared loss agreements; a system to request access to and receive permission for the computer applications and resources available to its employees, contractors, and other authorized personnel; and a primary receivership and subsidiary financial processing and reporting system.", "The federal government has seen a marked increase in the number of information security incidents affecting the integrity, confidentiality, and availability of government information, systems, and services. Without proper safeguards, computer systems are vulnerable to individuals and groups with malicious intentions who can intrude and use their access to obtain sensitive information, commit fraud and identity theft, disrupt operations, or launch attacks against other computer systems and networks. Cyber-based threats to information systems and cyber-related critical infrastructure can come from sources internal and external to the organization. External threats include the ever-growing number of cyber- based attacks that can come from a variety of sources such as individuals, groups, and countries who wish to do harm to an organization’s systems. Internal threats include errors or mistakes, as well as fraudulent or malevolent acts by employees or contractors working within an organization.", "Under the Federal Information Security Modernization Act of 2014 (FISMA), the Chairman of FDIC is responsible for, among other things, (1) providing information security protections commensurate with the risk and magnitude of the harm resulting from unauthorized access, use, disclosure, disruption, modification, or destruction of the agency’s information systems and information; (2) ensuring that senior agency officials provide information security for the information and information systems that support the operations and assets under their control; and (3) delegating to the corporation’s Chief Information Officer (CIO) the authority to ensure compliance with the requirements imposed on the agency under FISMA.\nFISMA states that the CIO is responsible for developing and maintaining a corporate-wide information security program and for developing and maintaining information security policies, procedures, and control techniques that address all applicable requirements. FISMA also states that the CIO is to designate a senior agency information security officer to carry out the CIO’s responsibilities for information security under the law. In most federal organizations, this official is referred to as the Chief Information Security Officer.\nAt FDIC, the CIO is responsible for, among other things, (1) establishing the information security risk management program and ensuring that it is properly implemented; (2) establishing the overall strategy for how the corporation frames, assesses, responds to, and monitors information security risks; and (3) establishing and promulgating agency-wide information security risk awareness programs and practices. The responsibilities of the FDIC Chief Information Security Officer include, among other things, (1) overseeing the corporation’s information technology security risk management program; (2) providing information security standards, control frameworks, security policy, best practices, and security architecture oversight; (3) ensuring appropriate staffing and support of all information security positions that support the risk management program; and (4) managing and maintaining the continuous monitoring program.", "For calendar years 2016 and 2015, FDIC implemented numerous information security controls intended to protect its key financial systems. In addition, the corporation addressed 15 of 21 recommendations to mitigate control weaknesses that we had previously identified in our reports in 2013, 2014, 2015, and 2016. Nevertheless, weaknesses remained in FDIC’s implementation of access, configuration management, and information security program controls that threaten the confidentiality, integrity, and availability of its financial systems and information.\nAs we have previously reported, the collective effect of weaknesses in access and configuration management controls, both new and unresolved from previous audits, contributed to our determination that FDIC had a significant deficiency in internal control over financial reporting as of December 31, 2016.", "An agency can better protect the resources that support its critical operations and assets from unauthorized access, disclosure, modification, or loss by designing and implementing controls for protecting information system boundaries, identifying and authenticating users, restricting user access to only what has been authorized, encrypting sensitive data, and auditing and monitoring systems to detect potentially malicious activity, among other actions. Although FDIC had implemented numerous controls in these areas, weaknesses nevertheless continued to challenge the corporation in ensuring the confidentiality, integrity, and availability of its information and information systems.", "Boundary protection controls are intended to restrict logical access into and out of networks and control connectivity to and from network- connected devices. Any connections to the Internet or to other external and internal networks or information systems should occur through controlled interfaces (for example, gateways, routers, switches, and firewalls). In addition, networks should be appropriately configured to adequately protect access paths between systems; this can be accomplished through the use of access control lists and firewalls.\nNational Institute of Standards and Technology (NIST) guidance recommends that organizations employ boundary protection mechanisms to separate organization-defined information system components supporting organization-defined missions and/or business functions. Such isolation limits unauthorized information flows among system components and also provides the opportunity to deploy greater levels of protection for selected components. Consistent with NIST guidance, Office of Management and Budget Circular A-130 requires agencies to isolate sensitive or critical information resources (e.g., information systems, system components, applications, databases, and information) into separate security domains with appropriate levels of protection based on the sensitivity or criticality of those resources.\nFDIC did not implement sufficient internal boundary protection controls on its network to isolate financial systems from other parts of its network. Although the corporation partially isolated financial systems from other parts of the environment using virtual local area networks, it did not always implement controls on network devices to prevent unauthorized users and systems from communicating with the financial systems.\nAccording to FDIC, a plan to isolate sensitive systems had been made, but implementation of the plan had been delayed due to other competing priorities. Until it appropriately isolates its financial systems, FDIC faces increased risk that unauthorized or malicious attempts to communicate with its financial systems could go undetected.", "Identification is the process of distinguishing one user from all others, usually through user identifications (ID). These are important because they are the means by which specific access privileges are assigned and recognized by the computer. However, because the confidentiality of a user ID is typically not protected, other means of authenticating users— that is, determining whether individuals are who they say they are—are typically implemented. The combination of identification and authentication—such as user account-password combinations—provides the basis for establishing accountability and for controlling access to the system. NIST SP 800-53, revision 4 recommends that agency information systems uniquely identify and authenticate organizational users or processes acting on behalf of organizational users.\nFDIC did not implement sufficient controls to ensure that users would be held accountable for the use of a key privileged account. Although the corporation employed a software tool to control access to privileged accounts, it did not use the tool to control access to a privileged account that was used by multiple engineers to manage the corporation’s virtual environment. As a result, FDIC’s ability to attribute authorized, as well as unauthorized, system activity to specific individuals could be diminished.", "Authorization is the process of granting or denying access rights and privileges to a protected resource, such as a network, system, application, function, or file. A key component of granting or denying access rights is the concept of “least privilege,” which refers to granting a user only the access rights and permissions needed to perform official duties.\nTo restrict a legitimate user’s access to only those programs and files needed, organizations establish user access rights: allowable actions that can be assigned to a user or to groups of users. File and directory permissions are rules that are associated with a particular file or directory, regulating which users can access it—and the extent of their access rights. To avoid unintentionally giving a user unnecessary access to sensitive files and directories, an organization should give careful consideration to its assignment of rights and permissions.\nNIST SP 800-53, revision 4 recommends that organizations employ the principle of least privilege by allowing only authorized users (or processes acting on behalf of users) access permission that is necessary to accomplish assigned tasks in accordance with organizational missions and business functions. NIST also recommends periodic reviews of user accounts for compliance with account management requirements. In addition, FDIC policy requires administrators to use designated administrator accounts when conducting administrative tasks. FDIC policy also requires removal of user permissions if the job responsibilities of the user change, if the user transfers to a different organization, or the user no longer requires access for any other reason. Further, the policy requires that access settings be reviewed periodically to ensure that they remain consistent with existing authorizations and current business needs.\nDuring 2016, FDIC improved controls for authorizing users’ access by addressing all nine of the weaknesses pertaining to authorization that we had previously identified and that were still unresolved as of December 31, 2015. For example, FDIC implemented processes for reviewing individuals with access to its data centers; ensuring that users of a key financial application do not conduct access reviews of their own accounts; and removing users’ access to another financial application in a timely manner.\nHowever, while it addressed these weaknesses from prior years, the corporation did not always consistently implement authorization controls. Specifically, FDIC database administrators for one database management system did not use designated administrative accounts when performing administrative tasks on certain databases. Additionally, although the corporation had a process for conducting periodic reviews of access settings on mainframe accounts, it did not include all mainframe accounts in the access review process. Further, about one-fifth of the user accounts we reviewed on a key financial application were granted additional privileges that had not been authorized by the users’ supervisors. This occurred because the official granting the access had institutional knowledge of the privileges that the users would need, and because FDIC’s procedures for granting access to the application did not include responsibilities and procedures for ensuring that the level of access provided had been approved by the users’ supervisor. As a result, these systems are more vulnerable to unauthorized access and modification of data.", "Cryptography controls can be used to help protect the integrity and confidentiality of data and computer programs by rendering data unintelligible to unauthorized users and/or protecting the integrity of transmitted or stored data. Cryptography involves the use of mathematical functions called algorithms and strings of seemingly random bits called keys. Among other things, the algorithms and keys are used to encrypt a message or file so that it is unintelligible to those who do not have the secret key needed to decrypt it, thus keeping the contents of the message or file confidential. NIST SP 800-53, revision 4 recommends that organizations employ encryption to protect information from unauthorized disclosure and modification during transmission. The NIST standard for an encryption algorithm is Federal Information Processing Standards Publication (FIPS Pub.) 140-2.\nFDIC had not completed actions to implement our prior recommendation to use FIPS-compliant encryption for all mainframe connections. Although FDIC officials stated that they initially intended to implement a tool to enable mainframe encryption in 2016, the corporation determined that the tool would not encrypt all of the information within its planned scope. FDIC officials from the Division of Information Technology stated that the corporation is continuing to consider feasible options for encrypting mainframe connections. In the meantime, sensitive data— such as user IDs and passwords—continue to be transmitted over the network in clear text, exposing them to potential compromise.", "Audit and monitoring involves the regular collection, review, and analysis of auditable events for indications of inappropriate or unusual activity, and the appropriate investigation and reporting of such activity. Automated mechanisms may be used to integrate audit monitoring, analysis, and reporting into an overall process for investigation and response to suspicious activities. Audit and monitoring controls can help security professionals routinely assess computer security, perform investigations during and after an attack, and even recognize an ongoing attack.\nNIST SP 800-53, revision 4 states that organizations should review and analyze information system audit records for indications of inappropriate or unusual activity and report the findings to designated agency personnel. Additionally, NIST states that information systems should produce audit records that establish the type of event, when the event occurred, and the identity of any individuals or subjects associated with the event, among other things.\nFDIC improved its audit and monitoring controls by implementing four of the five recommendations pertaining to audit and monitoring that we had previously identified and that were still unresolved as of December 31, 2015. For example, the corporation had ensured that data on successful logins was being captured for each of its database systems for investigation of potential security incidents; implemented a centralized audit monitoring capability for its databases; improved the logging and monitoring process for several key systems; and documented all critical files on key servers that required real-time monitoring.\nHowever, other weaknesses existed in FDIC’s implementation of audit and monitoring controls. Specifically:\nFDIC had not performed vulnerability scans of all servers in its IT environment. In its November 2016 report on the effectiveness of the corporation’s information security program in accordance with the requirements of FISMA, the FDIC Office of Inspector General (OIG) reported that, at the time of its audit, FDIC was not performing vulnerability scans for more than 900 production servers within one of its general support systems. In addition, we found that FDIC had not scanned several production servers in another of its general support systems during the 3-month time period (July, August, and September 2016) that we reviewed.\nAccording to FDIC officials, these conditions occurred because the corporation did not have an inventory of network assets that included all servers and because its legacy scanning and discovery tool had failed to identify all servers. The officials added that the scanning and discovery tool had since been replaced. Without regularly scanning all servers, FDIC cannot reasonably be assured that vulnerabilities in its servers are identified and corrected in a timely manner, increasing the risk that its systems and information may be compromised.\nFDIC had not completed actions to address our prior year recommendation to ensure that changes made to critical files on certain key servers are adequately monitored. Although the corporation specified which directories on the servers were to be monitored, the logs that were generated did not provide sufficient detail to identify the individuals making changes.\nAccording to officials in FDIC’s Division of Information Technology, the corporation plans to implement a new solution in 2017 to enable security personnel to identify users making file system changes. Until FDIC fully addresses this recommendation by ensuring that users making changes to critical files are identified and logged, increased risk continues to exist that an unauthorized individual could inappropriately modify these files without being identified.", "In addition to access controls, agencies should implement policies, procedures, and techniques for managing the configuration of information systems. Configuration management controls are intended to prevent unauthorized changes to information system resources (for example, software programs and hardware configurations) and to provide reasonable assurance that systems are configured and operating securely and as intended. NIST SP 800-53, revision 4 recommends, among other things, that agencies develop and document an inventory of information system components that accurately reflects the current system and includes all components within the system’s authorization boundary; establish a baseline configuration for the information system and its constituent components; and identify and correct information system flaws, including installing security relevant software updates within a defined time period of their release.\nConsistent with NIST guidelines, FDIC policy states that mandatory configuration settings must be established and documented for IT products employed within the information system using information system-defined security configuration checklists. The policy also states that applicable vendor-released software patches designed to address security vulnerabilities are to be implemented in accordance with the CIO organization’s security patching schedule.\nNevertheless, FDIC had not consistently implemented configuration management controls. For example, although the corporation used multiple tools to track and validate its IT assets, it had not established a single, authoritative, accurate listing of all IT assets in its environment. This occurred because FDIC had not established a process to reasonably assure that a complete, accurate inventory was developed and maintained. Additionally, although the corporation had defined baseline configuration settings for its information systems and had conducted configuration scans of its systems, it had not yet fully implemented processes for verifying that configurations are consistently applied. Further, although FDIC had applied patches to certain third-party applications supporting financial processing and had made significant progress in identifying and tracking vulnerabilities related to third-party software, it had not yet fully implemented processes to ensure that assets that require patching are identified correctly.\nWithout establishing a reliable, authoritative listing of its IT assets and documenting, implementing, and monitoring security configurations, FDIC has reduced assurance that its information supporting financial processing is securely configured. Additionally, unless known vulnerabilities in FDIC’s systems and applications are patched, increased risk exists that they could be exploited, potentially exposing the corporation’s financial systems and information to unauthorized access or modification.", "An entitywide information security management program is the foundation of a security control structure and a reflection of senior management’s commitment to addressing security risks. The security management program should establish a framework and continuous cycle of activity for assessing risk, developing and implementing effective security procedures, and monitoring the effectiveness of these procedures. Without a well-designed program, security controls may be inadequate; responsibilities may be unclear, misunderstood, or improperly implemented; and controls may be inconsistently applied.\nFISMA requires each agency to develop, document, and implement an information security program to provide security for the information and information systems that support the agency’s operations and assets, including those provided or managed by another agency, contractor, or other organization on its behalf. Agency programs are to include, among other things, the following elements: periodic assessments of risk, including the magnitude of harm that could result from the unauthorized access, use, disclosure, disruption, modification, or destruction of information and information systems that support the operations and assets of the organization; plans and procedures to ensure continuity of operations for information systems that support the operations and assets of the agency; policies and procedures that are based on risk assessments, cost- effectively reduce information security risks to an acceptable level, and ensure that information security is addressed throughout the life cycle of each organizational information system; periodic testing and evaluation of the effectiveness of information security policies, procedures, practices, and security controls to be performed with a frequency depending on risk, but no less than annually; a process for planning, implementing, evaluating, and documenting remedial actions to address any deficiencies in the information security policies, procedures, and practices of the organization; and procedures for detecting, reporting, and responding to security incidents.\nIn addition, FISMA requires the head of each federal agency to ensure that information security management processes are integrated with agency strategic and operational planning processes.\nFDIC had developed, documented, and implemented many elements of its corporate information security program. For example, it had defined security categories for the general support systems we reviewed based on risk using NIST guidance, assessed the risk from control deficiencies identified during security control tests, and ensured that the general support systems we reviewed were authorized to operate; and conducted a disaster recovery test of its general support systems and mission-critical applications.\nHowever, FDIC had not fully or consistently implemented aspects of its information security program, which was an underlying reason for many of the information security weaknesses identified during our review. Specifically, FDIC had not included all necessary information in procedures for granting access to a key financial application; fully addressed the FDIC OIG’s finding that security control assessments of outsourced service providers had not been completed in a timely manner; fully addressed key previously identified weaknesses related to establishing agencywide configuration baselines and monitoring changes to critical server files; and completed actions to address the FDIC OIG’s finding that the corporation had not ensured that major security incidents are identified and reported in a timely manner.\nIn addition, in November 2016, the FDIC OIG reported that the corporation had not yet developed and documented an up-to-date information security strategic plan or completed actions to address weaknesses in its Information Security Managers program. These shortcomings are discussed in more detail in the following section.", "A key element of an effective information security program is to develop, document, and implement risk-based policies, procedures, and technical standards that govern the security over an agency’s computing environment. Information security policy is essential to establishing roles, responsibilities, and requirements necessary for implementing an information security program. The supporting procedures provide the information and guidance on implementing the policies. According to NIST SP 800-53, revision 4, organizations should develop and document procedures to facilitate the implementation of access and configuration management policies and associated controls.\nAlthough FDIC developed and documented many information security policies and procedures that were consistent with the NIST Risk Management Framework, its procedure for granting users access to a key financial application did not include responsibilities and steps for ensuring that the level of access provided had been approved by the users’ supervisor. As a result, the official granting access to the application—who had institutional knowledge of the privileges that the users would need—granted additional privileges to some users for which they had not been previously approved. Until it updates its procedure to include these responsibilities and steps, FDIC will continue to face increased risk that users may be granted access to privileges in the application for which they have not been approved.", "A key element of an information security program is to test and evaluate policies, procedures, and controls to determine whether they are effective and operating as intended. Security control testing should include management, operational, and technical controls for every system identified in the agency’s required inventory of major systems. Although control tests and evaluations may encourage compliance with security policies, the full benefits are not achieved unless the results are used to improve security. FISMA requires that the frequency of tests and evaluations of management, operational, and technical controls be based on risks and occur no less than annually.\nThe Office of Management and Budget (OMB) directs agencies to meet their FISMA-required controls testing by drawing on security control assessment results that include, but are not limited to, continuous monitoring activities. According to NIST SP 800-53, revision 4, continuous monitoring programs facilitate ongoing awareness of threats, vulnerabilities, and information security to support organizational risk management decisions. NIST also recommends that organizations monitor security control compliance by external service providers on an ongoing basis.\nFDIC developed a continuous control assessment methodology that defined the controls tested for each information system and the frequency that each control is to be tested. In addition, the corporation tested the effectiveness of the security controls for the three general support systems we reviewed in accordance with the methodology.\nHowever, the FDIC OIG has previously reported weaknesses in FDIC’s assessments of its outsourced service providers. Specifically, in October 2015, it reported that the corporation had not always ensured that security assessments of outsourced service providers were completed in a timely manner. In November 2016, the OIG reported that FDIC had made meaningful progress towards completing timely assessments of its outsourced service providers, but noted that continued management attention was warranted in this area to ensure outstanding assessments are completed timely.", "When security weaknesses are identified, the related risks should be assessed, appropriate corrective or remediation actions should be taken, and follow-up monitoring should be performed to make certain that corrective actions are effective. FISMA specifically requires that agencywide information security programs include a process for planning, implementing, evaluating, and documenting remedial actions to address any deficiencies in the information security policies, procedures, and practices of the agency.\nNIST SP 800-53, revision 4 recommends that organizations develop a plan of action and milestones (POA&M) for information systems to document the planned remedial actions to correct weaknesses or deficiencies identified during security control assessments. A POA&M should also be updated based on the findings from the security controls assessment, security impact analysis, and continuous monitoring activities.\nFDIC documented POA&Ms for weaknesses identified during internal control assessments and implemented an effective process for tracking and mitigating identified weaknesses for each of the systems that we reviewed. In addition, as of December 31, 2016, FDIC had addressed 15 of the 21 previously reported information system weaknesses that were unresolved at the end of our prior audit. For example, FDIC had improved controls for authorizing users’ access to financial applications and for logging and monitoring financial systems to detect potentially malicious activity. However, six previously identified weaknesses remained unresolved. Until it completes actions to address previously identified weaknesses, FDIC will continue to face increased risk that its systems may not be adequately or consistently protected against unauthorized access to systems or data. Appendix II details the status of weaknesses that were unaddressed as of December 31, 2015 or were initially reported in 2016.", "Comprehensive monitoring and incident response controls are necessary for rapidly detecting incidents, minimizing loss and destruction, mitigating the weaknesses that were exploited, and restoring computing services. While strong controls may not prevent all incidents, agencies can reduce the risks associated with these events by detecting and promptly responding before significant damage is done. FISMA requires federal agencies to develop and implement procedures for detecting, reporting, and responding to security incidents. NIST SP 800-53, revision 4 further recommends that agencies develop, document, and disseminate procedures to facilitate the implementation of the incident response policy and associated incident response controls.\nFDIC developed and documented information security policies and procedures on incident response. For example, its policy on reporting computer security incidents states that the FDIC Computer Security Incident Response Team is responsible for evaluating the seriousness of computer security incidents and taking appropriate corrective actions, including notifying FDIC senior management, the OIG, and other outside entities, when appropriate.\nNevertheless, shortcomings existed in FDIC’s implementation of its policies. Specifically, FDIC did not provide reasonable assurance that “major incidents,” as defined by OMB guidance, were identified and reported in a timely manner. Specifically, the OIG reported in July 2016 that FDIC’s incident response policies, procedures, and guidelines did not address major incidents. In addition, the large volume of potential security violations identified by its Data Loss Prevention tool, together with limited resources devoted to reviewing potential violations, hindered meaningful analysis of the information and FDIC’s ability to identify all security incidents, including major ones. Among other things, the OIG recommended that FDIC (1) revise its incident response policies, procedures, and guidelines to address major incidents; (2) ensure that these revisions include criteria for determining whether an incident is major, consistent with FISMA and Office of Management and Budget guidance; and (3) review the current implementation of the Data Loss Prevention tool to determine how it can be better leveraged to safeguard sensitive FDIC information.\nIn November 2016, the FDIC OIG reported that, in response to these findings, the corporation was working to improve its incident response capabilities by developing an overarching incident response program guide, hiring an incident response coordinator, implementing a new incident tracking system, updating incident response policies and procedures, and performing a comprehensive assessment of the FDIC’s information security and privacy programs. If fully implemented, these actions could improve FDIC’s ability to identify and address security incidents, including major incidents.", "According to NIST SP 800-39, effective risk management requires organizations such as FDIC to operate in highly complex, interconnected environments using state-of-the-art and legacy information systems— systems that organizations depend on to accomplish their missions and to conduct important business-related functions. The complex relationships among missions, mission/business processes, and the information systems supporting those missions and processes require an integrated, organization-wide view for managing risk.\nEffective management of information security risk is critical to the success of organizations in achieving their strategic goals and objectives. NIST SP 800-100 states that agencies should have a strategic plan for information security that identifies goals and objectives related to the agency’s mission, specifies a plan for achieving those goals, and establishes short- and mid-term performance targets and measures that allow the agency to track, manage, and monitor its progress toward those goals and objectives. In addition, according to NIST SP 800-39, agencies should establish roles and responsibilities for managing information security risk.\nHowever, FDIC had not fully implemented key activities for managing and overseeing information security risk across the organization. Specifically: In November 2016, the FDIC OIG reported that FDIC’s information security strategic plan was not up-to-date. Specifically, although the corporation had an information security strategic plan, this plan had expired in 2015 and did not fully reflect OMB’s cybersecurity priorities or the corporation’s strategies. Without an up-to-date strategic plan, ongoing and planned IT initiatives may not be linked to the corporation’s long-term security and business goals and priorities.\nFDIC had not completed actions to address gaps in how the roles and responsibilities of its Information Security Managers (ISM) are defined and carried out. In October 2015, the FDIC OIG reported that the duties and roles of the ISMs in addressing information security requirements and risks had evolved since the ISM program was established. It also reported that FDIC had not completed a recent comprehensive assessment to determine whether the skills, training, oversight, and resource allocations pertaining to the ISMs enabled them to effectively carry out their increased responsibilities and address security risks within their divisions and offices. In November 2016, the OIG reported that FDIC had conducted an assessment of its ISM program, which identified gaps in areas such as available resources, training, and performance measurement. The OIG also reported that FDIC plans to complete all actions to address these gaps by 2018. Until then, however, increased risk exists that these capability gaps could impact the effectiveness of the FDIC’s information security program.", "FDIC had implemented and strengthened many information security controls over its financial systems and information. For example, the corporation had taken steps to improve controls for restricting user access to only what has been authorized, auditing and monitoring systems for potentially malicious activity, and applying patches to address known software vulnerabilities by addressing many of the weaknesses that we previously reported. However, management attention is needed to address new and previously identified deficiencies in access controls— including boundary protection, identification and authentication, authorization, cryptography, and audit and monitoring controls—and in configuration management controls. These deficiencies, considered collectively, are the basis for our determination that FDIC had a significant deficiency in internal control over financial reporting in its information systems controls as of December 31, 2016.\nIn addition, FDIC had developed, documented, and implemented many elements of its corporate information security program. However, further actions are needed to address shortcomings in the corporation’s program, such as ensuring that its procedure for granting access to a key financial application includes key responsibilities and steps.\nGiven the important role that information systems play in FDIC’s internal controls over financial reporting, it is vitally important that the corporation address weaknesses in information security controls—both old and new—as part of its ongoing efforts to mitigate the risks from cyber attacks and to ensure the confidentiality, integrity, and availability of its financial and sensitive information. Continued and consistent management commitment and attention to access, configuration management, and security management controls will be essential to addressing existing deficiencies and further improving FDIC’s information system controls.", "To help improve the corporation’s implementation of its information security program, we recommend that the Chairman of FDIC direct the Chief Information Officer to update the procedure for granting access to the key financial application, to include responsibilities and steps for ensuring that the access privileges granted have been approved by the users’ supervisor.\nIn a separate report with limited distribution, we are also making six recommendations to resolve shortcomings in FDIC’s internal control over financial reporting and help strengthen access and configuration management controls over key financial information, systems, and networks.", "In written comments on a draft of this report (reprinted in appendix II), FDIC concurred with our recommendation to improve its implementation of its information security program and stated that corrective actions will be completed by July 2017. FDIC also provided an attachment detailing its actions to implement our recommendation.\nIn addition to the aforementioned comments, FDIC provided technical comments that we have addressed in our report as appropriate. In these comments, the corporation expressed concern about one additional recommendation to improve its information security program that we had made in our draft report. Specifically, the draft report had included a recommendation that FDIC develop, document, and implement procedures for ensuring that configuration actions identified by its Computer Security Incident Response Team are taken. In written and oral comments, FDIC officials provided additional information about the corporation’s incident handling process in order to clarify that the condition we identified did not pose a risk to the corporation’s information and systems. After our review of this information, we agree that the condition does not pose a risk to the corporation and, accordingly, removed the recommendation from our final report.\nWe are sending copies of this report to interested congressional parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you have any questions regarding this report, please contact Nick Marinos at (202) 512-9342 or Dr. Nabajyoti Barkakati at (202) 512-4499. We can also be reached by e-mail at marinosn@gao.gov and barkakatin@gao.gov. Key contributors to this report are listed in appendix II.", "The objective of this information security review was to determine the effectiveness of the Federal Deposit Insurance Corporation’s (FDIC) controls in protecting the confidentiality, integrity, and availability of its financial systems and information. To do this, we identified and reviewed FDIC information systems control policies and procedures, tested controls over key financial applications, and held interviews with key security representatives and management officials in order to determine whether information security controls were in place, adequately designed, and operating effectively. The review was conducted as part of our audit of the financial statements of the two funds administered by FDIC: the Deposit Insurance Fund and the Federal Savings and Loan Insurance Corporation Resolution Fund.\nThe scope of our audit included an examination of FDIC information security policies, procedures, and controls over key financial systems in order to (1) assess the effectiveness of corrective actions taken by FDIC to address weaknesses we previously reported and (2) determine whether any additional weaknesses existed. This work was performed in support of our opinion on internal control over financial reporting as it relates to our audits of the calendar years 2016 and 2015 financial statements of the two funds administered by FDIC.\nThe independent public accounting firm of Cotton & Company LLP tested certain FDIC information systems controls, including the follow-up on the status of FDIC’s corrective actions during calendar year 2016 to address open recommendations from our prior years’ reports. We agreed on the scope of the audit work, monitored the firm’s progress, and reviewed the related audit documentation to determine whether the firm’s findings were adequately supported.\nTo determine whether controls over key financial systems and information were effective, we considered the results of FDIC’s actions to mitigate previously-reported weaknesses that remained open as of December 31, 2015, and performed audit work at FDIC facilities in Arlington, Virginia. We concentrated our evaluation primarily on the controls for systems and applications associated with financial processing, such as the (1) New Financial Environment; (2) Communication, Capability, Challenge, and Control System; (3) Portfolio Investment Accounting; (4) Assessments Information Management System; and (5) general support systems. Our selection of the systems to evaluate was based on consideration of systems that directly or indirectly support the processing of material transactions that are reflected in the funds’ financial statements.\nOur audit methodology was based on the Federal Information System Controls Audit Manual, which contains guidance for reviewing information system controls that affect the confidentiality, integrity, and availability of computerized information.\nUsing standards and guidance from the National Institute of Standards and Technology and the Office of Management and Budget, as well as FDIC’s policies and procedures, we evaluated controls by examining network diagrams and device configuration settings to determine if intrusion detection and prevention systems were monitoring the FDIC network for suspicious activity; reviewing privileged accounts to verify that access to privileged accounts was appropriately controlled and that accounts were not shared among multiple users; analyzing user application authorizations to determine whether users had more permissions than necessary to perform their assigned functions; reviewing administrative account settings to determine if privileged accounts were used as required and if access to a privileged account was appropriately controlled; assessing configuration settings to evaluate settings used to audit inspecting vulnerability scans for in-scope systems to determine whether scans were conducted regularly and whether patches were appropriately installed on affected systems.\nUsing the requirements of the Federal Information Security Modernization Act of 2014, which establishes elements for an agency-wide information security program, we evaluated FDIC’s implementation of its security program by examining system authorization documentation for information on FDIC’s implementation of risk categorization and risk assessment practices; reviewing information security policies and procedures to determine whether they were adequately documented and implemented; examining FDIC training records for information on general and reviewing assessments of security controls to determine if they had been completed as scheduled; reviewing an FDIC Office of Inspector General (OIG) report for information on the corporation’s processes for assessing security controls of outsourced service providers; examining remedial action plans to determine whether FDIC had addressed identified vulnerabilities in a timely manner; examining two FDIC OIG reports for information on the corporation’s reviewing security event records to determine if security events were tracked and resolved appropriately; reviewing continuity of operations plans, contingency plans, and test results to determine whether contingency planning controls were appropriately implemented; and examining two FDIC OIG reports for information on the corporation’s information security strategic management activities.\nTo determine the status of FDIC’s actions to correct or mitigate previously reported information security weaknesses, we reviewed prior GAO reports to identify previously reported weaknesses, examined FDIC’s corrective action plans, and assessed the effectiveness of those actions.\nWe conducted this audit in accordance with U.S. generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provided a reasonable basis for our findings and conclusions based on our audit objective.", "", "", "", "In addition to the individuals named above, Gregory Wilshusen (Director); Gary Austin, Paul Foderaro, and Michael Hansen (Assistant Directors); William Cook (Analyst in Charge); Wayne Emilien; Nancy Glover; Franklin Jackson; Thomas J. Johnson; Jean Mathew; David Plocher; Dacia Stewart; and Adam Vodraska made key contributions to this report." ], "depth": [ 1, 2, 3, 3, 1, 2, 3, 3, 3, 3, 3, 2, 2, 3, 3, 3, 3, 3, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "h0_full h1_title", "h0_title", "", "h0_full", "", "", "", "", "h1_full", "", "", "h1_full", "", "", "h0_full", "h2_full", "h2_full", "", "", "", "", "" ] }

{ "question": [ "What are the changes that the FDIC made over its financial systems?", "What weaknesses exist in the controls imposed?", "What is an example of this drawback?", "How did the FDIC improve controls over Financial Systems and Information?", "What are these financial systems improvements?", "How many of the reported weaknesses were unresolved?", "What is the recommendation of GAO to the FDIC regarding Financial Systems and Information?", "How many recommendations did GAO make to the FDIC and on what subject matter?", "What was in the comment on the draft of this report?" ], "summary": [ "The Federal Deposit Insurance Corporation (FDIC) implemented numerous information security controls intended to protect its key financial systems.", "However, further actions are needed to address weaknesses in access controls—including boundary protection, identification and authentication, and authorization controls—and in configuration management controls.", "For example, the corporation did not sufficiently isolate financial systems from other parts of its network, ensure that users would be held accountable for the use of a key privileged account, or establish a single, accurate listing of all IT assets in its environment.", "The corporation established a comprehensive framework for its information security program and implemented many aspects of its program.", "For example, FDIC (1) defined security categories for the general support systems we reviewed based on risk; (2) assessed the risk from control deficiencies identified during security control tests; and (3) conducted a disaster recovery test of its general support systems and mission-critical applications.", "In addition, FDIC addressed 15 of the 21 previously reported weaknesses that were unresolved as of December 31, 2015, as indicated in the following table.", "GAO is recommending that FDIC take one action to more fully implement its information security program.", "In a separate report with limited distribution, GAO made six recommendations to FDIC to address newly identified weaknesses in access and configuration management controls.", "In commenting on a draft of this report, FDIC agreed with GAO’s recommendation and stated that corrective actions to implement the recommendation will be completed by July 2017." ], "parent_pair_index": [ -1, -1, 1, -1, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 6, 6, 6 ] }

{ "title": [ "Background", "Incentive Payments and Penalties", "Medicare EHR Program and Medicaid EHR Program Requirements", "HHS’s Quality Measurement Activities", "Performance Assessment", "Participation in the EHR Programs Has Increased, but Program Changes Make It Difficult to Estimate Future Participation", "Participation in 2012 Increased Even Though Some Providers Did Not Continue after 2011", "Program Changes, Including the Increasing Stringency of Requirements and the Implementation of Penalties, Make It Difficult to Estimate Future Participation", "Providers Exceeded Meaningful Use Requirements for Most Stage 1 Measures, but May Face Challenges with Certain More Stringent Stage 2 Measures", "HHS Lacks a Comprehensive Strategy to Help Ensure Reliability of EHR Data Collected to Improve Quality of Care", "Performance Measures for the EHR Programs Do Not Assess Outcomes Such As Improved Quality, Efficiency, and Patient Safety", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Effect of the HITECH Act on Health Insurance Premiums", "Appendix II: Scope and Methodology", "Appendix III: Stage 1 and Stage 2 Meaningful Use Measures", "Appendix IV: Meaningful Use Measure Reporting for the Medicare EHR Program, 2011 and 2012", "Appendix V: Strategic Goals and Associated Performance Measures Relevant to the EHR Programs", "Appendix VI: Program Evaluations Assessing the EHR Programs’ Effects on Outcomes", "Appendix VII: Comments from the Department of Health and Human Services", "Appendix VIII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Through use of incentive payments and penalties, the EHR programs are intended to help address the significant barriers to the adoption and use of EHRs, such as cost, and the technical challenges associated with their use. Beginning in 2011, the first year of the Medicare and Medicaid EHR programs, the programs have provided incentive payments to participating providers, that is, eligible providers that met program requirements.applying a penalty to hospitals and professionals that do not meet the Medicare EHR program requirements. There is no statutory end-point provided for the penalties. The Medicaid EHR program does not impose penalties on Medicaid providers that do not meet the Medicaid EHR program’s requirements by a specific date; however, if Medicaid providers also treat Medicare patients, they are required to meet the Medicare EHR program’s requirements from 2015 onward to avoid penalties from the Medicare EHR program. (See fig. 1.)\nBeginning in 2015, CMS is generally required to begin In the Medicaid EHR program, professionals cannot earn more Beginning in 2015, CMS will apply penalties to Medicare providers if they did not meet Medicare EHR program requirements. For most hospitals, penalties will be applied by reducing the Medicare Inpatient Prospective Payment System payment rate increase by 25 percent each year, with a However, for critical maximum cumulative reduction of 75 percent.access hospitals, the penalty is applicable to the hospital’s Medicare reimbursement for inpatient services. For professionals, penalties will be assessed by reducing the reimbursement that the provider would ordinarily receive for furnishing Medicare Part B services by 1 percent for each year the professional did not meet the requirements, with a cumulative penalty of up to 3 percent per year. CMS may exempt hospitals and professionals from penalties if it determines that complying with the program requirements would result in a significant hardship to the provider; such exemptions are to be granted on a case-by-case basis subject to annual renewal. Examples of permissible hardship circumstances include lacking necessary infrastructure, such as internet broadband; facing unforeseen circumstances such as a natural disaster; or, for professionals, lacking patient interaction.", "CMS has established requirements for the EHR programs that specify the providers eligible to participate—that is, providers that are permitted to earn incentive payments or that may be subject to penalties. For example, providers must be a permissible provider type, such as an acute care hospital or a doctor of medicine and, for the Medicaid EHR program, providers must generally meet a patient volume requirement to be eligible.\nIn addition to meeting program eligibility requirements, to receive incentive payments or avoid penalties, eligible providers must also satisfy reporting requirements by submitting information to CMS for the Medicare EHR program, to the states for the Medicaid EHR program, or to both. The reporting requirements generally incorporate the three statutory criteria for “meaningful use” established in HITECH—(1) demonstrate use of certified EHR technology in a meaningful manner; (2) demonstrate that certified EHR technology is connected in a manner that provides for the electronic exchange of health information; and (3) submit information on CQMs using certified EHR technology. To receive incentive payments from the Medicare EHR program, the information reported by providers must satisfy all three statutory criteria; that is, providers must “demonstrate meaningful use.” However, to receive incentive payments from the Medicaid EHR program in their first year of participation, providers need not satisfy the three statutory criteria. Instead, they must only report that they adopted, implemented, or upgraded to certified EHR technology. In subsequent years, though, they must demonstrate meaningful use to receive incentive payments.\nCertified EHR technology. Certified EHR technology is technology that has been determined by ONC-authorized organizations—referred to as certification bodies and testing laboratories—to conform to the standards and certification criteria developed by ONC. ONC has changed the certification criteria since the EHR programs began. Specifically, providers who participated in the EHR programs from 2011 through 2013 were generally required to use 2011-edition EHRs and all providers who participate in the EHR programs from 2014 through 2016—regardless of whether the provider participated in the program in earlier years—are required to use 2014-edition EHRs. another set of certification criteria for EHRs that providers would be required to use beginning in 2017.\nIn this report, when we use the term EHR, we are generally referring to certified EHR technology. different years. This approach is consistent with the HITECH Act, which directed the Secretary of HHS to seek to improve health care quality and the use of EHRs by requiring more stringent requirements over time. According to CMS, using the staged approach is intended to help overcome two important deficiencies—the lack of widespread use of capable EHRs and the lack of an HIT infrastructure—that existed when the requirements were being developed, with the hope that those deficiencies would be addressed over time as a result of the EHR programs. The stage that is applicable to each provider in each year is based on the first year in which the provider demonstrated meaningful use in the Medicare EHR program or the Medicaid EHR program. For example, a Medicare professional that first demonstrated meaningful use in 2011 must report the Stage 1 meaningful use measures for 2011, 2012, and 2013 to receive incentive payments for those years and must report the Stage 2 meaningful use measures beginning in 2014 to receive The Stage 3 requirements have not an incentive payment for that year.yet been developed but are expected to be finalized in 2015 and to apply beginning in 2017. (See table 1.)\nThe meaningful use measures in Stage 1 are intended to promote the electronic capture of health information in a structured format and to encourage providers to use that information to track key clinical conditions. The Stage 2 meaningful use measures were chosen to encourage continuous quality improvement at the point of care and are more stringent than the Stage 1 measures. For example, measures that were formerly optional are now mandatory, and some measures require that the provider perform the action for a greater percentage of patients or implement more interventions. Additionally, ONC and CMS have stated that Stage 2 places a stronger emphasis on electronic health information exchange with other providers compared to Stage 1.intention to develop even more stringent meaningful use measures for Stage 3 that would promote activities that can lead to improved health outcomes, such as using decision support tools or providing patient access to self-management tools.\nTable 2 provides information on the number and type of measures that providers must report for Stage 1 and Stage 2.\nClinical quality measures (CQM). Health care quality measures, also known as CQMs, can be used to assess provider performance and to drive quality improvement and accountability. For example, one CQM for professionals measures the use of high-risk medications in the elderly. CQMs are composed of a number of clinical data elements, or pieces of data, that must be collected in order to determine performance on any given measure. Using those data elements, a score for the measure can then be calculated. In order to demonstrate meaningful use in the Medicare or Medicaid EHR programs, providers are required to collect CQMs electronically using EHRs and report those data to CMS (Medicare), the states (Medicaid), or both. However, historically, CQMs have been collected through other data collection methods, such as through a detailed, manual review of paper medical records, a process referred to as chart abstraction. Most of the CQMs identified by CMS for use in the EHR programs were originally developed for paper medical records or other data collection methods and later modified so they could be collected using EHRs.\nThe CQMs that providers must collect using EHRs and report to demonstrate meaningful use are determined by the edition of certified EHRs providers must use. Specifically, using their 2011-edition certified EHRs that applied from 2011 to 2013, hospitals were required to report all 15 CQMs identified by CMS, and professionals were required to report 6 CQMs from a list of 44 measures. EHRs that will apply from 2014 to 2016, hospitals are required to report 16 CQMs from a list of 29 measures, and professionals are required to report 9 CQMs from a list of 64 measures. Medicare providers are being encouraged to electronically report the results of CQMs to CMS, but they have the option of reporting CQMs by manually entering information into CMS’s web-based tools, a process known as attestation.\nProfessionals had to report 3 core or alternative core measures and had to report an additional 3 measures from the list of measures.", "In addition to the EHR programs, HHS requires providers to collect and report CQMs for a number of other programs in order to measure health care quality, some of which provide financial incentives to health care providers to help achieve the goals of improved quality and efficiency. For example, CMS is to impose penalties on providers who do not satisfactorily report quality data to the Hospital Inpatient Quality Reporting (IQR) program and to the Physician Quality Reporting System (PQRS). The Patient Protection and Affordable Care Act directed HHS to implement new programs that will use CQMs, including pay-for- performance programs such as the Physician Value Based Payment Modifier program, which bases Medicare payments in part on CQM results, and the Medicare Shared Savings Program, which rewards Accountable Care Organizations that lower growth in health care costs while meeting performance standards.\nAcross its programs, HHS has a goal to use CQMs that are broad based, patient centered, and prioritized based on their potential to achieve population-wide improvements. In order to do this in its programs, CMS has set a goal of collecting and submitting data using EHRs, which HHS officials have indicated can be used to collect CQMs as a byproduct of the routine delivery of health care. To minimize the burden on providers of collecting and reporting similar CQMs for different CMS programs using differing methods, CMS has modified some of its programs’ requirements such that providers may submit data collected through EHRs as part of the Medicare or Medicaid EHR programs instead of separately collecting and submitting data through other methods such as chart abstraction. For example,\nHospitals electronically reporting to CMS one-quarter of CQM data collected in 2014 using 2014-edition EHRs for 16 CQMs will satisfy the IQR program’s four-quarter reporting requirement for those 16 measures for 2016 payment determinations and the Medicare EHR program’s CQM reporting requirement for 2014.\nProfessionals electronically reporting one year of CQM data generated from 2014-edition EHRs to CMS for PQRS in 2014 will satisfy the CQM reporting requirements for both PQRS and the Medicare EHR program. CMS will use those data for professionals in practices of 10 or more individuals to generate the Physician Value Based Payment Modifier that will be applied to payments made under the Medicare physician fee schedule starting January 1, 2016.", "GPRAMA requires federal agencies to prepare performance reports and establish performance measures to assess performance of federal programs. Performance measures assess performance via ongoing monitoring and reporting of program accomplishments, which include progress toward pre-established goals. Our previous work notes that performance measures can serve as an early warning system to management and as a vehicle for improving accountability to the public. We have also published guidance on assessing performance that incorporates GPRAMA criteria and which states that it is important for performance measures to be tied to program goals and for agencies to ensure their activities support their organizational missions and move them closer to accomplishing their strategic goals. In addition, our guidance to federal agencies on designing evaluations suggests that performance measures should include both process and outcome measures (see table 3). Outcome measures are particularly useful in assessing the status of program operations, identifying areas that need improvement, and ensuring accountability for end results. Furthermore, our guidance on assessing performance notes that leading organizations not only establish performance measures but also use information from these performance measures to continuously improve processes, identify program priorities, and set improvement goals.", "Participation in CMS’s EHR programs increased substantially from 2011 to 2012, but some providers who participated in 2011 did not continue in 2012. It is difficult to estimate future participation in the EHR programs because of various program changes, including the planned increase in stringency of the meaningful use measures, the introduction of penalties for some providers in 2015, CMS’s efforts to increase participation among certain providers, and changes to eligibility requirements.", "Participation in CMS’s EHR programs increased substantially from 2011 to 2012. For hospitals, participation increased from 45 percent of those eligible for 2011 to 64 percent of those eligible for 2012. For professionals, participation increased from 21 percent of those eligible for 2011 to 48 percent of those eligible for 2012. (See fig. 2.)\nThe amount CMS paid in incentive payments to providers for participating in the Medicare EHR program, Medicaid EHR program, or both programs increased from $5.2 billion for 2011 to $9.5 billion for 2012. In total, CMS paid $14.7 billion in incentive payments to providers for 2011 and 2012. Of this total, hospitals received nearly $8.6 billion and professionals received almost $6.1 billion. Incentive payments for hospitals and professionals under the Medicare EHR program amounted to $8.8 billion, while incentive payments for hospitals and professionals under the Medicaid EHR program were $5.9 billion. (See fig. 3.)\nAlthough participation in the EHR programs has increased overall, a substantial percentage of providers that participated in the Medicare EHR program or Medicaid EHR program in 2011 did not participate in either program in 2012. (See fig. 4.) Specifically, within the 36 states that had completed their determinations of which providers would receive incentive payments for the 2012 Medicaid EHR program year, 61 percent of professionals and 36 percent of hospitals that participated in the Medicaid EHR program in 2011 did not continue in 2012. Sixteen percent of professionals and 10 percent of hospitals participating in the Medicare EHR program in 2011 did not continue to participate in 2012.\nCMS officials are aware that some providers participating in 2011 did not continue in 2012 and told us that they are monitoring the issue and taking steps to reverse this trend. One CMS official told us there are various possible reasons Medicare and Medicaid providers did not continue to participate in the EHR programs. Noteworthy for the Medicaid EHR program, and in contrast to the Medicare EHR program, providers do not need to participate in consecutive years to maximize their incentive payments, and there are no penalties for not participating. Another possible reason providers did not continue to participate in the Medicaid EHR program in 2012 is that providers are not required to demonstrate meaningful use for their first year of participation, but must do so for their second year. One CMS official noted that a provider who received an incentive payment for adopting, implementing, or upgrading to a certified EHR could still be far from having the capability to demonstrate meaningful use. The CMS official also noted that the agency conducted a survey of a sample of providers to learn why they did not continue to participate in the EHR programs and found the following additional reasons: some providers did not realize they needed to participate in the program again; some providers did not know the deadline for submitting the required information to CMS for the Medicare EHR program, to the states for the Medicaid EHR program, or to both; some providers switched EHR vendors and were not ready in time to submit the required information; and some providers found it more difficult than anticipated to go from a 90-day reporting period to a full-year reporting period, as required for the second year of participation.\nIn an effort to reverse this trend, a CMS official told us CMS is working to ensure providers are well-informed regarding program requirements and data submission deadlines. For example, the official told us that CMS is emphasizing requirements and deadlines at meetings with providers, modifying educational materials, and reorganizing the agency’s website devoted to the EHR programs.", "Various program changes may affect participation in the EHR programs in the future, making future participation difficult to estimate. Beginning in 2014, Stage 2 requirements for demonstrating meaningful use will be introduced for many providers participating in the EHR programs, requiring providers to demonstrate that they are using their systems in more advanced ways. The increased stringency of these Stage 2 requirements for demonstrating meaningful use may slow participation in the EHR programs. While CMS and ONC have developed guidance materials and trainings to help providers prepare for Stage 2, survey data and statements by organizations representing providers suggest that some providers may be much less capable of demonstrating Stage 2 meaningful use, compared to Stage 1 meaningful use, which might result in reduced participation.\nConversely, other factors may encourage future participation. Penalties for Medicare providers not participating in the Medicare EHR program begin in 2015 and may motivate providers to begin participating in the program or to continue participating in the program. In addition, CMS and ONC have identified certain provider groups as having more difficulty participating in the program and are taking steps to increase participation among these providers. For example, CMS officials told us the agency has partnered with the American Association of Pediatricians to identify states in need of more outreach to encourage pediatricians to participate in the Medicaid EHR program, and ONC’s Regional Extension Center program has provided assistance to providers such as professionals in solo practices or rural areas to help them participate in the EHR programs. As we previously reported, participation in the Medicare EHR program among rural hospitals and professionals in solo practices increased faster from 2011 to 2012 than participation by hospitals and professionals overall. Furthermore, CMS has made changes to certain program eligibility requirements that may increase the number of providers participating. For example, beginning in 2014, professionals that are hospital-based may receive incentive payments if they can demonstrate that they fund the acquisition, implementation, and maintenance of EHRs in lieu of using a hospital’s EHRs.these professionals were ineligible to participate in the EHR programs.", "The meaningful use measures reported by providers for 2011 and 2012 indicate that providers used their certified EHR systems more often than required and suggest that many providers who have already reported certain Stage 1 measures will be able to meet most of the more stringent reporting thresholds for similar measures in Stage 2. (See app. IV, table 6.) For 2011 and 2012, Medicare providers that received EHR incentive payments consistently exceeded most meaningful use measure reporting thresholds—that is, a specified percentage of patients or actions required to satisfy the measure—established by CMS and ONC for the Of the 14 hospital meaningful use measures that had EHR programs.thresholds, on average, Medicare hospitals exceeded thresholds by at least 10 percentage points for all measures and by considerably more for many measures. For example, hospitals are required to use computerized provider order entry for more than 30 percent of patients with at least one medication for Stage 1. For both 2011 and 2012, Medicare hospitals reported using computerized provider order entry for medication orders for over 84 percent of patients—about 2.8 times the required threshold for Stage 1. Medicare professionals also greatly exceeded the reporting thresholds. We did not conduct an analysis of meaningful use measures reported by Medicaid providers, but there is some evidence that Medicaid professionals also consistently exceeded required thresholds for 2012. While providers that have not participated in the EHR programs may have different experiences, the fact that Medicare providers and Medicaid professionals that participated in 2011 or 2012—the first two years of Stage 1—generally exceeded most reporting thresholds by wide margins for the measures they reported suggests that they will be able to meet most of the more stringent reporting thresholds in Stage 2. For example, in Stage 2, providers are required to use their certified EHRs to record and chart changes in vital signs for more than 80 percent of patients. Medicare hospitals and professionals exceeded this threshold for both 2011 and 2012, reporting that they met this measure for over 90 percent of patients.\nIn addition to consistently exceeding most required reporting thresholds, other analyses identify some measures that were frequently reported by (See app. IV, table 7.) For example, close to providers in Stage 1.100 percent of providers for 2011 and 2012 reported the mandatory Stage 1 measure to record smoking status for patients 13 years and older without claiming allowable exemptions. Certain optional measures, including one related to the electronic exchange of health information, were also frequently reported. For example, over 80 percent of hospitals reported incorporating clinical lab test results into EHRs as structured data.\nOther measures not related to the electronic exchange of information may also be problematic for providers. For example, fewer than 25 percent of Medicare professionals in 2011 and 2012 reported sending patient reminders for preventive or follow-up care. This measure is optional for professionals in Stage 1 and mandatory for professionals in Stage 2. addition, these measures become more stringent in Stage 2, requiring ongoing submission of these data rather than just a one-time test of the ability to submit those data, which Stage 1 required.\nPerform medication reconciliation for patients received from another setting of care or provider of care. Fewer than 30 percent of Medicare hospitals reported this measure for 2011 and 2012. This measure is optional in Stage 1 and mandatory in Stage 2.\nProvide patients with their health information electronically. Less than 35 percent of Medicare hospitals and professionals for both 2011 and 2012 reported the mandatory measure to provide patients with an electronic copy of their health information. Data submitted by the providers that reported this measure indicate that very few patients— often fewer than 4 patients per year for hospitals and 12 patients per year for professionals—requested this electronic information. Additional evidence suggests that this measure was reported by a similar proportion of Medicaid professionals for 2012.measure becomes more stringent, by requiring that 5 percent of patients electronically view, download, or transmit their health information to a third party, in addition to requiring hospitals and professionals to provide patients with online access to their health information.\nIn Stage 2, the Other information also indicates that providers may face challenges with many of the same exchange-related Stage 2 meaningful use measures identified above. An analysis of the American Hospital Association’s 2012 survey of hospitals about technical capabilities related to meaningful use indicates that the least commonly implemented Stage 2 capabilities by acute care hospitals were those related to the electronic exchange of information.electronic data on reportable lab results to public health agencies; submitting electronic syndromic surveillance data to public health agencies; providing an electronic summary of care document for each transition of care or referral; and providing patients with electronic access to their health information by enabling them to view online, download, and transmit such information. These capabilities are related to optional Stage 1 measures but will be required in Stage 2 or become more complex in Stage 2. An analysis of the National Center for Health Statistics’ 2012 National Ambulatory Medical Care Survey shows similar results for physicians. Among the capabilities related to meaningful use measures, office-based physicians were least likely to have routinely submitted electronic data to immunization registries or information systems, or to have routinely communicated with patients using secure messaging. Stage 2 requires professionals to report measures that capture these capabilities, whereas reporting on the first capability was optional in Stage 1 and the second was not a Stage 1 measure.\nSuch capabilities included the following: submitting Consistent with indications from the survey data, stakeholder organizations have also noted concern that providers may have difficulty satisfying certain Stage 2 meaningful use measures due to the changes made to them for Stage 2. Table 4 lists meaningful use measures that organizations identified as challenging—two of which relate to the electronic exchange of information—and includes the requirements for satisfying each measure in Stage 1 and in Stage 2.\nA CMS official noted that although providers have expressed concern about their ability to meet the Stage 2 requirements, similar concerns existed prior to Stage 1 regarding the thresholds established for certain measures and the data suggest that providers have exceeded thresholds established by CMS for the Stage 1 requirements. This official also explained efforts to help providers to prepare to satisfy the Stage 2 meaningful use measures. CMS has been modifying its materials and holding training sessions and discussions with various provider groups. In anticipation of obstacles to the exchange of health information and in order to accelerate electronic exchange even among providers not eligible for incentive payments from the EHR programs, ONC and CMS issued a request for information in March 2013 to, among other things, solicit feedback on the challenges to the electronic exchange of health information and on possible mechanisms to overcome those challenges. Using the information collected, CMS and ONC issued a strategy in August 2013 for how they expect to advance health information exchange, which includes various steps the agencies plan to take under three broad categories—accelerating health information exchange, advancing standards and interoperability, and patient engagement.Ongoing work is examining the key challenges to the electronic exchange of health information that have been reported by providers and stakeholders and HHS’s efforts to address those challenges.", "The lack of a comprehensive strategy limits HHS’s ability to ensure that the department can reliably use the CQMs collected in certified EHRs for quality measurement activities. According to internal control standards, an agency must have relevant and reliable information to help it achieve its mission and goals. In order to drive quality improvement and accountability and to effectively utilize CQM data collected in EHRs for HHS’s quality measurement activities, the data collected must be reliable, that is, both accurate and complete. Data that are not reliable limit the credibility of the information and may present a risk to individuals or entities making decisions based on the data, such as to a patient choosing a hospital for treatment, or to CMS when applying a payment modifier resulting in an increase or reduction to a physician’s reimbursement.\nCMS and ONC have made changes to the specifications, certification criteria, and certification program to address some of the reliability concerns with the CQMs that providers were generally required to collect and report from 2011 to 2013 to demonstrate meaningful use (that is, using 2011-edition EHRs). These changes are incorporated into EHRs that will be used by participating providers in all stages of meaningful use from 2014 to 2016 (that is, 2014-edition EHRs). The changes made as a result of the concerns identified include the following.\nSpecifications. CMS made changes to CQM specifications—that is, the documentation that describes to providers, technology developers, and others how data on CQMs were to be collected through EHRs. These changes were made to correct previously identified errors and to help ensure the feasibility of implementing CQMs in the electronic format—that is, to ensure that the required data are readily available or can be collected in EHRs without undue burden. Problems with feasibility can compromise the accuracy or completeness of the data.\nCertification criteria. To address providers’ concern that their 2011- edition EHRs did not collect all of the data elements necessary to calculate the CQMs, ONC modified the CQM-related certification criteria.\nSpecifically, 2014-edition EHRs must collect each of the data elements associated with a specific CQM to be certified for that measure.\nCertification program. The program for certifying 2011-edition EHRs did not test whether the EHR system correctly collected and calculated the CQMs. However, beginning with the certification of 2014-edition EHRs, the certification bodies and testing laboratories will test whether EHRs accurately collect and calculate CQMs. These tests will be performed using a certification testing tool developed by ONC, known as Cypress. Further, beginning in 2014, the certification bodies will be required by ONC to conduct specific annual surveillance activities to determine whether 2014-edition EHRs are functioning as intended after being implemented by providers. CQMs have been identified as a priority area for these surveillance activities, which may help to inform CMS and ONC on whether the changes they have made to the specifications, certification criteria, and certification program are improving the reliability of CQMs, as intended, and whether further changes are needed.\nCMS and ONC officials indicated the changes made thus far should help to address reliability concerns, but provider experience with 2014-edition EHRs will be an important gauge of the effectiveness of the changes. Furthermore, there are still issues that could result in reliability problems, hindering CMS’s ability to use the data for its quality measurement activities. For example, after EHRs are certified as 2014-edition EHRs, the agencies do not require them to be recertified following updates to the specifications, which may be made annually or more frequently, or following updates to the certification testing tool.\nTesting bodies use the certification testing tool—Cypress—to test that EHRs accurately export, calculate, and electronically submit the data. This tool includes synthetic patient data used in the testing process. Vendors also have access to the testing tool prior to submitting their EHR products for certification. providers may report CQMs based on and tested to different requirements. CMS has taken some steps to mitigate the potential effect of these issues on the reliability of CQM data submitted by professionals who electronically submit CQM data by requiring them to report CQMs collected using EHR technology based on and tested to the most recent version of the electronic specifications. However, this variability may limit the ability to reliably compare quality across other providers, including hospitals, and undermines efforts CMS officials said they are taking to ensure that the CQMs lead to standardized, consistent data reporting. Another issue that may affect reliability is that many providers reported at least one CQM based on few patients, which may result in data that are not statistically reliable and therefore should not be used in quality measurement. We analyzed data submitted by providers to demonstrate meaningful use under the Medicare EHR program for 2011 and 2012 and found that 90 percent of hospitals and 50 percent of professionals reported at least one CQM based on few patients for 2012, a slight increase compared to 2011, when 86 percent of hospitals and 46 percent of professionals reported at least one CQM based on few patients.\nIn addition, stakeholder organizations continue to have concerns about reliability. CHIME members indicated that they do not think the specifications required to generate CQMs using 2014-edition EHRs will substantially improve the reliability of the data collected in Stage 2. They noted that the collection of CQM data includes data elements not currently captured by EHRs, and the data elements are not automatically part of most clinicians’ workflow (that is, incorporated into the tasks performed during the delivery of routine care). Due to these obstacles, CHIME members are concerned that clinicians will not consistently collect the required data elements, ultimately leading to problems with CQM reliability and comparability. CMS and ONC are making changes to the process used to develop new measures, which includes greater consideration of clinician workflow and provider burden. However, new CQMs will not be available until the beginning of Stage 3 in 2017.\nAnother concern expressed by stakeholder organizations such as the American Health Information Management Association, the American Hospital Association, the American Medical Association, the Healthcare Information and Management Systems Society, and The Joint Commission is that the CQMs generated from EHRs—which are based on electronically specified measures and are extracted automatically from EHRs—do not produce results that are comparable to corresponding measures based on data obtained through other methods, such as through manual abstraction of patient medical records by trained professionals. In its fiscal year 2014 Inpatient Prospective Payment System final rule, CMS noted that it intends to use the electronic CQM data submitted voluntarily by hospitals to assess the differences in performance rates from CQMs collected using EHRs and CQMs collected through chart-abstraction. However, CMS did not indicate when this study would be completed or describe how it would be designed. Designing the study to control for any other systematic differences between providers that use EHRs and other providers could have an important effect on CMS’s ability to understand the extent and implications of potential differences in performance rates.\nAlthough CMS officials told us that they were beginning to develop an approach to validate CQM data generated from EHRs, HHS has not yet developed a comprehensive strategy to address concerns with the reliability of CQMs collected using certified EHRs. Consistent with GPRAMA and our prior work, which identifies several important practices that can guide agencies in planning and implementing an effective government program, a comprehensive strategy would establish objectives, steps to achieve results, priorities, and milestones and identify the steps necessary to achieve desired results. Addressing the concerns is important to ensure that the CQM data can be reliably used for CMS’s quality measurement activities as well as providers’ quality improvement activities. For example, CMS plans to use CQMs collected and submitted via EHRs by certain professionals in 2014 to determine which providers will be subject to payment modifications under the Value Based Payment Modifier program in 2016. For hospitals, CMS officials told us that as part of their approach to validating data, they plan to use electronically submitted CQMs to develop monitoring processes to help inform them about the consistency and reliability of the data reported. Also for hospitals, CMS officials told us that they expect to introduce a process that is as robust as the one that is currently used for the IQR program under which a CMS contractor conducts an independent analysis to verify that the data submitted accurately reflect the information in the medical record. CMS officials told us that the agency’s plans for validating CQM data are preliminary, but the agency has stated that it intends to develop and propose a strategy for hospital data in 2014 as part of the agency’s annual rulemaking process. While the IQR program may provide a model for validating data collected by hospitals using certified EHRs, no comparable model or process exists that could be considered when developing a validation strategy for data collected by professionals using certified EHRs. Until HHS establishes and implements a comprehensive strategy to ensure the reliability of CQMs collected using certified EHRs, it will be unclear whether the department’s plans are sufficient to address the concerns, and therefore it will be uncertain when the CQM data can be reliably used to help assess provider performance, improve quality, and adjust provider payments.", "HHS, CMS, and ONC have established some performance measures for the EHR programs that are tied to strategic goals, but have not established performance measures for the goals most relevant to the intended outcomes of the EHR programs—that is, goals related to improving health care quality, efficiency, and patient safety. Establishing performance measures tied to goals is important for ensuring that agencies’ activities move them closer to accomplishing these goals, according to our guidance to federal agencies on effectively implementing GPRAMA, which describes leading practices for how federal agencies should assess their performance. Our guidance also notes that agencies should use information that performance measures provide to improve processes and set improvement goals. However, as the agencies have not established performance measures to assess outcomes, they are therefore unable to use the information such measures would provide.\nIn addition, the Centers for Disease Control and Prevention has 3 performance measures related to the meaningful use of EHRs intended to measure the readiness of public health agencies to receive electronically submitted data as part of the EHR programs. The Centers for Disease Control and Prevention provides direct assistance to state public health agencies to support electronic health information systems to receive data from providers.\nGAO/GGD-96-118 (Washington, D.C.: June 1, 1996). the percentage of nonfederal acute care hospitals that are electronically sharing summary of care records with providers outside their organization. (See app. V, table 8 for a list of the department- and agency-level strategic goals and 26 associated performance measures for this category.)\nFor these established performance measures, the agencies have developed corresponding performance targets and track results against those targets. For example, ONC has set a fiscal year 2014 target that 65 percent of nonfederal acute hospitals electronically share summary of care records with providers outside of their organization. These performance targets are publicly released alongside the performance measures and actual results in the annual ONC and CMS budget justifications and the HHS online performance appendix. The agencies told us they use this performance information to set the broader strategic direction for the agency and may also use the information to make changes to the programs to improve performance.\nHowever, although HHS, CMS, and ONC have established important performance measures for the goals related to adoption and meaningful use of EHRs, they have not established measures linked to the second category of goals, which would help them to track program outcomes such as health care quality, efficiency, and patient safety. (See app. V, table 9 for a list of the department- and agency-level strategic goals for this category.) Outcome measures would enable the agencies to measure whether the EHR programs’ intended effects are being achieved, rather than just the number of providers that satisfied the requirements necessary to demonstrate meaningful use. ONC’s strategic plan states that the meaningful use of EHRs—which, as explained above, the agencies track using several performance measures—is a necessary step to improve health care quality, efficiency, and patient safety. However, meaningful use is not sufficient to achieve these outcomes on its own. The plan notes that the EHR programs are an HIT investment made in lockstep with various other reform efforts such as patient- centered medical homes and that EHRs will contribute to improvements in health care quality, efficiency, and patient safety when used in support of these other reform efforts. Therefore, outcome measures—and the subsequent use of the information they provide—could be beneficial to evaluating how the EHR programs interact with other reform efforts. Furthermore, ONC has acknowledged the need to develop performance measures to track patient safety, in part due to concerns that EHRs could have some unintended consequences that cause patient harm. However, ONC has not yet developed these potential measures.\nWithout performance measures linked to the goals of improved health care quality, efficiency, and patient safety, CMS and ONC are limited in their abilities to determine the effectiveness of the EHR programs in improving outcomes. CMS and ONC may lack critical information necessary to establish program priorities and subsequently make program adjustments based on progress toward these outcomes. CMS and ONC officials have indicated that they do not expect to observe progress toward achieving the intended outcomes of improved health care quality, efficiency, and patient safety until at least Stage 3 of the EHR programs, which is not expected until 2017. However, establishing outcome-oriented performance measures before results are expected is a valuable practice to ensure that the agencies can make program adjustments as needed and are prepared to monitor outcomes and to establish baseline values, which can be useful for developing performance targets and assessing progress toward goals. Moreover, consistent with our guidance, outcome measures could be useful to guide the development and prioritization of Stage 3 requirements, which the agencies anticipate undertaking in 2014.\nWhile the agencies have not established outcome-related performance measures, agency officials told us they are conducting some evaluations to assess the effect of the EHR programs on outcomes. For example, ONC officials told us that CMS, ONC, and the Agency for Healthcare Research and Quality were working on a study to assess the effect of electronic prescribing on quality and efficiency using Medicare Part D claims, specifically, to determine whether electronic prescribing for diabetes patients is associated with a reduced risk of adverse drug events. (See app. VI for a summary of program evaluations assessing the EHR programs’ effects on outcomes.) However, these program evaluations—in contrast to performance measures—capture only a specific period of time, and, as a result, do not allow for ongoing monitoring of the EHR programs’ effectiveness.", "The EHR programs were intended to be long-term solutions—with multiple stages implemented over several years—to help address longstanding, significant barriers to greater use of EHRs as tools for improving outcomes such as health care quality, efficiency, and patient safety. The first stage of the EHR programs, from 2011 to 2012, has shown sizeable increases in the number of providers who have adopted and meaningfully used EHRs. This early measure of implementation still leaves substantial room to further increase meaningful use among certain providers. Implementation of the subsequent stages, which will increasingly emphasize the use of more advanced features of EHRs, will place more demands on providers through more stringent requirements, but could also increase the potential for achieving better outcomes. Because of the programs’ design to evolve over multiple years and stages, HHS has opportunities to make adjustments and closely monitor the programs to ensure that they remain on track to achieve their intended results.\nOne key feature of EHRs that shows a need for adjustment relates to the CQMs. We describe several issues regarding the reliability of CQM data—for example, providers may be reporting CQMs based on and tested to different specifications. The reliability of CQM data collected using certified EHRs is especially important due to the potential risk of making decisions—such as paying providers for performance—based on unreliable CQM data. CMS and ONC lack a comprehensive strategy that would allow them to ensure the reliability of CQM data collected using EHRs, in accordance with the internal control standard requiring an agency to have relevant and reliable information to achieve its mission and goals. Without a comprehensive strategy, the agencies may be limited in their abilities to reliably compare quality across providers or use CQM data collected through EHRs for a variety of quality measurement and pay-for-performance activities, thus restricting efforts to improve quality and efficiency.\nAnother area that merits attention relates to HHS’s ability to ensure that the EHR programs are on track to meet their goals. While the EHR programs are ultimately intended to improve outcomes such as health care quality, efficiency, and patient safety, the agencies have not established performance measures for monitoring progress toward achieving these improvements. Although HHS expects that EHRs can help achieve improved outcomes as well as support various other health care reform efforts that are also intended to improve care, that result is not yet assured. As established by our guidance to federal agencies, monitoring progress toward specific outcomes could allow HHS to make adjustments to the EHR programs throughout their implementation, such as adjusting priorities or requirements. Without such monitoring, the agencies will not be well positioned to understand how challenges affecting key parts of the programs, such as ensuring the reliability of CQM data or increasing providers’ abilities to exchange health information, might be affecting the programs’ overall ability to achieve their goals, reducing HHS’s ability to make course corrections.", "To more effectively use CQMs to assess provider performance, the Secretary of Health and Human Services should direct CMS and ONC to take the following action:\nDevelop a comprehensive strategy for ensuring that CQM data collected and reported using certified EHR technology are reliable, including testing for and mitigation of reliability issues arising from variance in certified EHR systems tested to different CQM specifications.\nTo ensure that CMS and ONC can effectively monitor the effect of the EHR programs and progress made toward goals, the Secretary of Health and Human Services should direct the agencies to take the following two actions:\nDevelop performance measures to assess outcomes of the EHR programs—including any effects on health care quality, efficiency, and patient safety and other health care reform efforts that are intended to work toward similar outcomes—and\nUse the information these performance measures provide to make program adjustments, as appropriate, to better achieve program goals.", "HHS provided written comments on a draft of this report, which are reprinted in appendix VII, and one technical comment. HHS agreed that data reliability and performance monitoring are important, but neither agreed nor disagreed with our recommendations. Regarding our first recommendation, HHS stated that the reliability and validity of CQM data are of paramount importance. HHS also stated that ONC and CMS work together to continually refine strategies to improve the reliability and efficiency of collecting, analyzing, and sharing CQM data collected using certified EHR technology. HHS did not, however, identify any specific actions the agencies might take to improve CQM reliability or whether those actions would include developing a comprehensive strategy. HHS also noted the importance of the certification testing tool, known as Cypress, which it stated ensures the reliability of CQM data collected using 2014-edition EHRs. While the addition of testing to ensure that 2014-edition EHRs accurately collect and calculate CQMs is an improvement over the process used to certify 2011-edition EHRs—during which such tests were not conducted—our report raises other reliability issues that would not be addressed by the certification testing tool alone. Regarding our second and third recommendations, HHS agreed that outcome-oriented performance measures that link participation in the EHR programs with discrete improvements in health care quality, efficiency, and safety would be useful for evaluating the extent to which improvements are achieved. HHS also noted that ONC oversees evaluation activities that have provided interim program results and conducts policy research and analytic projects that will enable the development of outcome-oriented performance measures. However, HHS did not provide any details on the timing or content of outcome-oriented performance measures that CMS and ONC might develop.\nWe are sending copies of this report to the Secretary of Health and Human Services, the Administrator of CMS, the National Coordinator for Health Information Technology, and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-7114 or at kohnl@gao.gov. Contact points for our Office of Congressional Relations and Office of Public Affairs can be found on the last page of this report. Other major contributors to this report are listed in appendix VIII.", "The Health Information Technology for Economic and Clinical Health (HITECH) Act mandates us to report on, among other things, the impact of the HITECH Act on health insurance premiums. In 2009, the Congressional Budget Office stated an expectation that nationwide adoption of health information technology such as electronic health records (EHR) would reduce total spending on health care and predicted that lower health care costs for private payers would result in lower health insurance premiums in the private sector.\nTo describe the effect of the HITECH Act on health insurance premiums, we contacted representatives from America’s Health Insurance Plans, the American Academy of Actuaries, the Blue Cross Blue Shield Association, and four health insurance companies. None of the seven organizations we spoke to had done any research to look at the impact of the HITECH Act on health insurance premiums. Three organizations also indicated that the HITECH Act’s effect on health insurance premiums would be difficult to isolate from the various other drivers of health insurance premium costs. For example, one organization noted that the health insurance industry is also in the midst of implementing the Patient Protection and Affordable Care Act, suggesting the reforms arising from that legislation are also affecting health insurance premium costs.\nFive of the seven organizations offered anecdotes or speculation as to the potential effect of the HITECH Act—and particularly the adoption and meaningful use of EHRs as encouraged by the EHR programs—on health insurance premiums. One organization told us that there is evidence that widely implemented payment and delivery reform—particularly the patient-centered medical home, of which EHRs are an important element—has led to reductions in health care utilization and, in some cases, generated savings, which may eventually affect health insurance premiums. Another organization said that implementing the HITECH Act and the Patient Protection and Affordable Care Act has increased administrative costs and expressed concern that if the organization’s administrative costs increase due to changes in requirements, they may rise above the 15 to 20 percent level allowed under medical loss ratio requirements.", "This appendix provides additional details regarding our analysis of (1) participation in the Medicare and Medicaid Electronic Health Record (EHR) programs; (2) meaningful use measures and clinical quality measures (CQM) Medicare providers reported to the Centers for Medicare & Medicaid Services (CMS) to demonstrate meaningful use; and (3) 2012 survey data collected by the National Center for Health Statistics.\nTo ensure the reliability of the data, we interviewed officials from CMS, reviewed relevant documentation, and conducted electronic testing to identify missing data and obvious errors. On the basis of these activities, we determined that the data were sufficiently reliable for our analysis.\nAnalysis of participation in the Medicare and Medicaid EHR programs. We conducted several analyses to report on participation in the Medicare and Medicaid EHR programs for the 2011 and 2012 program years. Specifically, we analyzed data that CMS collected in the National Level Repository through October 23, 2013. As a result, we generally included full-year information for both years in our analysis of the Medicare EHR program.complete information for the Medicaid EHR program for the 2012 program year because, according to CMS, 14 states and the District of Columbia had not yet completed their determinations of which hospitals and professionals had met all the requirements to receive incentive payments for 2012. We used these data to conduct the following analyses.\nHowever, our analysis does not contain\nWe estimated the percentage of eligible providers awarded an incentive payment from either the Medicare or the Medicaid EHR program. We determined the number of providers that were awarded a Medicare or Medicaid (or, in the case of some hospitals, both) EHR incentive payment by counting the number of providers that had an incentive payment disbursed to them for 2011 and for 2012.\nUsing a similar approach, we determined the number of providers that met the participation requirements of the Medicare Advantage EHR program for both years. divided the number of providers awarded incentive payments from either program by the total number of eligible providers CMS estimated in its Stage 1 final rule. Specifically, CMS estimated that 5,013 hospitals and 521,600 professionals were eligible for the Medicare or Medicaid EHR program for 2011 and 5,013 hospitals and 527,200 professionals for 2012.\nWe determined the total amount of Medicare and Medicaid EHR incentive payments awarded to providers each year by summing the Medicare and Medicaid EHR incentive payments awarded to providers for each program year.\nWe estimated the percentage of providers that were awarded a Medicare or Medicaid (or, in the case of some hospitals, both) EHR incentive payment for 2011 but not for 2012 by determining the number of providers that had a Medicare or Medicaid EHR incentive payment disbursed to them for 2011 but not for 2012. For the Medicaid EHR program, we limited this analysis to providers that were awarded incentive payments from 36 states that, according to CMS, had completed their determinations of which providers would receive incentive payments for the 2011 and 2012 Medicaid EHR program years as of October 23, 2013.\nAnalysis of meaningful use measures and CQMs Medicare providers reported to CMS to demonstrate meaningful use. We conducted several analyses of meaningful use measures and CQMs providers reported to CMS to demonstrate meaningful use under the Medicare EHR program for 2011 and 2012. We analyzed data that CMS collected in the National Level Repository through October 23, 2013. We did not analyze meaningful use measure or CQM data submitted by hospitals or professionals who received incentive payments from the Medicare Advantage EHR program or CQM data submitted by providers to one of the electronic reporting pilots that were available for the 2012 program year.program year.\nFor each of the following analyses, we compared reporting by\nWe determined the extent to which providers exceeded the reporting thresholds CMS established for a subset of the meaningful use measures (14 hospital measures and 16 professional measures) by determining providers’ average reporting rate for each applicable measure and comparing this rate to the threshold CMS established for the measures.\nWe determined the frequency with which providers reported meaningful use measures without claiming exemptions, by calculating the percentage of providers that reported meaningful use measures but excluding from the calculation those providers that reported to CMS that a measure was not relevant to them. A provider may claim exemptions from reporting some measures if the provider meets certain criteria specific to the individual measures. For example, the measure may not be relevant to the provider’s patient populations or clinical practices, the provider may have conducted too few actions to be measured, or the provider may not have been able to perform the action. The agency allows providers to claim exemptions from reporting certain meaningful use measures to help ensure that providers with all types of patient populations and clinical practices could potentially demonstrate meaningful use. For 2011 and 2012, hospitals were permitted to claim exemptions from reporting 7 meaningful use measures and professionals from reporting 14 meaningful use measures.\nWe determined the extent to which providers had few patients who could be included in the calculation of at least one CQM.capture a small number of patients may be unreliable measures of quality because relatively small changes in the number of patients who experienced the care processes or outcomes targeted by the measure can generate large shifts in the calculated percentage for the measure. CMS has recognized in other programs that including a small number of patients in the calculation of a CQM is a reliability issue. For example, on the agency’s Hospital Compare website, which publicly reports CQMs by hospital, CMS indicates whether the number of patients included in a particular measure calculation was based on fewer than 25 patients and was thus too small to reliably tell how well the hospital was performing. For our analysis, we identified CQMs as unreliable if fewer than 7 patients met inclusion criteria for the calculation the provider reported for a 90-day reporting period—that is, during the provider’s first year demonstrating meaningful use. For providers whose second year demonstrating meaningful use was 2012, the reporting period is a full year. Therefore, for these providers we identified CQMs as unreliable if fewer than 25 patients met the inclusion criteria for the calculation.\nAnalysis of 2012 survey data collected by the National Center for Health Statistics. We analyzed output of the National Ambulatory Medical Care Survey, an annual, nationally representative survey of office-based physicians conducted by the National Center for Health Statistics in the Centers for Disease Control and Prevention. The survey captures information about computerized capabilities of office-based physicians’ EHRs—which are related to meaningful use measures— including whether those capabilities are routinely used. We analyzed output from the 2012 survey obtained from the National Center for Health Statistics. We limited our analysis to office-based physicians who reported using an EHR or an electronic medical record system and who reported having patient care revenue from Medicare or Medicaid (69.0 percent of weighted responses). We then identified the computerized capabilities that were least likely to have been routinely used and determined, using a crosswalk of meaningful use measures and survey responses available from the Office of the National Coordinator for Health Information Technology (ONC), whether those capabilities were comparable to Stage 2 meaningful use measures. We also determined whether the computerized capabilities that were least likely to have been routinely used were related to electronic health information, based on information obtained from CMS and ONC.", "In general, to receive incentive payments from the Medicare or Medicaid Electronic Health Record (EHR) programs in Stage 1 or Stage 2, hospitals must report on a total of 19, and professionals must report on a total of 20, measures regarding their use of certified EHR technology, known as meaningful use measures. For certain meaningful use measures, a provider may report to the Centers for Medicare & Medicaid Services (CMS) that the measures are not relevant if the provider meets certain criteria specific to the individual measures; this is referred to as claiming an exemption. For example, the measure may not be relevant to the provider’s patient population or clinical practice, the provider may have conducted too few actions to be measured, or the provider may not have been able to perform the action. Table 5 lists the meaningful use measures for each stage and provider type and identifies whether the measure was mandatory or optional and whether it was identified by the Office of the National Coordinator for Health Information Technology (ONC) and CMS as being related to the electronic exchange of health information.", "In general, to receive incentive payments from the Medicare Electronic Health Record (EHR) program for 2011 or 2012, hospitals had to report on a total of 19, and professionals had to report on a total of 20, Stage 1 meaningful use measures. Among those measures reported, 14 were mandatory for hospitals and 15 were mandatory for professionals. The remaining measures were selected by providers from a list of optional measures. For certain meaningful use measures, providers must meet or exceed reporting thresholds—that is, a specified percentage of patients or actions required to satisfy the measure—established by the Centers for Medicare & Medicaid Services (CMS) and the Office of the National Coordinator for Health Information Technology (ONC) for the EHR programs. Table 6 displays the average percentage reported by providers for those measures that require providers to meet or exceed certain established thresholds. Table 7 displays the percentage of providers that reported certain measures for 2011 and 2012 but excludes from the calculation providers that reported to CMS that a measure was not relevant to them; this is referred to as claiming an exemption. Specifically, table 7 displays the percentage of providers that reported Stage 1 mandatory meaningful use measures that allow for exemptions and Stage 1 optional meaningful use measures. For 2011 and 2012, hospitals were allowed to claim exemptions from reporting 7 meaningful use measures, and professionals were allowed to claim exemptions from reporting 14 meaningful use measures.", "We reviewed Department of Health and Human Services (HHS), Centers for Medicare & Medicaid Services (CMS), and Office of the National Coordinator for Health Information Technology (ONC) strategic goals and categorized them into one of two major categories particularly relevant to the Electronic Health Record (EHR) programs—(1) adoption and meaningful use of EHRs; and (2) improving quality, efficiency, and patient The first category of goals is focused on program processes, and safety.the second is focused on program outcomes. For the first category— adoption and meaningful use of EHRs—HHS, CMS, and ONC have established 26 performance measures. See table 8 for the department- and agency-level strategic goals and performance measures that fall into this category.\nNote that ONC has three other goals that are relevant to the EHR programs but did not fall into the two categories we focused on and are thus not included in the table. Similarly to the measures identified in table 8, the performance measures associated with those additional goals enable the agency to track processes but not outcomes.", "Centers for Medicare & Medicaid Services (CMS) and Office of the National Coordinator for Health Information Technology (ONC) officials told us they are conducting some evaluations to assess the effect of the Electronic Health Record (EHR) programs on outcomes. See table 10 for a summary of these evaluations according to agency officials.", "", "", "", "In addition to the contact named above, Will Simerl, Assistant Director; Julianne Flowers; Melanie Krause; Shannon Legeer; Hannah Marston Minter; Monica Perez-Nelson; Roseanne Price; and Rebecca Rust Williamson made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "", "h0_full", "h1_full", "h2_full", "h2_full h1_full", "", "", "", "", "", "", "h1_full", "", "", "", "", "" ] }

{ "question": [ "What are the indications of those who participated in the programs' first phase?", "To what extent did these providers exceed requirements?", "What are the drawbacks of stage 1 measures?", "How is CMS addressing the lack of provider preparedness?", "What is the effect of the lack of a comprehensive strategy?", "What are some persisting issues and what have the respective departments done to address these issues?", "What issues are present in reporting CQMs?", "How efficient are the quality and efficiency?", "What are the measures for the EHR program and a drawback?", "Is the use of EHRs proved to improve outcomes?", "What are the issues facing CMS and ONC in regards to outcomes?" ], "summary": [ "Reporting on meaningful use for 2011 and 2012 indicates that providers who have already participated in the programs' first phase—Stage 1—used their certified EHR systems more often than required.", "For example, for both 2011 and 2012, Medicare hospitals reported using computerized provider order entry for over 84 percent of patients—in excess of the required threshold for Stage 1 of 30 percent.", "However, some meaningful use measures may be more challenging for providers, including measures involving the electronic exchange of information. For example, less than 15 percent of professionals reported on an optional Stage 1 measure to provide a summary of care document at each care transition or referral, which is mandatory in Stage 2.", "A CMS official said the agency is taking steps to help providers prepare for Stage 2 meaningful use measures.", "The lack of a comprehensive strategy limits HHS's ability to ensure the department can reliably use the clinical quality measures (CQM) collected in certified EHRs for quality measurement activities.", "Reliability issues persist, although CMS and HHS's Office of the National Coordinator for Health Information Technology (ONC) have made efforts to address concerns.", "For example, different providers may report CQMs based on and tested to different requirements depending on whether their EHRs have incorporated technical updates.", "Without a comprehensive strategy, efforts to address reliability issues (in accordance with the internal control standard requiring relevant and reliable information) and improve quality and efficiency may be limited.", "Consistent with law and GAO guidance on assessing agency performance, HHS, CMS, and ONC have established some performance measures for the EHR programs that are tied to strategic goals regarding adoption and meaningful use of EHRs; however, they have not established measures that would help them to track progress toward program outcomes such as health care quality, efficiency, and patient safety.", "Although HHS expects that the use of EHRs can help achieve improved outcomes and support other efforts that are also intended to improve care, that result is not yet assured.", "CMS and ONC may lack critical information necessary to establish program priorities and subsequently make program adjustments based on progress toward outcomes." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, 0, 0, -1, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 5, 5, 5 ] }

{ "title": [ "Background", "Section 1115 Demonstrations", "Effect of the Patient Protection and Affordable Care Act (PPACA) on Medicaid Coverage", "HHS’s Approvals Often Modified Existing Expenditure Authorities to Limit Medicaid Coverage under Demonstrations as a Result of PPACA’s New Coverage Options", "HHS’s Recent Approvals in More Than Half the States Reviewed Served to Limit Coverage of Low- Income Adults and Payments for Premium Assistance under Demonstrations as New Coverage Options Became Available", "For Almost Half the States Reviewed, HHS Approved Expenditure Authorities Related to the Delivery of Home- and Community- Based Services", "HHS Approved Expenditure Authorities for a Broad Range of Other Purposes, Including State Programs and New Types of Supplemental Payments", "HHS Approved New or Modified Existing Expenditure Authorities for $9.5 Billion in Medicaid Funding for More Than 150 State Programs", "HHS Approved New or Modified Existing Expenditure Authorities for More Than $26 Billion in New Types of Supplemental Payments to Hospitals through Funding Pools for Uncompensated Care and Incentive Payments for Delivery System Improvements", "Funding Pools for Hospital Uncompensated Care Costs", "Funding Pools for Incentive Payments to Hospitals", "HHS’s Criteria and Approval Documents Were Not Always Clear as to How Approved Expenditures Would Further Medicaid Objectives", "HHS Has Not Issued Specific Criteria for Assessing Whether Expenditure Authorities for State Programs and Funding Pools Promote Medicaid Objectives", "Approval Documents Did Not Always Specify What Expenditures Were for and How They Would Promote Medicaid Objectives", "Approval Documents Did Not Always Specify How States Were to Avoid Duplication with Other Sources of Federal Funding", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Summary of Types of Expenditure Authorities Approved from June 2012 through October 2013", "Appendix III: Other Expenditure Authorities Approved for Managed Care Organizations and Various State Activities", "Appendix IV: Duration of Expenditure Authorities for Some State Programs", "Appendix V: Total Funding Pool Spending Limits in Selected States", "Appendix VI: Comments from the Department of Health and Human Services", "Appendix VII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Each state administers its Medicaid program in accordance with its own state plan, which must be reviewed and approved by HHS, and must delineate, among other things, the groups of individuals to be covered, services to be provided, and methodologies for providers to be reimbursed. Within broad federal requirements, states have flexibility in deciding which individuals to cover and the range of medical services to provide in their Medicaid programs. For example, states generally must cover certain “mandatory” populations and benefits, such as low-income children and pregnant women and inpatient and outpatient hospital services, but they also have the option of covering “optional” categories of individuals and benefits such as children with higher family incomes. Additionally, coverage of certain institutional services is mandatory under Medicaid, while coverage of most home- and community-based services (HCBS) is optional for states. States may also choose from different delivery systems, such as fee-for-service or managed care.\nUnder Medicaid, states pay health care providers based on provider claims for eligible services rendered to Medicaid beneficiaries. In addition to payments for covered services, states often make Medicaid supplemental payments to providers, which are typically lump sum payments that are separate from and in addition to payments made to providers using regular Medicaid payment rates. One type of supplemental payment states may make to hospitals is Disproportionate Share Hospital (DSH) payments. Congress created the DSH program to help hospitals serving Medicaid and uninsured patients offset their uncompensated care costs, within facility-specific and state-specific caps, or limits. States may also make other supplemental payments under their state plan, sometimes referred to as “Upper Payment Limit (UPL) payments,” to providers such as hospitals and nursing homes. These payments are based on the difference between the amount that Medicaid paid for services using regular Medicaid payment rates and the UPL, which is an estimate of what the federal Medicare program would pay for similar services.supplemental Medicaid payments to providers under section 1115 demonstrations.", "If a state wishes to change its Medicaid program in ways that deviate from certain federal requirements, it may seek to do so under the authority of an approved demonstration, outside its state plan. For example, section 1115 demonstrations can enable states to test new approaches to beneficiaries’ health care delivery to generate savings or efficiencies by expanding benefits to cover populations that would not otherwise be eligible for Medicaid or altering the Medicaid benefit package for categories of covered populations while still qualifying for federal matching funds.demonstrations are often approved to expand Medicaid coverage, HHS also allows states to make changes to their existing expenditure authorities, which can include limiting or ending previously approved coverage. To obtain approval under section 1115 of the Social Security Act, a state’s demonstration must, in the Secretary’s judgment, be likely to promote Medicaid objectives.\nWhile the expenditure authorities included in the States submit applications for section 1115 demonstrations to HHS for review by a federal review team, led by HHS. consist of negotiations, including the exchange of questions and answers between the review team and the state. If the demonstration is approved, HHS issues an award letter to the state and an approval specifying the Medicaid requirements that are being waived, the expenditure authorities approved, and the special terms and conditions. The special terms and conditions encompass the requirements for the demonstration, which include the conditions and limitations on approved expenditure authorities as well as specific reporting and evaluation requirements for the demonstration period. HHS typically approves an 1115 demonstration for an initial 5-year period that can be amended or extended. In general, HHS can withdraw a state’s authority to claim federal funding for expenditures in an 1115 demonstration under certain circumstances, including if the agency determines that the demonstration no longer promotes the objectives of the Medicaid program.\nThe review team includes representatives from the Office of Management and Budget, other agencies within HHS as applicable, and HHS Secretarial Offices, including the Assistant Secretary for Planning and Evaluation and the Assistant Secretary for Financial Resources. were saving Medicaid funds through efficiencies under the demonstration, such as by implementing managed care. Each approved demonstration has a federal spending limit for purposes of determining budget neutrality. As specified in the special terms and conditions for each demonstration, yearly expenditure targets may be exceeded, but total spending over the time period of the demonstration must be at or under the overall limit.", "For many years, section 1115 demonstrations offered the only avenue for states to provide Medicaid coverage to childless adults, who were generally ineligible under the program, but this changed with the enactment of the Patient Protection and Affordable Care Act (PPACA) in 2010. PPACA brought significant changes to the Medicaid program, including giving states the option to expand Medicaid eligibility to nearly all adults with incomes at or below 133 percent of the Federal Poverty Level (FPL), thus removing the program’s historic exclusion of childless adults from Medicaid eligibility. States opting to cover newly eligible adults qualified for enhanced federal matching funds beginning January 1, 2014.\nIn addition to providing states with the option to expand Medicaid, PPACA also provided new income-based subsidies to make private health insurance coverage more affordable for certain low- and moderate- income individuals. Specifically, PPACA required the establishment of health insurance exchanges in each state, where, starting January 1, 2014, eligible individuals can purchase health insurance coverage from participating plans. In addition, eligible individuals with low- and moderate-household income may qualify for federal subsidies for this coverage. Individuals with household income between 100 and 400 percent of the FPL may be eligible for federal premium tax credits and individuals with household income between 100 and 250 percent of the FPL may be eligible for cost-sharing reductions.", "Among the variety of coverage-related expenditure authorities approved or modified by HHS during our review period, there were certain prevailing themes. While HHS did approve some expenditure authorities that extended coverage to new populations or for new benefits, HHS also modified existing expenditure authorities in several states to end or limit coverage of low-income adults or premium assistance payments under states’ demonstrations, as new coverage options became available under PPACA. In addition, in almost half of the states we reviewed, HHS approved or modified expenditure authorities to provide HCBS to certain populations or to provide full Medicaid coverage to populations already receiving HCBS. (See app. I for coverage-related and other types of expenditure authorities approved in all 25 states.)", "In 20 of the 25 states we identified with recent approvals, HHS had approved new or modified existing expenditure authorities for Medicaid coverage, premium assistance, or both, for low-income adults; however, often the approvals were to limit the duration of this coverage as new coverage options became available under PPACA. Twelve of the 20 states had covered low-income adults not eligible for Medicaid prior to 2014 under demonstrations and then had opted to expand Medicaid coverage to low-income individuals starting January 1, 2014, as allowed under PPACA. In most of these 12 states, HHS modified states’ existing expenditure authorities to end their coverage of low-income adults or permitted them to allow this coverage to expire under their demonstrations as of December 31, 2013; in 2 states HHS approved new expenditure authorities allowing the states to start covering low-income adults but just until the end of 2013. Beginning in 2014, some of these populations would likely be covered under the states’ Medicaid plans. Three of the states that limited coverage had not opted to expand These Medicaid, as allowed under PPACA, at the time of our review.states received approval to modify their expenditure authorities to end Medicaid coverage for some individuals with incomes above 100 percent of the FPL under their demonstrations as of December 31, 2013, at which time these individuals could purchase coverage through the exchanges and may also qualify for federal subsidies for this coverage. These states were also approved to maintain coverage for certain individuals with incomes up to 100 percent of the FPL, who would not be eligible for the subsidies if they were to purchase coverage through the exchanges.\nSimilar to coverage of low-income adults, HHS approved expenditure authorities for premium assistance in 7 of the 20 states during our review period, which often limited the duration of coverage under states’ demonstrations as new coverage options were made available through the exchanges.federal matching funds for different types of premium assistance payments, including those for employer-sponsored insurance and for individual private insurance—purchased either outside of or through the exchanges. Some states had expenditure authorities approved for more than one type of premium assistance. Appendix II provides information on the premium assistance programs included in the 1115 demonstrations we reviewed.\nUnder these approvals, the states were allowed to claim Employer-sponsored insurance. Six of the seven states had existing expenditure authorities for premium assistance for employer-sponsored insurance, and during our review period, most received approval to shorten the time frames for this coverage to coincide with the implementation of the exchanges. For example, while Vermont’s demonstration is effective until December 2016, the state was approved to end premium assistance for employer-sponsored insurance on December 31, 2013, for several different populations. Idaho received approval to offer premium assistance for individuals with incomes above 100 percent of the FPL through December 31, 2013, after which time these individuals can purchase coverage through the exchange and may be eligible for federal subsidies for this coverage if they meet certain criteria. The state also received approval to provide premium assistance through September 30, 2014, to individuals with lower incomes, who would not be eligible for federal subsidies if they chose to purchase coverage through the exchanges. In contrast, some states received approval during our review period to extend or expand premium assistance for employer-sponsored insurance. For example, in September 2012, Utah—a state that had not expanded Medicaid as provided for under PPACA at the time of our review—received approval to expand income eligibility for its premium assistance program for employer-sponsored insurance for nonelderly workers from at or below 150 percent to at or below 200 percent of the FPL.\nIndividual insurance. HHS also modified expenditure authorities for premium assistance for private individual insurance coverage in three states—Massachusetts, Oregon, and Vermont—in anticipation of new coverage being available for purchase through the exchanges starting in 2014. For example, in Massachusetts and Vermont the duration of premium assistance was modified for certain adults with higher incomes—above 133 percent in Massachusetts and 150 percent FPL in Vermont—to end December 31, 2013, after which time these individuals could receive federal subsidies to purchase private insurance from the exchanges.premium assistance for certain disabled adults outside of the exchanges after December 31, 2013. In contrast to the three states that limited premium assistance for individual insurance coverage, another state was approved to expand coverage through premium assistance. Specifically, HHS approved a new demonstration in Arkansas, which became the first state to receive expenditure authority allowing federal Medicaid funds be Massachusetts, however, did receive approval to provide used to provide premium assistance to enable newly eligible beneficiaries to purchase private insurance offered through the state’s exchange.", "HHS approved expenditure authorities in 12 of the 25 states we reviewed that allowed states either to target certain populations to receive HCBS or to provide full Medicaid coverage to populations that were eligible to receive HCBS through other Medicaid authorities. Some of these states received approvals for both options. HCBS encompasses a wide range of services to help individuals who have limited ability to care for themselves—such as some elderly individuals, some individuals with human immunodeficiency virus/ acquired immunodeficiency virus (HIV/AIDS), and some individuals with disabilities—to remain in their homes or live in a community setting instead of receiving these services in an institution, such as a nursing facility. HHS officials noted that states are increasingly seeking expenditure authority under their 1115 demonstrations to cover these types of long-term care services and supports.\nHHS approved expenditure authorities in 7 of the 12 states that allowed the states to provide HCBS under their demonstrations to specific populations. For example, Minnesota received approval to provide elderly individuals who had incomes above the state’s Medicaid standards with coverage of HCBS to prevent premature entry into nursing facilities and prevent or delay the spending down of their resources to obtain Medicaid eligibility.\nHHS also approved expenditure authorities in 8 of the 12 states that allowed the states to provide full Medicaid coverage under their demonstrations to populations that, prior to the demonstration, were eligible for HCBS. Within Medicaid, states may provide coverage of HCBS through various Medicaid authorities, including through section 1915(c) waivers. Under 1915(c) waivers, states may provide coverage of HCBS for a targeted population that would, if not for the services provided under the waiver, require institutional care. Through expenditure authorities approved in their 1115 demonstrations, the 8 states were allowed to extend full Medicaid coverage to these populations. For example, Delaware was approved to provide full Medicaid benefits for elderly and disabled individuals and also children and adults with HIV/AIDS, who were previously eligible for HCBS.\nAccording to HHS officials, each state that has opted to cover HCBS services or populations under 1115 demonstrations has done so a little differently with respect to how the demonstration works in conjunction with other Medicaid authorities the state may be using to cover HCBS. For example, officials noted that some states have incorporated coverage of all HCBS populations into their 1115 demonstrations, ending their coverage under separate 1915(c) waivers, in order to administer the program more easily. In another model, HHS approved one state— Kansas—to run its demonstration and 1915(c) waiver programs in parallel HHS officials stated even though they may cover the same populations. that they are encouraging states to consider this model because maintaining 1915(c) waivers provides better assurances that states will understand and comply with the quality assurance reporting, beneficiary protection, and other requirements that specifically apply to the HCBS populations through both types of authorities.\nIn Kansas, one of the main purposes was to enroll individuals eligible under 1915(c) waivers into Medicaid managed care plans.", "HHS approved expenditure authorities for a broad range of purposes beyond Medicaid coverage in the states we reviewed. Among these, two types allowed significant spending. HHS approved expenditure authorities that allowed states to spend up to $9.5 billion in Medicaid funds for state programs over the course of the demonstrations. HHS also approved expenditure authorities that allowed states to make more than $26 billion in new types of Medicaid supplemental payments to hospitals and other providers through capped funding pools. (See app. III for information about other noncoverage-related expenditure authorities approved by HHS.)", "During our review period, HHS approved new, and extended or modified existing expenditure authorities that allowed five states—California, Massachusetts, New York, Oregon, and Vermont—to receive federal matching funds for more than150 state-operated programs. These five states were collectively approved to spend $9.5 billion in Medicaid funds for these programs during their current demonstration approval periods, Expenditure authorities for some of which ranged from 2.5 to 5 years.these state programs were in place for longer periods, as demonstrations were extended or amended. (See app. IV for information on the length of time expenditure authorities for some state programs have been continuously approved over the course of their demonstrations.) Prior to being included in the demonstrations, these programs could have been financed with state or non-Medicaid federal funding sources, or a combination of these, such as state appropriations or non-Medicaid federal grant funding. These state programs include those providing outreach and treatment services for specific health conditions, insurance subsidy programs, and workforce development programs, and were operated or funded by a wide range of different state agencies, such as state departments of mental health, public health, corrections, youth services, developmental disabilities, aging, and state educational institutions. The expenditure authorities provided federal funds to the state agencies to support these state programs, but unlike coverage- related expenditure authorities they did not confer Medicaid beneficiary status on the individuals served by the programs. To receive federal matching funds, states must first allocate and spend state resources for each health program. The federal matching funds received could replace some of the state’s expenditures for the programs, freeing up state funding for other purposes. For example, states could use the freed-up state funding to invest in health care quality improvement efforts or health reform initiatives or simply to address shortfalls in states’ budgets.\nMassachusetts, New York, and Oregon received approval from HHS for federal Medicaid funding for more than 40 state programs each, and California and Vermont were approved for 17 state programs, collectively. Each approval specifies a limit on the total amount of Medicaid funds available in the aggregate for these programs and the time frame within which these funds must be claimed. On average, states were approved to spend nearly $2 billion (in combined federal and state funding) for state programs for the entire demonstration approval period, which ranged from 2.5 to 5 years. See table 1 for information on the number of state programs included in expenditure authorities approved or modified during our review period.\nThe expenditure authorities approved by HHS during our review period supported a broad range of state program costs that would not otherwise have been eligible for federal Medicaid funding. While many of the programs offered health-related services, the populations served may have incomes too high to qualify for Medicaid. Among the many categories of approved programs were those providing health-related services; those providing support services, for example, to non-Medicaid- eligible individuals; those providing access to private insurance coverage for targeted groups; and those funding workforce training programs.\nHealth-related services. Many of HHS’s approved expenditure authorities in five states were for state programs offering a variety of health-related services not necessarily targeted to the Medicaid population. For example, these included programs for treatment of prostate or breast cancer, treatment of alcohol dependency, and immunizations and screenings for newborns across the state.\nSupport services. HHS approved expenditure authorities for at least 50 state programs in four states that provide support services to families and individuals. These health programs coordinate care for the elderly and persons with chronic mental illness, developmental disabilities, and alcohol dependency, among other conditions, and were not necessarily targeted to the Medicaid population. Additionally, HHS approved funding for state programs providing respite care to caregivers of children with special health care needs, community services for individuals with head injuries, and short-term living arrangements for homeless adolescents transitioning to residential services.\nWorkforce training. HHS approved expenditure authorities for states to use federal Medicaid funds for more than a dozen employment and workforce training programs. States were approved to use federal Medicaid funding for health care professionals’ training and loan repayment, as well as for efforts to promote health care worker recruitment and retention in hospitals and nursing homes.\nPrivate insurance subsidies for private health coverage purchased on exchanges. HHS also approved expenditure authorities in two states—Massachusetts and Vermont—to spend up to a combined $86 million in Medicaid funds for their state-funded premium subsidy programs to provide additional assistance to individuals purchasing private insurance coverage through their states’ exchanges, effective January 1, 2014. Subsidies in these two states are offered at eligibility levels corresponding with section 1115 demonstration expenditure authority coverage that existed in these states’ demonstrations up through December 31, 2013. Individuals eligible for this assistance are not Medicaid beneficiaries and instead may qualify for premium tax credits and cost sharing reductions for exchange-purchased coverage, as provided for under PPACA. Because these federal subsidies may not cover the entire cost of individuals’ coverage, Massachusetts and Vermont requested expenditure authority to use Medicaid funding to provide additional assistance to individuals to offset any premium costs for insurance coverage purchased on the exchanges not covered through premium tax credits.", "Another major type of noncoverage-related expenditure authority approved by HHS in eight states during our review period was that which allowed states to make new kinds of supplemental payments—that is, payments in addition to base payments for covered services—to hospitals and other providers. During our review period, HHS approved expenditure authorities for pools of dedicated funds—called funding pools—amounting to more than $26 billion over the course of the current approvals, which ranged from 15 months to over 5 years. These expenditure authorities were for flexible funding under funding pools, through which states were authorized to make supplemental payments for uncompensated care or for delivery system or infrastructure improvements. In addition, some states had funding pools approved for other varied purposes, such as graduate medical education. Demonstration funding pools are subject to the limitations set forth in the demonstration’s special terms and conditions, which may differ from those applicable to supplemental payments made under state plans, such as Medicaid UPL and DSH payments.", "During our review period, HHS approved expenditure authorities for hospital uncompensated care funding pools in Hawaii, Kansas, Missouri, New Mexico, and Tennessee, and modified an existing funding pool in California. The six funding pools, which total about $7.6 billion in approved spending, varied in amount and duration—from $37.5 million over 15 months in Missouri to $4.0 billion over 5 years in California. Payments were intended to cover providers’ uncompensated care costs associated with both Medicaid and uninsured patients, similar to supplemental payments under the DSH program (see table 2).\nThe expenditure authorities for uncompensated care pools generally allowed states to claim federal matching funds for payments to hospitals for inpatient and outpatient uncompensated care costs, as can be done with DSH funds. In some cases, HHS also authorized uncompensated care pools for broader uses, including for other services and provider types. For example, the amendment to California’s demonstration approved during our review period created a new category of payments for Indian Health Service clinics and tribal providers in nonhospital settings, which would not be permitted under DSH.", "During our review period, HHS approved new expenditure authorities for funding pools to make incentive payments to promote health care delivery system or infrastructure improvements in Kansas, New Jersey, and New Mexico, and modified existing funding pools in California and Texas. The five funding pools, which total nearly $18.8 billion in approved spending, varied in amount—from $29.4 million in New Mexico to $11.4 billion in Texas, generally over a 5-year period. These expenditure authorities were for payments intended to incentivize hospitals, and in some cases their partners, to make a variety of infrastructure and delivery system improvements, such as lowering hospitals’ rates of adverse events or incidence of disease, improving care for patients with certain conditions, and increasing delivery system capacity. According to HHS officials, payments from these pools are not related to the costs of the improvements but rather are established by hospitals, with the state’s and HHS’s approval, as the payments for achieving designated milestones. The nature of the milestones depends on the project type. For example, under New Jersey’s pool, called a Delivery System Reform Incentive Payment (DSRIP) program, hospitals must complete projects designed to improve health care quality, efficiency, or population health from a menu of disease-specific focus areas, such as asthma, diabetes, and chemical See table 3 for expenditure authorities for incentive payment addiction.pools that were approved or modified by HHS during our review period.\nHHS approved or modified expenditure authorities for other funding pools for varied, and in some cases unspecified purposes. These included, for example, $250 million for temporary “transition payments” to New Jersey hospitals that previously received supplemental payments under New Jersey’s Medicaid state plan to cover the gap between year 1 of the demonstration and year 2, when the state’s incentive payment pool was to begin. $175 million for additional supplemental payments to two public hospitals in Tennessee, the purposes for which were not specified in the approval, plus $125 million for graduate medical education. $2.9 million in Missouri to support one specialty provider’s overhead costs, which per the special terms and conditions could include costs associated with purchasing billing software, hardware for systems, extended hours of operation, salaries, benefits and payroll taxes, professional and contractual services, supplies, insurance, occupancy costs, depreciation, and other miscellaneous costs.\nSee appendix V for total spending limits associated with the funding pools of all 11 states that received new or modified expenditure authorities related to funding pools (for any purpose) during our review period—that is, total spending for all funding pools included in the demonstrations, including for pools created prior to our review period.", "Although section 1115 of the Social Security Act provides HHS with broad authority to approve expenditure authorities that, in the Secretary’s judgment, are likely to promote Medicaid objectives, HHS has not issued specific criteria for making these determinations. Further, HHS’s approval documents were not always clear as to what precisely approved expenditures were for and how they would promote Medicaid objectives. In addition, the approval documents did not always specify how states were to avoid duplication with other federal funding received. In the absence of clear criteria for approving expenditure authorities and clear documentation of the application of those criteria, the bases for HHS’s decisions—involving tens of billions of Medicaid dollars—are not transparent to Congress, states, or the public.", "While section 1115 of the Social Security Act provides HHS with broad authority in approving expenditure authorities for demonstrations that, in the Secretary’s judgment, are likely to promote Medicaid objectives, HHS officials said the agency has not issued explicit criteria explaining how it assesses whether demonstration expenditures meet this broad statutory requirement. Federal standards for internal control of an agency’s operations stress that in addition to the need for effective internal communications within an agency, management should also ensure there are adequate means of communicating with, and obtaining information from, external stakeholders that may have a significant impact on the agency’s achieving its goals, such as states in the case of Medicaid demonstrations. In our view, the criteria HHS uses for approving expenditure authorities for state programs and funding pools would be subject to such a communication requirement. However, HHS officials informed us that the agency has not communicated specific criteria for assessing these expenditure authorities. For example, HHS’s website identifies different policy approaches that states may seek to test through demonstrations—such as the use of innovative service delivery systems to improve care, increase efficiency, and reduce costs—but does not specify how HHS will evaluate states’ proposals to determine whether the proposed demonstration expenditures are likely to promote Medicaid objectives. In particular, HHS officials said that they have not issued specific written criteria that by themselves would require HHS to approve or disapprove expenditure authorities for specific state programs or funding pools. HHS officials also told us that for a demonstration to be approved, its goals and purposes must provide an important benefit to the Medicaid program, but they did not provide more explicit criteria for determining whether approved demonstration expenditures would provide an important benefit or promote Medicaid objectives.\nIn the absence of explicit, written criteria, HHS officials described using other approaches for assessing expenditure authorities for state programs and funding pools for alignment with Medicaid objectives. HHS officials said that HHS considers each proposed demonstration on its own merits. Further, HHS officials said they consider how the programs or pools relate to and are connected with overall Medicaid program objectives and other aspects of the demonstration. In assessing expenditure authorities for state programs previously funded by the states, HHS officials said they consider two criteria. First, HHS considers whether the proposal supports a compelling demonstration purpose. Second, HHS considers how the proposed state programs are suitable candidates for federal participation that align with the objectives of the Medicaid statute. HHS officials said they have told states that HHS is less open to approving Medicaid matching funds for state programs in certain categories, such as prisons and corrections, bricks and mortar, and debt relief or restructuring, although at least one state received approval for a program that builds housing for the homeless. HHS officials said that funding pools for uncompensated care must provide necessary support to providers whose continued operation and participation are essential to the delivery of health care to low-income populations. Officials also said that funding pools for incentive payments are assessed in terms of the health care quality improvement and system redesign objectives proposed, their relevance to Medicaid beneficiaries, the inclusion of the most appropriate providers, and whether the incentives are appropriate. In discussing why HHS has not made these considerations public, HHS officials said that it is not in the agency’s interest to issue guidelines that might limit its flexibility in determining which demonstrations promote Medicaid objectives. However, without such guidance, the rationale for the agency’s approvals of expenditure authorities is not transparent.", "Demonstration approval documents in the states we reviewed with expenditure authorities for state programs or funding pools did not consistently include information indicating what, specifically, the approved expenditures were for and, therefore, how they would likely promote Medicaid objectives. Federal standards for internal control provide that all decisions, such as demonstration approvals, must be clearly documented and such documentation should be promptly and accurately recorded and available for review.\nAmong the five states with approved expenditure authorities for state programs, two had approvals that included detailed information about the programs—including program descriptions and target populations—in what the agency refers to as “claiming protocols.” HHS officials explained that claiming protocols for state programs outline the methods by which the state will identify appropriate expenditures and other revenues supporting the programs. HHS required the two states (California and Oregon) to submit and receive approval for the claiming protocols as a condition for claiming federal Medicaid matching funds. It included the claiming protocols as attachments to the special terms and conditions of the states’ approvals, which lay out the state’s obligations under the demonstration. The information provided in the claiming protocols can help explain how the programs may promote Medicaid objectives. However, even when claiming protocols were included, HHS’s basis for approving expenditure authorities for some state programs was not clear. For example, one state received approval for an expenditure authority for a state program that issues licenses and approves certifications of hospitals and certain other providers in the state. The state’s claiming protocol delineated the program’s mission and funding limits but did not explicitly address how the program related to the purposes of the demonstration or to Medicaid objectives.\nThe approvals for the other three states (Massachusetts, New York, and Vermont), authorizing nearly half of the state programs in our review, did not include claiming protocols for most state programs and otherwise lacked clear information on how the state programs would promote Medicaid objectives, such as how they would benefit low-income populations. Several state programs approved for federal Medicaid funds in these states appeared, on their face, to be only tangentially related to improving health coverage for low-income individuals and lacked documentation explaining how their approval was likely to promote Medicaid objectives. For example, among the programs approved were a program that funds insurance for fishermen and their families at a reduced rate; a program that constructs supportive housing for the homeless; and a program that recruits and aims to retain health care workers. Overall, state programs that were approved for federal Medicaid funds appeared to be wide ranging in nature. Table 4 shows the state programs approved by HHS during our review period, which were generally listed by program name in the special terms and conditions of each state’s approval, but often without any further detailed information.\nHHS officials stated that, beginning in 2012, the agency required all states to develop claiming protocols for state programs with more-specific information on their purposes. In its approval of amendments to New York’s demonstration in 2013, HHS required the state to develop a claiming protocol for 20 new state programs but did not require a claiming protocol for any of the 26 existing state programs approved for continued funding. Similarly, in its 2013 approval of amendments to Massachusetts’s demonstration, HHS did not require the state to submit a claiming protocol for 49 existing state programs. In the case of Vermont, HHS officials said that a claiming protocol was not needed to support funding for one program because it was modeled closely on a previously approved demonstration program. HHS officials also said that during the time of our review, they began requesting that states proposing that Medicaid cover certain state programs under demonstration expenditure authorities complete a spreadsheet tool that, among other things, helps to identify and exclude the costs of services for which Medicaid should already be paying.\nAs with approvals of expenditure authorities for state programs, HHS’s approvals of expenditure authorities for funding pools also did not consistently document how expenditures would likely promote Medicaid objectives. The approvals of incentive payment funding pools we reviewed (California, Kansas, New Jersey, New Mexico, and Texas) established a structure for planning, reporting on, and getting paid for general, system-wide improvements—for example, increasing primary care capacity or lowering admission rates for certain diseases—but most provided little or no detail on how the initiatives related to Medicaid objectives, such as their potential impact on Medicaid beneficiaries or low-income populations. One exception is New Mexico, which was required to select outcome measures that reflected areas of high need for Medicaid and uninsured patients. Further, the criteria for selecting providers eligible to participate in incentive pools were not apparent in most of the approvals we reviewed. HHS officials said that the hospitals that are identified as eligible for incentive payments are those that are expected to have the most impact on efficiency and quality of care for Medicaid populations and that often the hospitals selected are those that have historically received the most supplemental payments, which are generally allocated to providers serving Medicaid populations. However, such selection criteria were not apparent in HHS’s approvals, which listed eligible providers but with no additional information about their role in providing services to Medicaid populations. For example, none of the terms and conditions for the five states’ demonstrations established a minimum threshold of Medicaid or low-income patient volume as the basis for participation; however, three states’ approvals (New Jersey, New Mexico, and Texas) required that the payment allocations be weighted in part on measures of Medicaid or low-income patient workload.", "HHS’s approvals also varied in the extent to which they provided assurances that Medicaid funding approved for state programs would be claimed appropriately and would not duplicate any other potential sources of non-Medicaid federal funding. In two of the five states reviewed— California and Oregon—the claiming protocols attached to the terms and conditions clearly identified all other federal and nonfederal funding sources for each state program. These protocols also included specific instructions on how the states should “offset” other revenues received by the state programs related to eligible expenditures and how to determine the appropriate federal match based on net expenditures exclusive of any In Medicaid beneficiaries receiving services through the same program.a third state, Massachusetts, HHS’s approval included a general program integrity provision that required the state to have processes in place to ensure that there would be no duplication of federal funding, but the state was not required to develop a claiming protocol accounting for other federal funding sources for its 49 state programs. Further, our review of the expenditure authorities for state programs in two states—New York and Vermont—found that the approvals for 25 state programs did not require claiming protocols or otherwise lacked language expressly prohibiting the states’ use of federal funding for the same purpose. Combined, the state programs in Massachusetts, New York, and Vermont accounted for 74 state programs approved for about $4 billion in total spending. As previously discussed, HHS officials said they started using claiming protocols after 2012; however, at the time of our review, these practices were not applied to previously approved state programs. In addition, in 2012, HHS established an optional application template to assist states in the development of their section 1115 demonstration proposals that included a financing form with instruction for states to identify other federal funds used for the demonstration. The form notes that this information will help HHS identify potential areas of duplicative efforts.\nRegarding funding pools for incentive payments, only one state’s terms and conditions required the state (Kansas) to demonstrate that its funding pool was not duplicating any other existing or future federal funding streams for the same purpose, and two other state’s terms and conditions (New Jersey, Texas) required hospitals to demonstrate that incentive projects do not duplicate other HHS initiatives. Apart from including explicit protections against duplication in the terms and conditions, HHS officials said they ask providers to disclose other federal funding they may be receiving or expect to receive that could represent duplicative funding and that they also search federal funding databases to identify potentially duplicative funding.\nThe extent to which approvals for uncompensated care pools included protections against potential duplication of federal funds was somewhat mixed. The approvals placed some limits on the overlap between payments from the uncompensated care pool and the DSH program but generally did not address all other federal sources of funding. In the five approvals we reviewed with expenditure authorities for hospital uncompensated care pools (California, Hawaii, Kansas, New Mexico, Tennessee), HHS consistently included a requirement that when states calculate their hospitals’ DSH payment limits, they include as offsetting revenue payments received from the uncompensated care pool for inpatient or outpatient services. In the aggregate, however, if states establish uncompensated care pools under demonstrations alongside their state DSH programs, total Medicaid uncompensated care spending within a state—that is, DSH and uncompensated care pool payments combined—could result in the use of section 1115 funds to fill requirements already addressed by statewide DSH allotments. In two of the six states we reviewed with uncompensated care pools (Hawaii and Missouri), HHS imposed an overall limit on total uncompensated care payments (pool payments plus DSH payments) equal to the statewide DSH allotments authorized by Congress. In the other four states, HHS did not impose such a limit, such that total payments for uncompensated care could result in the use of section 1115 funds to fulfill a purpose otherwise limited by statewide DSH allotments.", "Section 1115 demonstrations account for a significant and growing proportion of expenditures under the Medicaid program. Ensuring the long-term sustainability of the program is important for the tens of millions of low-income beneficiaries who depend on Medicaid to cover their medical costs. Section 1115 Medicaid demonstrations provide a way for states to test and evaluate new approaches for delivering Medicaid services to beneficiaries. Under these demonstrations, the Secretary of Health and Human Services has broad authority to waive certain Medicaid requirements and approve expenditures for which states would not otherwise be able to receive matching funds. In doing so, the Secretary has responsibility for ensuring the prudent use of federal Medicaid resources, including ensuring that Medicaid expenditures under a demonstration will not significantly increase federal costs for Medicaid above what they would have been without the demonstration. Given the breadth of the Secretary’s authority under section 1115—the exercise of which may result in billions of dollars of federal expenditures for costs not otherwise allowed under Medicaid—explicit criteria are needed to illuminate how HHS determines that new demonstration spending promotes Medicaid objectives. Without explicit criteria, HHS’s decision- making will remain obscure to internal and external stakeholders, including Congress, the states, and the public, and opportunities for effective communication on this subject will remain elusive.\nIn addition, without documenting the basis for its approvals, HHS cannot provide reasonable assurance that it is consistently applying its criteria for determining whether demonstration expenditures promote Medicaid objectives. Based on our review, some of the Secretary’s approvals of 1115 demonstrations included information that documented how new expenditure authorities would promote Medicaid’s objectives, for example, by including information on how the demonstration related to health coverage for low-income populations. However, other approvals did not. For example, some of the demonstrations were for programs related to health care for the general population without an articulated link to low-income individuals or only tangentially related to improving their health coverage, while others were for funding pools for incentive payments made for a broad array of infrastructure improvements and other broad purposes. Given the amount of money involved and the broad array of purposes for which expenditure authorities have been approved, it is important that HHS document the basis for its decisions that approved expenditure authorities are likely to promote Medicaid’s objectives. Furthermore, demonstration approvals should document how new federal Medicaid expenditures will be coordinated with other federal funding streams available to states for the same or similar purposes to avoid duplication.", "To improve the transparency and accountability of HHS’s section 1115 Medicaid demonstration approval process, and to ensure that federal Medicaid funds for the demonstrations do not duplicate other federal funds, we are recommending that the Secretary of Health and Human Services take three actions: 1. Issue criteria for assessing whether section 1115 expenditure authorities are likely to promote Medicaid objectives. 2. Ensure the application of these criteria is documented in all HHS’s approvals of section 1115 demonstrations, including those approving new or extending or modifying existing expenditure authorities, to inform internal and external stakeholders, including states, the public, and Congress, of the basis for the agency’s determinations that approved expenditure authorities are likely to promote Medicaid objectives. 3. Take steps to ensure that Medicaid demonstration approval documentation consistently provides assurances—such as through claiming protocols or the application template—that states will avoid duplicative spending by offsetting as appropriate all other federal revenues received when claiming federal Medicaid matching funds.", "We received written comments on a draft of this report from HHS, which are reprinted in appendix VI. In its response, HHS partially concurred with one of the recommendations and concurred with the other two recommendations.\nIn responding to our recommendation that HHS issue criteria for assessing whether section 1115 expenditure authorities are likely to promote Medicaid objectives, HHS said that it partially concurred. HHS said that all section 1115 demonstrations are reviewed against “general criteria” to determine whether Medicaid objectives are met, including whether the demonstration will (1) increase and strengthen coverage of low-income individuals; (2) increase access to, stabilize, and strengthen providers and provider networks available to serve Medicaid and low-income populations; (3) improve health outcomes for Medicaid and other low-income populations; and (4) increase the efficiency and quality of care for Medicaid and other low-income populations through initiatives to transform service delivery networks. HHS also said that at times, it has issued what it considered to be criteria for certain types of demonstrations, such as those focused on substance-use delivery system reform or on services to individuals with HIV, through an informational bulletin or State Medicaid Director’s Letter. HHS committed to taking additional steps in the future to require that demonstration approval documents more clearly articulate how section 1115 authority is being used to help states address evolving trends or needs in their Medicaid programs.\nHHS’s response was silent, however, as to whether it planned to issue written guidance on the general criteria noted in its response. Further, we maintain that the general criteria are not sufficiently specific to allow a clear understanding of what HHS considers to be approvable Medicaid purposes. During the course of our review, HHS officials said that it is not in the agency’s best interest to issue guidelines that might limit the agency’s flexibility in determining which demonstrations promoted Medicaid objectives. Based on HHS’s response to our recommendation, we remain concerned that the agency has not altered its position. Even if HHS were planning to issue the four criteria noted in its response, they are no more specific than the broad policy approaches currently described on HHS’s website and therefore would be insufficient to inform stakeholders of the agency’s interpretation of its section 1115 authority. For example, although each of HHS’s four general criteria relates to serving low-income or Medicaid populations, HHS does not define low- income or what it means to serve these individuals. Several state programs that were approved for Medicaid spending that we reviewed appeared, on their face, to be only tangentially related to improving health coverage for low-income individuals. Similarly, investments in broad delivery system reforms that were approved for Medicaid spending would seemingly benefit all patients served by these systems, not necessarily only or mostly those with low incomes. Unless HHS issues written guidance that more precisely explains how such demonstrations must relate to serving low-income and Medicaid populations, the rationale for the agency’s approvals of expenditure authorities that can amount to billions of dollars in federal funding is not transparent.\nHHS concurred with our other two recommendations, saying that it will (1) ensure that all future section 1115 demonstration approval documents (including those for new demonstrations, renewals, and amendments) will identify how each approved expenditure authority promotes Medicaid objectives, and (2) take steps to ensure that section 1115 demonstration approval documentation for state programs, uncompensated care pools, and incentive pools consistently provides assurances that states will avoid duplication of federal spending. HHS also provided technical comments, which we incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of the report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the Secretary of Health and Human Services and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-7114 or iritanik@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of the report. GAO staff who made key contributions to this report are listed in appendix VII.", "Table 5 summarizes Department of Health and Human Services (HHS) approvals of expenditure authorities included in demonstrations approved or modified between June 2012 and mid-October 2013. Approvals were for new demonstrations, extensions of demonstrations due to expire, and amendments that modified the expenditure authorities of ongoing demonstrations. This information includes the type of approval(s) received, the demonstrations’ names and approval periods, and the types of approved expenditure authorities for coverage-related and non- coverage-related purposes. Expenditure authorities for coverage included expansion to populations such as low-income adults, the addition of benefits including home- and community-based services (HCBS), and premium assistance used to purchase health insurance. Non-coverage- related expenditure authorities included funding for state programs, funding pools, and other purposes.\nAppendix I: Summary of Types of Expenditure Authorities Approved from June 2012 through October 2013 State (Type of approval received during review period) Arkansas (New)\nX Appendix I: Summary of Types of Expenditure Authorities Approved from June 2012 through October 2013 State (Type of approval received during review period) Illinois (New)\nX Appendix I: Summary of Types of Expenditure Authorities Approved from June 2012 through October 2013 State (Type of approval received during review period) Missouri (Extension)\nAppendix I: Summary of Types of Expenditure Authorities Approved from June 2012 through October 2013 We identified several “other” expenditure authorities HHS approved during this period not related to other categories, including payments to managed care contractors that received certain exceptions from otherwise applicable Medicaid requirements See app. III for more information on these “other” expenditure authorities.\nThe demonstration approval period shown is inclusive of the approval periods for two demonstrations. The approval period for New York’s Partnership Plan demonstration was August 1, 2011, through December 31, 2014. The approval period for the state’s Federal State Health Reform Partnership demonstration was March 31, 2011, through March 31, 2014.\nTable 6 below shows expenditure authorities approved or modified by the Department of Health and Human Services (HHS) from June 2010 through mid-October 2013, allowing states to claim federal Medicaid matching funds for premium assistance payments under their section 1115 demonstrations. The table includes expenditure authorities that were newly approved, extended, or amended during this time period. (It does not include any expenditure authorities for premium assistance that may have been approved previously in these or other states and were in effect during this time period.) The table provides information on the effective dates of the expenditure authorities, the type of premium assistance approved, and the populations covered.", "In addition to expenditure authorities for state programs and funding pool payments, the Department of Health and Human Services (HHS) approved expenditure authorities under section 1115 of the Social Security Act that provided federal Medicaid funds for a variety of other non-coverage-related purposes. Specifically, HHS approved expenditure authorities in several states to make payments to managed care organizations (MCO) that received certain exceptions from otherwise HHS also approved several applicable Medicaid MCO requirements.expenditure authorities for states to claim federal matching funds for specific state activities not related to MCOs.\n42 U.S.C. § 11396u-2(a)(4)(A). that promote healthy behaviors earn credits that may be used for approved health-related expenditures.\nHHS also approved expenditure authorities for activities unrelated to MCOs. For example, Oklahoma was approved to receive matching funds for expenditures to embed health coaches within practices with a high number of patients with chronic disease or at high risk for poor health outcomes. Health coaches provide beneficiaries with a comprehensive initial evaluation, plan of care, educational materials, referrals, and self- management support. Missouri received approval allowing the state to continue to receive federal matching funds for expenditures incurred by a regional health commission for administrative activities related to the assessment of safety net benefits for the community.", "The Department of Health and Human Services’ (HHS) approvals of expenditure authorities for state programs previously financed by the states have been longstanding in some cases, particularly in cases when demonstrations were extended or amended. Table 7 shows the duration of some of the demonstrations that received HHS approval to extend expenditure authorities for state programs during our review period.", "Table 8 summarizes the total funding pool spending limits for the 11 states that received approval from the Department of Health and Human Services (HHS) for expenditure authorities for funding pools included in demonstrations approved or modified during our review period, between June 2012 and mid-October 2013. For states in our scope due to modifications to ongoing funding pools, other funding pools may have been in place. This table shows total approved spending limits for all funding pools in those states’ demonstrations, including those that were established before our review period. Funding pools were primarily for uncompensated care costs and incentive payments to carry out delivery system reform initiatives. Some states received approval for funding pools for other purposes—for example, additional supplemental payments in New Jersey and infrastructure payments for a specialty provider’s overhead costs in Missouri.", "", "", "", "In addition to the contact name above, Catina Bradley, Assistant Director; Christine Davis; Anne Hopewell; Shirin Hormozi; Linda McIver; Perry Parsons; Roseanne Price; and Hemi Tewarson made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 2, 2, 1, 2, 2, 3, 3, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_title", "h3_full", "", "h2_title", "h2_full", "", "h0_full", "h0_full", "h0_full", "", "", "h2_full h1_full", "", "h1_full", "h1_full", "", "", "h3_full", "h3_full", "h2_full", "", "", "", "", "", "" ] }

{ "question": [ "What occurred to the expenditures for Medicaid coverage?", "What are the types of non-coverage related expenditures?", "What are the state implications of the expenditures?", "How did the HHS approve spending expenditures?", "What are the HHS's determinations on Medicaid objectives.", "What are the issues of HHS's approval documents?", "What is an example of this?", "What are the issues of promoting Medicaid objectives?", "What is Medicaid?", "What is section 1115 of the Social Security Act?", "How has HHS changed to become more accommodating to other populations?", "What was GAO asked to review and for how many sections?", "What are these reports?", "What are the approvals for the new documents?" ], "summary": [ "In the 25 reviewed states, HHS approved expenditure authorities for a broad range of purposes beyond Medicaid coverage.", "Two types of noncoverage-related expenditure authorities were significant in terms of approved spending amounts.", "In 5 states, HHS approved expenditure authorities allowing the states to spend $9.5 billion in Medicaid funding during their current demonstration approval periods (about 2 to 5 years) to support about 150 state programs that would not otherwise have been eligible for federal Medicaid funding.", "HHS also approved expenditure authorities in 8 states allowing states to spend more than $26 billion during their current demonstration approval periods (about 15 months to over 5 years) for new types of supplemental payments to hospitals and other providers through capped funding pools for a range of purposes, which included payments to incentivize delivery system or infrastructure improvements.", "Although section 1115 of the Social Security Act provides HHS with broad authority to approve expenditure authorities that, in the Secretary's judgment, are likely to promote Medicaid objectives, HHS has not issued specific criteria for making these determinations.", "Further, HHS's approval documents are not always clear as to what, precisely, approved expenditures are for and how they will promote Medicaid objectives.", "For example, HHS's approvals in three states authorizing the use of federal Medicaid funds for more than half of the state programs GAO reviewed lacked clear information on how the programs would promote Medicaid objectives, such as how they would benefit low-income populations. In addition, HHS's approvals authorizing funding pools for incentive payments did not always provide clear explanations of how payments to hospitals would promote Medicaid objectives. Finally, approval documentation for some but not all approvals provided assurances that Medicaid funds would not be used for purposes addressed by other federal funding streams.", "Without clear criteria for assessing how proposed expenditure authorities states are seeking will promote Medicaid objectives, and without clear documentation of the application of those criteria, the bases for HHS's decisions involving tens of billions of Medicaid dollars are not transparent to Congress, states, or the public.", "Medicaid, an over $500 billion joint federal-state program, provides health care coverage to low-income individuals.", "Section 1115 of the Social Security Act authorizes the Secretary of HHS to waive certain Medicaid requirements and authorize expenditures not otherwise allowed for demonstration projects likely to promote Medicaid objectives.", "HHS has approved expenditure authorities to allow states to expand Medicaid coverage to populations not otherwise eligible, as well as for other purposes, such as funding for state programs.", "GAO was asked to review approved expenditure authorities in recent section 1115 demonstrations.", "This report examines (1) expenditure authorities approved for purposes of Medicaid coverage, (2) expenditure authorities approved for purposes other than Medicaid coverage, and (3) the criteria HHS uses to determine whether expenditure authorities for purposes other than Medicaid coverage are likely to promote Medicaid's objectives and the documentation of the basis for its approvals.", "GAO reviewed approval documents for new, extended, or amended section 1115 demonstrations approved by HHS in all 25 states with approvals between June 2012 and October 2013, and interviewed HHS officials." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 1, -1, -1, -1, 1, -1, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "Most Recent Developments", "USDA Adopts New Approach to Animal Disease Traceability", "Initial Steps for Animal Disease Traceability", "Highlights of Current Thinking on Traceability", "Overview of Animal Disease Costs", "What Is Animal ID?", "Data Requirements", "Objectives", "Pros and Cons of an Animal ID System", "Proponents' Claimed Benefits10", "Opponents' Claimed Criticisms", "Development of a National Animal ID System", "Species Coverage", "USDA's Involvement", "NAIS Business Plan21", "NAIS User Guide22", "NAIS Program Standards and Technical Reference23", "NAIS Goals", "NAIS Program Implementation", "Step 1. Premises Registration25", "Step 2. Animal Identification28", "Animal Identification Number (AIN)", "Group Identification Number (GIN)", "Step 3. Animal Tracing31", "Issues Concerning NAIS", "Low Participation Rates; Slow Implementation Pace", "Mandatory or Voluntary?", "Costs and Who Pays", "Estimated Costs", "Estimated Benefits", "Liability and Confidentiality of Records", "International Traceability Requirements for Meat Imports", "USDA Listening Sessions", "Congressional Actions", "Funding", "Legislative Proposals", "Congressional Hearings" ], "paragraphs": [ "", "This report provides a summary of current developments in the U.S. Department of Agriculture's (USDA's) effort to establish a national animal traceability capacity with the intended goal of being able to rapidly identify and respond to an animal disease outbreak. National animal identification and traceability appear to have substantial economic value, yet federal proposals have proven controversial among certain segments of the U.S. cattle industry. This report provides background on animal ID and traceability in general, and the development of the current U.S. system of animal ID and traceability in particular. In addition, it reviews the claims and counter-claims of proponents and opponents of a national animal ID system, and describes many of the unresolved issues related to program development. Finally, two appendixes offer a brief chronology of the development of the U.S. National Animal Identification System (NAIS) and its successor program, and a brief description of the major international organizations involved in setting standards and rules for animal health and trade in animal products, along with summary descriptions of animal ID and traceability programs found in other major livestock producer and consumer countries.", "", "On February 5, 2010, Secretary of Agriculture Tom Vilsack announced that USDA was substantially revising its approach to achieving a national capability for animal disease traceability. The previous plan, called the National Animal Identification System (NAIS), first proposed in 2002, was being abandoned. In its place USDA proposed a new approach—Animal Disease Traceability—that will allow individual states and tribal nations to choose their own degree of within-state animal identification (ID) and traceability for livestock populations. The flexibility is intended to allow each state to respond to its own producer needs and interests.\nHowever, under the new Animal Disease Traceability framework, USDA will require that all animals moving in interstate commerce have a form of ID that allows traceability back to its originating state. The Secretary of Agriculture derives the authority to regulate interstate movement of farm-raised livestock from Section 10406 of the Animal Health Protection Act ( P.L. 107-171 , Subtitle E; 7 U.S.C. 8305).", "In the six months after the February announcement, USDA began collaboratively building on its framework with animal health officials from states and tribal nations. USDA established a Traceability Regulation Working Group from state, tribal nation, and Animal and Plant Health Inspection Service (APHIS) officials. The working group is responsible for synthesizing feedback and making recommendations for the content of a proposed rule.\nAPHIS held a forum on March 18-19, 2010, for animal health officials from state and tribal nations to discuss and provide feedback on the new framework for animal disease traceability. In May, June, and July APHIS held five public meetings around the country to present the framework and gather feedback from animal health officials and producers. Then, on August 13, 2010, USDA released two publications, Animal Disease Traceability Framework , Overview and Current Thinking and Animal Disease Traceability Framework, Update and Preliminary Content of the Proposed Rule , which outline USDA's current recommendations that could be incorporated in a proposed rule. APHIS then held three more follow-up public industry forums to provide further opportunities for animal health officials and producers to discuss and give feedback on the framework.", "USDA's traceability framework is still developing, but one of the key underlying principles of the framework is that managing a traceability program is the responsibility of states and tribal nations. Under this revised framework, states may choose to have no mandatory animal ID and traceability capability, or to rely on existing ID systems already in place to fight brucellosis, tuberculosis, and other contagious animal diseases, or to develop their own version of a more detailed birth-to-market ID system as originally proposed under NAIS. The within-state programs are intended to be implemented by the states and tribal nations, not the federal government. As such, any data collection and storage would done by state, not federal, authorities.\nThe federal rules will apply only to livestock that move in interstate commerce. The rules will require livestock that move interstate have some type of official identification and an Interstate Certificate of Veterinary Inspection (ICVI). Exemptions for identification and ICVI requirements will be defined in the rules. For example, cattle moving directly to slaughter would be exempt. Types of acceptable official identification will be defined in federal regulations through the rulemaking process.\nThe animal disease traceability capacity of each state and tribal nation will be evaluated according to performance standards that are defined through rulemaking. The Traceability Regulation Working Group, in conjunction with state and tribal animal health officials, will define performance standards that will describe a desired outcome but not the method for achieving the outcome. The method will be left up to the states and tribal nations.\nEach state and tribal nation will have detailed traceability cooperative agreements with APHIS that describe the cooperators' objectives. Whatever federal funding is available will be provided through annual cooperative agreements. Although the agriculture appropriations bill for FY2011 is not finalized, no funding is designated for animal traceability in the bill. However, the Senate Committee on Appropriations report indicates that funding could be considered after needs are identified under USDA's new initiative.\nThe program governing animal disease traceability of interstate animal movements and coordination between different state \"identification and traceability programs\" will be implemented through federal regulations and the federal rulemaking process. USDA will define animal disease traceability with a new section in Title 9 of the Code of Federal Regulations . USDA has indicated that a proposed rule could be published in April 2011 with a 60- to 90-day comment period. According to USDA , once the proposed rule is published, it likely would be 12 to 15 months before the final rule is released.", "Major outbreaks of harmful animal diseases—including avian influenza (AI), foot and mouth disease (FMD), and bovine spongiform encephalopathy (BSE, or mad cow disease)—have led to the slaughter of millions of commercial animals and caused billions of dollars in economic damages ( Table 1 ). The economic harm from these disease outbreaks first hits the farm enterprise that suffers direct loss of its animals and its livelihood. But it also extends well beyond the farm place to disrupt domestic and international markets, causing losses all along the marketing chain and ultimately hitting consumers.\nTo date, the United States has been fairly fortunate in avoiding a catastrophic animal disease outbreak of the nature of the FMD events that occurred in Taiwan in 1997 or the United Kingdom in 2001. Were a similar FMD outbreak to hit the United States, the economic consequences could be staggering—possibly in the range of $30 billion to $100 billion in cost to the U.S. cattle industry alone, according to House Agriculture Committee Chairman Collin Peterson in remarks made at a March 11, 2009, hearing by the subcommittee on Livestock, Dairy, and Poultry to review animal identification systems.\nThe economic consequences of major animal disease outbreaks that occurred during the 1990s and early 2000s provided the impetus for the development and implementation of animal identification (ID) and traceability systems in many countries. The motivation and nature of these programs varies across countries, ranging from voluntary programs focused on animal health as in the United States, to mandatory programs focused on both food safety and animal health as in the European Union (EU), Japan, and South Korea ( Figure 1 ). More recently, some major importers of animal products, Japan and South Korea in particular, have begun to discuss the possibility of requiring traceability on imported meat products, which, if undertaken, would add a further dimension—market access—to animal ID and traceability programs.\nAny developments that occur in domestic or international markets with respect to animal health, food safety, and import standards have potentially significant economic importance for U.S. livestock industries because the United States is a major producer and exporter of livestock and animal products ( Table 2 ). The United States is the world's leading producer of beef and poultry and ranks third in pork production behind China and the EU (see tables in Appendix B ). With respect to trade in animal products, the United States is the world's leading exporter of pork, the second-leading exporter of poultry (behind Brazil), and the third-leading exporter of beef, while ranking first as the world's leading importer of beef. In addition to these global rankings, U.S. exports of animal products account for substantial portions of total use of domestic production—17% for both pork and poultry, and 6% for beef, in 2007 and 2008.", "Animal identification (ID) refers to keeping records on individual farm animals or groups (e.g., flocks or herds) of farm animals so that they can be more easily tracked from their birth through the marketing chain. Historically, animal ID was intended to indicate ownership and prevent thievery. Today, animal identification has been expanded to include information on the animal's origins (e.g., birthplace, parentage, sex, breed, genetics) as well as traceability—the ability to trace an animal product back through the marketing chain to its source, while identifying those other animals or animal products with which it has come into contact.\nIn essence, a national database of animal ID combined with traceability, accessible via a high-speed computer network, is considered the ideal system to permit quick response to news of an animal disease outbreak or the discovery of tainted food so as to limit threats to human or animal health and to minimize commercial damage. Versions of animal ID systems currently exist in several countries, with differences based primarily on the amount and type of information collected and the extensiveness of the traceability system.", "At a minimum, information is collected and stored concerning the animal's place and date of birth, the name and address of the owner, the date and location of movements between the animal's origin and its place of slaughter, and the date and location of slaughter. More elaborate animal ID systems include information on the sex, breed, and parentage of an animal, the names of all feeds and pharmaceuticals used in raising the animal, and the movement of specific animal products from the processing plant to the retail consumer.", "The reasons for identifying and tracking animals and their products have evolved and include rapid response to animal health and/or food safety concerns, as well as verification of recognized premium commercial production processes as specified on qualifying product labels.\nIn the United States, the current focus of animal ID is animal health. As such, traceability is limited specifically to movements from the animal's point of birth to its slaughter and processing location. In other countries such as the European Union (EU), Japan, and South Korea, the focus of animal ID is both animal health and food safety ( Figure 1 ). As a result, those countries have more comprehensive traceability systems that extend beyond the processing plant and follow animal products (marked with an animal-specific bar code) to the retail consumer.\nIncreasingly, international buyers of U.S. animal products are demanding better information on those products' history—for example, where and how the animals were raised, how the products were prepared, and what is the nature of the marketing chain the products followed to reach their consumer markets. Traceability responds, in part, to these demands.", "As a national animal ID and traceability system has evolved in the United States, so too have its proponents and critics. This section briefly highlights the potential benefits of a national animal ID and traceability system as cited by its proponents, and the criticisms that have been raised by program opponents.", "Proponents argue that an animal ID and traceability system:\n1. Enhance s animal health surveillance and disease eradication .\nAccording to USDA, animal ID would facilitate early detection of dangerous and costly animal disease outbreaks, while a traceability system would help to identify the source as well as those animal populations that were exposed to the disease, and to contain them via zoning or compartmentalization. Together, USDA claims that a national animal ID and traceability program would likely reduce animal producers' disease testing costs by controlling and/or eradicating animal diseases at both regional and national levels.\n2. M inimize s economic impact of an animal disease outbreak .\nRegionalization or compartmentalization is a disease management tool that contains a disease outbreak to a specific zone, while leaving the remaining areas outside of that zone free of the particular disease and not at risk for international trade restrictions. Rapid identification and compartmentalization of a disease outbreak limits both the spread of commercially harmful diseases and, thereby, the number of animals that would otherwise have to be destroyed or removed from marketing channels. Compartmentalization also facilitates re-establishing international market access and the reopening of lost export markets. The more rapid the response to a disease outbreak, the more limited the economic damage.\n3. Increase s d omestic m arketing o pportunities .\nMany farmers and ranchers already keep track of individual animals and how they are being raised, in order to identify and exploit desirable production characteristics—such as \"organic\" or \"grass-fed\" or \"hormone-free\"—that can command substantial price premiums in certain retail markets. Universal bar codes on processed food, including many meats, are widely used by processors and retailers to manage inventories, add value to products, and monitor consumer buying. When consumers seek meat, eggs, or milk from animals raised according to specified organic, humane treatment, or environmental standards, ID and traceability can help firms verify production methods.\nGovernment-coordinated programs also have been established for these purposes. For example, a process verification program operated by USDA's Agricultural Marketing Service (AMS) \"provides livestock and meat producers an opportunity to assure customers of their ability to provide consistent quality products by having their written manufacturing processes confirmed through independent, third party audits,\" according to AMS. USDA \"Process Verified\" suppliers can have marketing claims such as breeds and feeding practices, and so label them, under this voluntary, fee-for-service program.\nOther programs employing varying levels and types of traceability include the domestic origin requirement for USDA-purchased commodities used in domestic feeding programs; the national organic certification program, which AMS also oversees; and the mandatory country-of-origin labeling (COOL) program.\n4. Provide s a valuable management tool for producers .\nA traceability program that follows animal products to consumers would provide post-mortem information on cattle with respect to success of various production techniques (e.g., feed types, feed-pasture ratios, or genetics). Similarly, an ID system would be ideally suited for tracking the performance history, along with other relevant criteria, of racing or show animals. It would also increase transparency in the supply chain from producers to consumers; thereby reducing the risk of unfounded liability claims against livestock producers. Finally, an animal ID and traceability program would help producers maintain records on animal movements and health, breed registries, and other marketing activities.\n5. Addresses f ood s afety and n ational s ecurity c oncerns .\nFederal and state food safety agencies collaborate with APHIS to protect the food supply from the introduction, through animals, of threats to human health, such as tuberculosis, and foodborne illnesses from bacteria like Salmonella and E. coli O157:H7. Generally, when local health officials can link an illness to a particular product, firms and their regulators have been able to trace that product back to the processor and/or slaughter facility. It has been more difficult to determine which particular animals, herds, or flocks were involved. Some believe that a more rigorous traceback and animal ID system would facilitate food recalls, possibly contain the spread of a foodborne illness, and help authorities stem future incidents. Others, particularly many within the food industry, strongly disagree, countering that such a system would not be based on sound science, and would be technically unworkable and costly.\n6. Enhance s foreign marketing opportunities for animal products .\nIn the global marketplace, animal disease programs, aided by traceability systems, are used both to reassure buyers about the health of U.S. animals and to satisfy foreign veterinary and/or food safety requirements. In addition, they assist in assuring credible attributes of animal products with consumers, thus improving opportunities for capturing value-added niche markets by certifying production processes—that is, for export programs that ensure certain aspects of the animal production process such as hormone- or antibiotic-free production.\nAfter BSE appeared in North America in 2003, USDA's AMS developed an export verification (EV) program for U.S. plants seeking to meet the differing beef import specifications of various countries like Japan, a key foreign market for U.S. beef. AMS establishes the standards that U.S. suppliers must follow if they want to ship beef to these countries, and certifies that the proper procedures are in place. While EV is \"voluntary,\" it also has become a prerequisite for access to the Japanese, Korean, and other foreign markets.\nUSDA contends that establishing an internationally recognized system of traceability is likely to enhance the competitiveness of U.S. exports of animals and animal products. In fact, the lack of a standardized, national animal identification system was one factor that prevented the United States from receiving \"negligible risk\" status (the best status possible under the rating system) for BSE from the World Organization for Animal Health (OIE). Receiving negligible risk status would likely enhance the United States' ability to compete internationally, but USDA contends that it would also support U.S. domestic price structures, so that all producers—regardless of their interest in international marketing—would benefit when the United States expands its export markets.\n7. Enhance s animal welfare in response to natural disasters .\nIn the event of a national disaster, such as a hurricane or major flood, an animal ID system could be used to locate and rescue at-risk animal populations.", "Opponents argue that an animal ID and traceability system:\n1. Constitutes an i nvasion of privacy .\nOne of the primary concerns cited by opponents or critics of a national animal ID program is that the collection of personal identification information and production methods represents a government invasion of privacy and could potentially result in the public disclosure of proprietary information. These critics claim that personal data held by government authorities is not secure and may ultimately be released to the broader public.\n2. Increase s c osts and technical c omplexity .\nOther critics cite the likelihood of increased producer-level costs of implementation with no guarantee of any market benefit. This concern was at least partially born out by a USDA-funded benefit-cost analysis of animal ID implementation in the United States (discussed in detail in a later section of this report) which found that over 90% of the annual cost of such a program would fall upon the cattle sector.\nIn addition, the as-yet-unknown technology requirements (e.g., computer hardware/software, record keeping, radio frequency recording, etc.) could potentially increase the complexity of operations and could easily exceed an operator's capability.\n3. Rewards vertical integration at the expense of family farms .\nStudies have shown that the cattle industry is expected to bear the brunt of the costs of implementing a national ID program, in large part because each individual animal will have to be tagged, unlike in the large, vertically integrated pork and poultry industries, where animals are usually raised and moved in lots. Critics claim that this added cost factor would unfairly disadvantage cattle producers in domestic and international meat markets. For small operators who are unable to spread such new costs over large operations, ID costs would likely erode an already thin profit margin.\n4. D isadvantages family farms with a l ack of market power in price structure .\nIt has also been argued that, as more tracing requirements are imposed, large retailers and meat packers will exercise market power to shift compliance costs backward to farms and ranches, making it even more difficult for the smaller, independent ones to remain in business.\n5. Is objectionable on r eligious grounds .\nCertain religious groups claim that a government program marking individual animals is an apocalyptic sign of the world's end and should therefore be avoided.\n6. Other potential reasons for producer push-back .\nAlthough the issue is unstated, some producers are likely concerned that greater transparency at the farm level as a result of more thorough counting and reporting of livestock numbers and sales may increase both income and property tax liabilities, particularly for those producers who previously provided less than full disclosure of animal numbers and farm operations.", "At the national level, an animal ID and traceability program emerged and evolved over the years from various state and national animal disease eradication and pest control programs. For example, USDA's Animal and Plant Health Inspection Service (APHIS)—the federal agency that oversees animal health in consultation with state veterinary authorities—directs several programs for animal disease eradication and control that include animal identification components effectively requiring ID and tracking. As part of a brucellosis eradication program, uniquely numbered brucellosis ID tags were routinely attached to animals, noting that they had been vaccinated or tested. The program was successful, and brucellosis has largely been eradicated from U.S. commercial herds; as a result, animal ID became less common as the program wound down.\nIn addition to ID requirements under selected APHIS programs, certain classes of livestock have long had official identification requirements before entering interstate commerce. For example, the official disease programs for pseudorabies in swine and scrapie in sheep require that both of these species be officially identified before entering interstate commerce. Often state laws or breed association rules require animals of these and other species, like cattle and horses, to be identified to participate in shows or races. But these various programs are not national in scope and vary in their manner of animal identification, record keeping, and data management.\nU.S. animal ID limitations were noted after bovine spongiform encephalopathy (BSE, or mad cow disease) was discovered in the United States (in a Canadian-born dairy cow) in December 2003. A number of trading partners that had quickly closed their borders to U.S. beef reportedly were reluctant to reopen them, due in part to U.S. difficulties in tracing the whereabouts of other cattle that had entered the United States with the BSE-infected cow; similar difficulties arose in determining the whereabouts and/or herd mates of the two later U.S.-born BSE cases.\nThe National Animal Identification System (NAIS) program, first proposed in 2002, attempted to build on and learn from these earlier programs, and, although administered by USDA's APHIS, was based on a state-federal-industry partnership that provided the opportunity for producers not part of a disease program to voluntarily participate in national animal health safeguarding efforts. Certain states have mandated some components of animal identification, such as premises registration; however, at the federal level, NAIS was a voluntary program.\nUSDA's February 5, 2010, decision to replace NAIS with a more flexible, state-based program that mandates traceability only for livestock moving in interstate commerce responds to strong criticism of NAIS from the U.S. cattle sector, in large part because the burden of cost and implementation would fall most heavily on cattle producers.\nThe following discussion refers primarily to the now-outdated NAIS system, but is useful in that many aspects of NAIS remain highly relevant to the potential implementation of the new, as-yet-unnamed system to take its place.", "NAIS was intended to cover all major commercial livestock and poultry species raised in the United States, including beef and dairy cattle, hogs, sheep, goats, chickens, and turkeys, as well as large animal species raised and kept for sports and/or recreation, most notably horses. This was a new development in the United States, as there has never been a nationwide animal ID system for all animals of any given species.\nHousehold pets were excluded from NAIS. Only animals that enter commerce or that commingle with animals at other premises (like sales barns, state or national fairs, or exhibits) were to be identified. Also, animals that typically are moved in groups—such as hogs and poultry—could be identified as part of their group rather than individually.", "Because NAIS was voluntary, and because much of its implementation was to occur at the local and state levels, USDA's involvement was focused on popularizing the program, ensuring that adequate information was available to all participants (both actual and potential), and addressing the following general issues:\nprioritizing implementation by species/sectors, taking into account where the greatest disease concerns and traceability opportunities exist; harmonizing animal ID programs; standardizing data elements of disease programs to ensure compatibility; integrating automated data capture technology with disease programs; partnering with states, tribes, and territories; collaborating with industry; and advancing ID technologies.\nTo ensure that NAIS participants and other interested stakeholders had access to pertinent information about the program, USDA published a series of reports that provided participant guidance, technical standards, and implementation strategies. Three reports in particular (described below) provided detailed information about the status of NAIS, how to participate in the program, including the necessary technical details, and the future direction of program implementation.", "A Business Plan to Advance Animal Disease Traceability detailed recommended strategies and actions to enable existing state and federal regulated and voluntary animal health programs, industry-administered animal health and marketing programs, and various animal identification techniques to work in harmony to enhance animal disease traceability.", "The NAIS User Guide , first published in November 2006, provided guidance to producers and owners of animals, as well as other sectors involved in the animal agricultural industry, on how to participate in NAIS and how participation would benefit them.", "As a supplement to the User Guide , the Program Standards and Technical Reference document established data standards for NAIS, including:\nthe data element formats for premises identification numbers, animal identification numbers, and group/lot identification numbers, needed to ensure compatibility across information systems; standards for official identification devices that utilized the animal identification number; and information on technology standards published by the International Organization for Standardization (ISO) that were utilized in NAIS.\nUse of these standards by states, tribes, industry organizations, identification device manufacturers, and other entities involved in NAIS would help to ensure system effectiveness.", "The primary goal of NAIS was to protect the commercial interests involved in U.S. agriculture from the potential harm associated with the outbreak of an animal disease. NAIS was not intended to serve as a food safety program per se, although there could be positive public safety effects from its successful implementation.\nUSDA identified the following specific goals for NAIS:\nIncrease the United States' disease response capabilities. Limit the spread of animal diseases. Minimize animal losses and economic impact. Protect the livelihoods of animal producers. Maintain market access.\nTo accomplish these goals, USDA's long-term goal was to achieve the ability to identify and trace animals of interest within 48 hours of an animal disease problem. To meet this time frame, animal health officials would require rapid access to reliable and complete data on both animal ID and movement history.", "When a disease outbreak occurs, animal health officials need three key pieces of information in order to contain the outbreak and limit its commercial damage.\nWhich animals are involved in a disease outbreak? Where are the infected animals currently located? What other animals might have been exposed to the disease?\nNAIS was designed to meet these three data needs so as to facilitate quick traceback from the point of discovery of an animal disease at any point in its commercial marketing chain back to its original premises, while noting all other animals that came into contact with the diseased animal. To collect the requisite information, NAIS was composed of three sequential components—premises registration, animal identification, and animal tracking.", "The first phase of NAIS involved registering the geographic location (i.e., the farm or ranch) where the livestock or poultry were raised, housed, or boarded. To meet USDA's data standards for premises registration, states and tribes had to collect and maintain \"at a minimum\" the following pieces of information:\npremises identification number (PIN); name of entity; contact person for premises; mailing address or latitude/longitude coordinates of the premises; contact phone number; operation type; date activated, date retired, and the reason retired (to determine whether animals still exist at the location); and alternative phone numbers.\nThe PIN, a unique seven-digit number permanently assigned to a location, would not change following a change of ownership. A producer or owner could have multiple PINs based on the nature and type of operations (e.g., if a single producer had distinctly different animal production activities taking place at different locations).\nPremises were to be registered at one of the state (or tribal) animal health authorities. Premises registration was free and did not require participation in the following two steps. USDA maintained the premises information in a National Premises Information Repository, but declared that it would protect individuals' private information and confidential business information from disclosure.\nAccording to USDA, premises information would ensure that producers are notified quickly when a disease outbreak or other animal health event might harm their operations. In an emergency, animal health officials would be able to quickly locate at-risk animals and take precise actions to address the situation, minimize hardships, and speed disease eradication efforts as much as possible.\nIn late 2006, the goal was to have all premises registered by 2009. However, as of September 6, 2009, only about 37% of premises (excluding horses) were registered under the NAIS out of an estimated 1.4 million U.S. animal and poultry operations ( Table 3 ). USDA stated that much higher levels of participation would be needed to successfully implement NAIS.", "The second phase of NAIS involved assigning each individual animal or each specific group of animals a unique number from a uniform numbering system. A group ID is best suited for animals, such as swine or poultry, that are raised in confined lots and move through the production chain as one group.", "An animal identification number (AIN) is a unique, 15-digit number, where the first three numbers are the country code and the following 12 digits are the animal's unique identifying number. The first three numbers of an AIN issued in the United States would always be 840. As a result, tags, radio frequency identification devices, and other ID devices that comply with the 15-digit AIN numbering system are often referred to as 840 devices.\nAnimal ID under NAIS was accomplished by obtaining USDA-recognized numbering tags or devices from representatives of authorized manufacturers. AIN devices include the traditional visual ear-tag or tattoos that are read by physical viewing, or the radio frequency identification (RFID) tags as well as injectable transponders, which may be read electronically from a moderate distance and without direct line of sight. USDA did not designate any specific identification technologies beyond the minimum requirements for official identification described in the Code of Federal Regulations .\nIn recent years, the use of RFID devices and injectable transponders with information that is read by scanners and fed into computer databases is becoming more common, because these devices allow for faster, easier access to ID information. Because they can be read electronically, RFID and electronic transponder devices eliminate the need to approach or restrain animals, thereby reducing stress and increasing the quality of the data obtained.\nSome animals did not need to be identified under NAIS, specifically animals whose movement poses a low risk of disease spread or exposure. Such cases include animals that never leave their birth premises (e.g., that die and are buried at their birthplace) or are only moved directly to custom slaughter for personal consumption. However, USDA encouraged all animal owners to register their premises, regardless of the number of animals present, because many animal diseases (such as avian influenza, foot-and-mouth disease, and vesicular stomatitis) can be spread whether an animal leaves its home premises or not.\nThe person responsible for the care of the animal would choose when to place the ID on the animal. Some producers might want to attach ID devices shortly after birth; others might choose to attach a device later. However, USDA contended that an animal should have an ID attached before it moved from its current premises to another producer's premises, a livestock market, or a feedlot, among other locations. If the animals could not be tagged at their current premises, producers might elect to have their animals tagged at an auction market providing tagging services when they were ready to market their animals. In such cases, when the animals were unloaded, they would be tagged before they were commingled with animals from other premises. In some areas, tagging services are available. Producers who purchase animals (whether from a domestic or foreign source) and bring them into their operation would be expected to maintain the official identification already on the animal—no additional identification or change of identification of those animals would be needed.", "Animals that typically move through the production chain as a group of animals of the same species could be identified by group/lot identification numbers (GINs), rather than individual numbers. This practice is most common in the poultry and pork industries. However, group/lot identification could be an option for other species moving through the production chain as a group. The GIN is a 15-character number consisting of the seven-character PIN; the six-digit date (MMDDYY) that the group or lot of animals was assembled; and a two-digit number (01 to 99) to reflect the count of groups assembled at the same premises on the same day. Since the GIN is \"self-generated\" by the producer (not assigned by USDA), the GIN of each group would be maintained at the premises by the producer in his or her management records.\nThe ID would remain with the animal for its lifetime. The uniform numbering system would link each producer's livestock or poultry flock to the animal's birthplace or premises of origin. The actual identification protocol is sensitive to the unique qualities of different species groups, and the way they are raised, moved, commingled, and processed.", "The third phase of NAIS involved access to timely, accurate animal movement records in order to quickly locate at-risk animals in the event of a disease outbreak, and to limit the disease to a clearly defined region or compartment. Under this third step, a producer would select one of the NAIS-compliant animal tracking databases (ATDs) maintained by states and private industry (i.e., not the federal government) to which the producer could report the movement of animals shipped from or moved into their premises. Under NAIS, only the minimum, standardized tracing information was necessary for participation. The minimum traceback information included:\nthe national premises identification number (PIN); the animal ID number (AIN) or group ID number (GIN); the date of the event; and the event itself (e.g., move-in to a new premises or move-out of the current premises).\nOther animal-specific data (e.g., age, species, sex) that supported NAIS in traceback situations were also standardized, but were not necessary for participation.\nThe traceback information would be read and recorded each time that a notable movement between locations occurred. Movements within a production unit for management purposes (e.g., from pasture to pasture) were not considered to impact disease spread, and therefore were not necessary to report relative to NAIS.\nThe voluntary animal tracing component of NAIS was a public/private partnership. Both industry—through private systems—and states would operate and maintain ATDs, which contain the animal location and movement records that producers report to help safeguard animal health. In other words, the federal government would not maintain the ATDs; states and privates entities would. Having states and industry maintain these ATDs was part of USDA's plan to assure confidentiality for participants. On the federal side, USDA would operate a portal system to enable animal health officials to submit requests for information to the administrators of the ATDs when investigating an animal disease event. This system was known as the Animal Trace Processing System (ATPS).\nWhen there was a disease outbreak or other animal health event, the ATDs were designed to provide timely, accurate reports that showed where potentially exposed animals had been and what other animals had come into contact with them. USDA defines retrieval of traceback data within a 48-hour window as optimal for efficient, effective disease containment.\nState and federal animal health officials would use the system only in the following situations:\nan indication (suspect, presumptive positive, etc.) or confirmed positive test for a foreign animal disease; an animal disease emergency as determined by the Secretary of Agriculture and/or state departments of agriculture; or a need to conduct a traceback/traceforward to determine the origin of infection for a program disease (brucellosis, tuberculosis, etc.).", "", "As of September 2008, about 40% of potential premises in the United States (including premises with horses) had been registered ( Table 4 ), although there was substantial variation in participation across species and states ( Table 3 ). Poultry and sheep registration was estimated at 95%, swine at 80%, goat at 60%, horse at 50%, and cattle at 18%.\nOn September 6, 2009, APHIS reported that 531,284 animal premises (excluding horses) had been registered in one of the available databases ( Table 3 ). This represents 36.9% of the estimated 1.4 million livestock and poultry farms (with animal product sales of at least $1,000) in the United States, up slightly from a year earlier.\nTo achieve an effective response to an animal disease outbreak, a certain level of participation is necessary. According to USDA, NAIS would have to achieve a \"critical mass\" level of participation to achieve its long-term goal of 48-hour traceback. USDA estimated that 70% of the animals in a specific species and/or sector would need to be identified and traceable to their premises of origin to achieve the necessary \"critical mass.\" Dr. John Clifford, USDA's Chief Veterinary Officer for animal health, also cited a participation rate of 70% of the animals in a specific species—that could be both identified and traceable to their premises of origin—as necessary to provide an effective measure of traceability. However, Dr. Clifford suggested that a much higher participation rate, perhaps as high as 90%, would be necessary to ensure the full benefits of the system.\nSome animal ID program supporters have criticized USDA for moving too slowly and/or not setting a clearer path toward universal ID. A July 2007 report by the Government Accountability Office (GAO) concluded that a number of problems had hindered effective implementation of animal ID, such as no prioritization among the nine animal species to be covered to focus on those of greatest disease concern; no plan to integrate NAIS into existing USDA and state animal ID requirements; and no requirement that some types of critical data be provided to the databases, such as species or age. USDA's NAIS Business Plan (2008) was intended to respond to several of the GAO criticisms.\nOthers believe that USDA's slow progress has simply reflected the wide differences among producers and other interests over many unresolved issues.", "NAIS was operated as a voluntary program. However, USDA officials expressed concern that participation rates were too low for NAIS to be effective at achieving its 48-hour traceback window. These officials publicly called for Congress to address the low participation rates either by increasing the incentives to participate or by making the program mandatory.\nOthers, including many state animal health officials, had already made similar requests. The American Veterinary Medical Association (AVMA), which represents more than 78,000 veterinarians across the United States, addressed Congress on its support for mandatory participation in NAIS. At meetings in October 2006, the National Assembly of State Animal Health Officials and the U.S. Animal Health Association's livestock committee each approved a recommendation that, as a step toward a national system, USDA make animal ID mandatory for all U.S. breeding cattle. Consumer advocacy groups also have pressed for a mandatory national system. Among livestock industry groups, the National Pork Producers Council (NPPC), the National Milk Producers Federation (NMPF), and the American Meat Institute (AMI) announced their support for a mandatory animal identification system. Both the chairman of the House Committee on Agriculture, Collin Peterson, and the chairwoman of the House Committee on Appropriations' Subcommittee on Agriculture, Rosa DeLauro, expressed their interest in seeing NAIS implemented as a mandatory program as a way to avoid devastating losses from virulent diseases.\nIn contrast, groups opposed to a mandatory NAIS have been associated primarily with the cattle industry, including the Rancher's-Cattlemen Action Legal Fund (R-CALF), the National Cattlemen's Beef Association (NCBA), and the Farm-to-Consumer Legal Defense Fund. Some opponents reportedly have worked to block mandatory and/or even voluntary programs in various states. The cattle groups fear that high costs for equipment to carry out the system will favor continued concentration in the industry to the disadvantage of small, independent producers, and they question whether USDA can keep the information confidential. Several members of Congress from districts and states with large cattle industries have echoed the cattle industry's concerns.\nThere has been some uncertainty over the degree of authority that a U.S. Secretary of Agriculture has in determining by decree whether NAIS would be a voluntary or mandatory program. However, in August 2006, then-Secretary of Agriculture Mike Johanns responded to the growing concerns of the cattle industry by announcing that USDA would continue to implement NAIS as a voluntary program. Proponents of a mandatory NAIS program have argued that, with a change in administration, Secretary Vilsack should have the authority to reverse Secretary Johanns's earlier determination and announce that participation in NAIS would be mandatory for the U.S. livestock industry.", "An animal ID system imposes a variety of costs, such as for tags or other identifying devices and their application, and data systems to track animals. As the extent of traceability increases, so do likely costs. Cost estimates of a national system have varied broadly, and are not directly comparable, a reflection of estimators' differing assumptions and of the varying designs of proposed programs. A related policy question is who should pay—the industry (and ultimately consumers), government, or both? USDA's ideas have called for expenses to be shared (e.g., database costs funded by government and the identifying devices by producers).\nIt has been argued that, as more tracing requirements are imposed, large retailers and meat packers will exercise market power to shift compliance costs backward to farms and ranches, making it even more difficult for the smaller, independent ones to remain in business. Larger, more vertically integrated operations are more likely to have the resources and scale economies to survive, some have argued. On the other hand, if traceability costs forced big meat plants to reduce line speeds, \"smaller plants with slower fabrication speeds may be better equipped to implement traceability to the retail level and may find niche market opportunities.\"\nOn April 29, 2009, APHIS released a study, the KSU Benefit-Cost Study (2009) , of the economic benefits and costs of adopting USDA's NAIS. The research was conducted by economists at Kansas State University in collaboration with researchers from Colorado State University, Michigan State University, and Montana State University. The report represented the researchers' best estimate of what would result from the adoption of NAIS across multiple species and at varying participation rates. Key study assumptions concerning individual versus group ID tagging included the following: all cattle are individually ID tagged; all swine are group ID tagged, except for cull breeding animals, which require individual ID tagging; and all poultry are uniquely group ID tagged. The results for a 100%-participation scenario are summarized in Table 5 .", "The KSU Benefit-Cost Study (2009) showed that annual estimated costs for implementing NAIS throughout the livestock (i.e., food animal) industries would be approximately $228 million (at 2009 prices) for full pre-harvest traceability with 100% participation ( Table 5 ). The cost expands to $304.2 million when horses are included. The cost estimates are less for lower levels of participation and for more limited traceability features. Over 90% of the food animal industry costs for such a system would be associated with the cattle sector, which equates to $5.97 per animal marketed. This is largely due to the individual animal ID required, whereas swine, sheep, goats, and poultry can often be sufficiently traced using premises and group lot information.\nIdentification tags and tagging cattle accounted for 75% of the cattle sector's annual adoption costs. The estimated tag and tagging costs varied among cattle producers from $3.30 to $5.22 per animal, depending on current identification practices. In comparison to the cattle industry's $5.97 average cost per marketed animal, the average per animal cost for other livestock sectors was $0.059 per swine, $1.39 per sheep, $0.0007 per broiler, $0.002 per turkey, and $0.0195 per layer.", "The study also found that the economic benefits from NAIS with 100% participation easily exceeded the costs. Benefits included:\nsubstantial federal and state government savings in connection with administration of animal disease control and eradication programs due to the reduction in disease outbreaks; economic benefits from quickly re-establishing markets following a disease outbreak, plus possible expanded market access in the international marketplace; avoidance of significant losses—as great as $1.32 billion per year over a 10-year period—due mostly to lost export market access; and increased consumer demand resulting from higher confidence in food products.\nBy evaluating the cost-benefit effects over a range of participation levels, the study found that implementation of NAIS would become more cost-effective as participation levels increase, and that NAIS might not be economically viable at lower participation levels.", "Some producers have been concerned that they would be held liable for contamination or other problems over which they believe they have little control after the animal leaves the farm. On the other hand, documentation of management practices, including animal health programs, can help to protect against liability because it can prove where animals originated and how they were raised. Also at issue is whether producers can and should be protected from public scrutiny of their records. The federal Freedom of Information Act (FOIA) entitles members of the public to obtain records held by federal agencies. Some producers have been concerned, for example, that animal rights extremists might misuse information gained through FOIA, or that the data collection might reveal proprietary information. However, FOIA exempts access to certain types of business information, such as trade secrets, commercial or financial information, or other confidential material that might harm the provider.\nIn the 110 th Congress, conferees deleted a provision (Sec. 10305) in the Senate-passed version of H.R. 2419 , the omnibus 2008 farm bill enacted as P.L. 110-246 , that would have required USDA regulations addressing \"the protection of trade secrets and other proprietary and/or confidential business information\" disclosed due to participation in an animal ID system.", "A South Korean agriculture official recently reported that his government intends to impose traceability requirements on imported beef as soon as December 2010. Currently the EU requires individual identification and traceability for all suppliers, domestic and foreign.\nPresently, Japan does not specifically require traceability for imported beef, although imported beef is subject to several other specifications including a 20-month age limitation. The opposition Democratic Party of Japan (DPJ) has declared that, if elected, it will work toward early passage of both an existing \"BSE Measures Law\" and a \"Beef Traceability Law\" in order to subject imported beef to the same traceability requirements as domestic beef. On August 30, 2009, the DPJ won 308 seats in the Japanese Diet. The DPJ hopes to forge a coalition with two minor parties that would give it a two-thirds majority, enabling it to force through legislation. However, as the DPJ is involved with setting up its new administration and prioritizing its agenda, it is unlikely that the issue of a traceability requirement on imported meat will be addressed as an early priority.\nThe only top tier beef exporter in the world besides the United States without a traceability system is India, which exports very low-valued canned/cooked beef. According to CattleFax analyst Brett Stuart, \"While few U.S. producers are willing, or expected, to implement a system voluntarily with little direct benefit, we may be rapidly approaching a future where beef traceability is the price of admission into the global beef world.\"\nThe WTO's Agreement on the Application of Sanitary and Phytosanitary Measures applies rules to the use of non-tariff trade barriers (e.g., traceability and identification requirements) to restrict market access. The implementation of traceability measures applied to imports must meet two requirements. First, any traceability requirements must be scientifically justified based on an assessment of risk to human, animal, or plant health. Second, they may be equivalent to, but not more rigorous than, the standards applied to domestic industry.", "Since early 2004, USDA has committed nearly $142 million to the development of NAIS, providing many of the funds to states and tribal organizations for research, database systems, and startup of premises registration. Despite the large monetary investment, overall participation in NAIS remained low through 2009 at about 40% of livestock producers, and substantial criticism of the proposed national program resonated from the U.S. cattle sector.\nIn response to slow growth in NAIS participation rates and to better assess the producer concerns surrounding NAIS implementation, Secretary of Agriculture Tom Vilsack undertook a series of public listening sessions around the country between April 15 and June 30, 2009, to hear from livestock producers and other interested parties concerning their views of the NAIS.\nSecretary Vilsack said that he hoped to use the listening sessions to gather feedback and input that would assist him in making decisions about the future direction of animal ID and traceability in the United States. It was the information obtained from these listening sessions, plus the thousands of written comments submitted to USDA, that motivated Secretary Vilsack to announce the abandonment of NAIS in favor of a more flexible, state-based system on February 5, 2010 (as described in this report's introduction).", "", "From FY2004 through FY2009, approximately $142 million was appropriated for NAIS ( Table 6 ). However, since 2008 Congress expressed growing frustration with the slow pace of NAIS implementation relative to the funding outlays. The explanatory language that accompanied the FY2009 USDA appropriation ( P.L. 110-161 , Division A), explicitly directed APHIS \"to make demonstrable progress\" to implement the program, and to meet a number of specific objectives (regarding 48-hour traceback ability) that were in the agency's 2008 traceability business plan.\nIn 2009 the Administration proposed increasing the funding for the NAIS slightly to $14.6 million in FY2010. However, on June 11, 2009, the House Agriculture Appropriations Subcommittee voted to eliminate funding for USDA's NAIS from the FY2010 appropriations bill ( H.R. 2997 ). Subcommittee chairwoman Rosa DeLauro, along with Collin Peterson, chairman of the House Agriculture Committee, both of whom expressed interest in seeing a mandatory animal ID program passed into law, also expressed frustration with the slow pace of national sign-up for NAIS. The full committee's report ( H.Rept. 111-181 ) observed:\nAfter receiving $142 million in funding since FY2004, APHIS has yet to put into operation an effective system that would provide needed animal health and livestock market benefits. Until USDA finishes its listening sessions and provides details as to how it will implement an effective ID system, continued investments in the current NAIS are unwarranted.\nThe Senate version of H.R. 2997 (originally S. 1406 ) originally provided for the entire $14.6 million proposed by the Administration. An amendment to zero out Senate funding for NAIS failed to pass in committee in July; however, another floor amendment ( S.Amdt. 2230 ; introduced by Senators Tester and Enzi) was passed on August 3, 2009, that reduced the FY2010 funding to $7.3 million. The successful amendment explicitly restricted use of FY2010 funds to ongoing NAIS activities and purposes related to rulemaking for the program. The Senate version of H.R. 2997 , as amended, was passed by the full Senate on August 4, 2009. House and Senate differences in NAIS funding for FY2010 were resolved in conference and the final FY2010 funding level for NAIS was set at $5.3 million. The FY2010 Agriculture appropriations bill was signed into law as P.L. 111-80 by President Obama on October 21, 2009.", "USDA has claimed it has existing authority, under the Animal Health Protection Act (7 U.S.C. 8301 et seq. ), to implement an animal ID program. In the 110 th Congress, several bills were proposed (but not adopted) aimed at clarifying USDA's authority or spelling out what type of program should be established. They included H.R. 1018 , prohibiting USDA from carrying out a mandatory program and also seeking to protect the privacy of producer information under a voluntary system; H.R. 2301 , establishing an industry-led Livestock Identification Board to manage a national ID system; and S. 1292 , requiring USDA to implement a more comprehensive farm-to-consumer animal ID and meat traceability program. H.R. 3485 would have required comprehensive new traceability systems both for USDA-regulated meat and poultry and for other foods regulated by the U.S. Food and Drug Administration (FDA).\nIn the 111 th Congress, the broader food traceability provisions of H.R. 814 (DeGette) and S. 425 (Brown) both include the requirement that FSIS establish, within one year, a system that can trace each animal to any premises in which it was held at any time prior to slaughter, and each carcass, carcass part, or meat/poultry product from slaughter through processing and distribution to the ultimate consumer. The bills also would authorize the Secretary of Agriculture to require records to be maintained and to provide access to them for purposes of traceability.\nTraceability provisions have been incorporated into food safety legislation ( H.R. 2749 ) approved by the House and into a bill ( S. 510 ) expected to be the markup vehicle in the Senate, but these provisions would apply to FDA-regulated foods, not to FSIS-regulated meat and poultry products.", "The 111 th Congress held two hearings on the national animal ID system (NAIS), both in the House. On March 11, 2009, the House Committee on Agriculture's Subcommittee on Livestock, Dairy, and Poultry held a public hearing to review animal identification systems. Then on May 5, 2009, the House Committee on Agriculture's Subcommittee on Livestock, Dairy, and Poultry held a joint public hearing with the Committee on Homeland Security's Subcommittee on Emerging Threats, Cybersecurity, and Science and Technology to review the National Animal Identification System. Previous Congresses have held public hearings on issues related to animal ID, including animal health and disease matters, as well as bio-security and agro-terrorism.\nAppendix A. Chronology of NAIS's Development\nEarly U.S. History\nUse of animal ID in the United States dates back at least to the 1800s, when hot iron brands were used throughout the U.S. West to identify ownership and prevent thievery.\n1940s\nDuring the 1940s, the APHIS predecessor at USDA initiated an extensive program to identify cattle vaccinated for brucellosis. The official brucellosis vaccination tag and ear tattoo provided USDA with a highly successful animal ID program for cattle for decades. However, since brucellosis has neared eradication in the United States, the system of tagging and ID has been phased out.\n1950s-1980s\nIndividuals associated with animal industries recognized that finding potentially sick or exposed animals early in a disease outbreak was essential to containing the disease quickly. USDA slowly began piecing together plans for a national animal identification system.\n1986-1988\nBovine spongiform encephalopathy (BSE) or \"mad cow disease\"—a fatal neurological disease—is first identified in the United Kingdom's cattle and dairy herds. BSE is believed to be transmitted mainly by feeding infected cattle parts back to cattle (a practice widespread in the UK at the time). Subsequent testing found BSE to be widespread in the UK's cattle population and resulted in the slaughter of 3.7 million cattle.\n1997\nAn outbreak of foot and mouth disease (FMD) in swine in Taiwan cost $6.9 billion in losses and eradication costs, including the slaughter of 3.8 million pigs, and decimated its previously strong pork export market. Similarly, a major outbreak of Classical Swine Fever in the Netherlands resulted in the destruction of 12 million hogs and direct economic losses totaling $2.3 billion.\n2001\nAn outbreak of FMD in cattle in the United Kingdom ultimately led to the forced slaughter of over 10 million sheep and cattle and cost an estimated $7.9 billion in losses and eradication costs.\n2002\nAPHIS officials working with the National Institute for Animal Agriculture, the U.S. Animal Health Association, and other organizations helped to draft an early version of an animal ID plan.\n2003\nThe preliminary work plan was expanded by a group of approximately 100 state, federal, and industry representatives—the National Identification Development Team—which produced an initial draft of the U.S. Animal Identification Plan (USAIP).\nDecember 2003\nA draft \"U.S. Animal Identification Plan (USAIP)\" is published calling for recording the movement of individual animals or animal groups in a central database. APHIS's role was to design an ID numbering system, then allocate numbers to premises (e.g., farms, feedlots, auction barns, processing plants) and to animals or groups of animals. Finally, APHIS was to coordinate the data collection. The work plan envisioned by the USAIP had first called for all states to have an animal premises ID system by July 2004, with farm animals of all major species identified by July 2006. As the draft USAIP was being published in December 2003, the first case of bovine spongiform encephalopathy (BSE or mad cow disease) was detected in the United States.\nAmong the initiatives USDA quickly announced to shore up confidence in the beef supply was accelerated implementation of a verifiable national animal ID system including action taken by then-Secretary of Agriculture Ann Veneman who used her emergency authority to transfer $18.8 million of Commodity Credit Corporation (CCC) funds to APHIS for this purpose.\nApril 27, 2004\nSecretary Ann Veneman announced the framework for implementing the National Animal Identification System (NAIS). The outlines of the program have been periodically revised since then in response to changing circumstances and input from industry participants.\nMay 2005\nUSDA issued a \"Draft Strategic Plan\" that included timelines for a mandatory program by January 2009.\nAugust 2005\nUSDA announced the Draft Program Standards with a new set of \"guiding principles.\"\nApril 2006\nUSDA unveiled a new plan—\"Implementation Strategies\"—that set a timeline for full implementation by 2009. The plan stated that the program was voluntary with a contingency that USDA would consider regulations that would require participation if voluntary participation levels were not adequate to have an effective program.\nAugust 2006\nNAIS program was initially designed with a vision of ultimately transitioning from a voluntary program to a mandatory program. However, in response to various concerns raised by some producers, small farmers, and religious groups, then-Secretary of Agriculture Mike Johanns announces that NAIS would be entirely voluntary at the federal level.\nNovember 2006\nUSDA distributed a draft \"user guide\" as \"the most current plan for the NAIS [which] replaces all previously published program documents, including the 2005 Draft Strategic Plan and Draft Program Standards and the 2006 Implementation Strategies.\" This user guide first identifies the proposed three-step approach—premises registration, animal ID, and traceability—to implementing a national animal ID program. The user guide sought to assure livestock producers that the program would remain voluntary, and that it is bound by law to protect individuals' private and confidential business information.\nDecember 2007\nUSDA's APHIS released the National Animal Identification System (NAIS) — A User Guide and Additional Information Resource .\nApril 2008\nUSDA's APHIS released A Business Plan to Advance Animal Disease Traceability in draft form. This same report is currently available with a September 2008 date. The Business Plan attempted to further clarify current implementation strategies. It provided benchmarks to guide the NAIS' progress towards the long-term goal of 48-hour traceback of affected or exposed animals in the event of an animal disease outbreak. One of seven key strategies would be to prioritize species, with the primary commercial food animals in \"Tier 1,\" along with horses that need a health certificate or test when moved. All other livestock and poultry would be in a lower-priority Tier 2. Another key objective would be to bring 70% of the cattle breeding herd into NAIS by the end of 2009.\nJanuary 13, 2009\nAPHIS published a proposed rule entitled, \"Official Animal Identification Numbering System,\" (Docket No. APHIS-2007-0096) in the Federal Register for comment through March 16, 2009. The proposed rule would establish the seven-character PIN as the standard location identifier.\nApril 15, 2009 to June 30, 2009\nSecretary of Agriculture Tom Vilsack undertook a series of public listening sessions—with a variety of stakeholders representing the full spectrum of views on the NAIS—around the country to gather feedback and input to assist Secretary Vilsack and USDA in making decisions about the future direction of animal identification and traceability in the United States.\nApril 29, 2009\nUSDA's APHIS released the results of a comprehensive benefit-cost analysis— KSU Cost-Benefit Study (2009) —of the NAIS.\nFebruary 5, 2010\nSecretary of Agriculture Vilsack announced that USDA was substantially revising its approach to achieving a national capability for animal disease traceability. NAIS was to be replaced with a new approach that will allow individual states (and tribal nations) to choose their own degree of within-state animal identification (ID) and traceability for livestock populations. However, under the proposed revision USDA will require that all animals moving in interstate commerce have a form of ID that allows traceability back to its originating state.\nMarch 2010 Through August 2010\nUSDA held a series of public meetings on the Animal Disease Traceability framework to provide opportunities for state and tribal nation animal health officials to discuss and provide feedback. APHIS released two documents on August 13 ( Animal Disease Traceability Framework, Overview and Current Thinking and Animal Disease Traceability Framework , Update and Preliminary Content of the Proposed Rule ) that described what a proposed rule on traceability might contain.\nAppendix B. International Animal ID and Traceability\nOrganizations and Standards\nThe United States participates with its trading partners in several important international organizations that are involved in animal health, food safety, and trade in livestock and animal products including the CODEX alimentarius, the World Organization for Animal Health (OIE), and the World Trade Organization (WTO). In addition to U.S. participation in these international organizations, U.S. livestock and animal products are often subject to \"export certification\" standards imposed by importing countries.\nAs a member of the WTO, the United States agrees to abide by a set of international trade rules that seek to harmonize participation in international commerce and to provide for a framework for dispute settlement. In contrast, both the CODEX alimentarius and the OIE are designed to recommend scientifically-based standards for food safety and animal health, respectively, but such standards are not international laws; rather, they are intended as guidelines for countries when they are developing their own standards.\nWorld Trade Organization (WTO)\nIn response to concerns that market access may be limited by use of non-tariff trade barriers, the WTO's Agreement on the Application of Sanitary and Phytosanitary Measures explicitly restricts the implementation of traceability measures applied to imports to two requirements. First, any traceability requirements must be scientifically justified based on an assessment of risk to human, animal or plant health. Second, they may be equivalent to, but not more rigorous than, the standards applied to domestic industry.\nCODEX\nThe Codex Alimentarius Commission was created in 1963 by two United Nations' organizations—the Food and Agricultural Organization (FAO) and the World Health Organization (WHO)—to develop food standards, guidelines and related texts such as codes of practice under the Joint FAO/WHO Food Standards Program. The main purposes of this program are protecting health of the consumers and ensuring fair trade practices in the food trade, and promoting coordination of all food standards work undertaken by international governmental and nongovernmental organizations.\nWorld Organization for Animal Health (OIE)\nFounded in 1924 as the Office International des Epizooties (OIE) and renamed in 2003 as the World Organization for Animal Health, the OIE is an intergovernmental organization responsible for improving animal health worldwide. In its capacity as a leading international standard-setting organization for animal identification and traceability, the OIE helps its member countries and territories to implement animal identification and traceability systems in order to improve the effectiveness of their policies and activities relating to disease prevention and control, animal production food safety, and certification of exports.\nIn March 2006, the OIE's Terrestrial Animal Health Standards Commission established a first series of guidelines on identification and traceability on behalf of OIE Members, which democratically adopted them in May 2007 as official OIE standards in the Terrestrial Animal Health Code . Chapter four of the OIE's Terrestrial Code includes two sections on animal identification and tracing: section 4.1 which defines general principles, and section 4.2 which provides general guidance on the design and implementation of systems. In April 2008, the Director General of the OIE (Bernard Vallet) called for progressive implementation of animal identification and product traceability systems from the \"farm to the fork\" be progressively implemented worldwide. Under internationally recognized OIE standards, robust animal identification and tracing systems would allow compartmentalization and regionalization of a disease outbreak so that trade could continue for animal products from other parts of the country. The OIE's Terrestrial Code includes two sections that deal with compartmentalization: section 4.3 which defines general principles of zoning and compartmentalization, and section 4.4 which discusses application of compartmentalization.\nExport Certification\nCertification is frequently part of export verification processes imposed by importing countries. In the United States, certification is handled by USDA's Food Safety and Inspection Service (FSIS). Although each specific country can have its own specific beef importing requirements, certification generally refers to the idea that animal production methods and processing plants comply with the importer's veterinary, animal health, and sanitary standards. This often involves sanitary sampling and plant inspection by the importing country. The OIE contributes to harmonization of international certification standards through its various programs and via the promotion of transparency and reliance on scientific information as a basis for evaluation. Chapter 5 of the OIE's Terrestrial Code presents the general obligations related to certification as well as certification procedures.\nForeign Animal ID and Traceability Programs\nMany of our international trading partners and competitors, including Argentina, Australia, Brazil, Canada, the European Union, Japan, New Zealand, South Korea, and Uruguay, have adopted national animal identification systems with traceability capabilities ( Table B -1 ).\nCanada\nThe Canadian Cattle Identification Agency (CCIA) is a federally incorporated, nonprofit, industry-led organization that manages, administers, and develops policy for Canada's national individual identification, tracking, and trace-back system for the Canadian cattle and bison industry. The CCIA is led by a board of directors made up of representatives from several sectors of the Canadian livestock industry. The government's Canadian Food Inspection Agency (CFIA) is a non-voting board member of the CCIA. Agri-Food and Agriculture Canada (AAFC)—Canada's USDA counterpart—works closely with the CCIA to ensure that funding requirements for development and enhancement initiatives are met.\nAnimal identification for cattle in Canada was initially a voluntary program when first established in 2001, but was phased into a mandatory program on July 1, 2002. Initially, identification was based on traditional CCIA-approved ear tags. However, in 2003 the Canadian cattle industry committed to transitioning to Radio Frequency Identification (RFID). Since September 1, 2006, all cattle leaving their farm of origin must be tagged with a CCIA-approved RFID tag consisting of a transponder with encoded chip and antenna. According to the CCIA, RFID benefits include exceptional tag retention and readability, increased data integrity, ability to read at a distance without line of sight, and future capabilities of full animal movement tracking.\nCCIA executive director Kerry St. Cyr, estimated that, as of March 2009, the nationwide compliance rate for Canadian cattle ID was between 99-100%. With respect to privacy issues, St. Cyr stated that all personal information associated with ear tag number is securely maintained within the national database and is only accessed by authorized personnel in the event of an animal health issue. CCIA's repository—the Canadian Livestock Traceability System (CLTS)—houses the national ID and traceback systems for a variety of industry and species groups including dairy, beef, bison, sheep, pork, and poultry. The Canadian sheep and hog identification programs gained mandatory status in 2004 and 2008, respectively.\nAustralia\nThe National Livestock Identification System (NLIS) is Australia's system for identification and traceability of livestock. NLIS is a permanent whole-of-life system that allows individual animals to be identified electronically and tracked from property of birth to slaughter. A mandatory system for cattle has been in place since July 1, 2005, while a tracing system has been operational for sheep and goats since January 1, 2009. Similar tracing systems are under development for pigs and alpacas.\nAustralia began its animal identification system in the early 1960s in coordination with a national program to eradicate bovine tuberculosis and brucellosis. A mandatory property identification system for cattle was started in 1967 that identified herds in relation to a parcel of land; these were referred to as Property Identification Codes (PICs)—an eight-digit number that identifies the state, region, and specific location of a property—and provided the ability to trace all cattle back to their last property of residence. In the mid-1990s, the established visual-read-only PIC system was converted to an electronic (using Radio Frequency Identification Devices (RFIDs)) whole-of-life individual cattle identification system on the grounds that it was only a matter of time before such a system would be needed to ensure biosecurity, food safety and market access. In 1998, in response to a trading partner, individual identification was made compulsory for producers supplying the European Union (EU) market to provide meat from Hormone Growth Promotant-free cattle. In 1999, the NLIS was introduced.\nIn a 2004 audit of the NLIS—the National Livestock Tracing Audit—all of the animals identified using NLIS were traced to their property of origin within 24 hours. In contrast, only 41% of cattle without NLIS tags were located within 24 hours. In 2005, NLIS expanded to mandatory animal identification for all cattle leaving their property of birth, and all stock movements must be read at points of transfer including saleyards and slaughterhouses.\nIn Australia, at slaughter each individual animal is assigned a unique ID number that is attached to a bar code. As a result, individual animal ID information is linked not only to live animals, but can also be linked to carcasses, hides, and byproducts of each animal. However, unless specific agreements are reached between producers and harvesting facilities, the animals are generally grouped into lots by harvest date and time, and the individual animal information (carcass data) is not available.\nAustralia's NLIS is a joint commitment and working partnership between the Australian Government at federal and state levels and Australian industry. However, the Federal government has an overall policy coordination role and supplies funding to underpin the national system. State governments have legal jurisdiction over the movement and health of livestock. The state governments work with industry in joint management committees to develop and implement legislation that underpins the animal identification program. This committee in each state coordinates extension and producer education programs such as demonstration sites, an assistance hotline and industry seminars that assist producers with on-farm use of technology. The state governments have established a registry of PICs, are responsible for ordering of identification devices and have assisted with establishing the reading infrastructure and more recently auditing device performance and monitoring compliance with legislative requirements.\nA private industry company, Meat and Livestock Australia (MLA), currently administers the database for NLIS. As a result, data collected through the NLIS are protected from Australian Freedom of Information (FOI). Privacy and \"commercial-in-confidence\" provisions of the Australian FOI Act offer additional protection via exemptions for this type of data.\nEuropean Union\nThe European Union (EU) explicitly classifies animal identification as part of its \"food safety\" programs and has mandatory programs in place for the major commercial animal species. The basic objectives for EU rules on the identification of animals are the localization and tracing of animals for veterinary purposes for the control of infectious diseases. EU species-specific ID systems have evolved over time in response to particular disease events including the outbreaks of classical swine fever in 1997 and foot-and-mouth disease in 2001, as well as the 1997 BSE crisis. As the various animal ID systems evolved within the EU, they have each incorporated trace back and general traceability as a system goal along with animal identification.\nIn April 1997, in response to the BSE crisis, the Council of the European Union implemented a mandatory system of permanent identification of individual bovine animals enabling reliable traceability from birth to death. All bovine animals were required, by January 1, 2000, to be identified with double ear tags that identify individual animals, a register must be maintained at each animal location (farm, market, etc.), cattle passports to record movements, and a computerized electronic national database includes both ID and tracking information. On July 17, 2000, an additional regulation was passed that fully implemented and made mandatory the bovine ID and traceability system that is currently in place in the EU.\nIn addition to tracking animals from birth through harvest, the EU regulations stipulate the labeling of meat products in the following way: (1) a reference number that links the meat product to the animal or animals of origin; (2) identification of the member state where the meat was harvested and processed; and (3) the harvesting or fabrication facility's approval number(s). Mandatory food traceability has been a part of the general food law of the EU since January 1, 2005.\nSince July 1, 2000, it is compulsory for all equidae moving within the EU to be accompanied by a passport during their movements (on foot and during transport). A mandatory identification system for porcine animals went into effect on August 28, 2008. Initially adopted in December 2003, the EU's ID system for ovine and caprine animals was entered into in full force in July 2005.\nJapan\nJapan has a mandatory bovine ID and traceability system (in place since December 1, 2004) that identifies and tracks individual domestic animals from birth through the production chain until purchased by consumers. Imported beef is presently not subject to the same traceability requirements as domestically produced beef. However, political pressure for such a requirement appears to be building.\nIn response to a series of food safety crises in the early 2000s, including the discovery of bovine spongiform encephalopathy (BSE) in Japan's domestic cattle herd and a series of labeling scandals, the Japanese government implemented a series of animal traceability regulations and food safety oversight. The first phase began in July 2002 when the Law Relating to Special BSE Countermeasures was enacted. As part of this new law, Japan implemented a set of bovine animal traceability and identification laws that required traceability of domestically produced beef from farms to slaughterhouses by December 1, 2003. In the second phase, Japan's Diet passed the Food Safety Basic Law on May 23, 2003, establishing the Food Safety Commission. Then, in June 2003 the Beef Traceability Law was enacted that required traceability be extended from slaughterhouses to processors, distributors, and retailers by December 1, 2004. As a result, Japanese retailers and restaurants now display animal identification numbers to allow consumers to reference information about the domestic beef that they buy and eat.\nIn June 2003, Japan's Ministry of Agriculture, Forestry, and Fisheries (MAFF) also announced a new Japan Agricultural Standard (JAS) program to certify the traceability of imported beef. To gain certification, exporters must be able to provide all the same information required under the Law Relating to Special BSE Countermeasures—date of birth, sex, breed, name and address of owner, location of fattening, date fattening commenced, and slaughter date—plus the names of all feeds and pharmaceuticals used in producing the animal.\nSouth Korea\nSouth Korea has a mandatory domestic Beef Traceability System (BTS). Initiated in 2004 as a voluntary program, the BTS became mandatory for domestically produced beef in 2009. The BTS requires individual identification and registration in a central database system (known as the Beef Traceability database). The BTS operates as a whole-of-life traceability system, tracking each individual animal from birth to the consumer. For domestic beef produced under the BTS, Korean consumers can access a range of animal-specific information including the sex, breed, quality grade, location of birth and subsequent premises, owner's personal information, feed administered, medications given, location and date of slaughter, date of inspection, and location of processing.\nIn July 2009, a South Korean agriculture official reported that the South Korean government intends to impose traceability requirements on imported beef as soon as December 2010.\nNew Zealand\nNew Zealand does not have a fully functioning national animal ID system. In August 2004, the Animal Identification and Traceability Working Group (AITWG) was established when industry approached the government to work together to improve animal traceability in New Zealand. In March 2006, an Animal Identification and Traceability Governance Group (AITGG) was established to oversee the development of a new animal ID system under the name NAIT (National Animal Identification and Tracing). As of early 2009, NAIT still exists more as a project under development than as a functioning system.\nCurrently New Zealand has several partial systems that allow for traceability at herd levels but fail to provide effective traceability for individual animals. In addition, these partial systems leave substantial coverage gaps at the national level. The current focus is on developing traceability for cattle and deer populations. The Ministry of Agriculture and Forestry (MAF) has stated that the addition of other species—whether flock/group or individual identification—to the NAIT system should only be considered once the system is up and running for cattle and deer.\nNew Zealand's existing animal ID systems began under the Bio-security Act of 1993 which provided for two systems of partial bovine animal ID: the Management Information System for Dairy Administration (MINDA) and the National Bovine Tuberculosis Identification Program (NBTIP). MINDA is a voluntary livestock and herd management system that has very high dairy herd participation (97%) in New Zealand. However, MINDA was not designed and does not function well for animal traceability. In contrast, the NTBIP is a mandatory, herd-based system that requires the identification of cattle and deer before movement from their property of origin. In addition to these two systems, several other private and governmental traceability databases are available for producers' use on a voluntary basis. A new mandatory animal identification system for cattle and possibly deer is proposed to be in place by June 2011. The inclusion of deer is dependent on confirmation of the in-field performance of radio frequency tags.\nBrazil\nIn 2001, Brazil created the Brazilian Bovine and Buffalo Identification and Certification System (SISBOV, now renamed ERAS) as a farm-level identification system for cattle. In September 2006, SISBOV was extended to include the entire beef chain rather than just producers. Initially, SISBOV was intended as a mandatory program for identification of individual animals with a target date of 2008 for mandatory national participation; however, Brazil's domestic market had little demand for origination information and Brazilian cattle producers resisted adoption. As a result, SISBOV remains a voluntary program focused primarily on those premises engaged in providing animals to slaughterhouses that supply products destined for foreign markets that require origination information—most notably the EU which was Brazil's largest beef export market at that time and which requires substantial identification and traceability criteria for imported animal products. In addition, instead of identifying individual animals, animal classification has been by group lot under SISBOV. The EU has accepted individual tags for each group of cattle sold to export slaughterhouses.\nSince 2003, successive audits of SISBOV conducted by the EU's Food and Veterinary Office (EU/FVO) have found severe shortcomings in Brazil's animal identification and traceability system. In 2008, the EU imposed a near-total ban on beef imports from Brazil, unless they were sourced from farms that had been approved by Brussels. However, in a report released on August 4, 2009, the EU/FVO suggests that the situation in Brazil was getting worse. Europe has two major concerns: a lack of robust information, and the fear that foot-and-mouth disease could inadvertently enter the EU from Brazil.\nArgentina\nIn 2003, Argentina established a limited mandatory system of animal identification and traceability—the Argentine Animal Health Information System (SGS) —directed at animal products destined for the EU. The Argentine system included farm-of-origin information and permits that document cattle movements including whether the animals have been in areas exposed to FMD. However, as in Brazil, Argentina operates its animal identification system primarily for identifying cattle (generally in group lots) destined for export markets.\nStarting in 2007, official ID tagging has been required for all calves born after September 2007. The compulsory cattle identification program will facilitate tracking cattle from birth to slaughter; however, the entire Argentine beef herd is not expected to be tagged until 2017.\nBecause Argentina has traditionally been unable to control disease outbreaks—particularly foot and mouth disease (FMD)—its beef exports to the United States have been primarily restricted to thermo-processed beef (heated to a specific temperature for a specified amount of time). These export limitations provide ample incentive for Argentina to improve its animal identification and traceability system.\nUruguay\nUruguay is very dependent on external markets for selling a large portion of its annual domestic production. An estimate 68% of Uruguay's annual beef production was sold in foreign markets during the 2004-2008 period. As a result, Uruguay has a strong incentive to provide animal identification and traceability information as demanded by foreign buyers; however, it is only since late 2006 that Uruguay has been able to institute a comprehensive national program.\nOn September 1, 2006, Uruguay's Ministry of Livestock, Agriculture, and Fisheries (MAGyP) implemented a mandatory animal identification system called the National Livestock Information System (SNIG). Under SNIG, all individual animals must be identified (i.e., tagged) before six months of age or before they are transported from their property of birth. Two tags are required for all cattle, one highly visible and one electronic, for example, an RFID device. In addition, the appropriate paperwork that tracks cattle from birth to slaughter must accompany each animal. The Uruguayan government plans to have all herds registered and all cattle tagged by 2010. At that point, the government will require traceability be extended, not just to the point of slaughter, but also to all cuts of beef back to specific animals at their farm of origin.\nSNIG builds on Uruguay's national premises identification system (DICOSE)—established in 1973—which, for participating producers, provided information on each individual animal in their herds. Private individuals or companies registered within SNIG must be used for movement notification. Termination records are recorded by MAGyP. The SNIG database then includes premises and animal identification, movements, and termination data. SNIG does not yet mandate further traceability to consumers, although this is under consideration. The Uruguayan government currently pays for the ID tags, although it plans to shift the cost to the producers at some point in the future.\nCountries Not Implementing Animal ID Programs\nNot all countries with large animal populations have ongoing animal ID programs—examples include Bangladesh, India, Indonesia, and Russia. Reasons for the non-existence of animal ID programs in these countries include the following. Many of these countries have large land masses consisting of mainly agrarian populations that are not technologically advanced. Also, several of these countries lack national distribution chains for animal products, instead relying on local production and marketing processes. Alternately, in many poorer countries of the world, consumers are simply unable financially to be overly discriminating in their choice of animal products. As a result, many lower-income consumers are not willing to pay a premium for food that is identified and traceable." ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 2, 2, 3, 3, 3, 2, 2, 3, 3, 4, 4, 3, 1, 2, 2, 2, 3, 3, 2, 2, 1, 1, 2, 2, 2 ], "alignment": [ "h0_title h1_title", "", "h0_title", "", "", "h0_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_title", "h1_full", "h1_full", "", "", "", "", "", "h1_full", "h0_title h1_title", "h1_full", "", "h0_full h1_full" ] }

{ "question": [ "What will be implemented in the federal regulations?", "Since when has the USDA held public meetings and what was their goal?", "What is the expected outcome, and when will it be finalized?", "What are the expenditures and challenges of NAIS?", "What was the USDA's decision on revising NAIS and what caused it?", "What was the participation of the initial phase of NAIS?", "What was the reason for this level of participation?" ], "summary": [ "The larger program governing traceability of interstate animal movements and coordination between different states and tribal nations will be implemented in federal regulations through the federal rulemaking process.", "Since the February announcement, USDA has held a series of public meetings for animal health officials and producers to provide opportunities for discussion and feedback.", "USDA expects to issue a proposed rule in April 2011, and a final rule could be released 12 to 15 months later.", "Since 2004, USDA had spent $150 million trying to get NAIS up and running. Since 2008, key committee leaders in Congress had expressed frustration with the slow pace of NAIS implementation and, as a result, had reduced annual funding appropriations for the program.", "USDA's decision to revise NAIS was made after a series of 15 listening sessions across the country in 2009, and after receiving thousands of comments concerning NAIS.", "Participation in the initial phase of NAIS, premises registration, reflected this same degree of interest, as very high percentages of eligible premises were registered for most major animal species—poultry (95%), sheep (95%), swine (80%), goats (60%), and horses (50%)—with the exception of cattle (18%).", "USDA stated that such a low participation rate for cattle rendered NAIS ineffective as a tool for controlling animal disease, and that a much higher participation rate would be necessary to respond effectively to an animal disease outbreak. Under the new proposal, USDA anticipates much higher participation rates." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Constitutional Provisions", "Who May Be Impeached and Removed?", "Impeachment Grounds", "Is Impeachment Limited to Criminal Acts?", "Are the Standards for Impeachable Offenses the Same for Judges and Executive Branch Officials?", "Categories of Impeachment Grounds", "Exceeding or Abusing the Powers of the Office", "Behavior Incompatible with the Function and Purpose of the Office", "Misuse of Office for Improper Purpose or for Personal Gain", "Impeachment for Behavior Prior to Assuming Office", "Impeachment After an Individual Leaves Office", "Overview of Impeachment Procedures", "The House of Representatives: Sole Impeachment Power", "Initiation", "Investigation", "House Action Subsequent to Receipt of Committee Report", "Notification by the House and Senate Response", "The Senate: Sole Power to Try Impeachments", "Trial Preparation in the Senate", "Trial Procedure in the Senate", "Judgment of the Senate", "Judicial Review" ], "paragraphs": [ "", "The Constitution gives Congress the authority to impeach and remove the President, Vice President, and other federal \"civil officers\" upon a determination that such officers have engaged in treason, bribery, or other high crimes and misdemeanors. Impeachment is one of the various checks and balances created by the Constitution, and is a crucial tool for potentially holding government officers accountable for violations of the law and abuse of power. Rooted in various constitutional provisions, impeachment is largely immune from judicial review. When considering impeachment matters, Members of Congress have historically examined the language of the Constitution; past precedents; the debates at the Constitutional Convention; the debates at the ratifying conventions; English common law and practice; state impeachment practices; analogous case law; and historical commentaries.\nAlthough the term \"impeachment\" is commonly used to refer to the removal of a government official from office, the impeachment process, as described in the Constitution, entails two distinct proceedings carried out by the separate houses of Congress. First, a simple majority of the House impeaches —or formally approves allegations of wrongdoing amounting to an impeachable offense, known as articles of impeachment. The articles of impeachment are then forwarded to the Senate where the second proceeding takes place: an impeachment trial. If the Senate, by vote of a two-thirds majority, convicts the official of the alleged offenses, the result is removal from office of those still in office, and, at the Senate's discretion, disqualification from holding future office.\nThe House has impeached 19 individuals: 15 federal judges, one Senator, one Cabinet member, and two Presidents. The Senate has conducted 16 full impeachment trials. Of these, eight individuals—all federal judges—were convicted by the Senate.\nThis report briefly surveys the constitutional provisions governing the impeachment power, examines which individuals are subject to impeachment, and explores the potential grounds for impeachment. In addition, it provides a short overview of impeachment procedures in the House and Senate and concludes with a discussion of the limited nature of judicial review for impeachment procedures.", "The House of Representatives shall chuse their Speaker and other Officers; and shall have the sole Power of Impeachment.\n—Article I, Section 2\nThe President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors .\n—Article II, Section 4\nThe Senate shall have the sole Power to try all Impeachments. When sitting for that Purpose, they shall be on Oath or Affirmation. When the President of the United States is tried, the Chief Justice shall preside: And no Person shall be convicted without the Concurrence of two thirds of the Members present.\nJudgment in Cases of Impeachment shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust or Profit under the United States; but the Party convicted shall nevertheless be liable and subject to Indictment, Trial, Judgment and Punishment, according to Law.\n—Article I, Section 3\nThe Constitution provides that impeachment applies only to the \"President, Vice President, and all civil Officers of the United States,\" and that the grounds for impeachment are limited to \"Treason, Bribery, or other high Crimes and Misdemeanors.\" The decision to impeach an individual rests solely with the House of Representatives. The House thus has discretion over whether to impeach an individual and what articles of impeachment will be presented to the Senate. The Senate, in turn, has the sole power to try impeachments. Conviction of an individual requires a two-thirds majority of the present Senators on one of the articles brought by the House. When conducting the trial, Senators must be \"on oath or affirmation,\" and the right to a jury trial does not extend to impeachment proceedings. As President of the United States Senate, the Vice President usually presides at impeachment trials; however, if the President is impeached and tried in the Senate, the Chief Justice of the Supreme Court presides at the trial.\nThe immediate effect of conviction upon an article of impeachment is removal from office, although the Senate may subsequently vote on whether the official shall be disqualified from again holding an office of public trust under the United States. If this option is pursued, a simple majority vote is required. Convicted individuals are still subject to criminal prosecutions for the same factual situations, and individuals who have already been convicted of crimes may be impeached for the same underlying behavior later. Finally, the Constitution bars the President from using the pardon power to shield individuals from impeachment or removal from office.\nIn considering the use of the impeachment power, Congress confronts at least two preliminary legal questions bearing on whether an impeachment inquiry against a given official is constitutionally appropriate: first, whether the individual whose conduct is under scrutiny holds an office that is subject to impeachment and removal, and second, whether the conduct for which the official is accused constitutes an impeachable offense.", "The Constitution explicitly makes \"[t]he President, Vice President and all civil Officers of the United States\" subject to impeachment and removal. Which officials are to be considered \"civil Officers of the United States\" for purposes of impeachment is a significant constitutional question that remains mostly unresolved. In the past, Congress has seemingly shown a willingness to impeach Presidents, federal judges, and Cabinet-level executive branch officials, but a reluctance to impeach private individuals and Members of Congress. A question which precedent has not thus far addressed is whether Congress may impeach and remove subordinate, non-Cabinet level executive branch officials.\nThe Constitution does not define \"civil Officers of the United States.\" Nor do the debates at the Constitutional Convention provide significant evidence of which individuals (beyond the President and Vice President) the Founders intended to be impeachable. Impeachment precedents in both the House and Senate are equally unhelpful with respect to subordinate executive officials. In all of American history, only three members of the executive branch have been impeached: two Presidents and a Secretary of War. Thus, while it seems that executive officials of the highest levels are \"civil Officers,\" historical precedent provides no examples of the impeachment power being used against lower-level executive officials. One must, therefore, look to other sources for aid in determining precisely how far down the federal bureaucracy the impeachment power might reach.\nThe general purposes of impeachment may assist in interpreting the proper scope of \"civil Officers of the United States.\" The congressional power of impeachment constitutes an important aspect of the various checks and balances that were built into the Constitution to preserve the separation of powers. It is a tool, entrusted to the House and Senate alone, to remove government officials in the other branches of government, who either abuse their power or engage in conduct that warrants their dismissal from an office of public trust. At least one commentator has suggested that the Framers recognized, particularly with respect to executive branch officials, that there would be instances in which it may not be in the President's interest to remove a \"favorite\" from office, even when that individual has violated the public trust. As such, the Framers \"dwelt repeatedly on the need of power to oust corrupt or oppressive ministers whom the President might seek to shelter.\" If the impeachment power were meant to ensure that Congress has the ability to impeach and remove corrupt officials that the President was unwilling to dismiss, it would seem arguable that the power should extend to officers exercising a degree of authority, the abuse of which would be harmful to the separation of powers and good government.\nThe writings of early constitutional commentators also arguably suggest a broad interpretation of \"civil Officers of the United States.\" Joseph Story addressed the reach of the impeachment power in his influential Commentaries on the Constitution , asserting that \" all officers of the United states [] who hold their appointments under the national government, whether their duties are executive or judicial, in the highest or in the lowest departments of the government , with the exception of officers in the army and navy, are properly civil officers within the meaning of the constitution, and liable to impeachment.\" Similarly, William Rawle reasoned that \"civil Officers\" included \"[ a ] ll executive and judicial officers, fro m the President downwards , from the judges of the Supreme Court to those of the most inferior tribunals ...\" Consistent with the text of the Constitution, these early interpretations suggest the impeachment power was arguably intended to extend to \"all\" executive officers, and not just Cabinet level officials and other executive officials at the highest levels.\nBut who is an officer? The most thorough elucidation of the definition of \"Officers of the United States\" can be found in judicial interpretations of the Appointments Clause. That provision, which establishes the methods by which \"Officers of the United States\" may be appointed, has generally been viewed as a useful guidepost in establishing the definition of \"civil Officers\" for purposes of impeachment.\nThe Appointments Clause provides that the President\nshall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.\nIn interpreting the Appointments Clause, the Court has made clear distinctions between \"Officers of the United States,\" whose appointment is subject to the requirements of the Clause, and non-officers, also known as employees, whose appointment is not. The amount of authority that an individual exercises will generally determine his classification as either an officer or employee. As established in Buckley v. Valeo , an officer is \"any appointee exercising significant authority pursuant to the laws of the United States,\" whereas employees are viewed as \"lesser functionaries subordinate to the officers of the United States,\" who do not exercise \"significant authority.\"\nThe Supreme Court has further subdivided \"officers\" into two categories: principal officers, whom may be appointed only by the President with the advice and consent of the Senate; and inferior officers, whose appointment Congress may vest \"in the President alone, in the Courts of Law, or in the Heads of Departments.\"\nThe Court has acknowledged that its \"cases have not set forth an exclusive criterion for distinguishing between principal and inferior officers for Appointments Clause purposes.\" The clearest statement of the proper standard to be applied in differentiating between the two types of officers appears to have been made in Edmo nd v. United States . In Edmond , the Court noted that \"[g]enerally speaking, the term 'inferior officer' connotes a relationship with some higher ranking officer or officers below the President ... [and] whose work is directed and supervised at some level by others who were appointed by presidential nomination with the advice and consent of the Senate. \" Thus, in analyzing whether one may be properly characterized as either an inferior or principal officer, the Court's decisions appear to focus on the extent of the officer's discretion to make autonomous policy choices and the authority of other officials to supervise and to remove the officer.\nApplying the principles established in the Court's Appointments Clause jurisprudence to define the scope of \"civil Officers\" for purposes of impeachment, it would appear that employees, as non-officers, are not subject to impeachment. Therefore lesser functionaries—such as federal employees who belong to the civil service, do not exercise \"significant authority,\" and are not appointed by the President or an agency head—would not be subject to impeachment. At the opposite end of the spectrum, it would seem that any official who qualifies as a principal officer, including a head of an agency such as a Secretary, Administrator, or Commissioner, would be impeachable.\nThe remaining question is whether inferior officers, or those officers who exercise significant authority under the supervision of a principal officer, are subject to impeachment and removal. As previously noted, it would appear that an argument can be made from the text and purpose of the impeachment clauses, as well as early constitutional interpretations, that the impeachment power was intended to extend to \" all \" officers of the United States, and not just those in the highest levels of government. Any official exercising \"significant authority\" including both principal and inferior officers, would therefore qualify as a \"civil Officer\" subject to impeachment. This view would permit Congress to impeach and remove any executive branch \"officer,\" including many deputy political appointees and certain administrative judges.\nThere is some historical evidence, however, to suggest that inferior officers were not meant to be subject to impeachment. For example, a delegate at the North Carolina ratifying convention asserted that \"[i]t appears to me ... the most horrid ignorance to suppose that every officer, however trifling his office, is to be impeached for every petty offense ... I hope every gentleman ... must see plainly that impeachments cannot extend to inferior officers of the United States.\" Additionally, Governeur Morris, member of the Pennsylvania delegation to the Constitutional Convention, arguably implied that inferior officers would not be subject to impeachment in stating that \"certain great officers of State; a minister of finance, of war, of foreign affairs, etc. ... will be amenable by impeachment to the public justice.\"\nNotwithstanding this ongoing debate, the authority to resolve any ambiguity in the scope of \"civil Officers\" for purposes of impeachment lays initially with the House, in adopting articles of impeachment, and with the Senate, in trying the officer.", "", "The Constitution describes the grounds of impeachment as \"treason, bribery, or other high Crimes and Misdemeanors.\" While treason and bribery are relatively well-defined terms, the meaning of \"high Crimes and Misdemeanors\" is not defined in the Constitution or in statute and remains somewhat opaque. It was adopted from the English practice of parliamentary impeachments, which appears to have been directed against individuals accused of crimes against the state and encompassed offenses beyond traditional criminal law.\nSome have argued that only criminal acts are impeachable offenses under the United States Constitution; impeachment is therefore inappropriate for non-criminal activity. In support of this assertion, one might note that the debate on impeachable offenses during the Constitutional Convention in 1787 indicates that criminal conduct was encompassed in the \"high crimes and misdemeanors\" standard.\nThe notion that only criminal conduct can constitute sufficient grounds for impeachment does not, however, comport with historical practice. Alexander Hamilton, in justifying placement of the power to try impeachments in the Senate, described impeachable offenses as arising from \"the misconduct of public men, or in other words from the abuse or violation of some public trust.\" Such offenses were \" political , as they relate chiefly to injuries done immediately to the society itself.\" According to this reasoning, impeachable conduct could include behavior that violates an official's duty to the country, even if such conduct is not necessarily a prosecutable offense. Indeed, in the past both houses of Congress have given the phrase \"high Crimes and Misdemeanors\" a broad reading, \"finding that impeachable offenses need not be limited to criminal conduct.\"\nA variety of congressional materials support this reading. For example, committee reports on potential grounds for impeachment have described the history of English impeachment as including non-criminal conduct and noted that this tradition was adopted by the Framers. In accordance with the understanding of \"high\" offenses in the English tradition, impeachable offenses are \"constitutional wrongs that subvert the structure of government, or undermine the integrity of office and even the Constitution itself.\" \"[O]ther high crimes and misdemeanor[s]\" are not limited to indictable offenses, but apply to \"serious violations of the public trust.\" Congressional materials indicate that the term \"Misdemeanor ... does not mean a minor criminal offense as the term is generally employed in the criminal law,\" but refers instead to the behavior of public officials. \"[H]igh Crimes and Misdemeanors\" are thus best characterized as \"misconduct that damages the state and the operations of government institutions.\"\nSimilarly, the judiciary subcommittee charged with investigating Associate Justice Douglas of the Supreme Court concluded that, at least with regard to federal judges, impeachment was appropriate in several circumstances. First, if the conduct was connected with the judicial office or the exercise of judicial power, then both criminal conduct and conduct constituting a serious dereliction of public duty were grounds for impeachment. Second, if the conduct was not connected to the duties of judicial office, then criminal conduct could constitute grounds for impeachment. The committee left unresolved whether non-criminal conduct outside of the judicial function could support an impeachment charge.\nThe purposes underlying the impeachment process also indicate that non-criminal activity may constitute sufficient grounds for impeachment. The purpose of impeachment is not to inflict personal punishment for criminal activity. In fact, the Constitution explicitly makes clear that impeached individuals are not immunized from criminal liability once they are impeached for particular activity. Instead, impeachment is a \"remedial\" tool; it serves to effectively \"maintain constitutional government\" by removing individuals unfit for office. Grounds for impeachment include abuse of the particular powers of government office or a violation of the \"public trust\" —conduct that is unlikely to be barred via statute.\nCongressional practice also appears to support this notion. Many of the impeachments approved by the House of Representatives have included conduct that did not involve criminal activity. Less than a third have specifically invoked a criminal statute or used the term \"crime.\" For example, in 1803, Judge John Pickering was impeached and convicted for, among other things, appearing on the bench \"in a state of total intoxication.\" In 1912, Judge Robert W. Archbald was impeached and convicted for abusing his position as a judge by inducing parties before him to enter financial transactions with him. In 1936, Judge Halstead Ritter was impeached and convicted for conduct that \"br[ought] his court into disrepute, to the prejudice of said court and public confidence in the administration of justice ... and to the prejudice of public respect for and confidence in the federal judiciary.\" And a number of judges were impeached for misusing their position for personal profit.", "Some have suggested that the standard for impeaching a federal judge differs from an executive branch official. While Article II, Section 1, of the Constitution specifies the grounds for the impeachment of civil officers as \"treason, bribery, and other high Crimes and Misdemeanors,\" Article III, Section 1, provides that federal judges \"hold their Offices during good behaviour.\" One argument posits that these clauses should be read in conjunction, meaning that judges can be impeached and removed from office if they fail to exhibit good behavior or if they are guilty of \"treason, bribery, and other high Crimes and Misdemeanors.\"\nHowever, while one might find some support for the notion that the \"good behavior\" clause constitutes an additional ground for impeachment in early twentieth century practice, the \"modern view\" of Congress appears to be that the phrase \"good behavior\" simply designates judicial tenure. Under this reasoning, rather than functioning as a ground for impeachment, the \"good behavior\" phrase simply makes clear that federal judges retain their office for life unless they are removed via a proper constitutional mechanism. For example, a 1973 discussion of impeachment grounds released by the House Judiciary Committee reviewed the history of the phrase and concluded that the \"Constitutional Convention ... quite clearly rejected\" a \"dual standard\" for judges and civil officers. The \"treason, bribery, and high Crimes and Misdemeanors\" clause thus serves as the sole standard for impeachable conduct for both executive branch officials and federal judges. The next year, the House Judiciary Committee's Impeachment Inquiry asked whether the \"good behavior\" clause provides an additional ground for impeachment of judges and concluded that \"[i]t does not.\" It emphasized that the House's impeachment of judges was \"consistent\" with impeachment of \"non-judicial officers.\" Finally, the House Report on the Impeachment of President Clinton affirmed this reading of the Constitution, stating that impeachable conduct for judges mirrored impeachable conduct for other civil officers in the government.\nNevertheless, even if the \"good behavior\" clause does not delineate a standard for impeachment and removal for federal judges, as a practical matter, one might argue that the range of impeachable conduct differs between judges and executive branch officials due to the differing nature of each office. For example, one might argue that a federal judge could be impeached for perjury or fraud because of the importance of trustworthiness and impartiality to the judiciary, while the same behavior might not constitute impeachable conduct for an executive branch official. However, given the wide variety of factors at issue—including political calculations, the relative paucity of impeachments of non-judicial officers compared to judges, and the fact that a non-judicial officer has never been convicted by the Senate—it is uncertain if conduct meriting impeachment and conviction for a judge would fail to qualify for a non-judicial officer.\nThe impeachment and acquittal of President Clinton illustrates this difficulty. The House of Representatives impeached President Clinton for (1) providing perjurious and misleading testimony to a federal grand jury and (2) obstruction of justice in regards to a civil rights action against him. The House Judiciary Committee report that recommended articles of impeachment argued that perjury by the President was an impeachable offense, even if committed with regard to matters outside his official duties. The report rejected the notion that conduct such as perjury was \"more detrimental when committed by judges and therefore only impeachable when committed by judges.\" The report pointed to the impeachment of Judge Claiborne, who was impeached and convicted for falsifying his income tax returns—an act which \"betrayed the trust of the people of the United States and reduced confidence in the integrity and impartiality of the judiciary.\" While it is \"devastating\" for the judiciary when judges are perceived as dishonest, the report argued, perjury by the President was \"just as devastating to our system of government.\" In addition, the report continued, both Judge Claiborne and Judge Nixon were impeached and convicted for perjury and false statements in matters distinct from their official duties. Likewise, the report noted the President's perjurious conduct, though seemingly falling outside of his official duties as President, nonetheless constituted grounds for impeachment.\nIn contrast, the minority views from the report opposing impeachment reasoned that \"not all impeachable offenses are crimes and not all crimes are impeachable offenses.\" The minority emphasized that the President was not impeachable for all potential crimes, no matter how minor; impeachment was reserved for \"conduct that constitutes an egregious abuse or subversion of the powers of the executive office.\" Examining the impeachment of President Andrew Johnson and the articles of impeachment drawn up for President Richard Nixon, the minority concluded that both were accused of committing \"public misconduct\" integral to their \"official duties.\" The minority noted that the Judiciary Committee had rejected an article of impeachment against President Nixon alleging that he committed tax fraud, primarily because that \"related to the President's private conduct, not to an abuse of his authority as President.\"\nThe minority did not explicitly claim that the grounds for impeachment might be different between federal judges and executive branch officials, but its reasoning at least hints in that direction. Its rejection of nonpublic behavior as sufficient grounds for impeachment for the President—including its example of tax fraud as nonpublic behavior that does not qualify—appears to conflict with the past impeachment and conviction of federal judges on just this basis. One reading of the minority's position is that certain behavior might be impeachable conduct for a federal judge, but not for the President.\nWhile two articles of impeachment were approved by the House, the Senate acquitted President Clinton on both charges. However, generating firm conclusions from this result is quite difficult as there may have been varying motivations for these votes. One possibility is that the acquittal occurred because some Senators—though agreeing that such conduct merited impeachment—thought the House Managers failed to prove their case. Another is that certain Senators disagreed that such behavior was impeachable at all. Yet another possibility is that neither ideological stance was considered, and voting was conducted solely according to political calculations.", "Congressional materials have cautioned that the grounds for impeachment \"do not all fit neatly and logically into categories\" because the remedy of impeachment is intended to \"reach a broad variety of conduct by officers that is both serious and incompatible with the duties of the office.\" Nonetheless, congressional precedents reflect three broad types of conduct thought to constitute grounds for impeachment, although they should not be understood as exhaustive or binding: (1) improperly exceeding or abusing the powers of the office; (2) behavior incompatible with the function and purpose of the office; and (3) misusing the office for an improper purpose or for personal gain.", "The House has impeached several individuals for abusing or exceeding the powers of their office. For example, in 1868, amidst a struggle over Reconstruction policy, the House impeached President Andrew Johnson on allegations that he violated the Tenure of Office Act, which restricted the power of the President to remove members of the Cabinet without Senate approval. Considering the statute unconstitutional, President Johnson removed Secretary of War Edwin M. Stanton and was impeached shortly thereafter on nine articles relating to his actions. Two more articles were brought the next day, alleging that he had made \"harangues\" criticizing the Congress and questioning its legislative authority that brought the presidency \"into contempt, ridicule, and disgrace\" and attempted to prevent the execution of the Tenure in Office Act and an army appropriations act by conspiring to remove Stanton. President Johnson was acquitted by a margin of one vote in the Senate.\nIn 1974, the House Judiciary Committee recommended articles of impeachment against President Richard Nixon on the theory that he abused the powers of his office. First, the articles alleged that the President, \"using the powers of his high office,\" attempted to obstruct the investigation of the Watergate Hotel break-in, conceal and protect the perpetrators, and conceal the existence of other illegal activity. Second, that he used the power of the office of the Presidency to violate citizens' constitutional rights, \"impair[]\" lawful investigations, and \"contravene[]\" laws applicable to executive branch agencies. Third, that he refused to cooperate with congressional subpoenas. President Nixon resigned before the House voted on the articles.\nOne of the articles of impeachment recommended by the House Judiciary Committee against President Clinton also alleged abuse of the powers of his office, although the House rejected this article. That article alleged that the President refused to comply with certain congressional requests for information and provided false and misleading information in response to others. The committee report argued that such conduct \"showed contempt for the legislative branch and impeded Congress's exercise of its Constitutional responsibility\" of impeachment.", "A number of individuals have also been impeached for behavior incompatible with the nature of the office they hold. For example, Judge Harry Claiborne was impeached for providing false information on federal income tax forms, an offense for which he had previously been convicted for in a criminal case. The first two articles of impeachment against Judge Claiborne simply laid out the underlying behavior. The third article \"rest[ed] entirely on the conviction itself\" and stood for the principle that \"by conviction alone he is guilty of 'high crimes' in office.\" The fourth alleged that Judge Claiborne's actions brought the \"judiciary into disrepute, thereby undermining public confidence in the integrity and impartiality of the administration of justice\" which amounted to a \"misdemeanor.\" The Senate voted to convict Judge Claiborne on the first, second, and fourth articles.\nTwo judges were impeached for appearing on the bench in a state of intoxication. Judge John Pickering was impeached and convicted in 1803 for, among other things, appearing in court \"in a state of intoxication and using profane language.\" Judge Mark H. Delahay was impeached in 1873 for his \"personal habits,\" including being intoxicated on and off the bench. He resigned before a trial in the Senate.\nVarious other activities incompatible with the nature of an office have merited impeachment procedures. In 1862, Judge West H. Humphrey was impeached and convicted for neglecting his duties as a judge and joining the Confederacy. In 1926 Judge George English was impeached for showing judicial favoritism which eroded the public's confidence in the court. And in 2009, Judge Samuel B. Kent was impeached for allegedly sexually assaulting two court employees, obstructing the judicial investigation of this behavior, and making false and misleading statements to agents of the Federal Bureau of Investigation about the activity. Judge Kent resigned before the Senate trial was completed.\nFinally, one might classify some of the articles of impeachment brought against President Clinton as grounded on alleged behavior considered incompatible with the nature of the office of the Presidency. Both the first article, for allegedly lying to a grand jury, and the second, for allegedly obstructing justice by concealing evidence in a federal civil rights action brought against him, noted that by doing this, \"William Jefferson Clinton has undermined the integrity of his office, has brought disrepute on the Presidency, has betrayed his trust as President, and has acted in a manner subversive of the rule of law and justice, to the manifest injury of the people of the United States.\"", "A number of individuals have been impeached for official conduct for an improper purpose. The first type of behavior involves vindictive use of the office. For example, in 1826, Judge James Peck was impeached for charging a lawyer with contempt, imprisoning him, and ordering his disbarment for criticizing one of the judge's decisions. Judge Peck was acquitted by the Senate. In 1904, Judge Charles Swayne was also impeached by the House and acquitted by the Senate. Among the articles of impeachment was the allegation that he had unlawfully imprisoned several individuals on false charges of contempt.\nThe second type of behavior involves misuse of the office for personal gain. Secretary of War William W. Belknap was impeached in 1876 for allegedly receiving payments in return for appointing an individual to maintain a trading post in Indian Territory. Belknap resigned two hours before the House impeached him, but the Senate nevertheless conducted a trial in which Belknap was acquitted. In 1912, Judge Robert W. Archbald was impeached and convicted for using the office to acquire business favors from both litigants in his court and potential litigants. And the impeachments of Judges English, Louderback, and Ritter all involved \"misusing their power to appoint and set the fees of bankruptcy receivers for personal profit.\"\nSimilarly, Judge Alcee L. Hastings was impeached by the House on 16 articles, including involvement in a conspiracy to accept bribes in return for lenient sentences for defendants, lying about the underlying events at his criminal trial, and fabricating false documents and submitting them as evidence at his criminal trial. Judge Hastings was convicted by the Senate on eight articles.\nIn addition, Judge Walter L. Nixon Jr. was convicted in a criminal case on two counts of perjury to a grand jury concerning his relationship with a man whose son was being prosecuted. He was subsequently impeached in 1989 for his behavior, including making false statements to the grand jury about whether he had discussed a criminal case with the prosecutor and attempted to influence the case, as well as for concealing such matters from federal investigators. The Senate convicted Judge Nixon on two of three articles.\nFinally, in 2010, Judge G. Thomas Porteous Jr. was impeached for participating in a corrupt financial relationship with attorneys in a case before him, and engaging in a corrupt relationship with bail bondsmen whereby he received things of value in return for helping bondsman develop corrupt relationships with state court judges. Judge Porteous was convicted by the Senate on all the articles brought against him.", "Most impeachments have concerned behavior occurring while an individual is in a federal office. However, some have addressed, at least in part, conduct before individuals assumed their positions. For example, in 1912, a resolution impeaching Judge Robert W. Archbald and setting forth 13 articles of impeachment was reported out of the House Judiciary Committee and agreed to by the House. The Senate convicted Judge Archbald in January the following year. At the time that Judge Archbald was impeached by the House and tried by the Senate in the 62 nd Congress, he was U.S. Circuit Judge for the Third Circuit and a designated judge of the U.S. Commerce Court. The articles of impeachment brought against him alleged misconduct in those positions as well as in his previous position as U.S. District Court Judge of the Middle District of Pennsylvania. Judge Archbald was convicted on four articles alleging misconduct in his then-current positions as a circuit judge and Commerce Court judge, and on a fifth article that alleged misuse of his office both in his then current positions and in his previous position as U.S. District Judge.\nWhile Judge Archbald was impeached and convicted in part for behavior occurring before he assumed his then-current position, the underlying behavior occurred while he held a prior federal office. Judge G. Thomas Porteous, in contrast, is the first individual to be impeached by the House and convicted by the Senate based in part upon conduct occurring before he began his tenure in federal office. Articles I and II each alleged misconduct beginning while he was a state court judge as well as misconduct while he was a federal judge. Article IV alleged that Judge Porteous made false statements to the Senate and FBI in connection with his nomination and confirmation to the U.S. District Court for the Eastern District of Louisiana. On December 8, 2010, he was convicted on all four articles, removed from office, and disqualified from holding future federal offices.\nOn the other hand, it does not appear that any President, Vice President, or other civil officer of the United States has been impeached by the House solely on the basis of conduct occurring before he began his tenure in the office held at the time of the impeachment investigation, although the House has, on occasion, investigated such allegations.", "It appears that federal officials who have resigned have nonetheless been thought to be susceptible to impeachment and a ban on holding future office. Secretary of War William W. Belknap resigned two hours before the House impeached him, but the Senate nevertheless conducted a trial in which Belknap was acquitted. However, during the trial, upon objection by Belknap's counsel that the Senate lacked jurisdiction because Belknap was now a private citizen, the Senate voted in favor of jurisdiction.\nThat said, the resignation of an official under investigation for impeachment often ends impeachment proceedings. For example, no impeachment vote was taken following President Richard Nixon's resignation after the House Judiciary Committee decided to report articles of impeachment to the House. And proceedings were ended following the resignation of Judges English, Delahay, and Kent.", "The Constitution sets forth the general principles which control the procedural aspects of impeachment, vesting the power to impeach in the House of Representatives, while imbuing the Senate with the power to try impeachments. Both the Senate and the House have designed procedures to implement these general principles in dealing with a wide range of impeachment issues. This section provides a brief overview of the impeachment process, reflecting the roles of both the House and the Senate during the course of an impeachment inquiry and trial.", "", "Impeachment proceedings may be commenced in the House of Representatives by a Member declaring a charge of impeachment on his or her own initiative, by a Member presenting a memorial listing charges under oath, or by a Member depositing a resolution in the hopper, which is then referred to the appropriate committee. The impeachment process may be triggered by non-Members, such as when the Judicial Conference of the United States suggests that the House may wish to consider impeachment of a federal judge, where an independent counsel advises the House of any substantial and credible information which he or she believes might constitute grounds for impeachment, by message from the President, by a charge from a state or territorial legislature or grand jury, or by petition.\nResolutions regarding impeachment may be of two types. A resolution impeaching a particular individual, who is within the category of impeachable officers under Article II, Section 4 of the Constitution, is usually referred directly to the House Committee on the Judiciary. A resolution to authorize an investigation as to whether grounds exist for the House to exercise its impeachment power is referred to the House Committee on Rules. Generally, such a resolution is then referred to the House Judiciary Committee. During the House impeachment investigation of President Richard M. Nixon, a resolution reported out of the House Judiciary Committee, H.Res. 803 , was called up for immediate consideration as a privileged matter. The resolution authorized the House Judiciary Committee to investigate fully whether sufficient grounds existed for the House to impeach President Nixon, specified powers which the Committee could exercise in conducting this investigation, and addressed funding for that purpose. The resolution was agreed to by the House.\nWhile the House Judiciary Committee usually conducts impeachment investigations, such matters have occasionally been referred to other committees, such as the House Committee on Reconstruction in the impeachment of President Andrew Johnson, or to a special or select committee. In addition, an impeachment investigation may be referred by the House Judiciary Committee to one of its subcommittees or to a specially created subcommittee.", "In all prior impeachment proceedings, the House has examined the charges prior to entertaining any vote. Usually an initial investigation is conducted by the Judiciary Committee, to which investigating and reporting duties are delegated by resolution after charges have been presented. However, it is possible that this investigation could be carried out by a select or special committee. If authorized by the House, the Judiciary Committee may designate a subcommittee or task force to investigate whether an individual should be impeached. For example, in 2009, the House passed a resolution authorizing the Judiciary Committee or a designated subcommittee or task force to investigate whether Judge Porteous should be impeached. The resolution also authorized the taking of depositions, the issuance of subpoenas, the disbursement of funds, and the hiring of staff.\nThe focus of the impeachment inquiry is to determine whether the person involved has engaged in treason, bribery, or other high crimes and misdemeanors. If a subcommittee or task force is charged with investigating a possible impeachment, the Members can vote to recommend articles of impeachment to the full committee. If the full committee, by majority vote, determines that grounds for impeachment exist, a resolution impeaching the individual in question and setting forth specific allegations of misconduct, in one or more articles of impeachment, will be reported to the full House.", "At the conclusion of debate, the House may consider the resolution as a whole, or may vote on each article separately. In addition, \"as is the usual practice, the committee's recommendations as reported in the resolution are in no way binding on the House.\" The House may vote to impeach even if the House Judiciary Committee does not recommend impeachment. Pursuant to Article I of the Constitution, a vote to impeach by the House requires a simple majority of those present and voting, upon satisfaction of quorum requirements. If the House votes to impeach, managers are then selected to present the matter to the Senate. In recent practice, managers have been appointed by resolution, although historically they occasionally have been elected or appointed by the Speaker of the House pursuant to a resolution conferring such authority upon him.", "The House will also adopt a resolution in order to notify the Senate of its action. The Senate, after receiving such notification, will then adopt an order informing the House that it is ready to receive the managers. Subsequently, the appointed managers will appear before the bar of the Senate to impeach the individual involved and exhibit the articles against him or her. After this procedure, the managers would return and make a verbal report to the House.", "", "Impeachment proceedings in the Senate are governed now by the Rules of Procedure and Practice in the Senate when Sitting on Impeachment Trials. After presentation of the articles and organization of the Senate to consider the impeachment, the Senate will issue a writ of summons to the respondent, informing him or her of the date on which appearance and answer should be made. On the date established by the Senate, the respondent may appear in person or by counsel. The respondent may also choose not to appear. In the latter event, the proceedings progress as though a \"not guilty\" plea were entered. The respondent may demur, arguing that he or she is not a civil official subject to impeachment, or that the charges listed do not constitute sufficient grounds for impeachment. The respondent may also choose to answer the articles brought against him or her. The House has traditionally filed a replication to the respondent's answer, and the pleadings may continue with a rejoinder, surrejoinder, and similiter.", "When pleadings have concluded, the Senate will set a date for trial. Upon establishing this date, the Senate will order the House managers or their counsel to supply the Sergeant at Arms of the Senate with information regarding witnesses who are to be subpoenaed, and will further indicate that additional witnesses may be subpoenaed by application to the Presiding Officer. Under Article I, Section 3, clause 6 of the Constitution, the Chief Justice presides over the Senate impeachment trial if the President is being tried.\nIn impeachment trials, the full Senate may receive evidence and take testimony, or may order the Presiding Officer to appoint a committee of Senators to serve this purpose. If the latter option is employed, the committee will present a certified transcript of the proceedings to the full Senate. The Senate will determine questions of competency, relevancy, and materiality. The Senate may also take further testimony in an open Senate, or may order that the entire trial be before the full Senate.\nAt the beginning of the trial, House managers and counsel for the respondent present opening arguments outlining the charges to be established and controverted. The managers for the House present the first argument. During the course of the trial evidence is presented, and witnesses may be examined and cross-examined.\nThe Senate has not adopted standard rules of evidence to be used during an impeachment trial. The Presiding Officer possesses authority to rule on all evidentiary questions. However, the Presiding Officer may choose to put any such issue to a vote before the Senate. Furthermore, any Senator may request that a formal vote be taken on a particular question. Final arguments in the trial will be presented by each side, with the managers for the House of Representatives opening and closing.", "When the presentation of evidence and argument by the managers and counsel for the respondent has concluded, the Senate as a whole meets in closed session to deliberate. Voting on whether to convict on the articles of impeachment commences upon return to open session, with yeas and nays being tallied as to each article separately. A conviction on an article of impeachment requires a two-thirds vote of those Senators present. If the respondent is convicted on one or more of the articles against him or her, the Presiding Officer will pronounce the judgment of conviction and removal. No formal vote is required for removal, as it is a necessary effect of the conviction. The Senate has not always voted on every article of impeachment before it; for example, when the Senate did not convict President Andrew Johnson in the votes on three of the articles of impeachment against him, the Senate did not vote on the remaining articles.\nThe Senate may subsequently vote on whether the impeached official shall be disqualified from again holding an office of public trust under the United States. If this option is pursued, a simple majority vote is required.", "Impeachment proceedings have been challenged in federal court on a number of occasions. Perhaps most significantly, the Supreme Court has ruled that a challenge to the Senate's use of a trial committee to take evidence posed a nonjusticiable political question. In Nixon v. United States , Judge Walter L. Nixon had been convicted in a criminal trial 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.\nThe Supreme 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 certain prudential considerations—\"the lack of finality and the difficulty of fashioning relief\"—weighed against adjudication of the case. Judicial review of impeachments could create considerable political uncertainty, if, for example, an impeached President sued for judicial review.\nThe Court was careful to distinguish the situation from Powell v. McC ormack , 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—Representatives must be at least 25 years of age, have been U.S. citizens for at least seven years, and inhabit the states they represent. 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.\nIn addition, several other aspects of the impeachment process have been challenged. Judge G. Thomas Porteous brought a suit seeking to bar counsel for the Impeachment Task Force of the House Judiciary Committee from using sworn testimony the judge had provided pursuant to a grant of immunity. The impeachment proceedings were initiated after a judicial investigation of Judge Porteous for alleged corruption on the bench. During that investigation, Judge Porteous testified under oath to the Special Investigatory Committee under an order granting him immunity from that information being used against him in a criminal case. Before the U.S. District Court for the District of Columbia, Judge Porteous argued that the use of his immunized testimony during an impeachment proceeding violated his Fifth Amendment right not to be compelled to serve as a witness against himself. The court rejected his challenge, reasoning that because the use of such testimony for an impeachment proceeding fell within the legislative sphere, the Speech or Debate Clause prevented the court from ordering the committee staff members to refrain from using the testimony.\nSimilarly, Judge Alcee L. Hastings sought to prevent the House Judiciary Committee from obtaining the records of a grand jury inquiry during the Committee's impeachment investigation. Prior to the impeachment proceedings, although ultimately acquitted, Judge Hastings had been indicted by a federal grand jury for a conspiracy to commit bribery. Judge Hastings' argument was grounded in the separation of powers: he claimed that permitting disclosure of grand jury records for an impeachment investigation risked improperly allowing the executive and judicial branches to participate in the impeachment process—a tool reserved for the legislature. The U.S. Court of Appeals for the Eleventh Circuit, however, rejected this \"absolutist\" concept of the separation of powers and held that \"a merely generalized assertion of secrecy in grand jury materials must yield to a demonstrated, specific need for evidence in a pending impeachment investigation.\"\nThe U.S. District Court for the District of Columbia initially threw out Judge Hastings' Senate impeachment conviction, because the Senate had tried his impeachment before a committee rather than the full Senate. The decision was vacated on appeal and remanded for reconsideration in light of Nixon v. United States . The district court then dismissed the suit because it presented a nonjusticiable political question." ], "depth": [ 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 2, 2, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title", "h2_full", "h0_full h1_full", "h2_full", "h2_title", "h2_full", "", "h2_full", "", "", "", "", "", "h0_title h1_title", "", "", "", "", "", "h0_title h1_title", "", "", "h0_full h1_full", "h1_full" ] }

{ "question": [ "What is the impeachment process?", "How has the constitution directed responsibility of impeachment?", "What is to follow after this party has reached a determination on impeachment?", "What is the senate requirement for a conviction on any one of the articles of impeachment?", "To what extent does the senate have authority over the punishment for a conviction?", "What is the penalty for conviction?", "How is a removal from office possible?", "What is the requirement for such a removal?", "What parties are responsible for removal of 'civil officers' and on what grounds?", "What is the requirement of the house for impeachment?", "What is senate's role on impeachment?", "Who qualifies as a \"civil officer\"?", "To whom are the impeachment applied?", "What are the grounds of impeachment?", "How many of each type of \"civil officers\" have been impeached?" ], "summary": [ "The impeachment process provides a mechanism for removal of the President, Vice President, and other \"civil Officers of the United States\" found to have engaged in \"treason, bribery, or other high crimes and misdemeanors.\"", "The Constitution places the responsibility and authority to determine whether to impeach an individual in the hands of the House of Representatives.", "Should a simple majority of the House approve articles of impeachment specifying the grounds upon which the impeachment is based, the matter is then presented to the Senate, to which the Constitution provides the sole power to try an impeachment.", "A conviction on any one of the articles of impeachment requires the support of a two-thirds majority of the Senators present.", "Should a conviction occur, the Senate retains limited authority to determine the appropriate punishment.", "Under the Constitution, the penalty for conviction on an impeachable offense is limited to either removal from office, or removal and prohibition against holding any future offices of \"honor, Trust or Profit under the United States.\"", "Although removal from office would appear to flow automatically from conviction on an article of impeachment, a separate vote is necessary should the Senate deem it appropriate to disqualify the individual convicted from holding future federal offices of public trust.", "Approval of such a measure requires only the support of a simple majority.", "The Constitution gives Congress the authority to impeach and remove the President, Vice President, and other federal \"civil officers\" upon a determination that such officers have engaged in treason, bribery, or other high crimes and misdemeanors.", "A simple majority of the House is necessary to approve articles of impeachment.", "If the Senate, by vote of a two-thirds majority, convicts the official on any article of impeachment, the result is removal from office and, at the Senate's discretion, disqualification from holding future office.", "The Constitution does not articulate who qualifies as a \"civil officer.\"", "Most impeachments have applied to federal judges. With regard to the executive branch, lesser functionaries—such as federal employees who belong to the civil service, do not exercise \"significant authority,\" and are not appointed by the President or an agency head—do not appear to be subject to impeachment.", "Congress has identified three general types of conduct that constitute grounds for impeachment, although these categories should not be understood as exhaustive: (1) improperly exceeding or abusing the powers of the office; (2) behavior incompatible with the function and purpose of the office; and (3) misusing the office for an improper purpose or for personal gain.", "The House has impeached 19 individuals: 15 federal judges, one Senator, one Cabinet member, and two Presidents. The Senate has conducted 16 full impeachment trials. Of these, eight individuals—all federal judges—were convicted by the Senate." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, -1, 2, -1, 0, 0, -1, -1, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 3, 3, 3, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Naval Forces Involved in Amphibious Operations", "Navy and Marine Corps Training for Amphibious Operations", "Marine Corps’ Use of Virtual Training Devices", "Navy and Marine Corps Units Completed Training for Certain Amphibious Operations Priorities but Not Others, and Efforts to Mitigate Training Shortfalls Are Incomplete", "Navy and Marine Corps ARG-MEU Deploying Units Completed Required Training for Amphibious Operations, but Several Factors Have Limited Training for Other Marine Corps Amphibious Operations Priorities", "Efforts to Identify and Address Amphibious Training Shortfalls Lack Strategic Training and Risk-Management Practices", "More Comprehensively Incorporating Collaboration Practices Would Further Naval Integration Efforts for Amphibious Operations", "The Marine Corps Has Not Fully Integrated Its Virtual Training Devices into Operational Training", "The Marine Corps Has Taken Some Steps to Integrate Virtual Training Devices into Operational Training", "Marine Corps Process to Manage the Development and Use of Virtual Training Devices in Operational Training Plans Has Gaps", "Front-End Planning", "Expected and Actual Usage Data", "Evaluate the Effectiveness of Devices", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Navy", "Marine Corps", "Appendix II: Comments from the Department of Defense", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "An amphibious operation is a military operation launched from the sea by an amphibious force, embarked in ships or craft, with the primary purpose of introducing a landing force ashore to accomplish an assigned mission. An amphibious force is comprised of an (1) amphibious task force and (2) landing force together with other forces that are trained, organized, and equipped for amphibious operations. The amphibious task force is a group of Navy amphibious ships, most frequently deployed as an Amphibious Ready Group (ARG). The landing force is a Marine Air- Ground Task Force—which includes certain elements, such as command, aviation, ground, and logistics—embarked aboard the Navy amphibious ships. A Marine Expeditionary Unit (MEU) is the most-commonly deployed Marine Air-Ground Task Force. Together, this amphibious force is referred to as an ARG-MEU.\nThe Navy’s amphibious ships are part of its surface force. An ARG consists of a minimum of three amphibious ships, typically an amphibious assault ship, an amphibious transport dock ship, and an amphibious dock landing ship. Figure 1 shows the current number of amphibious ships by class and a description of their capabilities.\nThe primary function of amphibious ships is to provide transport to Marines and their equipment and supplies. The ARG includes an amphibious squadron that is comprised of a squadron staff, tactical air control squadron detachment, and fleet surgical team. This task organization also includes a naval support element that is comprised of a helicopter squadron for search and rescue and antisurface warfare, two landing craft detachments for cargo lift, and a beachmaster unit detachment to control beach traffic.\nAn MEU consists of around 2,000 Marines, their aircraft, their landing craft, their combat equipment, and about 15 days’ worth of supplies. The MEU includes a standing command element; a ground element consisting of a battalion landing team; an aviation element consisting of a composite aviation squadron of multiple types of aircraft; and a logistics element consisting of a combat logistics battalion. Figure 2 provides an overview of the components of a standard ARG-MEU.\nAn amphibious force can be scaled to include a larger amphibious task force, such as an Expeditionary Strike Group, and a larger landing force, such as a Marine Expeditionary Brigade or Marine Expeditionary Force (MEF) for larger operations. A Marine Expeditionary Brigade is comprised of 3,000 to 20,000 personnel and is organized to respond to a full range of crises, such as forcible entry and humanitarian assistance. A MEF is the largest standing Marine Air-Ground Task Force and the principal Marine Corps warfighting organization. Each MEF consists of 20,000 to 90,000 Marines. MEFs are used in major theater war and other missions across the range of military operations. There are three standing MEFs—I MEF at Camp Pendleton, California; II MEF at Camp Lejeune, North Carolina; and III MEF in Okinawa, Japan.", "Navy ships train to a list of mission-essential tasks that are assigned based on the ship’s required operational capabilities and projected operational environments. Most surface combatants, including cruisers, destroyers, and all amphibious ships, have mission-essential tasks related to amphibious operations. The Navy uses a phased approach to training, known as the Fleet Response Training Plan. The training plan for amphibious ships is broken up into five phases: maintenance, basic, advanced, integrated, and sustainment. The maintenance phase is focused on the completion of ship maintenance, with a secondary focus on individual and team training. The basic phase focuses on development of core capabilities and skills through the completion of basic-level inspections, assessments, and training requirements, among other things. This phase can include certification in areas such as mobility, communications, amphibious well-deck operations, aviation operations, and warfare training. The basic phase of training requires limited Marine Corps involvement—mainly to certify amphibious ships for well-deck and flight-deck operations. The advanced phase focuses on advanced tactical training, including amphibious planning. The integrated phase is where individual units and staffs are aggregated into an Amphibious Ready Group (ARG) and train with an embarked MEU or other combat units. The sustainment phase includes training to sustain core skills and provides an additional opportunity for training with Marine Corps units, when possible.\nMarine Corps units train to accomplish a set of mission-essential tasks for the designed capabilities of the unit. For example, the mission-essential tasks for a Marine Corps infantry battalion include amphibious operations, offensive operations, defensive operations, and stability operations. Many Marine Corps units within the command, aviation, ground, and logistics elements have an amphibious-related mission-essential task. The Marine Corps uses a building-block approach to accomplish training, progressing from individual through collective training. For example, an assault amphibian vehicle battalion will progress through foundational, individual, and basic amphibious training—such as waterborne movement and ship familiarization—to advanced amphibious training, such as live training involving ship-to-shore movement conducted under realistic conditions.\nMarine Corps unit commanders use Training and Readiness manuals to help develop their training plans. Training and Readiness manuals describe the training events, frequency of training required to sustain skills, and the conditions and standards that a unit must accomplish to be certified in a mission-essential task. To be certified in the mission- essential task of amphibious operations, Marine Corps units must train to a standard that may require the use of amphibious ships. For example, ground units with amphibious-related mission-essential tasks will not be certified until live training involving sea-based operations and ship-to- shore movement has been conducted under realistic conditions. Similarly, for aviation squadrons, training for amphibious operations (called sea- based aviation operations) will not be certified until live training involving sea-based operations has been conducted under realistic conditions, including aviation operations from an amphibious platform. Similar types of units, such as all infantry battalions, may train on the same mission- essential tasks. However, unit commanders are ultimately responsible for their units’ training, and a variety of factors can lead commanders to adopt different approaches to training, such as the units’ assigned missions or deployment locations.\nMarine Corps units that are scheduled to deploy as part of an ARG-MEU will follow a standardized 6-month predeployment training program that gradually builds collective skill sets over three phases, as depicted in figure 3.", "The Marine Corps’ use of virtual training devices has increased over time. Virtual training devices were first incorporated into training for the aviation community, which has used simulators for more than half a century. The Marine Corps’ ground units did not begin using simulators and simulations until later. Specifically, until the 1980s, training in the ground community was primarily live training. Further advances in technology resulted in the acquisition of simulators and simulations with additional capabilities designed to help individual Marines and units acquire and refine skills through more concentrated and repetitive training. For example, the Marine Corps began using devices that allowed individual Marines to conduct training in basic and advanced marksmanship and weapons employment tactics. More recently, during operations in Iraq and Afghanistan, the Marine Corps introduced a number of new virtual training devices to prepare Marines for conditions on the ground and for emerging threats. For example, to provide initial and sustainment driver training, the Marine Corps began using simulators that can be reconfigured to replicate a variety of vehicles. In addition, in response to an increase in vehicle rollovers, the Marine Corps began using egress trainers to train Marines to safely evacuate their vehicles. The Marine Corps has also developed virtual training devices that can be used to train Marines in collective training, such as amphibious operations. For example, the Marine Air-Ground Task Force Tactical Warfare Simulation is a constructive simulation that provides training on planning and tactical decision making for the Marine Corps’ command element. See figure 4 for a description of examples of Marine Corps devices that can be used for individual through collective training.", "Navy and Marine Corps units that are deploying as part of an ARG-MEU completed their required training for amphibious operations, but several factors have limited the ability of Marine Corps units to conduct training for other amphibious operations–related priorities. The Navy and Marine Corps have taken steps to identify and address amphibious training shortfalls, but their efforts to mitigate these shortfalls have not prioritized available training resources, systematically evaluated among potential training resource alternatives to accomplish the services’ amphibious operations training priorities, or monitored progress toward achieving the priorities.", "Navy and Marine Corps units deploying as part of ARG-MEUs have completed required training for amphibious operations, but the Marine Corps has been unable to consistently accomplish training for other service amphibious operations priorities. We found that Navy amphibious ships have completed training for amphibious operations. Specifically, based on our review of deployment certification messages from 2014 through 2016, we found that each deploying Navy ARG completed training for the amphibious operations mission in accordance with training standards. Similarly, we found that each MEU completed all of its mission-essential tasks that are required during the predeployment training program. These mission-essential tasks cover areas such as amphibious raid, amphibious assault, and noncombatant evacuation operations, among other operations.\nHowever, while the Marine Corps has completed amphibious operations training for the MEU, based on our review of unit-level readiness data from fiscal year 2014 through 2016 we found that the service has been unable to fully accomplish training for its other amphibious operations priorities, which include home-station unit training to support contingency requirements, service-level exercises, and experimentation and concept development for amphibious operations. Specific details of these shortfalls were omitted because the information is classified.\nAdditionally, Marine Corps officials cited shortfalls in their ability to conduct service-level exercises that train individuals and units on amphibious operations-related skills, as well as provide opportunities to conduct experimentation and concept development for amphibious operations. In particular, officials responsible for planning and executing these exercises told us that one of the biggest challenges is aligning enough training resources, such as amphibious ships, to accurately replicate a large-scale amphibious operation. For example, officials from III MEF told us that the large-scale amphibious exercise Ssang Yong is planned to be conducted every other year, but that the exercise requires the availability and alignment of two ARG-MEUs in order to have enough forces to conduct the exercise. These officials stated that this alignment may only happen every 3 years, instead of every other year, as planned. In addition, officials from I MEF and II MEF told us that their large-scale amphibious exercises are intended to be a Marine Expeditionary Brigade–level training exercise, however, these exercises are typically only able to include enough amphibious ships to support a MEU, while the other forces must be simulated. Despite these limitations, Navy and Marine Corps officials have identified these service-level exercises as a critical training venue to support training for the Marine Expeditionary Brigade command element and to rebuild the capability to command and control forces participating in amphibious operations.\nBased on our analysis of interviews with 23 Marine Corps units, we found that all 23 units cited the lack of available amphibious ships as the primary factor limiting training for home-station units. The Navy’s fleet of amphibious ships has declined by half in the last 25 years, from 62 in 1990 to 31 today, with current shipbuilding plans calling for four additional amphibious ships to be added by fiscal year 2024, increasing the total number of amphibious ships to 35 (see fig. 5).\nNavy and Marine Corps officials noted a number of issues that can affect the amount of training time that is available with the current amphibious fleet. In particular, the current fleet of ships is in a continuous cycle of maintenance, ARG-MEU predeployment training, and sustainment periods, leaving little additional time for training with home-station units and participation in service-level exercises. Navy officials told us that the Optimized Fleet Response Plan may provide additional training opportunities for Marine Corps units during the amphibious ships’ sustainment periods. Given the availability of the current inventory of amphibious ships, Marine Corps requests to the Navy for amphibious ships and other craft have been difficult to fulfill. For example, data from I MEF showed that the Navy was unable to fulfill 293 of 314 (93 percent) of I MEF requests for Navy ship support for training in fiscal year 2016. Similarly, data from II MEF showed that in fiscal year 2016 the Navy was unable to fulfill 19 of 40 requests for ship services. We identified issues with the completeness of this request data. Specifically, we found that the data may not fully capture the Marine Corps’ demand for amphibious ships. As a result, this information may overstate the ability of the Navy to fulfill these requests. We discuss these data-reliability issues further below.\nMarine Corps officials from the 23 units we interviewed also cited other factors that limit opportunities for amphibious operations training, such as the following:\nAccess to range space: Seventeen of 23 Marine Corps units we interviewed identified access to range space as a factor that can limit their ability to conduct amphibious operations training. Unit officials told us that priority for training resources, including range access, is given to units that will be part of a MEU deployment, leaving little range time available for other units. In addition, unit officials told us that the amount of range space available can affect the scope and realism of the training that they are able to conduct. Training for amphibious operations can require a large amount of range space, because the operational area extends from the offshore waters onto the landing beach and further inland. A complete range capability requires maneuver space, tactical approaches, and air routes that allow for maneuverability and evasive actions. However, officials from II MEF told us that the size of the landing beach near Camp Lejeune, North Carolina makes conducting beach-clearing operations infeasible. Adequate ranges have been identified as a challenge across DOD. For example, according to DOD’s 2016 Report to Congress on Sustainable Ranges, some Marine Corps installations lack fully developed maneuver corridors, training areas, and airspace to adequately support ground and air maneuver inland from landing beaches.\nMaintenance delays, bad weather, and transit time: Ten of 23 Marine Corps units told us that changes to an amphibious ship’s schedule resulting from maintenance overruns or bad weather can also reduce the time available for a ship to be used for training. In addition, the transit time a ship needs to reach Marine Corps units can further reduce the time available for training. This is a particular challenge for II MEF units stationed in North Carolina and South Carolina that train with amphibious ships stationed in Virginia and Florida. According to II MEF officials, transit time to Marine Corps units can take up to 18 hours in good weather, using up almost a full day of available training time for transit.\nHigh pace of deployments: Five of 23 Marine Corps units told us that the high pace of deployments and need to prepare for upcoming deployments limited their opportunity to conduct training for amphibious operations. For example, II MEF officials told us that an infantry battalion that is scheduled to deploy as part of a Special Purpose Marine Air-Ground Task Force to Africa generally does not embark on an amphibious ship or have amphibious operations as part of its assigned missions. As a result, the unit will likely not conduct amphibious operations during its predeployment training.", "The Navy and Marine Corps have taken some steps to mitigate the training shortfall for their amphibious operations priorities, but these efforts are incomplete because they have not prioritized available training resources, systematically evaluated among potential training resource alternatives to accomplish the services’ amphibious operations training priorities, or monitored progress toward achieving the priorities. The Navy and Marine Corps are in the process of identifying (1) the amount of amphibious operations capabilities and capacity that are needed to achieve the services’ wartime requirements, and (2) the training resources and funding required to meet the amphibious operations- related training priorities. First, in December 2016, the Navy conducted a force structure assessment that established a need for a fleet of 38 amphibious ships. Based on the assessment, the Chief of Naval Operations and the Commandant of the Marine Corps determined that increasing the Navy’s amphibious fleet from a 31-ship to a 38-ship amphibious fleet would allow the Marine Corps to meet its wartime needs of having enough combined capacity to transport two Marine Expeditionary Brigades. Specifically, a 38-ship fleet would provide 17 amphibious ships for each Marine Expeditionary Brigade, plus four additional ships to account for ships that are unavailable due to maintenance. According to Navy and Marine Corps officials, an increase in the number of amphibious ships should create additional opportunities for the Navy and Marine Corps to accomplish amphibious operations training.\nSecond, the Marine Corps has also recognized a need to improve the capacity and experience of its forces to conduct amphibious operations and is taking steps to identify the training resources and funding required to meet its amphibious operations–related training priorities. To accomplish this task, in 2016 the Marine Corps initiated the Amphibious Operations Training Requirements review. As a part of this review, the Marine Corps has comprehensively determined units that require amphibious operations training and is in the process of refining the training and readiness manuals for each type of Marine Corps unit to include an amphibious-related mission-essential task as appropriate, and better emphasizing the types of conditions and standards for amphibious training in the manuals. According to officials, as of May 2017, Marine Corps Forces Command has reviewed the mission-essential tasks for 60 unit types and found 31 unit types already had a mission-essential task for amphibious operations, while another 5 unit types required that an amphibious-related mission-essential task be added. The review further found that the other 24 unit types do not require a mission-essential task for amphibious operations. In addition, the Marine Corps Training and Education Command noted in its review that certain training standards within the training manuals are being refined in order to distinguish between levels of training accomplished. For example, for ground-based units, such as infantry battalions, an additional training standard was added for all amphibious-related mission-essential tasks that a unit would not be considered both trained and certified unless live training using amphibious ships has been conducted under realistic conditions.\nThe Amphibious Operations Training Requirements review is also intended to accomplish other actions to better define the services’ amphibious operations training priorities, but these actions were incomplete at the time of our review. Specifically, the review will also establish an objective for the number of Marine Corps forces that must be trained and ready to conduct amphibious operations at a given point in time, and the amount of funding for ship steaming days that is required to provide training for the services’ amphibious operations priorities. According to officials responsible for the Amphibious Operations Training Requirements review, an outcome of the review is expected to be a combined Navy and Marine Corps directive signed by the Chief of Naval Operations and the Commandant of the Marine Corps that should provide guidance to better define a naval objective for amphibious readiness and required ship steaming days. Marine Corps officials estimated that the issuance of the directive will be in the summer of 2017.\nWith these two efforts, the Navy and Marine Corps have been proactive in identifying the underlying problems with training for amphibious operations, and their ongoing efforts indicate that addressing this training shortfall is a key priority for the two services. In particular, the proposed Navy and Marine Corps directive that will result from the Amphibious Operation Training Requirements review should help establish a naval objective for amphibious readiness with the corresponding units that need to be trained and ready in amphibious operations, as well as a basis for estimating the required amount of training resources, such as ship steaming days, to meet amphibious operations training priorities. When completed, the development of this directive is an important first step to clearly identify the total resources needed for amphibious operations training.\nHowever, the Navy’s and Marine Corps’ current approach for amphibious operations training does not incorporate strategic training and leading risk-management practices. Specifically, we found the following:\nThe Marine Corps does not prioritize all available training resources: Based on our prior work on strategic training, we found that agencies need to align their training processes and available resources to support outcomes related to the agency’s missions and goals, and that those resources should be prioritized so that the most- important training needs are addressed first. For certain units that are scheduled to deploy as part of an ARG-MEU, the Navy and Marine Corps have a formal training program that specifies the timing and resource needs across all phases of the training, including the number of days embarked on amphibious ships that the Navy and Marine Corps need to complete their training events. Officials stated that available training resources, including access to amphibious ships for training, are prioritized for these units.\nHowever, for other Marine Corps units not scheduled for a MEU deployment, officials described an ad hoc process to allocate any remaining availabilities of amphibious ship training time among home- station units. Specifically, officials stated that the current process identifies units that are available for training when an amphibious ship becomes available rather than a process that aligns the next highest- priority units with available training resources. For example, officials at Headquarters Marine Corps told us that the Navy will identify training opportunities with amphibious ships at quarterly scheduling conferences. The Marine Corps will fill these training opportunities with units that are available to accomplish training during that period, but not based on a process that identifies its highest-priority home- station units for training. Similarly, a senior officer with First Marine Division told us that he would prioritize home-station units that have gone the longest without conducting amphibious-related training, which may not be the units with the highest priority for amphibious operations training.\nThe Navy and Marine Corps have recognized the need for reinstituting a recurring training program for home-station units, but efforts to implement such a program have not been started at the time of our review. According to Navy officials, the Navy and Marine Corps have had a recurring training program in the past to provide home- station units with amphibious operations training called the Type Commander Amphibious Training series, or TCAT, but this program was phased out 15 years ago with the implementation of the Fleet Response Training Plan that is more focused on ARG-MEU training. Navy and Marine Corps officials told us that reinstituting a similar training program would allow the services to better prioritize training resources and align units to achieve the services’ proposed naval objective for amphibious readiness. Without establishing a process to prioritize available training resources for home-station units, the Navy and Marine Corps cannot be certain that scarce training opportunities are being aligned with their highest-priority needs.\nThe Navy and Marine Corps do not systematically evaluate a full range of training resource alternatives to achieve amphibious operations training priorities: Our prior work on risk management has found that evaluating and selecting alternatives are critical steps for addressing operational capability gaps. Based on our interviews with officials across the Marine Expeditionary Forces and review of documentation, we identified a number of alternatives that could help mitigate the risk to the services’ amphibious capability due to limited training opportunities. These alternatives include utilizing additional training opportunities during an amphibious ship’s basic phase of training; using alternative platforms for training, such as Marine Prepositioning Force ships, or the amphibious ships of allies; utilizing smaller Navy craft or pier-side ships to meet training requirements; and leveraging developmental and operational test events.\nHowever, the Navy and Marine Corps have not developed a systematic approach to explore and incorporate selected training resource alternatives into home-station training plans. Specifically, officials told us that the combined Navy and Marine Corps directive that is expected to be completed later this year will better define a naval objective for amphibious readiness and the required training resources to achieve it, and will provide guidance to the two services to better identify training resource alternatives for home-station training. Based on our review of briefing materials on the Amphibious Operations Training Requirements review, however, we found that the services have discussed using some training resource alternatives to mitigate amphibious operations training shortfalls, such as pier-side ships to minimize the required number of ship steaming days, but the services have not systematically evaluated potential alternatives. Marine Corps officials told us that fully evaluating resource alternatives, particularly the use of simulated training and pier-side ships, could allow for more amphibious training without the need for additional steaming days. Fully exploring alternatives, such as utilizing alterative platforms and pier-side ships, and incorporating a broader range of training resource alternatives into training will be important as the Navy and Marine Corps try to achieve their training priorities and could help bridge the time gap until more amphibious ships are introduced into the fleet.\nThe Navy and Marine Corps have not developed a process or set of metrics to monitor progress toward achieving its amphibious operations training priorities and mitigating existing shortfalls: Our prior work on risk management has found that monitoring the progress made and results achieved are other critical steps for addressing operational capability gaps. Marine Corps officials told us that the service uses the readiness reporting system (Defense Readiness Reporting System—Marine Corps) to measure the capabilities and capacity of its units to perform amphibious operations. While this reporting system allows the Marine Corps to assess the current readiness of units to perform the amphibious operations mission-essential task—an important measure—the system does not provide other information. For example, it does not allow officials to assess the status of service-wide progress in achieving its amphibious operations priorities or monitor efforts by the Marine Expeditionary Forces in establishing comprehensive amphibious operations training programs.\nMarine Corps officials told us that they may need to capture and track additional information, such as the number of amphibious training events scheduled and completed. However, as noted above, we found that the Marine Corps does not capture complete data that could be used for these assessments, such as demand for training time with amphibious ships. For example, officials from I MEF told us they do not capture the full demand for training time with Navy ships because unit commanders will not always submit a request that they believe is unlikely to be filled. In addition, these officials stated that their requests are prescreened before being submitted to the Navy to ensure that the requests align with known periods of available ship time. As a result, requests for amphibious ships and crafts are supply- driven, instead of demand-driven, which could affect the services’ ability to monitor progress in accomplishing unit training because an underlying metric is incomplete. Establishing a process to monitor progress in achieving amphibious operations training priorities will better enable the Navy and Marine Corps to ensure that their efforts are accomplishing the intended results and help assess the extent to which the services have mitigated any amphibious operations training shortfalls.", "The Navy and Marine Corps have taken some steps to improve coordination between the two services, but the services have not fully incorporated leading collaboration practices that would help drive efforts to improve naval integration for amphibious operations. Our prior work on interagency collaboration has found that certain practices can help enhance and sustain collaboration among federal agencies. These key practices include (1) defining and articulating a common outcome; (2) establishing mutually reinforcing or joint strategies; (3) identifying and addressing needs by leveraging resources; (4) agreeing on roles and responsibilities; (5) establishing compatible policies, procedures, systems, and other means to operate across agency boundaries; (6) developing mechanisms to monitor, evaluate, and report on results; and (7) reinforcing agency accountability for collaborative efforts through plans and reports, among others.\nCommon outcomes and joint strategy: The Navy and Marine Corps have issued strategic documents that discuss the importance of improving naval integration, but the services have not developed a joint strategy that defines and articulates common outcomes to achieve naval integration. We have found that collaborative efforts require agency staff working across agency lines to define and articulate the common outcome or purpose they are seeking to achieve that is consistent with their respective agency goals and mission. In addition, collaborating agencies need to develop strategies that work in concert with those of their partners. These strategies can help in aligning the partner agencies’ activities, processes, and resources to accomplish common outcomes. Further, joint strategies can benefit from establishing specific objectives, related actions, and subtasks with measurable outcomes, target audiences, and agency leads.\nBased on our review of Navy and Marine Corps strategic-level documents, both services identify the importance of improving naval integration, but these documents do not define and articulate outcomes that are common among the services or identify actions and time frames to achieve common outcomes that would be included a joint strategy. Instead, the documents describe naval integration in varying ways, including as a means to improve the capabilities of naval forces to perform essential functions, such as sea control and maritime security; exercise command and control for large-scale operations, including amphibious operations; and establish concepts to conduct naval operations in contested environments, among other areas. For example, strategic documents developed by the Navy only broadly discuss naval integration. In March 2015, the Department of the Navy issued an updated version of A Cooperative Strategy for 21st Century Seapower. This document discusses building the future naval force, including the need to organize and equip the Marine Expeditionary Brigade to exercise command and control of joint and multinational task forces for larger operations and enable the MEF for larger operations. In January 2016, the Department of the Navy published A Design for Maintaining Maritime Superiority, stating the need to deepen operational relationships with other services to include current and future planning, concept and capability development, and assessment.\nMarine Corps strategic documents provide a more-detailed and expansive list of areas for improved integration with the Navy, but do not provide guidance on how to achieve those areas. For example, in March 2014, the Marine Corps issued Expeditionary Force 21, which describes the need to increase naval integration, including operational integration between the Marine Expeditionary Brigade and the Navy’s Expeditionary Strike Group. Further, in September 2016 the Marine Corps issued a Marine Corps Operating Concept that establishes five tasks needed for the Marine Corps to build its future force, including integrating the naval force to fight at and from the sea.\nAccording to Navy and Marine Corps officials, naval integration is a broad term, has different meanings across various service organizations, and is not commonly understood. For example, officials told us that the services have identified the need to develop more-precise language around the term naval integration and articulate common outcomes to create a more- integrated approach to develop naval capabilities. Another senior Marine Corps training official told us that clear guidance is needed on how to define outcomes for naval integration for Navy and Marine Corps command-level staff. In particular, the official stated that without guidance it is unclear how an integrated staff should be composed—whether as two separate Navy and Marine Corps command staffs that should work together, or as one staff composed of both Navy and Marine Corps personnel. The continuing lack of common outcomes and a joint strategy could limit the Navy and Marine Corps ability to achieve their goals for naval integration. Further, joint strategies for improving naval integration could help ensure that services efforts are aligned to maximize available training opportunities and resources.\nCompatible policies, procedures, and systems: The Navy and Marine Corps have established several mechanisms to better coordinate their respective capabilities for amphibious operations training, but have not fully established compatible policies, procedures, and systems to foster and build naval integration. We have found that agencies need to address the compatibility of standards, policies, procedures, and data systems that will be used in the collaborative effort. These policies can be used to provide clarity about roles and responsibilities, including how the collaborative effort will be led.\nThe Marine Corps has established a working group that provides a forum for collaboration for amphibious operations. Specifically, Marine Corps Forces Command established a Maritime Working Group to develop and manage a continuing Navy–Marine Corps quarterly collaborative process that is comprised of officials from the services’ headquarters, components, and operating forces. According to its mission statement, the Maritime Working Group is intended to align naval amphibious exercise planning to inform force development, war games, experimentation, and coalition participation in order to advance concepts; influence doctrine; inform naval exercise design and sourcing; inform capabilities development; and increase naval warfighting readiness. Based on our observation of the Maritime Working Group in September 2016, we found that the forum covered a broad range of topics including exercise prioritization, experimentation, and planning for future Navy exercises. Following the meeting, a summary of the topics discussed was provided to all participants as well as follow-on actions to be completed.\nHowever, we found that the Navy and Marine Corps have not fully established compatible policies and procedures, such as common training tasks and standards and agreed-upon roles and responsibilities, to ensure their efforts to achieve improved naval integration are consistent and sustained. For example, on the West Coast, the Navy and Marine Corps organizations 3rd Fleet and I MEF have issued guidance that formalizes policies that assign 1st Marine Expeditionary Brigade and Expeditionary Strike Group 3 with the responsibilities to conduct joint training. This guidance addresses the importance of Navy and Marine Corps interoperability by formalizing procedures, assigning responsibility, and providing general policy regarding training certification standards for these units. Officials from Fleet Forces Command noted that there is not similar guidance for East Coast–based units for the 2nd Marine Expeditionary Brigade and Expeditionary Strike Group 2. According to a Navy inspection report, Fleet Forces Command officials stated that they did not institute a deployment certification program for Expeditionary Strike Group 2 because of changing priorities at the command. As a result, the services lack clarity on the roles and responsibilities for these organizations—another key collaboration practice—that is needed to ensure these improvements are prioritized to further and sustain the collaborative effort.\nBoth the Navy and Marine Corps have also identified areas where more- compatible training is needed to improve the skills and abilities of naval forces to perform certain missions. For example, Marine Corps training guidance from III MEF identifies a number of areas where Marine Corps units could improve collective naval capabilities by expanding training with the Navy, including areas such as joint maneuver, seizure and defense of forward naval bases, and facilitating maritime maneuver, among others. The Marine Corps Operating Concept also identifies other areas where integration with the Navy should be enhanced, including for intelligence, surveillance, and reconnaissance; operating in a distributed or disaggregated environment; and employment of fifth-generation aviation, such as the F-35. However, the services have been limited in their efforts to improve naval integration in these areas because they have not established compatible training tasks and standards that would institutionalize Navy and Marine Corps unit-level training requirements. Marine Corps officials told us that without compatible training tasks and standards, there is not a mechanism to force continued integration between the services outside of forces deploying as part of an ARG-MEU to help develop integrated naval capabilities.\nWe also found that some of the Navy and Marine Corps’ systems for managing and conducting integrated training are incompatible, leading to inefficiencies in the process to manage training events involving Navy and Marine Corps units. For example, the Marine Corps has developed a system called Playbook to help align Navy and Marine Corps resources for training exercises that have been scheduled through the Force Synchronization process. At the time of our review, the Marine Corps was in the process of inputting data for all of its scheduled training exercises, including experiments and war games, into the system in order to align training resources and capabilities to its highest priority exercises and help build a training and exercise plan through 2020. However, the Navy uses several other data systems to track and capture its training resource requirements, and these systems are incompatible with Playbook. The lack of interface requires the Marine Corps to manually input and reconcile Navy information into its system. This can cause certain inefficiencies in arranging training. For example, officials from III MEF told us that adjustments to the Navy’s maintenance schedule for amphibious ships are not always communicated in advance, which can create a misalignment in the availability of amphibious ships and Marine Corps units to conduct training exercises. The Marine Corps has identified the need to define the Navy’s use of Playbook and explore a potential interface with Navy systems, but, as of May 2017, officials said that any evaluation, including potential cost-benefit analyses for addressing the interoperability issues, had not yet taken place. By having incompatible systems to schedule training, the services remain at risk of missing opportunities to maximize training opportunities for amphibious operations.\nLeverage resources to maximize training opportunities: The Navy and Marine Corps have identified certain opportunities where the two services can better leverage resources to conduct additional amphibious operations training together, but these opportunities have not been fully maximized. We have found that collaborating agencies should look for opportunities to address needs by leveraging each other’s resources, thus obtaining additional benefits that would not be available if they were working separately. Marine Corps Forces Command and Fleet Forces Command, as well as Marine Corps Forces Pacific and Pacific Fleet, have each established a Campaign Plan for Amphibious Operations Training. The purpose of these plans is to align resources for larger, service-level exercises for amphibious operations over a 5-year period. The goal of these exercises is to develop operational proficiency for a Marine Expeditionary Brigade–level contingency or crisis, but the specific focus of the exercise can change from year to year. For example, in 2017 the Bold Alligator exercise will focus on joint forcible entry operations and anti-access / area denial, whereas in prior years the focus has been on other operational areas, such as crisis response. We found that the Navy and Marine Corps also use mechanisms, such as scheduling conferences, to coordinate and prioritize requests for ship services for these exercises, as well as for other training events.\nThe services are looking to better leverage available training resources for amphibious operations, but enhancing their collaborative efforts could take greater advantage of potential training opportunities. For example, Navy officials have stated that the Surface Warfare Advanced Tactical Training initiative could provide an additional training opportunity for Marine Corps units to train with Navy ships. This initiative is intended to provide amphibious ships with a period of training focused on advanced tactical training, such as defense of the amphibious task force, and multiunit ship-to-shore movement, among other objectives. According to a Navy official responsible for the development of this initiative, its primary focus is on advanced tactical training for Navy personnel, but greater integration with the Marine Corps may be needed to accomplish certain training objectives, such as air defense. Further, it would provide an opportunity for the Marine Corps to achieve additional amphibious operations training. However, according to this official, the Marine Corps did not provide input into how its capabilities could be fully incorporated into the Navy’s advanced tactics training or identify potential opportunities to maximize amphibious operations training for both services.\nFurther, the Marine Corps officials told us that there are opportunities to use transit time during Navy community-relations events, such as port visits, to conduct amphibious training for home-station units, but these events are not always identified with enough lead time to take full advantage of the training opportunity. According to officials at II MEF, Marine Corps units typically need at least 6 months of advance notice to align their forces and equipment for the potential training opportunity. Further, Marine Corps officials told us that the Navy does not always have a fully trained staff with the amphibious ship during these events, which can limit the comprehensiveness of the training that Marine Corps units are able to accomplish. These officials also stated that the flight deck or well deck may not be certified for use at the time of these community- relations events, further limiting their utility for Marine Corps training. Despite these limitations, Marine Corps officials have told us that these events can still provide training benefits, such as ship familiarization for Marines, but that these opportunities still require advanced notice. By improving coordination over its training resources, the services will be better positioned to take full advantage of these scarce training opportunities.\nMechanisms to monitor results and reinforce accountability: The Navy and Marine Corps have processes to evaluate and report on the results of specific training exercises, but have not developed mechanisms to monitor, evaluate, and report on results nor jointly reinforced accountability for their naval integration efforts through agency plans and reports. We have found that agencies need to monitor and evaluate their efforts to enable them to identify areas for improvement and help decision makers obtain feedback for improving operational effectiveness. Further, agency plans and reports can reinforce accountability by aligning goals and strategies with the collaborative effort.\nFor large-scale exercises, such as Bold Alligator, the Marine Corps conducts reviews that identify actions that should be sustained moving forward, as well as areas that should be improved in future exercises, including issues related to naval integration. However, the services have not established other processes or mechanisms to monitor, evaluate, and report on results that are needed to measure progress in achieving service-level goals for naval integration and to align efforts to maximize training opportunities for amphibious operations. For example, the Marine Corps does not have a process to monitor and report on results for the critical tasks identified in its Marine Corps Operating Concept, including those tasks related to naval integration, such as integrating command structures, developing concepts for littoral operations in a contested environment, and conducting expeditionary advanced base operations. Monitoring progress against these tasks, as well as common outcomes, once defined, should help the Navy and Marine Corps track progress toward achieving improved naval integration.\nWhile the Navy and Marine Corps have taken some steps to improve naval integration in recent years, these efforts are still in the early stages. In particular, Navy and Marine Corps officials stated that the services have not yet defined or articulated common outcomes needed to achieve naval integration because they have not determined who would be responsible for this effort or when to begin its development. Defining and articulating common outcomes for naval integration would allow the services to more effectively incorporate other leading collaboration practices aimed at those common outcomes, to the extent deemed appropriate, such as developing a joint strategy, establishing compatible policies, leveraging resources, and monitoring results.", "The Marine Corps has taken some steps to better integrate virtual training devices into its operational training. However, the Marine Corps’ process to manage the development and use of its virtual training devices in operational training plans has gaps.", "The Marine Corps has taken some steps to integrate virtual training devices into operational training and has other efforts under way. In 2013, we reported that the Marine Corps did not have information on the performance and cost of virtual training that would assist the service in assessing and comparing the benefits of virtual training as it sought to optimize the mix of live and virtual training to meet requirements and prioritize training investments. We also found that the Marine Corps had not developed overall metrics or indicators to measure how the use of virtual training devices had contributed to improving the effectiveness of training, or identified a methodology to identify the costs associated with using virtual training. We recommended that the Marine Corps develop outcome-oriented performance metrics for assessing the effect of virtual training on improving performance or proficiency and develop a methodology to identify the costs of virtual training in order to compare the costs of using live and virtual training. Further, in 2015 the Commandant of the Marine Corps issued guidance that stated the service will focus on better leveraging virtual training technology and that all types of Marine Corps forces should make extensive use of virtual training where appropriate.\nIn response to our recommendations and the Commandant’s guidance, in 2015 the Marine Corps Training and Education Command created a Simulation Assessment Working Group with stakeholders from across the Marine Corps to identify training events that could be supported by virtual training devices and incorporate those devices into Training and Readiness manuals. The working group found that over 7,000 of the 12,000 training events reviewed could use a virtual training device to either fully or partially meet the training standard of that event. The group also identified 135 events that may only be performed using the virtual training device or must be performed with the device as a prerequisite to live training. Based on the results of the working group, Training and Education Command updated the corresponding unit-specific Training and Readiness manuals to identify where a training event could be completed using a virtual training device. While this action represents some progress toward better incorporating virtual training devices into operational training, our recommendations remain open because the Marine Corps’ efforts to develop specific outcome-oriented performance metrics to assess virtual training or a methodology to make more- informed comparisons between the costs of live and virtual training are not yet complete. According to a senior Training and Education Command official, the Marine Corps is working to update its training information management system to better capture this information.\nIn 2015, the Marine Corps also issued a Concept of Operations (CONOPS) for the United States Marine Corps Live, Virtual, and Constructive – Training Environment (LVC-TE) (hereafter referred to as Concept of Operations) that is intended to describe the live, virtual, and constructive training environment based on operational requirements in sufficient detail to continue the development of this training capability. According to the Concept of Operations, the goal in implementing the live, virtual, and constructive training environment is to expand training opportunities, reduce training costs, improve safety, and maintain high levels of proficiency and readiness. The Concept of Operations estimates that the live, virtual, and constructive training environment will be implemented in 2022.\nLastly, the Marine Corps has an ongoing effort to better inform users of the availability of virtual training devices that support ground-based units. Specifically, the Marine Corps Training and Education Command is developing a Ground Training Simulations Implementation Plan that is intended to provide a framework for the use of current and future virtual training devices for ground units. The Ground Training Simulations Implementation Plan is modeled after the processes used by the Marine Corps’ aviation community to integrate simulators into aviation training. The Marine Corps estimates that the plan will be finalized in the summer of 2017. According to a Training and Education Command official involved in the plan’s development, the plan will help address a challenge the Marine Corps has faced in educating commanders on the availability and capabilities of available virtual training devices. This challenge is consistent with information we gathered during our visit to selected Marine Corps installations. Officials at the two Battle Simulation Centers we visited, for example, told us that unit commanders do not always know what virtual training devices are available and how they can be used to meet training requirements.", "The Marine Corps process to manage the development and use of virtual training devices in operational training plans has gaps due to a lack of guidance. Specifically, the Marine Corps does not (1) include consideration of critical factors for integrating virtual training devices into operational training in its front-end planning to support the acquisition of its virtual training devices, (2) consistently consider expected and actual usage data for virtual training devices to support its investment decisions, or (3) consistently evaluate the effectiveness of its virtual training devices for operational training.", "The Marine Corps’ process for conducting front-end planning and analysis to support the acquisition of its virtual training devices does not include consideration of critical factors for integrating virtual training devices into operational training, such as the specific training tasks the device is intended to address, how the device would be used to meet proficiency goals, or available time for units to train with the device. DOD’s Strategic Plan for the Next Generation of Training for the Department of Defense states that the right mix of live, virtual, and constructive training capabilities will depend on training tasks and objectives, required proficiency, and available training time, among other factors. In addition, we have previously found that part of the front-end analysis process for training and development programs should include a determination of the skills and competencies in need of training and how training will build proficiency for those skills and competencies.\nBased on our analysis of the Marine Corps’ front-end planning documents (called system development documents) for the six virtual training devices included in our review, we found that documentation for five of the six devices did not include specific training tasks. In addition, the documentation for two devices specified that specific training tasks would be identified during the verification and validation phase, which is a type of analysis that typically takes place after the device has already been acquired, according to a senior Training and Education Command official. While the documentation for all of the devices included a high- level discussion of relevant mission areas, documentation for five out of six devices did not identify specific training tasks, such as specific training events in a unit’s Training and Readiness manual, that the device was intended to address. For example, documentation for the Combined Arms Command and Control Training Upgrade System includes a high-level discussion of mission areas that the device supports, such as force application, command and control, and battlespace awareness. It also states that the device is to support training events, but it does not specify what those events are. In addition, none of the system development documents we reviewed identified proficiency goals or considered available training time for the units to use the device.\nAccording to officials at Training and Education Command, many virtual training devices in the Marine Corps’ inventory were developed based on urgent needs to meet capability gaps identified by warfighters and were not based on training requirements. Of the six devices included in our review, three of the devices were acquired to meet urgent warfighter needs—the Family of Egress Trainers—Modular Amphibious Egress Trainer, the Operator Driver Simulator, and the Supporting Arms Virtual Trainer. However, the system development documents we reviewed for those three devices were completed after the devices had been fielded to meet the urgent needs, but still did not identify specific training tasks or proficiency goals, or consider available training time for the units to use the device. Moreover, the system development documents for two of the remaining three devices we reviewed did not contain this information.\nWhile the Marine Corps did not identify and assess these factors in the front-end planning process, the Marine Corps has begun taking steps to identify these factors through efforts such as the Simulation Assessment Working Group. However, these efforts are occurring after the devices have already been acquired and fielded, leading to decisions that have potential cost implications. For example, in its analysis, the Simulation Assessment Working Group did not fully consider alternative devices that could be used to achieve specific training tasks because its methodology was to identify the one virtual training device that was considered the “best in breed” simulator for conducting each training event rather than considering all devices that could be used for the event, including those that might be more cost-effective. Officials at II MEF told us that this methodology did not include an evaluation of the device’s cost compared to other devices that could achieve similar training outcomes. For example, these officials told us that the Supporting Arms Virtual Trainer was identified as a “best in breed” device for a number of training events, including calls for fire and close air support. However, these officials stated that the Deployable Virtual Training Environment device is a lower- cost alternative that could achieve similar outcomes for many of the training events that do not require the level of realism provided by the Supporting Arms Virtual Trainer. Based on information provided by Training and Education Command, the acquisition cost for the Supporting Arms Virtual Trainer is about $4.5 million per system while the acquisition cost for the Deployable Virtual Training Environment laptop is around $3,700 (see fig. 6).\nThe Marine Corps’ front-end planning process to support the acquisition of virtual training devices has gaps because the service does not have specific policies to ensure the process considers key factors. Specifically, Navy and Marine Corps acquisition policies we reviewed do not require that front-end planning consider specific training tasks the device is intended to address, how the device would be used to meet proficiency goals, or available time for units to train with the device. Training and Education Command officials acknowledged the gaps in the Marine Corps’ process and stated that the front-end process for future device acquisitions would identify specific training tasks that a device will address. However, without guidance that specifically addresses these factors, the Marine Corps does not have a reasonable basis to ensure that it is acquiring the right number and type of virtual training devices to meet its operational training needs.", "The Marine Corps does not consistently consider expected and actual usage data for virtual training devices to support its investment decisions. Our prior work has found that agencies should establish measures that they can use in assessing training programs, such as expected training hours, which reflect the usage rates of the training program. However, the Marine Corps did not establish expected usage rates in its system development documents for five of the six virtual training devices included in our review, and a senior Training and Education Command official said it also has not established expected usage rates since acquiring the devices. For example, the system development document for the Supporting Arms Virtual Trainer stated that the usage of the device could replace up to 33 percent of the live-fire missions required to retain annual currency, but the document does not specify that units are expected to use the device to replace that high of a percentage of the live-fire missions. As a result, the Marine Corps does not have a baseline against which to assess actual usage of the device. Only the system development document for the Marine Air-Ground Task Force Tactical Warfare Simulation included usage targets, stating that usage is expected to be extensive and estimates that the device will be used for 700 hours per system per year. However, the system development documents for the other four devices we reviewed did not include any information on expected usage rates.\nAdditionally, the Marine Corps has not consistently collected actual usage data for its virtual training devices, which could be used to inform continued investments in existing virtual training devices. During our review, a senior Marine Corps Training and Education Command official told us that Training and Education Command collects data for about two- thirds of the Marine Corps’ total inventory of virtual training devices, but usage data are not available for certain devices. More specifically, the Marine Corps provided usage data for three of the six devices that were included in our review, but it was unable to provide usage data for certain systems, such as the Marine Air-Ground Task Force Tactical Warfare Simulation and the Combined Arms Command and Control Training Upgrade System. This official stated that contractors collect data on these devices, but there is no Marine Corps’ system to collect data on the number of Marines or hours trained. Specifically, contractors submit spreadsheets on a monthly basis showing the number of Marines who have used the device, but these data are not included in any formal reports and there is no standard database for collecting or evaluating them.\nThe Marine Corps has not considered actual usage data in its decision making for additional investments in certain virtual training devices, despite low usage rates for a number of those devices. For example, according to available contractor data, actual usage for the Operator Driver Simulator was significantly lower than the current available hours. Based on data provided by Training and Education Command, the Operator Driver Simulator was used for approximately 7,600 hours in fiscal year 2015 and 5,600 hours in fiscal year 2016, but was available for use for approximately 192,000 hours. However, based on the results of the Simulation Assessment Working Group, Training and Education Command estimated that to accomplish all training events linked to the Operator Driver Simulator would require about 570,000 available training hours. As a result, the Simulator Assessment Working Group recommended various investment options for the Operator Driver Simulator that ranged from $56 million to $121 million, despite the current low utilization and excess capacity. Officials from Training and Education Command told us that they anticipate an increase in user demand for the Operator Driver Simulator based on guidance from the Commandant of the Marine Corps to make driver certification more rigorous. However, officials from Marine Corps Systems Command stated that current Operator Driver Simulators have deficiencies in supporting driver training and, therefore, Marines choose to drive live vehicles instead.\nThe Marine Corps has not considered expected and actual usage of its virtual training devices to support investment decisions due to a lack of guidance on establishing and collecting usage data. Marine Corps training guidance for ground units states that virtual training devices shall be used, as applicable, when constraints limit the use of realistic training conditions, but it does not identify the extent to which virtual training devices are expected to be used. Without guidance on setting usage- rate expectations and assessing actual usage, the Marine Corps risks sustained investment in virtual training devices that do not meet operational training needs.", "We also found that the Marine Corps was not consistently evaluating the effectiveness of its virtual training devices to accomplish operational training. Our prior work has shown that agencies need to develop processes that systematically plan for and evaluate the effectiveness of their training and development efforts. These evaluations should include data measures, both quantitative and qualitative, to assess training results in areas such as increased user proficiency. Further, evaluations of training effectiveness should be used to make decisions on whether resources should be reallocated or redirected.\nThe Marine Corps uses the verification and validation report process as its primary assessment of a virtual training device after it has been fielded, according to the senior Training and Education Command official with whom we spoke. However, based on our review of postfielding analyses for the virtual training devices included in our review, we found that the Marine Corps does not have a consistent process for selecting devices for which to complete these analyses or how the analysis should be conducted. More specifically, we were provided with verification and validation reports for only three of the six devices in our review—the Supporting Arms Virtual Trainer, the Family of Egress Trainers—Modular Amphibious Egress Trainer, and the Operator Driver Simulator—as well as plans to complete these reports for two other devices. According to a senior Training and Education Command official, Training and Education Command considers certain factors to prioritize the completion of verification and validation reports, such as planned investments for major upgrades on a device. The official also stated that Training and Education Command prioritized completing reports for these virtual training devices to specifically align with recommendations made by the Simulation Assessment Working Group. However, the Simulation Assessment Working Group does not take place on a recurrent basis, and therefore the recommendations from the group do not establish a process for prioritizing future verification and validation reports. Officials from Marine Corps Systems Command told us that program managers are now trying to perform verification and validation reports for future acquisitions prior to full acceptance of the training systems, but that this step is not mandatory.\nAdditionally, there is not a consistent process to include training effectiveness evaluations within the verification and validation report itself. The verification and validation process is not required to include an evaluation of effectiveness based on current guidance, but as noted in the verification and validation report for the Family of Egress Trainers— Modular Amphibious Egress Trainer, such an evaluation is essential to determine whether the capabilities of a virtual training device satisfy requirements to improve training performance and combat readiness. In two instances, the verification and validation reports for the Operator Driver Simulator and Family of Egress Trainers—Modular Amphibious Egress Trainer both included evaluations of the effectiveness of the devices in improving user proficiency, which concluded that the devices enabled Marines to successfully pass related training courses. In another instance, the Marine Corps did not conduct a training effectiveness analysis as part of the verification and validation process. Specifically, for the Supporting Arms Virtual Trainer, Marine Corps Systems Command attempted to conduct a training effectiveness evaluation, but training activity data for a statistically significant sampling of the target training audience were unavailable, which suggests the need for improved data on device usage.\nWe further found that the training effectiveness evaluations that the Marine Corps did complete differed in how they were conducted, which can affect the quality of the information the evaluations provide. For example, the training effectiveness evaluation for the Operator Driver Simulator was conducted to determine whether the device effectively trained Marines to perform tasks required for one specific training and readiness event. The methodology included collecting training activity data from 1 fiscal year in one location and for one of the Operator Driver Simulator vehicle variants. The report noted that conducting a more- complete evaluation, along with additional data collection, would better identify opportunities to improve and enhance training. In contrast, the training effectiveness evaluation for the Family of Egress Trainers— Modular Amphibious Egress Trainer also collected training activity data, but collected data from multiple training sites and for all training courses conducted during the 1-year period used for the evaluation. According to officials from Marine Corps Systems Command, the effectiveness evaluation methods may vary based on the type of training being executed and how well the training requirements are defined. These officials stated that when the device’s training requirements have been more thoroughly defined, the effectiveness evaluation can be more targeted.\nThe Navy and Marine Corps acquisition policy and guidance documents we reviewed do not establish a process to consistently evaluate the training effectiveness of virtual training devices, including identifying the devices to be evaluated and determining what data should be collected and assessed. According to a senior Training and Education Command official, evaluating effectiveness is not a required part of the verification and validation process and is an area that needs to be addressed. The Marine Corps’ Concept of Operations also identified a lack of guidance for conducting effectiveness analyses. Specifically, the Concept of Operations identifies a lack of policy guiding live, virtual, and constructive training capabilities and benefits. It also identifies a training gap on the linkages between live, virtual, and constructive training, as well as a policy gap around the lack of guidance on analysis of virtual training devices after they have been fielded. Without guidance establishing a well-defined process to consistently evaluate the effectiveness of virtual training devices for training—including the selection of devices, guidelines on conducting the analysis, and the data that should be collected and assessed—the Marine Corps risks investing in devices whose value to operational training is undetermined.", "The Navy and Marine Corps have identified the need to rebuild the capability to conduct amphibious operations and to reinvigorate naval integration between the services toward that end. However, the Navy and Marine Corps have not completed efforts needed to mitigate their training shortfalls for amphibious operations. Specifically, the services have not developed an approach to prioritize available training resources, systematically evaluate among training resource alternatives to achieve amphibious operations priorities, and monitor progress toward achieving them. Without such an approach, the services are not well positioned to mitigate existing amphibious operations training shortfalls and begin to rebuild their amphibious capability as the services await the arrival of additional amphibious ships into the fleet. In addition, while the Navy and Marine Corps have taken a number of positive steps to improve coordination between the two services, they need to define and articulate common outcomes for naval integration. This first critical step will enable them to fully incorporate other leading collaboration practices aimed at a common purpose, such as developing a joint strategy; more fully establishing compatible policies, procedures, and systems; better leveraging resources; and establishing mechanisms to monitor results that are needed to achieve service-level goals for naval integration and to align efforts to maximize training opportunities for amphibious operations. Further, the Marine Corps’ process to integrate virtual training devices into operational training has gaps. Developing guidance for the development and use of virtual training devices would help close these gaps, which is critical as virtual training will become increasingly important to the development of the capability of Marines, including the capability for conducting amphibious operations, among other mission areas.", "To better mitigate amphibious operations training shortfalls, we recommend the Secretary of Defense direct the Secretary of the Navy, in coordination with the Chief of Naval Operations and Commandant of the Marine Corps, to develop an approach, such as building upon the Amphibious Operations Training Requirements review, to prioritize available training resources, systematically evaluate among training resource alternatives to achieve amphibious operations priorities, and monitor progress toward achieving them.\nTo achieve desired goals and align efforts to maximize training opportunities for amphibious operations, we recommend the Secretary of Defense direct the Secretary of the Navy, in coordination with the Chief of Naval Operations and Commandant of the Marine Corps, to clarify the organizations responsible and time frames to define and articulate common outcomes for naval integration, and use those outcomes to develop a joint strategy; more fully establish compatible policies, procedures, and systems; better leverage training resources; and establish mechanisms to monitor results.\nTo more effectively and efficiently integrate virtual training devices into operational training, we recommend that the Secretary of Defense direct the Commandant of the Marine Corps to develop guidance for the development and use of virtual training devices that includes developing requirements for virtual training devices that consider and document training tasks and objectives, required proficiency, and available training time; setting target usage rates and collecting usage data; and conducting effectiveness analysis of virtual training devices that defines a consistent process for performing the analysis, including the selection of the devices to be evaluated, guidelines on conducting the analysis, and the data that should be collected and assessed.", "We provided a draft of the classified report to DOD for review and comment. The department’s comments on the classified report are reprinted in Appendix II. In its comments, DOD concurred with all three recommendations. DOD stated that it will review the status of actions the Navy and Marine Corps plan to take in response to all three recommendations within the next twelve months.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Defense, the Office of the Under Secretary of Defense for Personnel and Readiness, the Secretary of the Navy, and the Commandant of the Marine Corps. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you have any questions about this report or need additional information, please contact me at (202) 512-5431 or russellc@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix III.", "The objectives of this report are to determine the extent to which (1) the Navy and Marine Corps have completed training for amphibious operations priorities and taken steps to mitigate any training shortfalls, (2) the Navy’s and Marine Corps’ efforts to improve naval integration for amphibious operations incorporate leading collaborative practices, and (3) the Marine Corps has integrated selected virtual training devices into its operational training.\nThis report is a public version of a classified report that we issued in August 2017. DOD deemed some of the information in our August report to be classified, which must be protected from loss, compromise, or inadvertent disclosure. Therefore, this report omits classified information on select Marine Corps units’ ability to complete training for amphibious operations. Although the information provided in this report is more limited, the report addresses the same objectives as the classified report and uses the same methodology.\nWe focused our review on Navy and Marine Corps organizations and units that have a role in the development and execution of training requirements for amphibious operations. For the Navy, we focused on the training requirements and accomplished training for amphibious ships. For the Marine Corps, we focused on selected active-component units that have identified training requirement for amphibious operations, including Marine Expeditionary Units (MEU) and other units with a mission-essential task for amphibious operations. We selected a nongeneralizable sample of 23 Marine Corps units to speak with in order to interview geographically dispersed units under each Marine Expeditionary Force, as well as units across all elements of the Marine Air-Ground Task Force (i.e., command, ground combat, aviation combat, and logistics combat forces). See below for the list of 23 Marine Corps units. We focused on the Marine Corps’ integration of virtual training devices into operational training because the Navy does not have virtual training devices that simulate amphibious operations, including ship-to- shore movement, according to Navy officials. In addition, we focused on Marine Corps virtual training devices that are used to support the command and ground elements of the Marine Air-Ground Task Force. We selected a nongeneralizable sample of six virtual training devices based on the target training audience, applicability to amphibious operations training, location, and type of training events (individual or collective training) for which the devices are used. The devices included in our review are the Combined Arms Command and Control Training Upgrade System, Marine Air-Ground Task Force Tactical Warfare Simulation, Supporting Arms Virtual Trainer, Amphibious Assault Vehicle Turret Trainer, Family of Egress Trainers—Modular Amphibious Egress Trainer, and Operator Driver Simulator.\nTo determine the extent to which the Navy and Marine Corps have completed training for amphibious operations priorities and taken steps to mitigate any training shortfalls, we analyzed deployment certification reports for all Amphibious Ready Group (ARG)—Marine Expeditionary Unit (MEU) deployments over the most-recent 3-year period. We also analyzed unit-level readiness data for all Marine Corps’ infantry battalions, assault amphibian vehicle battalions, Osprey tilt-rotor aircraft squadrons, and Marine Expeditionary Brigades over the most-recent 3- year period—from fiscal years 2014 through 2016—and compared those data against unit-level training requirements for amphibious operations. We analyzed 3 years of training data because training requirements for Marine Corps units are reviewed and updated on a 3-year cycle. We performed data-reliability procedures on the unit-level readiness data by comparing the data against related documentation and surveying knowledgeable officials on controls over reporting systems and determined that the data presented in our findings were sufficiently reliable for the purposes of this report. We interviewed Navy and Marine Corps officials to discuss any factors that limited their ability to conduct training for amphibious operations. We assessed the reliability of data on amphibious ship requests by speaking with knowledgeable officials and determined the data were sufficiently reliable for the purposes of presenting the number of actual requests submitted and fulfilled. In addition, we reviewed processes and initiatives established by the Navy and Marine Corps to identify and assess training shortfalls for amphibious operations, including the Marine Corps’ Amphibious Operations Training Requirements review, and evaluated these processes and initiatives against our prior work on strategic training and risk management.\nTo determine the extent to which the Navy’s and Marine Corps’ efforts to improve naval integration for amphibious operations incorporate leading collaboration practices, we reviewed the Navy and Marine Corps documents, including A Cooperative Strategy for 21st Century Seapower and the Marine Corps Operating Concept, that discuss the goal of improving naval integration. We also reviewed mechanisms that have been established to coordinate training, including campaign plans for amphibious operations; observed a working group focused on amphibious operations; and interviewed officials with both services to discuss efforts to improve naval integration. We assessed the extent to which the Navy’s and Marine Corps’ efforts toward improving naval integration have followed leading practices for collaboration that we have identified in our prior work. Specifically, we have identified eight practices described in our prior work that can help enhance and sustain collaboration. We selected seven of the eight practices most relevant to issues we identified in our prior work on collaboration to assess the status of Navy and Marine Corps collaborative efforts to improve naval integration. Based on our analysis, we selected the following seven practices: define and articulate a common outcome; establish mutually reinforcing or joint strategies; identify and address needs by leveraging resources; agree on roles and responsibilities; establish compatible policies, procedures, and other means to operate across agency boundaries; develop mechanisms to monitor, evaluate, and report on results; and reinforce agency accountability for collaborative efforts through agency plans and reports.\nTo determine the extent to which the Marine Corps has integrated selected virtual training devices into its operational training, we collected information on the development, usage, and evaluation of virtual training devices, and their integration into operational training plans. We reviewed documentation on actions the Marine Corps has taken to integrate its virtual training devices into operational training, including documentation on the Simulation Assessment Working Groups and the Ground Training Systems Plan. We reviewed DOD and Marine Corps acquisition policies and interviewed Marine Corps officials responsible for the acquisition and oversight of virtual training devices at Training and Education Command and Marine Corps Systems Command and officials responsible for management of the virtual training devices at the Battle Simulation Centers at Camp Lejeune, North Carolina, and Camp Pendleton, California. We reviewed acquisition documents for each of the selected devices, including Capability Production Documents and Capability Development Documents, and assessed the extent to which these documents included key information as identified in leading practices for managing strategic training and DOD’s Strategic Plan for the Next Generation of Training for the Department of Defense. We also reviewed documentation on the Marine Corps process to include expected and actual usage data for virtual training devices to support investment decisions. Further, we reviewed analyses conducted after the selected devices had been fielded through Verification and Validation Reports and evaluated the extent these documents assessed the effectiveness of the virtual training devices for improving user proficiency.\nThe performance audit upon which this report is based was conducted from May 2016 to August 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate, evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We subsequently worked with DOD from August 2017 to September 2017 to prepare this unclassified version of the original classified report for public release. This public version was also prepared in accordance with these standards.", "", "", "", "", "", "In addition to the contact name above, Matthew Ullengren, Assistant Director; Russell Bryan; William Carpluk; Ron La Due Lake; Joanne Landesman; Kelly Liptan; Shahrzad Nikoo; and Roxanna Sun made key contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 1, 2, 2, 3, 3, 3, 1, 1, 1, 1, 2, 2, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "h0_full", "h0_full", "", "", "h1_full", "", "h1_full", "", "", "h1_full", "h0_full", "h0_full", "", "h0_full h2_full", "", "", "", "", "", "" ] }

{ "question": [ "What are the differences for units in receiving the Amphibious Operations Training?", "What are the factors in the decline of amphibious ships?", "How has this affected training?", "How is this impact being addressed?", "To what extent is this approach effective?", "In what ways are virtual training being implemented and are there any gaps?", "More specifically, what are the problems with virtual training devices reported by GAO?", "How does this impact the Marine Corps?", "Who imposed the bills for the National Defense Authorization Act and for what cause?", "To what extent has training changed?", "How has GAO analyzed these training initiatives?" ], "summary": [ "Navy and Marine Corps units that are deploying as part of an Amphibious Ready Group and Marine Expeditionary Unit (ARG-MEU) completed their required training for amphibious operations, but other Marine Corps units have been limited in their ability to conduct training for other amphibious operations–related priorities.", "GAO found that several factors, to include the decline in the fleet of the Navy's amphibious ships from 62 in 1990 to 31 today limited the ability of Marine Corps units to conduct training for other priorities, such as recurring training for home-station units (see figure).", "As a result, training completion for amphibious operations was low for some but not all Marine Corps units from fiscal years 2014 through 2016.", "The services have taken steps to address amphibious training shortfalls, such as more comprehensively determining units that require training.", "However, these efforts are incomplete because the services do not have an approach to prioritize available training resources, evaluate training resource alternatives, and monitor progress towards achieving priorities. Thus, the services are not well positioned to mitigate any training shortfalls.", "The Marine Corps has taken steps to better integrate virtual training devices into operational training, but gaps remain in its process to develop and use them.", "GAO found that for selected virtual training devices, the Marine Corps did not conduct front-end analysis that considered key factors, such as the specific training tasks that a device would accomplish; consider device usage data to support its investment decisions; or evaluate the effectiveness of existing virtual training devices because of weaknesses in the service's guidance.", "As a result, the Marine Corps risks investing in devices that are not cost-effective and whose value to operational training is undetermined.", "Senate and House reports accompanying bills for the National Defense Authorization Act for Fiscal Year 2017 included provisions for GAO to review Navy and Marine Corps training.", "This report examines the extent to which (1) the Navy and Marine Corps have completed training for amphibious operations priorities and taken steps to mitigate any training shortfalls, (2) these services' efforts to improve naval integration for amphibious operations incorporate leading collaboration practices, and (3) the Marine Corps has integrated selected virtual training devices into operational training.", "GAO analyzed training initiatives; interviewed a nongeneralizable sample of officials from 23 units that were selected based on their training plans; analyzed training completion data; and selected a nongeneralizable sample of six virtual training devices to review based on factors such as target audience." ], "parent_pair_index": [ -1, -1, 1, 1, 1, -1, 0, 0, -1, -1, 1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 5, 5, 5, 1, 1, 1 ] }

{ "title": [ "Background", "VA Community Care Programs", "Choice", "Hierarchy of VA Community Care Referrals", "Credentials Verification", "VA’s Consolidation of Community Care", "VA Contractors Complied with Requirements for Verifying Selected PC3 Physicians’ Credentials, but their Verification of Choice Physicians’ Credentials was Deficient", "VA Contractors Complied with Contract Requirements for Verifying Selected PC3 Physicians’ Credentials", "VA Contractors’ Verification of Selected Choice Physicians’ Credentials was Deficient", "VHA Lacked a Comprehensive Strategy for Overseeing Contractors Responsible for Verifying the Credentials of PC3 and Choice Physicians", "VHA Did Not Require Its Staff to Verify Licenses and Lacked Specific Plans for Oversight of VHA Choice Provider Agreements", "VHA Did Not Require Its Staff to Verify Choice Physicians’ Licenses under Choice Provider Agreements", "VHA Lacked Specific Plans for Oversight of Its Staff Responsible for Verification of Credentials for Choice Physicians", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Comments from the Department of Veterans Affairs", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "PC3 and Choice are among several VA community care programs, each of which has varying eligibility requirements and types of services offered. While the amount of claims VA paid for the treatment of veterans under PC3 decreased by about half over the past year, the amount has more than tripled for the treatment of veterans under Choice.\nPC3 was not specifically enacted by law, but was created by VA under existing statutory authorities to provide veterans with needed care that is not feasibly available from a VHA medical facility. VA originally required its PC3 contractors, Health Net and TriWest, to each develop regional networks, made up of community providers of specialty care, mental health care, limited emergency care, and maternity and limited newborn care. VA and the contractors began implementing PC3 in October 2013, and it was fully implemented nationwide as of April 2014. In August 2014, VA expanded PC3 to allow community providers of primary care to join Health Net’s and TriWest’s networks.\nVeterans may be eligible to obtain care under PC3 when they are unable to access a particular service from a VHA medical facility, either because the service is not offered or the veteran would have to travel a long distance to obtain it from a VHA medical facility. The veteran’s VHA provider requests an authorization for care, and if approved, the responsible contractor tries to arrange for care for the veteran with one of the providers in its PC3 network.", "The Choice Act provides, among other things, temporary authority and funding for veterans to obtain certain types of health care services from community providers to address long wait times, lengthy travel distances, or other challenges accessing care at a VHA medical facility. Under this authority, VHA introduced Choice in November 2014. As stated in VHA’s December 2015 guidance, Choice allows eligible veterans to obtain health care services from community providers if the veteran meets any of the following criteria: the next available medical appointment with a VA provider is more than 30 days from the veteran’s preferred date or the date the veteran’s physician determines he or she should be seen; the veteran lives more than 40 miles driving distance from the nearest VHA medical facility with a full-time primary care physician; the veteran needs to travel by air, boat, or ferry to the VHA medical facility that is closest to his or her home; the veteran faces an unusual or excessive burden in traveling to a VHA medical facility based on geographic challenges, environmental factors, or a medical condition; the veteran’s specific health care needs, including the nature and frequency of care needed, warrants participation in the program; or the veteran lives in a state or territory without a full-service VHA medical facility.\nChoice is primarily implemented through VA’s contracts with Health Net and TriWest; however, staff at VHA medical facilities have also, under certain conditions, begun entering into VHA Choice provider agreements. Specifically, VHA Choice provider agreements can be used when 1) the services are not covered under VA’s contracts with Health Net and TriWest, or 2) Health Net or TriWest cannot deliver the care and returns the authorization request to the VHA medical facility for certain reasons. If the needed services are covered by the VA contracts for Choice care, VHA must give Health Net and TriWest the first opportunity to arrange the care for the veteran. VHA began entering into Choice provider agreements in February 2016. As of July 14, 2016, VHA reported that its medical facilities had 4,859 VHA Choice provider agreements in place, and had used 925 of them to authorize Choice care for veterans.", "Because some veterans could be eligible for more than one type of VA community care—for example, if they live a long distance from a VHA medical facility—VHA issued guidance on the hierarchy of community care referrals. Given that Congress designated funding specifically for Choice, the guidance communicates a preference for the use of Choice, whenever possible. Specifically, when a VHA medical facility determines that there is a need for community care, VHA instructs them to first refer the veteran to the appropriate contractor for Choice care if the veteran meets the eligibility criteria and the needed services are covered by Choice. If the veteran is eligible for Choice care, but the contractor is unable to arrange for the care, the facility may use a VHA Choice provider agreement or another type of community care, such as PC3. If the veteran is not eligible for Choice or the needed services are not covered by Choice, the VHA guidance says VHA medical facility staff may use their discretion to refer the veteran to another type of community care. As of July 2016, both Health Net and TriWest reported that Choice care made up the vast majority of their authorizations.", "The process of reviewing and verifying physicians’ credentials, also known as credentialing, includes inspecting and authenticating the documents that constitute evidence of appropriate education, training, licensure, and experience to ensure the physician is qualified to practice medicine in the designated setting. Industry standards for credentialing, developed by various accreditation organizations, such as URAC, generally require accredited organizations to verify credentials in order to confirm the factual accuracy and authenticity of the information submitted by the physician. The industry standards call for some credentials, such as medical licenses, to be verified using the primary source—the original or issuing source of the credential. In the case of a medical license, the primary source would be the state licensing board that issued the license. Other credentials may be verified using accepted secondary sources, such as the National Practitioners Data Bank for verifying malpractice history. The standards also call for documentation of credentials verification activities, such that there is evidence that verification was conducted consistent with requirements and standards.\nVA contracted with Health Net and TriWest to conduct credentials verification for PC3 physicians in their respective networks, and maintain documentation of this verification. To implement contractual requirements for PC3, Health Net and TriWest verify PC3 physicians’ credentials in accordance with URAC accreditation standards for credentialing. For example, Health Net and TriWest verify licenses, education and training, and malpractice history for each PC3 physician, and conduct reverification at least once every three years.\nHealth Net and TriWest are also required to verify the credentials of Choice physicians; however, to further the goal of getting veterans access to care quickly under Choice, VA chose to require fewer credentials for Choice physicians. According to a VHA official, it generally takes between 5 and 10 days to complete the credentials verification process for Choice physicians, compared to 90 days for PC3. Specifically, in contrast to traditional credentialing, VA’s contracts only require Health Net and TriWest to ensure that Choice physicians hold an active, unrestricted license in the state where Choice service have a national provider identification (NPI) number; have a Drug Enforcement Agency (DEA) number to prescribe are not excluded from participation in federally funded health care participate in Medicare.\nHealth Net’s and TriWest’s contracts require them to comply with section 101 of the Choice Act, which also requires Choice physicians to submit verification of their credentials at least annually. VHA policy requires Choice physicians who participate in VHA Choice provider agreements to submit a similar set of credentials at least annually. For additional detail on the different credentials requirements, see figure 1.", "The VA Budget and Choice Improvement Act required VHA to develop a plan for consolidating community care, and VHA submitted its plan to Congress on October 30, 2015. In its submission to Congress, VHA outlined its plan to consolidate all of its existing community care programs, including PC3 and Choice, into a single program with uniform credentials requirements for all participating physicians. VHA’s plan stated that it does not currently have a standard approach to credentialing under the various existing community care programs. In April 2016, VA published a draft of a performance work statement for a future contract for consolidated community care in order to solicit comments and suggestions from interested parties. The April 2016 draft specifies that the contractors’ credentialing program will be accredited by a national organization and shall perform credentialing in accordance with the accreditation standards.", "", "We found that both Health Net and TriWest complied with contractual requirements to verify PC3 physicians’ credentials and maintain documentation for our selected sample. To meet these requirements, both Health Net and TriWest developed written policies on the types of credentials required and how to verify them, and both contractors submitted an outline of their credentials verification procedures to VHA. Both contractors also have quality assurance mechanisms in place that include routinely reviewing a sample of files for errors and missing information.\nWe reviewed the credentials files for 50 PC3 physicians and found that Health Net always conducted credentials verification consistent with its policies and procedures, and TriWest almost always did so. We identified three deficiencies among the 25 selected PC3 physicians from TriWest. Specifically, we found that TriWest did not verify one physician’s license, one physician’s absence from the exclusionary list, and one physician’s malpractice insurance coverage.\nWe found that Health Net and TriWest document credentials verification in different ways. TriWest’s procedure is to maintain copies of credentials verification from primary sources (such as a printout from the state licensing board website for each physician), while Health Net’s procedure is to document discrete data elements from the verification sources (such as the name of the source and the date the credential expires). Both approaches are acceptable under URAC accreditation standards and allowed us to observe that credentials verification had been conducted.", "We identified deficiencies in both Health Net’s and TriWest’s verification of credentials for the 50 selected Choice physicians we reviewed. VA’s contracts specify five types of credentials that are required for Choice physicians and incorporate the Choice Act requirement that Choice physicians submit verification of their credentials at least annually. We found that the contractors did not always verify the credentials of Choice physicians in a timely manner and often could not produce documentation to demonstrate that verification occurred.\nInitial verification: Of the 50 selected Choice physicians from Health Net and TriWest, we identified one physician from Health Net whose credentials had not been verified before treating veterans. Specifically, we found that Health Net conducted the verification of this physician after we identified the physicians for our review, at which time the physician had treated at least three veterans. This is inconsistent with VA’s contract, which calls for Health Net to ensure that each physician holds the specified set of credentials in order to deliver Choice care.\nAnnual reverification: Health Net’s and TriWest’s contracts incorporate a Choice Act requirement that physicians must submit verification of their credentials at least annually. In practice, the Choice physicians do not submit verification of their credentials, because the information needed for verification is available to Health Net and TriWest through online databases, such as state licensing board websites. VHA officials and representatives of both Health Net and TriWest consistently interpreted the provision of the Choice Act to require annual reverification of the physicians’ credentials.\nHowever, we did not find evidence that Health Net and TriWest were conducting this annual reverification among the 50 selected Choice physicians. Specifically, we identified six Health Net Choice physicians whose credentials had been initially verified over a year before our review. At the time of our review, Health Net could not provide documentation of reverifying these physicians within a year of their initial verification, but provided documentation of reverifying five of them after we identified our sample. Upon reverifying these physicians, Health Net learned that one physician was no longer participating in Medicare. Health Net representatives told us they had discontinued this physician from Choice participation. Following our review, Health Net representatives told us they could provide evidence that they had reverified these physicians three months prior to our review. Specifically, they had provided a list of 48,000 providers, including these six physicians, to an outside vendor to reverify the required credentials. Health Net representatives explained that they had not loaded this information into the database, and thus they had not provided evidence of this reverification to us during our review. At the time of our review, reverification was not part of TriWest’s process. Of the 25 Choice physicians that we selected from TriWest, there were eight physicians in our sample whose credentials were initially verified over a year before our review, and we did not find evidence that they had been reverified. The other 17 physicians’ credentials were initially verified within the year prior to our review.\nDocumentation: Health Net could not produce documentation of the initial verification of six physicians’ DEA numbers, though Health Net included an annotation on the documentation for our review that it had conducted the verification. While Health Net conducted the DEA verification for these physicians just before our review, all six physicians had each treated at least 15 veterans by that time.\nSimilarly, TriWest provided insufficient documentation for us to determine whether it verified most of the selected Choice physicians’ credentials. Specifically, TriWest provided screenshots of its credentialing database that included limited information, such as the physician’s name and the state issuing the credential and the registration number of the credential. However, the screenshots of the database rarely included license expiration dates and did not include information about who conducted the verification, what source was used, or when it was conducted. Unlike TriWest’s process for documenting verification of PC3 physicians’ credentials, TriWest was not saving screenshots of the source documents that would contain this type of information for most Choice physicians. Based on this documentation, it was not possible for us to tell whether the information in the database was obtained from the physician or whether TriWest had conducted any verification of credentials.\nTriWest representatives explained that responsibility for verifying most Choice physicians’ credentials was assigned to staff who did not have access to TriWest’s credentialing database used for entering information and saving documentation; rather, these staff said they took mental note of their verification activities without documenting anything. TriWest representatives further explained that other staff with access to the credentialing database take the information that was obtained and enter it into the credentialing database, but do not look for missing or incorrect information.\nThe lack of documentation makes it difficult to determine whether credentials verification actually occurred. In fact, TriWest representatives disclosed that they identified deficiencies among the 25 selected physicians, which we would not have been able to identify from the documentation provided. Specifically, TriWest identified 4 physicians who were not meeting the contract’s Medicare-participation requirement as a result of our request. TriWest representatives told us they had terminated these physicians from Choice participation. In addition, TriWest acknowledged that their database was missing the DEA numbers for 21 of the 25 selected physicians, though they had added them to the database prior to sending the files to us. As a result of this finding, TriWest conducted a systematic review of physicians in its database and identified an additional 1,817 Choice physicians whose DEA numbers were missing. TriWest representatives said they have added the missing information to the database and have retrained their staff on the verification of Medicare-participation and DEA numbers.\nUnlike their processes for PC3, neither Health Net nor TriWest had developed written policies on verification of Choice physicians’ credentials at the time of our review. Additionally, both contractors were conducting little to no oversight of the staff responsible for Choice credentials verification. Neither contractor was including Choice physicians in its routine quality assurance monitoring that they conduct of PC3 physicians’ credentials files. A Health Net official reported routinely checking credentials against the primary sources for a sample of Choice physicians in order to identify physicians that do not have the appropriate credentials to participate in the program. However, without reviewing documentation in the credentials files, this official could not identify the deficiencies with the process like we identified related to timely verification and documentation.\nHealth Net and TriWest representatives attributed the deficiencies we identified to Choice being set up very quickly, and Choice being different from the typical credentials verification process for which they are accredited. Both Health Net and TriWest provided us with copies of written policies on the verification of Choice physicians’ credentials developed following our review, and both described plans for additional improvements, such as reassigning credentials verification responsibility to staff with access to the credentialing database where documentation is stored. These plans, if implemented, could potentially result in better compliance with the contract, a determination that VHA would be responsible for making through future oversight.", "We found that VHA lacked a comprehensive strategy for overseeing Health Net’s and TriWest’s compliance with contract requirements for verifying the credentials of PC3 and Choice physicians. VA’s contracts with Health Net and TriWest include a section referred to as the quality assurance surveillance plan (QASP), which specifies that VHA will review the contractors’ credentialing periodically to determine whether the contractors are in full compliance with the terms of the contract. In addition, federal internal control standards call for monitoring, and corresponding guidance suggests an agency consider having a strategy to ensure that monitoring is effective. However, we found that VHA’s monitoring is primarily limited to independent reviews of physicians’ credentials using primary source databases, rather than oversight of the contractors’ verification processes through review of documentation. VHA has conducted only one evaluation of the contractors’ documentation of verifying physicians’ credentials. Additionally, VHA officials provided conflicting information about the scope, frequency, and interpretation of the results of the oversight they do conduct.\nWe found that VHA conducts monthly ongoing monitoring of certain types of credentials in two ways. Each month, Health Net and TriWest each submit to VHA a list of PC3 and Choice providers in its network, including physicians. First, VHA checks that all providers listed, including physicians, are not on the exclusionary list from participation in federal programs. VHA also selects a sample of providers, including physicians, from the contractors’ lists each month and checks online databases to verify that they possess certain credentials. The QASPs call for 100 percent compliance with credentials requirements. From September 2015 to February 2016, VHA reviewed 484 physicians and identified 18 physicians with a potential issue, such as an expired license in the state where the physician practices. VHA also reviewed 698 non-physician providers during the same period and identified 33 with a potential issue. VHA expects the contractor to terminate any physician VHA identifies as having an issue, and VHA officials told us they check subsequent monthly lists to ensure that identified physicians have been removed. However, this ongoing monitoring does not identify systematic deficiencies in the contractors’ processes for verifying physicians’ credentials, such as not annually reverifying physicians. As we demonstrated through our review of the contractors’ credentials files, reviewing documentation can reveal such deficiencies and help ensure that the contractors’ processes are being implemented to identify physicians that do not have the required credentials to care for veterans through these community care programs.\nWe also found that VHA has conducted one evaluation of the contractors’ documentation of verifying physicians’ credentials: an audit of TriWest’s credentials verification for PC3 physicians. This audit—similar to our review—generally found TriWest’s credentials verification for PC3 physicians to be reliable, but did identify some instances of insufficient documentation. VHA has not conducted any similar evaluations of Health Net’s documentation of verifying PC3 physicians’ credentials, despite original intentions of auditing both contractors. Further, VHA officials responsible for auditing VHA programs have not conducted any audits of either of the contractors’ verification of credentials for Choice physicians.\nIn the absence of a comprehensive oversight strategy, we found that VHA officials lacked consensus regarding their oversight plans and provided conflicting information about the scope, frequency, and interpretation of the results of their existing oversight activities. Specifically, various VHA officials we interviewed had conflicting understandings of whether the monthly reviews included both PC3 and Choice physicians. For example, VHA officials responsible for conducting the reviews were including both PC3 and Choice physicians in the monthly samples. However, the officials responsible for overseeing the contracts and reporting the results to the contractors via the QASPs were reporting the results as specific to Choice. An analysis of the samples from the monthly reports we reviewed revealed that 22 percent of physicians sampled were Choice physicians and the remainder were PC3 physicians. In addition, while federal entities such as VHA have the discretion to determine appropriate oversight methods based on an assessment of their own risk and resources, VHA officials we interviewed disagreed about the needed frequency of these audits. Specifically, the VHA officials responsible for overseeing the contracts believe that the officials responsible for auditing VHA programs should be conducting further audits of credentials verification; however, the auditing officials told us that they did not have plans to conduct any additional audits related to credentials verification in fiscal year 2016, for either PC3 or Choice, due to competing priorities.\nWithout a comprehensive oversight strategy, VHA cannot ensure the contractors are in compliance, and VHA officials may be missing an opportunity to assess current monitoring activities for effectiveness and make any changes to their methods. As a result, VHA risks sending veterans to physicians who do not meet PC3 and Choice credentials requirements, which could call into question the quality of care provided to veterans through these two community care programs.", "", "Under VHA Choice provider agreements, staff at VHA medical facilities are not required to verify physicians’ licenses. Specifically, staff at the five VHA medical facilities that participated in the initial implementation phase of VHA Choice provider agreements told us that they review a copy of the license submitted by the physician, but they do not verify its status at the time of review or determine whether the license has any negative actions taken against it.\nVHA officials told us that they do not consider this process to be traditional credentialing because VHA staff rely on the physicians to attest to the accuracy of the information that they submit with their provider agreement, including that they hold an unrestricted license. However, they also told us they designed the credentials requirements for VHA Choice provider agreements to be similar to the Choice contractors’ requirements to avoid any advantages or disadvantages of participation through VHA. Federal internal control standards state that management should define risk tolerances and identify potential risk factors, such as the opportunity for fraud due to the absence of controls. In the absence of verifying a license against the issuing source under the VHA Choice provider agreement, VHA may not be able to determine whether a physician has submitted a copy of a license that was revoked by the state licensing board before it was due to expire. This could have the unintended consequence of physicians with licensing problems migrating to Choice provider agreements with VHA medical facilities where their licenses are not verified. Without assessing the risk that a lack of verification of physicians’ licenses by VHA staff poses for the program, VHA does not know whether a change to its policy is needed.", "VHA lacked specific plans for oversight of its staff responsible for verifying Choice physicians’ credentials as part of the recently implemented VHA Choice provider agreements. Under VHA Choice provider agreements, which the agency began implementing in February 2016, staff at each of VHA’s approximately 170 medical facilities have the new responsibility of reviewing community physicians’ credentials. Specifically, VHA policy on Choice provider agreements requires medical facility staff to verify that Choice physicians are not excluded from participation in federally funded health care programs, to review documented evidence of DEA numbers and medical licensure, and to conduct annual reverification of these credentials. At the time of our review, VHA officials did not have any specific plans for conducting oversight to determine whether medical facility staff are complying with these requirements.\nVHA’s lack of oversight of medical facility staff reviewing credentials for physicians involved in VHA Choice provider agreements is inconsistent with federal standards for internal control, which call for agencies to establish monitoring activities, and with GAO guidance for internal controls, which calls for management to have a strategy to ensure that ongoing monitoring is effective. VHA officials told us they had ideas for oversight activities, but they had not determined any specific details that a comprehensive strategy might include, such as the scope, frequency, or start date for implementing these activities. For example, VHA officials also told us they are maintaining a temporary database of physicians with VHA Choice provider agreements, to which staff upload electronic copies of a physician’s credentials along with the signed agreement. VHA officials said that in the future, they may conduct periodic audits to check that facility staff are uploading all of the required documents regarding physician credentials, but they did not have plans for when such audits would start or how frequently they might conduct them. In addition, VHA staff said they have plans to develop a permanent electronic database that would include a feature to allow individual VHA medical facilities to conduct their own oversight. However, VHA did not have a timeline for when this permanent database would be operational.\nAlthough VHA’s use of VHA Choice provider agreements was in its early stages at the time of our review, developing a specific plan before results are expected is important to ensure that the agency can make program adjustments as needed to achieve desired results. Without conducting oversight, VHA cannot ensure that staff at each of its medical facilities are verifying Choice physicians’ credentials consistent with the requirements of the program. As a result, VHA risks sending veterans to physicians whose qualifications do not meet VHA Choice provider agreement requirements, which could call into question the quality of care provided to veterans through the program.", "Providing our nation’s veterans with quality health care is a critical responsibility of VHA, and ensuring physician qualifications through verifying credentials is crucial. However, VHA’s existing oversight approach is insufficient to ensure that Health Net and TriWest are verifying credentials according to contractual requirements, or that VHA’s own staff are reviewing qualifications as appropriate under the recently implemented VHA Choice provider agreements. VHA’s oversight of its contractors generally does not include the review of credentials file documentation, and VHA has conducted only one evaluation of the contractors’ documentation of verifying credentials and has no documented plans for additional reviews in the future. Moreover, VHA currently lacks a comprehensive strategy and detailed plans for oversight of contractors’ and its own staff’s credentials verification activities. Without a comprehensive oversight strategy that provides consensus on the scope and frequency of oversight activities, as well as the interpretation of oversight findings, VHA cannot ensure veterans receive quality care via PC3 and Choice.\nUnlike Health Net and TriWest, VHA does not require its own staff at VHA medical facilities to verify state licenses of Choice physicians under the VHA Choice provider agreements, even though the program was designed to be similar to Choice as implemented by Health Net and TriWest. Thoroughly reviewing Choice physicians’ licenses could be particularly important given that other types of qualifications, such as a physician’s malpractice history, are not reviewed for Choice physicians. Without verifying physicians’ licenses, VHA may be putting itself at risk for procuring care from physicians who are not qualified to treat veterans.", "In order to ensure that veterans receive quality care from qualified physicians, we recommend that the Secretary of Veterans Affairs direct the Under Secretary for Health to take the following two actions:\nDevelop and implement a comprehensive oversight strategy that includes ongoing monitoring and evaluations of the contractors’ verification of PC3 and Choice physicians’ credentials, as well as VHA staff’s review of Choice physicians. VHA’s oversight should include reviewing documentation and assessing whether the contractors’ plans for improving their processes for Choice credentials verification are effective.\nAssess the risk associated with not verifying Choice physicians’ licenses under VHA Choice provider agreements, and determine whether modifications to VHA’s policy are needed.", "We provided a draft of this report for review to the Department of Veterans Affairs. In its written comments, reproduced in appendix I, the department concurred with our recommendations and described plans to implement them by March 2017. The department also provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to relevant congressional committees and other interested parties. This report is also available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staffs have any questions about this report, please contact me at (202) 512-7114 or curdae@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs are on the last page of this report. GAO staff who made major contributions to this report are listed in appendix II.", "", "", "", "In addition to the contact named above, Marcia A. Mann, Assistant Director; Kaitlin McConnell, Analyst-in-Charge; and Hannah Marston Minter made key contributions to this report. Also contributing were Muriel Brown; Christine Davis; Jacquelyn Hamilton; Drew Long; Jennifer Whitworth; and William T. Woods." ], "depth": [ 1, 2, 3, 3, 2, 2, 1, 2, 2, 1, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_title h3_title", "h2_title h3_title", "h3_full h2_full", "", "", "", "h0_title h1_title h3_title", "h3_full", "h0_full h1_full", "h3_full h1_full", "h2_title h3_title", "h2_full", "h3_full h2_full", "h2_full h1_full", "h0_full h3_full", "", "", "", "", "" ] }

{ "question": [ "How was the compliance of VHA in verifying the credentials of various contractors?", "What were GAO's findings of the documentation of the credentials of physicians?", "According to GAO, how was the verification of those in the Veterans Choice Program?", "Describe an example of the verification or lack thereof of the contractors.", "What was the issue with the VHA's strategy for overseeing Health Net's and TriWest's compliance?", "What is in review for the contracts?", "What did GAO find about the VHA?", "How has VHA analyzed the documentation of TriWest and Health Net?", "In what ways was VHA's information conflicting?", "How does this affect compliance?", "What did VHA start in 2016 with community physicians?", "What is under this agreement?", "What were the federal internal controls standards?", "How does the lack of assessing risk of licenses affect VHA?", "In what aways VHA prepared or not prepared in facing this issue?", "How does VHA ensure various care to veterans?", "What are the programs in place to hold credentials?", "How did Congress have VHA reviewed?", "What does the report explain pertaining to this review?", "What did GAO review to get the information they required for PC3 and Choice?" ], "summary": [ "GAO found that the Department of Veterans Affairs' (VA) contractors—Health Net Federal Services (Health Net) and TriWest Healthcare Alliance (TriWest)—complied with contractual requirements to verify the credentials of physicians under one community care program, but were deficient in doing so under another program.", "Based on GAO's review of selected physicians, GAO found that the contractors almost always verified and documented the credentials of physicians in the Veterans Health Administration's (VHA) Patient-Centered Community Care (PC3) program consistent with the requirements of the contract.", "In contrast, the contractors did not always verify credentials of the physicians in the Veterans Choice Program (Choice) in a timely manner; and for many physicians, contractors could not produce documentation to support verification consistent with the requirements of the contract.", "For example, Health Net did not document verification of six Choice physicians' certification to prescribe controlled substances, and TriWest provided insufficient documentation for GAO to determine whether it verified most of the selected Choice physicians' credentials. Both contractors shared plans to address the identified deficiencies.", "VHA lacked a comprehensive strategy for overseeing Health Net's and TriWest's compliance with contract requirements for verifying the credentials of PC3 and Choice physicians.", "VA's contracts with Health Net and TriWest specify that VHA will review the contractors' credentialing periodically to determine whether the contractors are in full compliance with the terms of the contract.", "However, GAO found that VHA's monitoring is primarily limited to independent reviews of physicians' credentials using primary source databases, rather than oversight of the contractors' processes for verifying physicians' credentials.", "VHA has evaluated TriWest's documentation of verifying physicians' credentials for PC3 physicians, but not Health Net's, and has not evaluated either contractor for Choice physicians.", "Additionally, VHA officials provided conflicting information about the scope, frequency, and interpretation of the results of the oversight they do conduct.", "Without a comprehensive oversight strategy, VHA cannot ensure that Health Net and TriWest are in compliance with the terms of the contract and that veterans are treated by qualified physicians.", "In February 2016, VHA began entering into Choice provider agreements with community physicians to provide Choice care to veterans in certain situations.", "Under these agreements, VHA staff at each medical facility—rather than the contractors—review Choice physicians' credentials. GAO found that VHA did not require its staff to verify licenses submitted by physicians against the issuing source; rather, they review copies of the licenses.", "Federal internal control standards state that management should identify potential risk factors, such as opportunities for fraud, due to the absence of controls.", "Without assessing the risk of not verifying physicians' licenses against the issuing source, VHA does not know if a policy change is needed.", "Furthermore, VHA lacked plans for overseeing staff across each of its medical facilities with the new responsibility of verifying Choice physicians' credentials under the recently implemented VHA Choice provider agreements.", "To help ensure that veterans are provided timely and accessible health care, VHA purchases care from community physicians.", "Two community care programs, PC3 and Choice, require physicians to hold certain credentials reflecting their qualifications.", "Congress included a provision in law for GAO to review VHA's processes for, and oversight of, credentials verification for PC3 and Choice physicians.", "This report examines (1) whether VA contractors comply with contractual requirements for verifying PC3 and Choice physicians' credentials; (2) the extent to which VHA oversees the contractors responsible for verifying the credentials of PC3 and Choice physicians; and (3) VHA's own processes for, and oversight of, verifying Choice physicians' credentials under recently implemented VHA Choice provider agreements. GAO reviewed PC3 and Choice contracts, VHA and contractor policies, and federal internal control standards.", "GAO reviewed a nongeneralizable sample of 50 PC3 and 50 Choice physician credentials files, selected among five types of care across the nation. GAO also interviewed VHA officials and contractor representatives." ], "parent_pair_index": [ -1, 0, -1, 2, -1, -1, -1, -1, 3, 3, -1, 0, -1, -1, 3, -1, -1, -1, 2, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Crop Insurance Participation and Disaster Assistance Payments", "Potential for Fraud, Waste, and Abuse in the Federal Crop Insurance Program", "Data Mining to Prevent and Detect Fraud, Waste, and Abuse", "Standard Reinsurance Agreement", "Farm Programs’ Income and Payment Limits and Other Eligibility Standards", "A Limit on Crop Insurance Subsidies Would Lower Program Costs", "A Potential Limit on Crop Insurance Subsidies Would Have Resulted in Savings for 2011", "Limiting or Reducing Premium Subsidies Raises Other Considerations", "RMA Has Not Maximized the Use of Data Mining Tools, Largely Because of Competing Priorities", "Letters to Farmers Have Prevented Fraud, Waste, and Abuse, but RMA Has Not Fully Used This Data Mining Tool", "USDA May Use the List of Agents and Adjusters with Anomalous Losses to Corroborate Other Information, but RMA Does Not Conduct Required Reviews", "Competing RMA Priorities Result in Limited Time to Conduct Reviews of Farmers and Agents and Adjusters Identified by Data Mining Tools", "RMA and FSA Have Not Taken Full Advantage of Data Management Techniques to Facilitate Data Mining", "Conclusions", "Matter for Congressional Consideration", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Income and Payment Limits for Selected Farm Programs", "Program/payment category Commodity programs", "Appendix III: Locations of Participating Farmers Receiving More than $40,000 in Premium Subsidies, 2011", "Appendix IV: Information on the Levels of Premium Subsidies and Administrative Expense Subsidies for Individual Farmers", "Appendix V: Comments from the U.S. Department of Agriculture", "GAO Comments", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Related GAO Products" ], "paragraphs": [ "In conducting their operations, farmers are exposed to financial losses because of production risks—droughts, floods, and other natural disasters—as well as price risks. The federal government has played an active role in helping to mitigate the effects of these risks on farm income by promoting the use of crop insurance. RMA has overall responsibility for administering the federal crop insurance program, including controlling costs and protecting against fraud, waste, and abuse. RMA partners with 15 private insurance companies that sell and service the federal program’s insurance policies and share a percentage of the risk of loss and opportunity for gain associated with the policies.\nThrough the federal crop insurance program, farmers insure against losses on more than 100 crops. These crops include major crops—such as corn, cotton, soybeans, and wheat, which accounted for three-quarters of the acres enrolled in the program in 2011—as well as nursery crops and certain fruits and vegetables. For the purposes of this report, we generally refer to participants in the federal crop insurance program as participating farmers.\nMost crop insurance policies are either production-based or revenue- based. For production-based policies, a farmer can receive a payment if there is a production loss relative to the farmer’s historical production per acre. Revenue-based policies protect against crop revenue loss resulting from declines in production, price, or both. The federal government encourages farmers’ participation in the federal crop insurance program by subsidizing their insurance premiums and acting as the primary reinsurer for the private insurance companies that take on the risk of covering, or “underwriting,” losses to insured farmers. A common measure of crop insurance program participation is the percentage of planted acres nationwide for major crops that are enrolled in the program.\nIn addition, the federal government pays administrative expense subsidies to insurance companies as an allowance that is intended to cover their expenses for selling and servicing crop insurance policies. In turn, insurance companies use these subsidies to cover their overhead expenses, such as payroll and rent, and to pay commissions to insurance agencies and agents. Companies also incur expenses associated with verifying—adjusting—the amount of loss claimed. These expenses include, for example, loss adjusters’ compensation and their travel expenses to farmers’ fields. The financial relationships among the federal government, private insurance companies, agents, and farmers are illustrated in figure 1.\nFor 2011, the federal government’s subsidy costs were about $7.4 billion for crop insurance premiums and about $1.3 billion for administrative expenses. Crop insurance premium subsidies are not payments to farmers, but they can be considered a financial benefit. Without a premium subsidy, a participating farmer would have to pay the full amount of the premium. The administrative expense subsidies also can be considered a subsidy to farmers; with these subsidies, crop insurance premiums are lower than they would otherwise be if the program followed commercial insurance practices. In private insurance, such as automobile insurance, these administrative expenses typically are included in the premium that a policy holder pays.\nARPA and the 2008 farm bill set premium subsidy rates, that is, the percentage of the premium paid by the government. Premium subsidy rates vary by the level of insurance coverage that the farmer chooses and the geographic diversity of the crops insured. For most policies, the statutory subsidy rates range from 38 percent to 80 percent. Table 1 shows the total costs of subsidies for all crop insurance premiums and administrative expenses for 2000 through 2011. The table shows that premium subsidies have generally increased since 2000, both in dollars and as a percentage of total premiums. The premium subsidy rates, authorized by ARPA, became effective in 2001. Premium subsidies increased, as a percentage of total premiums, from 37 percent in 2000 to 60 percent in 2001. In addition, premium subsidies rose as crop prices increased.\nAs crop prices increase, the value of the crops being insured increases, which results in higher crop insurance premiums and premium subsidies. For example, the prices of major crops were substantially higher in 2011 than in 2006, and premium subsidies in 2011 (about $7.4 billion) were substantially higher than in 2006 (about $2.7 billion). USDA forecasts that the prices of major crops—corn, cotton, soybeans, and wheat—will continue to be substantially higher than 2006 prices through 2016. Administrative expense subsidies also increased because of higher crop prices. However, RMA capped administrative expense subsidies in the 2011 standard reinsurance agreement (SRA), a cooperative financial agreement between USDA and insurance companies. These changes became effective in 2011. As a result, administrative expense subsidies were lower in 2011 than they otherwise would have been.", "The federal government provides crop insurance subsidies to farmers in part to achieve high crop insurance participation and coverage levels, which are intended, according to USDA economists, to reduce or eliminate the need for ad hoc disaster assistance payments to help farmers recover from natural disasters, which can be costly. For example, under three separate congressionally authorized ad hoc crop disaster programs, USDA provided $7 billion in disaster assistance payments to farmers whose crops were damaged or destroyed by natural disasters from 2001 through 2007.\nCongress established a standing disaster program in the 2008 farm bill— the Supplemental Revenue Assistance Payments Program. Under this program, Congress funded a $3.8 billion permanent trust fund and directed the Secretary of Agriculture to make crop disaster assistance payments to eligible farmers who suffer crop losses on or before September 30, 2011. USDA—through FSA—began making disaster payments under this program in early 2010 for crop losses incurred in 2008. To qualify for a disaster assistance payment under this program, a farmer must have purchased either federal crop insurance coverage or be covered under the Noninsured Crop Disaster Assistance Program for all crops of economic significance on their farming operation. Without reauthorization, the Supplemental Revenue Assistance Payments Program will not make payments on losses caused by natural disasters that occurred after September 30, 2011.\nFarmers’ participation in the federal crop insurance program and spending on ad hoc disaster assistance have been policy issues for more than 30 years. According to a 2005 USDA publication, Congress passed the Federal Crop Insurance Act in 1980 to strengthen participation in the crop insurance program with the goal of replacing the costly disaster assistance programs.acres enrolled in the program, the percentage of eligible acres of major crops and the percentage of a crop’s market value insured—the coverage level. According to the USDA publication, the government has historically Crop insurance participation can be measured by attempted to increase participation by subsidizing premiums. Under the 1980 law, the government offered premium subsidy rates of up to 30 percent. However, by 1994, less than 40 percent of eligible acreage was enrolled in the program, and Congress had passed ad hoc disaster assistance totaling nearly $11 billion. In order to increase participation, according to the USDA publication, the Federal Crop Insurance Reform Act of 1994 increased premium subsidy rates. Farmers responded by enrolling more acres. Enrollment was about 100 million acres in 1993 before the act and about 182 million acres in 1997. Under ARPA, premium subsidy rates increased again in 2001. Farmers subsequently purchased more insurance at higher coverage levels. With the increases in acres enrolled and coverage levels, premium subsidy costs increased. The 2005 USDA publication noted that by 2004 premium subsidies totaled nearly $2.5 billion and had become an increasingly costly way of encouraging participation. As shown in table 1, premium subsidies reached $7.4 billion in 2011.", "From 2008 through 2010, annual payments to farmers for their crop insurance claims averaged about $6 billion. Most claims are legitimate, but some involve fraud, waste, or abuse, according to RMA’S data mining contractor. USDA’s Office of the Inspector General has reported that fraud is commonly perpetrated through false certification of one or more of the basic data elements, such as production history, essential for RMA to determine program eligibility or validity of claims. Crop insurance fraud cases can be particularly complex in their details and correspondingly time-consuming to review. These fraud cases sometimes involve multiple individuals working together, such as farmers, insurance agents, and insurance loss adjusters. Claim payments based on fraudulent crop insurance losses sometimes result in comparatively large monetary costs to USDA. Waste is incurring unnecessary costs as a result of inefficient or ineffective practices, systems, or controls. Waste includes improper payments that may be caused by errors in data upon which claim payments are based. Abuse occurs when a participating farmer’s actions defeat the intent of the program, although no law, regulation, or contract provision may be violated. For example, under the Federal Crop Insurance Act, RMA must offer coverage for prevented planting—that is, if farmers cannot plant a crop for specified reasons, prevented planting coverage enables them to receive a claim payment. In 2005, we noted instances in which FSA county officials stated they believed that some farmers in their counties who claimed prevented planting losses never intended to plant or did not make a good faith attempt to plant their crop but still received prevented coverage claim payments. In 2011, RMA issued guidance to its field offices and insurance companies to address abuse involving prevented planting.", "RMA uses data mining—a technique for extracting knowledge from large volumes of data—to detect potential cases of fraud, waste, or abuse by (1) developing scenarios of potential program abuse by farmers, insurance agents, and loss adjusters and (2) querying the database containing crop insurance data and information on weather, soil, and land surveys to generate reports and lists of participating farmers with anomalous claim payments. RMA has contracted with the Center for Agribusiness Excellence, located at Tarleton State University in Stephenville, Texas, to conduct data mining since 2001. Following USDA written procedures, RMA and the insurance companies are to use data mining results to conduct reviews of the claims to determine if there is actual fraud, waste, or abuse. The data mining tools that RMA uses include the following:\nList of farmers with anomalous claim payments. Through data mining, RMA develops a list of farmers with anomalous claim payments.RMA annually provides this list to FSA, which assists RMA in monitoring these farmers. Under USDA guidance, FSA county offices are to conduct two inspections (postplanting and preharvest) for each policy these farmers hold. FSA county offices are then to report to RMA on whether they inspected the crop and, if so, whether the inspection determined that (1) the inspected farmer’s crop was in good condition; (2) the inspected farmer’s crop was not in good condition, but other farmers’ crops in the local area were in good condition; or (3) the inspected farmer’s crop was not in good condition, and other farmers’ crops in the local were also not in good condition.\nList of insurance agents and adjusters with anomalous losses. ARPA requires the Secretary of Agriculture to establish procedures that RMA can use to develop a list of insurance agents and loss adjusters with anomalous losses—losses that are higher than those of their peers in the same geographic area—and to review this list to determine whether the anomalous losses are the result of fraud, waste, or abuse. RMA uses data mining and scenarios it has developed for fraud, waste, and abuse to identify these insurance agents and adjusters.\nThe RMA contractor’s data mining reports identify individual farmers with anomalous claim payments or insurance agents and adjusters with anomalous losses, but these anomalies only indicate potential cases of fraud, waste or abuse. These claims and losses may be legitimate, resulting from unusual weather or other conditions on a farm. As such, a portion of each list inevitably represents “false positives”—farmers whose claims were valid. To determine if there is actual fraud, waste, or abuse, RMA or the insurance company must engage in additional review. Such reviews may require RMA or the company to, among other things, analyze the claims, appraisal sheets, special adjuster reports, photographs, and receipts for inputs, such as seeds and fertilizer. These reviews are needed to determine the validity of the data mining reports; providing feedback on the reports’ validity to the data mining contractor enables RMA’s contractor to refine its data mining tools, thereby improving the detection of fraud, waste and abuse.", "RMA administers the crop insurance program through the SRA. This agreement establishes the terms and conditions under which insurance companies that sell and service policies have to operate. Under the 2011 SRA, insurance companies are to conduct reviews, including inspections of crop insurance policies for which anomalies have been identified through data mining, and report the results to RMA. These reviews are not to exceed 3 percent of eligible crop insurance contracts (about 30,000 policies), unless RMA provides notice that additional reviews are required. The SRA also requires insurance companies to conduct inspections or monitoring programs for agents and loss adjusters that RMA has identified as necessary for protecting the program’s integrity.", "Unlike the crop insurance program, many USDA farm programs— including income support programs, conservation programs, and disaster assistance programs—have statutory income and payment limits that apply to individual farmers and legal entities. Income limits set the maximum amount of income that a person or legal entity can earn and still remain eligible for certain farm program payments. For example, a person or legal entity with an average adjusted gross farm income (over the preceding 3 tax years) exceeding $750,000 is generally ineligible for direct payments. Payment limits set the maximum payment amount that a person or legal entity can receive per year from a farm program. For example, for direct payments, the payment limit in the 2008 farm bill is generally $40,000 per person or legal entity. For a disaster assistance program, the annual payment limit is $100,000 per person or legal entity. Additional income and payment limits for selected farm programs are described in appendix II.\nGAO, Farm Program Payments: USDA Needs to Strengthen Regulations and Oversight to Better Ensure Recipients Do Not Circumvent Payment Limitations, GAO-04-407 (Washington, D.C.: Apr. 30, 2004).\nRevenue Election Program payments under the 2008 farm bill,individual or entity must be “actively engaged in farming.” To be considered actively engaged in farming, an individual must, among other things, make significant contributions to a farming operation in (1) capital, land, or equipment and (2) personal labor or active personal management. An entity is considered actively engaged in farming if, among other things, the entity separately makes a significant contribution of capital, land, or equipment, and its members collectively make a significant contribution of personal labor or active personal management. In addition, participants in many farm programs who farm in areas identified as having highly erodible land or a wetland must comply with certain land and environmental conservation requirements for payment eligibility purposes. Participants who fail to abide by or apply approved conservation practices on land identified as highly erodible or a wetland are subject to payment reductions or total ineligibility for program payments.", "According to our analysis of RMA data for 2011, the federal government would have achieved savings in the crop insurance program by limiting premium subsidies for crop insurance participants, as payments are similarly limited for other farm programs. A decision to limit or reduce premium subsidies to achieve cost savings raises other considerations, such as the potential effect of such a limit on the financial condition of large farms and on program participation.", "Without limits on the premium subsidies in the crop insurance program, the nearly 900,000 farmers participating in the program received premium subsidies of $4.7 billion in 2010 and $7.4 billion in 2011. Applying limits on premium subsidies to participating farmers, similar to the payment limits for other farm programs, would lower program costs and save federal dollars, according to our analysis of RMA data. Using a limit of $40,000 per participating farmer for premium subsidies for this period— the limit applied to direct payments—we identified significant potential savings to the federal government—savings of up to $358 million for 2010 and $1 billion for 2011.\nThe amount of these savings may depend on whether, and the extent to which, farmers and legal entities reorganized their business to avoid or lessen the effect of limits on premium subsidies. As we have previously reported regarding payment limits for other farm programs, some farming operations may reorganize to overcome payment limits to maximize their farm program benefits. For these farmers and legal entities, it is unclear whether further reorganization to lessen the effect of limits on premium subsidies would occur. In addition, in some instances, the requirement that an individual or entity be actively engaged in farming to receive farm program benefits is likely to prevent the creation of entities in order to avoid a limit on premium subsidies. Finally, some farmers would likely begin to report their spouse as a member of the farming operation, which under payment limit rules enables an operation to double the amount of benefits it can receive.\nIn particular, if a $40,000 limit on premium subsidies had been applied in 2010, up to 13,309 farmers—1.5 percent of all participating farmers— would have seen their subsidies reduced, for an annual savings of up to $358 million to the federal government. For 2011, if the limit had been applied, up to 33,690 farmers—3.9 percent of all participating farmers— would have received reduced subsidies, at an annual savings of up to $1 billion. The number of participating farmers receiving more than $40,000 in premium subsidies increased from 2010 to 2011 because crop prices increased. Higher crop prices increased the value of crops insured, resulting in higher crop insurance premiums and hence a higher subsidy level. Figures 2 and 3 provide more information about the distribution of premium subsidies among participating farmers in 2010 and 2011. The figures show the number of participating farmers by the level of premium subsidies that individual farmers (i.e., persons or legal entities) received.\nGAO-04-407. Since we issued this report, the 2008 farm bill decreased the incentive to reorganize a farming operation in order to avoid a limit on farm program payments by eliminating the “three-entity rule” and requiring direct attribution of payments to individuals.\nIn 2010, the average value of the premium subsidies received by participating farmers was $5,339. Thirty-seven participating farmers each received more than $500,000 in premium subsidies. The participating farmer receiving the most in premium subsidies—a total of about $1.8 million—was a farming operation organized as a corporation that insured cotton, tomatoes, and wheat across two counties in one state. In addition, the cost of the administrative expense subsidies that the government spent on behalf of this corporation was about $309,000. Another of the 37 participating farmers was an individual who insured corn, forage, potatoes, soybeans, sugar beets, and wheat across 23 counties in six states, for a total of about $1.6 million in premium subsidies. In addition, the cost of the administrative expense subsidies that the government spent on behalf of this farmer was about $443,000.\nIn 2011, the average value of the premium subsidies received was $8,312. Fifty-three of these farmers each received more than $500,000 in premium subsidies. The largest recipient was a corporation that insured nursery crops across three counties in one state, for a total of about $2.2 million in premium subsidies. In addition, the administrative expense subsidies that the government spent on behalf of this corporation totaled about $816,000. Another of the 53 farmers was an individual who insured canola, corn, dry beans, potatoes, soybeans, sugar beets, and wheat across eight counties in two states, for a total of about $1.3 million in premium subsidies. In addition, the administrative expense subsidies that the government spent on behalf of this farmer totaled about $499,000.\nAlternatively, recent studies—noting the rising cost of premium subsidies—have proposed reducing premium subsidy rates for all participating farmers to achieve savings.subsidy rate for 2010 and 2011 had been reduced by 10 percentage points—from 62 percent to 52 percent—for all participating farmers, the annual cost savings for those years would have been about $759 million and $1.2 billion, respectively.\nFor example, if the premium We also examined the effect on costs for the federal crop insurance program of applying a crop insurance subsidy limit to administrative expense subsidies, as well as premium subsidies. Additional savings would be realized, according to our analysis. For example, if a limit of $40,000 per farmer for both premium subsidies and administrative expense subsidies had been applied to the crop insurance program for 2011, up to 52,693 farmers (6 percent of all participating farmers) would have seen their subsidies reduced, at an annual savings of up to nearly $1.8 billion to the federal government. In contrast, applying limits to premium subsidies alone would have resulted in a savings of about $1 billion. Additional information about the 2010 and 2011 cost of premium subsidies and administrative expense subsidies by farmer is in appendix IV.", "In addition to federal cost savings, we identified a number of other considerations that may come into play in deciding whether to limit premium subsidies to individual farmers. These considerations include (1) the potential effect on the financial condition of large farms (i.e., those with annual gross sales of $1 million or more), whose owners are most likely to be affected by subsidy limits; (2) the availability of other risk management tools against crop losses, such as marketing contracts; and (3) the potential effect on beginning and smaller farmers. In addition, we identified considerations associated with either limiting premium subsidies to large farmers or reducing premium subsidy rates for all farmers.\nThe application of limits of $40,000 in premium subsidies to farmers participating in the federal crop insurance program would primarily affect farmers who have large farms. For example, as discussed earlier, using our data for 2011, these participating farmers represented 3.9 percent of the farmers participating in the crop insurance program in 2011 and accounted for 32.6 percent of the premium subsidies. In view of the insured value of these farmers’ crops, they likely had annual gross sales approaching or exceeding $1 million. In addition, the insured value of these farmers’ crops represented about 26 percent of the total value of insured crops in 2011. Limiting premium subsidies to farmers may raise concerns about how these limits could affect large farms’ financial condition. Based on our review of data from USDA’s Agricultural Resource Management Survey on the financial condition of farms, by farm size, large farms are better positioned than smaller farms to pay a higher share of their premiums. Specifically, according to the USDA data:\nDuring 2008 and 2009, the most recent years for which USDA data were available, the largest farms with crop insurance coverage (i.e., those with annual gross sales of $1 million or more) earned an average annual net farm income of about $561,000. In contrast, the next two farm categories (farms with annual gross sales of from $500,000 to $1 million and farms with annual gross sales of from $250,000 to $500,000) had average annual net farm incomes of about $184,000 and $92,000, respectively.\nThe largest farms with crop insurance coverage had higher relative profitability as measured by rate of return on equity, which is the ratio of net farm income to the net worth of the farm. These farms had an average rate of return on equity of 8.8 percent. In contrast, the next two farm categories had rates of 4.5 percent and 1.9 percent, respectively.\nThe largest farms had higher debt-to-asset ratios than the next two farm categories,covering principal payments and interest on term debt was greater. Furthermore, a high debt-to-asset ratio is not necessarily a problem, as long as the rate of return on assets exceeds the interest rate on the funds borrowed. On average, farms with sales greater than $5 million generate more net cash income per dollar of assets than other farms, and the larger gross cash income can be used to pay interest or reduce loan balances. but the largest farms’ ability to service debt by In addition, regarding the financial condition of large farms, a related consideration is the global competiveness of U.S. agriculture. According to critics of limits on farm program benefits, larger farms should not be penalized for the economies of size and efficiencies they have achieved, and farm programs should help make U.S. farmers more competitive in global markets.\nIf the large farmers affected by a limit on premium subsidies were to reduce their coverage, they may be able to self-insure through a variety of risk management methods, including the following:\nMarketing contracts. Marketing contracts reduce price risks and are already used by many large farmers. These contracts are either verbal or written agreements between a buyer and a farmer that set a price for a commodity before harvest or before the commodity is ready to be marketed.\nFutures contracts and hedging. A futures contact is a financial contract obligating the buyer to purchase an asset (or the seller to sell an asset), such as a commodity, at a predetermined future date and price. Futures contracts detail the quality and quantity of the underlying asset and are standardized to facilitate trading on a futures exchange. Futures can be used to hedge on the price movement of the underlying asset. For example, a producer of corn could use futures to lock in a certain price and manage risk (hedge).\nCrop and other enterprise diversification. Diversification is a risk management strategy that involves participating in more than one activity. A crop farm, for example, may have several productive enterprises (i.e., several different crops or both crops and livestock), or may operate nonadjacent parcels so that local weather disasters are less likely to reduce yields for all crops simultaneously.\nLiquid credit reserves. Farmers may maintain liquid credit reserves, such as an open line of credit, to generate cash quickly to meet financial obligations in the face of an adverse event. Liquid credit reserves reflect unused borrowing capacity.\nPrivate insurance. Certain agricultural risks—such as the risks associated with hail and other weather events damage—are insured by private companies without subsidized premiums.\nUnlimited premium subsidies for individual farmers and farm entities may compound challenges that beginning and smaller farmers already face. For example, we reported in 2007 that the challenges facing beginning farmers include obtaining capital to purchase land and that the rising cost of land, driven in part by farm program subsidies, may make it difficult for beginning farmers to purchase land. According to USDA studies, farm program payments and other benefits, such as premium subsidies, result in higher prices to buy or rent land because, in some cases, the benefits go directly to landowners—resulting in higher land value—and in other cases the benefits go to tenants, prompting landlords to raise rental rates. Furthermore, a recent USDA report explained how farm program payments may provide an advantage to larger farms.report, “For some farmers, payments may provide opportunities to increase the size of their operation. A steady stream of income may allow recipients to gain access to higher levels of credit or may allow them to increase their rental or purchase bids for land. This may provide opportunities for them to increase in size while driving out competition from smaller farms that don’t have access to the same levels of capital, which can impact the overall structure of agriculture.”\nWe identified additional considerations associated with either limiting premium subsidies to large farms or reducing premium subsidy rates for all farmers.\nPremium subsidy limits or reduced premium subsidy rates could lead to lower participation in the federal crop insurance program and higher disaster assistance payments to farmers. In the past, Congress has authorized ad hoc disaster assistance payments to help farmers whose crops were damaged or destroyed by natural disasters. However, in view of the nation’s budgetary pressures, Congress may be less willing to approve such payments than it has in the past. In addition, according to a the increasing importance of crop Congressional Budget Office report,insurance to private lenders who provide farm loans may cause farmers to continue to participate in the crop insurance program, even if premium subsidies were reduced. Furthermore, assuming they are eligible to purchase unsubsidized crop insurance, farmers could still enroll all of their eligible crop acres in the program, making them eligible to receive claim payments on these acres. In the event of a loss, farmers who chose to maintain crop insurance coverage as they had in the past would then have the same level of protection.\nAs a member of the World Trade Organization, the United States has made commitments to limit domestic agricultural support that is most likely to distort trade. Under the current World Trade Organization agreement, the United States is committed to spending no more than $19.1 billion per year on this support. Keeping this domestic agricultural support below this limit is likely to be a consideration of policymakers when they are developing or modifying farm programs. In August 2011, when the United States reported its domestic agricultural support for 2009 to the World Trade Organization, it included the value of crop insurance premium subsidies—$5.4 billion—in its submission as nonproduct- specific support. This $5.4 billion was the largest amount reported as nonproduct-specific support, which totaled $6.1 billion. However, under the current agreement, nonproduct-specific support in 2009 did not count toward the United States’ limit of $19.1 billion.", "Since 2001, RMA has used data mining tools to prevent and detect fraud, waste, and abuse in the crop insurance program by either farmers or insurance agents and adjusters, but it has not maximized their use to realize potential additional savings, largely because of competing compliance review priorities. In particular, using data mining tools, RMA develops lists of farmers with anomalous claim payments and informs these farmers that their fields will be inspected. In addition, investigators from RMA and USDA’s Office of the Inspector General sometimes use the list of agents and adjusters—identified through data mining—who have anomalous losses to corroborate information from other sources, but RMA has not conducted required reviews of agents and adjusters to determine whether anomalous losses are the result of fraud, waste, and abuse. RMA has not maximized the use of data mining tools, largely because of competing compliance review priorities, according to RMA documents we examined and officials we spoke with. In addition, RMA and FSA have not taken full advantage of data management techniques to increase the effectiveness of data mining.", "Using data mining, RMA has identified farmers with anomalous claim payments (listed farmers), as called for under USDA procedures developed pursuant to an ARPA requirement. In addition, as described in these procedures, at RMA’s request, FSA has sent letters informing these farmers that an official in the FSA county office would inspect the crop in at least one of their fields during the growing season and report the results of the field inspection to RMA. For example, in 2010—the most recent year for which data are available—RMA asked FSA to send letters to 1,747 listed farmers for each of their 2,452 policies with anomalous claim payments. RMA officials told us that the letters act as a warning and have substantially reduced total claims, by an estimated $838 million from 2001 through 2010. According to RMA officials, about two-thirds of the farmers who receive a letter from FSA reduce or stop filing claims for at least 2 or 3 years following receipt of the letter, and one-third of farmers make additional anomalous claims after being placed on the list; some of these claims are likely to be legitimate.\nThe value of identifying farmers with anomalous claim payments may be undermined, however, by the fact that FSA does not complete all field inspections, and neither FSA nor RMA has a process to ensure that the results of all completed inspections are accurately reported, in accordance with USDA’s written procedures. In particular, in 2009 and 2010, RMA did not have field inspection results for 20 percent and 28 percent, respectively, of the fields for farmers listed as having anomalous claim payments. Four states—California, Colorado, Florida, and Texas— accounted for more than 40 percent of the missing data. For example, in Florida, FSA inspected a field for 8 of the 88 farmers with anomalous claim payments, according to our review of RMA records. If FSA does not complete all field inspections requested by RMA, not all farmers who have had anomalous claim payments will be subject to a review, increasing the likelihood that fraud, waste, or abuse may occur without detection. Table 2 shows the number of requests RMA made for FSA field inspections and the percentage of fields inspected for 2009 and 2010 in selected states.\nWe identified three reasons for the absence of FSA field inspections. First, we found that FSA state offices are not required to monitor the completion of field inspections conducted by FSA county offices during the growing season. Without FSA state office monitoring of RMA- requested field inspections, FSA county offices may have less incentive to complete them. The FSA state offices in the six states we reviewed varied in how closely they monitor these field office inspections. In particular, in Minnesota and North Dakota, FSA state offices monitored completion of field inspections and, in 2010, in these states, FSA county offices had 111 and 183 field inspections to conduct, respectively, and completed 97 percent and 92 percent, respectively, of these inspections. In Minnesota, according to an FSA official we spoke with, the state office “encouraged” completion of field inspections by e-mailing all of the state’s FSA county offices a list of offices that had not completed their inspections. In North Dakota, a state FSA official attributed the state’s high rate of completed inspections largely to the fact that the state office monitors the rate of field inspections during the growing season, encouraging county offices that have not completed their inspections to do so. In contrast, California, Colorado, and Florida each had from 24 to 85 inspections to conduct and completed from none to 44 percent of these inspections. FSA officials from California and Florida agreed that it would be a good practice to monitor the completion of field inspections during the growing season at the state or district level to hold the county offices accountable.\nSecond, FSA state officials in two of the four states with low inspection rates told us that insufficient resources were a key reason that county offices had not completed FSA inspections. These officials said that staffing had decreased for the past several years, but workload had increased.\nThird, some FSA state officials said that county office staff may hesitate to spend time and effort on inspections when they do not believe the inspections will have any impact. For example, they said that neither they nor county officials are informed of any action taken on their inspection results and that county officials are discouraged when their inspections do not result in actions against the farmers who appear to be engaged in negligent farming practices. However, at least one RMA compliance office—RMA’s Northern Regional Compliance Office—does provide feedback to FSA. This office is responsible for Iowa, Minnesota, Montana, North Dakota, South Dakota, Wisconsin, and Wyoming. According to an FSA official in North Dakota, RMA’s Northern Regional Compliance Office sends FSA state officials letters describing the results of reviews RMA requested the insurance companies to conduct based on FSA inspections, and the state officials are to forward this information to the counties.\nIn addition, in 2010, as provided for under the SRA, RMA regional compliance offices directed insurance companies to review and report on farmers’ policies to ascertain whether fraud, waste, or abuse had occurred. These RMA offices have generally directed such reviews in two situations. First, when FSA inspectors reported that farmers’ crops were in worse condition than their peers, RMA regional compliance offices may direct companies to analyze the claims, documenting their work with appraisal sheets, special adjuster reports, pictures, and receipts for inputs such as seeds and fertilizer. Second, when farmers have anomalous claims data related to production history—a key factor in determining the total claims farmers make—RMA offices may direct the insurance companies to review these policies.\nUSDA’s Office of the Inspector General reported in 2009 that RMA lacks documented procedures for following up on cases where farmers file claims after FSA’s field inspections indicate that crops are in good condition, and the farmer should not experience a loss. Under the Standards for Internal Control in the Federal Government, federal agencies are to employ control activities, such as clearly documenting internal control in management directives, administrative policies, or operating manuals, and the documentation is to be readily available for examination. Without documented agency policies and procedures for reviewing farmers’ policies identified by data mining reports, RMA cannot provide reasonable assurance that the farmers’ policies would be reviewed consistently. The Inspector General added that, since RMA’s resources are not unlimited, the agency should consider requiring that insurance companies perform as much of this work as possible. In this regard, as we noted above, about one-third of farmers listed as having anomalous claim payments again claim losses after being placed on the list. RMA has not maximized the use of the list of farmers with anomalous claim payments by, for example, directing insurance companies to review these farmers’ claims before paying them after FSA has reported the crops to be in good condition. According to three current and former RMA and Office of the Inspector General officials, because these farmers have previously had anomalous claim payments, their claims warrant a review, particularly when FSA’s inspection found their crops to be in good condition within weeks of the time that the farmer made a claim.", "Investigators from RMA and USDA’s Office of the Inspector General said that they use the list of insurance agents and loss adjusters with anomalous losses at times to corroborate information from other sources—such as the Office of the Inspector General’s fraud hotline— rather than as a basis for initiating reviews. However, RMA has not fully met a statutory ARPA requirement to conduct a review of agents and adjusters with higher losses than their peers to determine whether the losses associated with these individuals are the result of fraud, waste, or abuse.\nOfficials from RMA and its data mining contractor told us of an instance in which an investigator in USDA’s Office of the Inspector General used the list of insurance agents and loss adjusters with anomalous losses as a starting point. Based on information in the list, the investigator began calling other USDA Inspector General investigative offices to determine whether they were also familiar with an agent who frequently had large anomalous losses. As a result of the list and telephone calls, the investigator identified an Inspector General hotline informant who had filed complaints about the same agent; the investigator initiated a review that became the largest crop insurance fraud case in U.S. history; this case involved tobacco farmers and insurance agents and adjusters working together. According to the Office of the Inspector General, the case may result in lower program costs of more than $80 million and continues to expand to more related reviews.\nWe also found that RMA had not fully met a requirement to conduct a review of agents and adjusters with higher losses than their peers to determine whether the losses associated with these individuals are the result of fraud, waste, or abuse. In 2009, the Inspector General found that RMA was not reviewing these individuals and recommended that RMA develop policies and procedures for reviewing disparately performing agents and adjusters to assess whether the higher-than-average loss ratios for the agents and adjusters identified are the result of potential fraud, waste, or abuse. According to RMA officials we interviewed, RMA had not fully met this requirement because of resource constraints, among other things. These officials told us that investigating agents and loss adjusters is more complex and time-consuming than investigating individual farmers because one agent or adjuster may be identified with a dozen or more policies. In addition, officials said, the insurance company database used to develop the list includes agents who are not servicing the policy they are identified with. RMA officials told us that they have discussed the problem of inaccurate data with insurance companies and that the companies have made improvements, but they could not specify the extent of the problem or the improvements. Some RMA officials also pointed out that investigators use many different data mining tools and that it may be a better use of resources if the requirement for RMA to review the list of agents and adjusters was changed to allow RMA to review agents and adjusters and farmers using a variety of data mining tools, such as a software program that helps investigators identify links among producers, agents, or adjusters who are jointly engaged in activities that are anomalous. In addition, in response to another 2000 ARPA requirement, RMA included in the 2011 SRA a provision directing insurance companies to annually evaluate the performance of every agent and loss adjuster, including their loss ratios and the number and type of errors made by an agent or adjuster. The SRA does not, however, require additional focus on agents and adjusters identified as having anomalous losses through data mining.", "According to RMA documents we examined and five of the six RMA regional compliance officials we spoke with, RMA staff devote most of their time to three priority compliance activities aimed at detecting fraud, waste, and abuse in crop insurance. As a result, they have limited time to review individuals identified by data mining tools, such as the list of farmers with anomalous claim payments and the list of agents and adjusters with anomalous losses. Specifically, regional compliance offices are responsible for carrying out the following priority activities:\nReconciling conflicting RMA/FSA data associated with an FSA disaster assistance program, the Supplemental Revenue Assistance Payments Program. RMA headquarters directs staff to reconcile RMA data, such as the number of acres for which a farmer is claiming a loss, with FSA data on the number of acres planted. According to an RMA document, as of August 5, 2011, FSA had identified more than 5,000 discrepancies for 2008 and 2009 and sent these to RMA, and RMA regional compliance offices had resolved over half of them. RMA officials said that they do not use data mining to determine priorities for reconciliations because they are required to reconcile every discrepancy referred by FSA, even if it is a $10 discrepancy. In addition, the RMA Administrator told us that insurance companies that are asked to help RMA resolve discrepancies have discussed the substantial costs they incur to correct small errors.\nReviewing crop insurance policies to comply with the Improper Payments Information Act of 2002. RMA staff review 250 randomly selected policies each year, as agreed with the Office of Management and Budget, to estimate a payment error rate. Some RMA officials said that they would prefer to focus more attention on using data mining to review high-risk policies to detect and prevent fraud, waste, and abuse and focus less attention on conducting reviews to estimate an error rate.\nReviewing potential cases of fraud, waste, or abuse in the crop insurance program that were identified through hotline calls and referred by USDA’s Inspector General. According to RMA data, each year the agency opens and closes several hundred cases of potential fraud, waste, and abuse involving thousands of crop insurance policies; some field offices reported having large backlogs of cases to address. Several RMA officials said they would like to use data mining to determine which referrals they should review, but Office of the Inspector General policy requires them to review all of these referrals within 90 days. They noted that some referrals provide little information or relate to small-value policies, but RMA may give priority to these referrals over reviews with a potentially greater cost-benefit result because of the Office of the Inspector General policy.", "We identified three areas in which RMA and FSA have not taken full advantage of data management techniques to increase the effectiveness of data mining: inaccurate and incomplete FSA field inspection data for listed farmers, the insufficiency of the data collected from insurance companies on the results of their reviews, and RMA’s not providing insurance companies with results for most FSA inspections.\nCertain FSA field inspection data for listed farmers may be inaccurate and incomplete because the results of the inspections may be reported late or not at all. This problem arises because RMA and FSA have a complicated process for transmitting the data, creating opportunities for errors and omissions. Specifically:\nStaff in about 1,000 FSA county offices transmit their field inspection data to nearly 50 state offices by e-mailing data, mailing CDs or paper documents, or inputting the data in their FSA computer systems.\nThe FSA state offices e-mail or mail the data, in its different formats, to six RMA regional compliance offices.\nTwo of the six RMA regional compliance offices retype the data into an RMA system, and the other four offices retype a small portion of the data—the field inspection date and crop conditions—into a spreadsheet that already contains the original data mining information, such as the policy number and participating farmer’s name. The six offices then send the FSA data to RMA’s data mining contractor for analysis.\nThrough interviews with FSA state officials and a review of the data on FSA field inspection results, we identified several examples of errors and omissions that had occurred in the process of recording and transmitting the data from FSA to RMA and its data mining contractor for additional analysis and followup on anomalous claims and to its data mining contractor for further analysis. For example:\nOfficials in three FSA state offices said that additional field inspections likely have been done even though the data for them are missing. They said that some county staff had not been trained on how to enter inspection results into the FSA computer system and therefore did not always report information on completed inspections to state FSA offices so that it could be provided to RMA.\nFSA state offices, at times, did not forward field inspection data to RMA for several months after the inspections were completed, according to our analysis of FSA records and an RMA official. All of the field inspection data for one state were missing from RMA’s data mining contractor records because the FSA state office provided the data to RMA after RMA had sent inspection data to the data mining contractor for analysis. At least 10 percent of the data for another state were missing for the same reason. One RMA official noted that FSA occasionally provides late responses for fields with crops in worse condition than others in the area. Such delays mean that RMA cannot ask insurance companies to review the fields for these policies before harvest or making a claim payment, when insurance adjusters could determine whether the crop was being deliberately managed in a way that reduces yield.\nAccording to RMA officials and contractor staff, they have recognized these problems and proposed using software that other USDA agencies use in a new process to transmit the data from the FSA county offices directly to a USDA system while providing access to RMA and FSA. They told us that they are planning to implement the new system before 2012 field inspections have begun and believe the new system will eliminate problems we identified.\nRMA does not collect sufficient data from insurance company reviews in an electronic format that facilitates its data mining, according to RMA officials. RMA uses an electronic form to collect data from all types of company reviews, including those that RMA requested as a result of data mining and those that were requested because of Office of the Inspector General hotline referrals. However, this form does not provide the data mining contractor with sufficient information on which records the insurance companies reviewed and why they reviewed these records in order to determine if an adjustment needs to be made to improve data mining, according to RMA officials and the data mining contractor. In addition, RMA officials and the data mining contractor told us that the electronic form does not provide an efficient way of sorting out the data needed for data mining. RMA officials said that more complete data on the insurance company reviews are important for improving data mining because insurance companies often have information that RMA does not have that can explain why an anomalous claim is being made. The data mining contractor stated that it had developed proposals for revising the electronic form to collect information that could help it improve data mining lists, such as the list of farmers with anomalous claim payments and agents and adjusters with anomalous losses. In 2009, the Inspector General also concluded that the data mining contractor needed such information to refine data mining reports. Without an electronic mechanism to collect sufficient data from insurance companies on their reviews, RMA is limited in the analyses it can conduct and in the improvements it can make in data mining. As a result, RMA may be missing opportunities for savings that result from better data mining. RMA officials said that they are considering making changes so that the data mining contractor receives additional information.\nRMA generally does not provide insurance companies with field inspection results for most FSA inspections—that is, those for fields in good condition—but provides them with the field inspection results for a small portion of the farmers—those with crops in worse condition than their peers. However, inspection information on fields in good condition is important—particularly for inspections that occurred shortly before a claim was made. Past cases have revealed that some farmers may harvest a high-yielding crop, hide the sale of that crop, and report a loss to receive an insurance payment. USDA’s Inspector General has reported on the need to use FSA field inspection information to identify potential fraud, waste, and abuse.on two farmers on the list of farmers with anomalous claim payments whose crops were in good condition, according to the FSA inspection; however, these farmers filed nearly $300,000 in claims a short time after the FSA inspection, and RMA did not notice the discrepancy. RMA’s data mining contractor stated that it could, with a few days of effort, provide all the FSA field inspection data to the insurance companies, including those on crops in good condition, which represent the bulk of inspections.", "Federal crop insurance plays an important role in protecting farmers from losses caused by natural disasters and price declines, and it has become one of the most important programs in the safety net for farmers. As we have discussed, unlike other farm programs, the crop insurance program does not limit the subsidies that a farmer can receive. Without subsidy limits, a small number of farmers receive relatively large premium subsidies and a relatively large share of total premium subsidies. In addition, premium subsidies for all farmers, which averaged 62 percent of premiums in 2011, have increased substantially since 2000. With increasing pressure to reduce the federal budget deficit and with record farm income in recent years, it is critical that taxpayer-provided funds for the farm safety net are spent as economically as possible. Limits on premium subsidies to individual farmers or reductions in the amount of premium subsidies for all farmers participating in the crop insurance program, or both limits and reductions, present an opportunity to save hundreds of millions of dollars per year for taxpayers without compromising this safety net.\nIn addition, RMA has made substantial progress over the past decade in developing data mining tools to detect and prevent fraud, waste, and abuse from a list of farmers who have received payments for anomalous claims, but RMA’s use of these tools lags behind their development, largely because of competing priorities. By not maximizing the use of these tools, RMA may be missing opportunities to identify and prevent losses to the federal government that result from fraud, waste, or abuse. Furthermore, because FSA does not require its state offices to monitor, during the growing season, completion of its county office field inspections for farmers with anomalous claim payments, and because FSA does not always communicate its inspection results to RMA in a timely manner, RMA and FSA may not know about farmers who improperly manage their crops or falsely report losses. FSA state offices that do such monitoring seem to encourage a higher completion rate of county office field inspections. RMA has also not provided insurance companies with most FSA inspection results, particularly findings that crops were in good condition, or directed insurance companies to review the results of all completed FSA field inspections before paying claims that occur after inspections showed a crop was in good condition. As a result, insurance companies may not have information that could help them identify claims that should be denied.\nRMA has also not realized the potential of data mining tools to enhance its detection of fraud, waste, and abuse on the part of insurance agents and adjusters, including addressing the ARPA requirement to review agents and adjusters identified as having anomalous losses. Furthermore, RMA has not taken steps requiring minimal resources, for example, by directing insurance companies, during annual performance evaluations of agents and adjusters, to focus more attention on the list of agents and adjusters with such losses. In addition, RMA’s electronic form does not collect sufficient data from insurance companies on their reviews in order to facilitate the use of these reviews in data mining.", "To reduce the cost of the crop insurance program, Congress should consider limiting the subsidy for premiums that an individual farmer can receive each year or reducing the subsidy for all farmers participating in the program, or both limiting and reducing these subsidies.", "To help prevent and detect fraud, waste, and abuse in the federal crop insurance program, we recommend that the Secretary of Agriculture direct the Administrator of RMA and the Administrator of FSA, as appropriate, to take the following four actions:\nFor the list of farmers with anomalous claim payments, encourage the completion of FSA county office inspections during the growing season by requiring FSA state offices to monitor the status of their completion.\nMaximize the use of the list of farmers with anomalous claim payments by, for example, ensuring that insurance companies receive the results of all FSA field inspections in a timely manner and directing insurance companies to review the results of all completed FSA field inspections before paying claims that occur after inspections showed the crop was in good condition.\nIncrease the use of the list of agents and adjusters with anomalous losses through actions, such as directing insurance companies, during annual performance evaluations of insurance agents and adjusters, to focus more of their attention on the list of agents and adjusters with anomalous losses.\nDevelop a mechanism, such as a revised electronic form, to collect additional data from insurance companies in order to facilitate the use of the companies’ reviews in data mining.", "We provided the Secretary of Agriculture with a draft of this report for review and comment. We received written comments from the acting USDA Under Secretary for Farm and Foreign Agricultural Services. In these comments, the acting Under Secretary stated it was ill advised for us to suggest that Congress consider limiting or reducing premium subsides without further study. The acting Under Secretary stated that in recommending a $40,000 limit on premium subsidies, the report does not fully account for all potentially negative impacts and costs resulting from such a change. However, as we state in the report, we do not recommend a $40,000 limit in premium subsidies per crop insurance participant. Instead, we used $40,000 as an example of a premium subsidy limit and noted that setting a premium subsidy limit higher or lower would have corresponding effects on cost savings. In addition, our report recognizes that setting a subsidy limit may have impacts, and we discuss some of these potential impacts. Moreover, at a time when the agriculture sector is enjoying record farm income and higher farmland values and the nation is facing severe deficit and long-term fiscal challenges, we believe that crop insurance premium subsidies—the single largest component of farm program costs—is a potential area for federal cost savings. Furthermore, the Administration’s budget for fiscal year 2013 and the Congressional Budget Office each proposed a reduction in premium subsidies. These subsidies increased fourfold, from $1.7 billion in 2002 to $7.4 billion in 2011.\nUSDA agreed with one of our recommendations, and did not directly respond to the other three. Regarding our first recommendation— encouraging the completion of FSA county office inspections for the list of farmers with anomalous claim payments by requiring FSA state offices to monitor the status of their completion—USDA stated that it will update its written procedures to require FSA state offices to monitor county offices’ completion of these inspections.\nRegarding our second recommendation—that USDA maximize its list of farmers with anomalous claims by providing the results of completed FSA inspections to the insurance companies—USDA stated it is unlikely that FSA will be able to accomplish this recommendation, but that comment is not responsive to our recommendation. We clarified the language to say that insurance companies should receive the results of all inspections that have been completed. This effort would not entail additional work on the part of FSA. RMA’s data mining contractor told us that it could complete this activity within a few days after an inspection was completed.\nRegarding our third recommendation—to direct insurance companies, during annual performance evaluations of insurance agents and adjusters, to focus more of their attention on the list of agents and adjusters with anomalous losses than on others—USDA reported that it was issuing guidance directing companies to provide to USDA the results of reviews conducted on each agent/loss adjuster identified on the anomalous agent/loss adjuster list provided by RMA. We agree that providing guidance to the companies is important and continue to believe that directing insurance companies to focus more attention on these agents and loss adjusters during annual performance reviews would produce additional benefits.\nRegarding the fourth recommendation—to develop a mechanism, such as a revised electronic form, to collect additional data from insurance companies in order to facilitate the use of the companies’ reviews in data mining—USDA did not clearly state whether it agreed or disagreed. USDA stated that as one of its information systems projects matures, it will find better ways to record and gather data for data mining. However, we continue to believe that the data mining contractor needs additional data from insurance company reviews in order to improve data mining, and that specific direction from USDA is needed to acquire it.\nUSDA comments and our response are in appendix V.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees; the Secretary of Agriculture; the Director, Office of Management and Budget; and other interested parties. In addition, this report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff members have any questions about this report, please contact me at (202) 512-3841 or shamesl@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix VI.", "Our objectives were to determine (1) the effect on program costs of applying limits on farmers’ federal crop insurance subsidies, as payment limits are applied to other farm programs, and (2) the extent to which the U.S. Department of Agriculture (USDA) has used data mining tools to prevent and detect fraud, waste, and abuse in the crop insurance program.\nTo address the first objective, we reviewed eligibility standards, such as adjusted gross income limits and payment limits, in the provisions of the Food, Conservation, and Energy Act of 2008 (2008 farm bill); other statutes; and USDA regulations. We also interviewed officials from USDA’s Farm Service Agency (FSA) and Risk Management Agency (RMA) regarding eligibility standards and payment limits in the 2008 farm bill for farm programs other than the crop insurance program. To determine the distribution of crop insurance subsidies among farmers who participate in the program, we analyzed RMA data for 2010 and 2011 on the number and percentage of farmers receiving various levels of subsidies and the locations of farmers who received higher subsidies. We selected $40,000 as an example of a potential subsidy limit because it is the payment limit for direct payments. Many participants in the crop insurance program also participate in other farm programs that are administered by USDA’s Farm Service Agency (FSA). Many of these other farm programs have payment limits based on benefits that are attributed to each interest holder in a farming operation. Under a scenario of a limit on premium subsidies, it is likely these same rules regarding the attribution of benefits would also apply to premium subsidies for the crop insurance program. Therefore, in our analysis, we attributed these subsidies for each policy to the interest holders in the policy. We did so based on the payment share of each interest holder as recorded in FSA’s validated Permitted Entity database that is used to ensure compliance with payment limit rules. For entities, we attributed benefits through four levels, as appropriate. We summed premium subsidies across policies for each crop insurance participant. For those that were not found in FSA’s Permitted Entity database or if RMA’s database contradicted FSA’s Permitted Entity database, we attributed premium subsidies by dividing it equally among the policy holder and the interest holders as reported in RMA’s database. These participants represented 18.5 percent of the entities.\nWe also reviewed USDA and other studies that examined participation in the crop insurance program and premium subsidies. In addition, we reviewed USDA data on the financial condition of farms of various sizes. Furthermore, we reviewed USDA reports on the availability of private risk management tools against crop losses and the effects of farm program subsidies on beginning and smaller farmers. Finally, we reviewed farm and crop insurance industry organizations’ statements on the crop insurance program.\nTo determine the extent to which USDA has used data mining tools to prevent and detect fraud, waste, and abuse in the crop insurance program, we analyzed how RMA uses two data mining lists—the list of farmers with anomalous claim payments and the list of insurance agents and adjusters with anomalous losses—and the methods it uses to develop these lists. We reviewed requirements in the Agricultural Risk Protection Act of 2000 and the current and former standard reinsurance agreement related to data mining, FSA guidance for field inspections, FSA letters to farmers with anomalous claim payments, data analyses and summaries on data mining tools developed by RMA’s data mining contractor, USDA’s Inspector General reports and testimonies, and reports of RMA completion of disaster payment reconciliations. We also interviewed RMA data mining contractor staff, and RMA officials at headquarters and six regional compliance offices to identify RMA’s uses of these data mining tools, weaknesses found in the tools, opportunities for increased use of them, or competing RMA priorities. We also interviewed officials with USDA’s Office of Inspector General on their views and uses of these tools. In addition, we worked with RMA’s data mining contractor to analyze 2009 and 2010 data on FSA’s completion of field inspections for policies of those farmers listed as having anomalous claim payments. We conducted tests of the reliability of the data, such as checking formulas, and found the data to be sufficiently reliable for the purposes of this report. We also interviewed officials with RMA and its data mining contractor to determine the process used to acquire FSA’s field inspection data. We interviewed officials with FSA’s headquarters office and the five FSA state offices for California, Colorado, Florida, North Dakota, and Texas to obtain information about these data, obstacles to completing the inspections, and suggestions for increasing We selected FSA’s North Dakota office their completion and reporting.because of its high completion rate of field inspections (96 percent) for 2009 and 2010 and large number of requests for field inspections (378). We selected the other four state offices because, over the 2-year period, they had low completion rates of field inspections (less than 33 percent) and at least 80 requests for field inspections.\nWe conducted this performance audit from January 2011 to March 2012 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "$500,000 (average adjusted gross nonfarm income over the 3 preceding tax years).\nDirect and Countercyclical Program direct payments $500,000 (average adjusted gross nonfarm income over the 3 preceding tax years). $750,000 (average adjusted gross farm income over the 3 preceding tax years). $500,000 (average adjusted gross nonfarm income over the 3 preceding tax years). $500,000 (average adjusted gross nonfarm income over the 3 preceding tax years). $500,000 (average adjusted gross nonfarm income over the 3 preceding tax years). $50,000 (annual rental payment) $1,000,000 (average adjusted gross nonfarm income over the 3 preceding tax years).$1,000,000 (average adjusted gross nonfarm income over the 3 preceding tax years). $300,000 (total for all contracts for fiscal years 2009 through 2012)\nThis limit does not apply if more than 66.66 percent of the adjusted gross income—total of nonfarm adjusted gross income and farm adjusted gross income—was farm income.", "Figure 6 shows the locations of participating farmers who received more than $40,000 in premium subsidies for 2011. As the figure shows, many of these farmers were in the northern and southern plains. According to RMA officials, a region might have more farmers who received more than $40,000 in premium subsidies because farmers in the region have large- acreage farms; produce high-value crops, such as sugar beets; or have higher premium rates. For example, the average farm size in North Dakota is 1,241 acres, but the average size nationwide is 418 acres. In addition, high-value crops, such as sugar beets in North Dakota and fruits and vegetables in California, contribute to higher premiums and premium subsidies. Regarding premium rates, areas that have a higher risk of crop loss generally have higher premium rates. For example, the average premium rate in North Dakota is 17 percent, and the average premium rate nationwide is 10 percent.", "For 715,822 participating farmers, the sum of 2010 premium subsidies and 2010 administrative expense subsidies ranged from $1 to $10,000.", "", "1. As we clearly state in the report, we do not recommend a $40,000 limit in premium subsidies per crop insurance participant. Instead, as we stated, we used $40,000 as an example of a premium subsidy limit and noted that setting a premium subsidy limit higher or lower would have corresponding effects on cost savings. In this connection, we provided information on the potential savings that would result if premium subsidies were limited to $100,000. Furthermore, limits on premium subsidies would not prevent potentially affected farmers from enrolling all of their crop acres in the crop insurance program and receiving claim payments when a loss occurs. The report also notes that savings could result from reducing the subsidy amount for all farmers participating in the program, or both limiting and reducing these subsidies. In proposing these changes to the crop insurance program, we also identified other considerations that would come into play, including the potential effect on large farms’ financial condition and on participation in the crop insurance program. 2. We disagree. This report does show regions of the country that would be more affected by a limit on premium subsidies. On page 19, we state that many of the participating farmers who received more than $40,000 in premium subsidies were in the northern and southern plains. Additional information on the locations of participating farmers who received more than $40,000 in premium subsidies for 2011 is presented in appendix III. 3. An assessment of the availability of credit to the agricultural sector was not the focus of our work, but our review of data from USDA’s Agricultural Resource Management Survey shows that larger farms, which are more likely to be affected by a limit on premium subsidies, generally have stronger financial ratios and credit worthiness than other farms participating in the crop insurance program. (See pages 21 and 22 of this report.) Furthermore, since we sent our draft report to USDA for comment, we identified two Federal Reserve Bank reports—one from the Federal Reserve Bank of Chicago, and one from the Federal Reserve Bank of Kansas City—that reported that credit conditions for farmers are favorable. In addition, if premium subsidies were limited, an affected farmer could still purchase crop insurance, although the premiums might not be subsidized or subsidized less than currently. Thus, an affected farmer would not lose access to credit. 4. USDA did not adjust its estimate of affected crop insurance participants and savings in premium subsidies to reflect how a limit on premium subsidies might actually be implemented. That is, we assume that any subsidy limit would be administered as USDA’s Farm Service Agency (FSA) administers payment limits for other farm programs—allocating the benefits according to the interest holders in the farming operation. Most participants in the crop insurance program also participate in other farm programs that FSA administers, and many of these other farm programs have payment limits based on benefits that are attributed to each interest holder in a farming operation. As explained in our methodology, in developing our estimate for a potential $40,000 subsidy limit, we used the payment share of each interest holder as recorded in FSA’s validated Permitted Entity database, which FSA uses to ensure compliance with payment limit rules for farm programs. Using FSA’s information on the payment share of each interest holder, we attributed subsidies for each crop insurance policy to the interest holders in the policy. Therefore, we estimated that up to 33,690 participating farmers would have been affected in 2011 by a reduced subsidy, for a savings of up to $1 billion if a $40,000 subsidy limit were applied. We believe our analysis provides a reasonable estimate of the number of participating farmers who might be affected by a limit on premium subsidies and the dollars that might be saved. (See app. I for more information on our methodology.) 5. As we note in this report, a limit on crop insurance premium subsidies would affect more farmers in some areas of the country than in other areas. We also note in the report that large farms are better positioned than smaller farms to pay a higher share of their premiums. Furthermore, a higher limit on premium subsidies would affect fewer farmers. In addition, limits on farm program benefits already have disproportionate impacts. For example, under the Supplemental Revenue Assistance Payments program and Noninsured Crop Disaster Assistance program, annual payments are limited to $100,000, which disproportionately affects farmers in regions that are more prone to natural disasters.\nIn addition to a limit on premium subsidies, this report also examines reducing premium subsidy rates for all farmers, which would have a more proportionate effect across states and regions. However, it would also reduce subsidies for those who may be less able to afford higher premiums, particularly beginning and limited resource farmers, as well as socially disadvantaged farmers. 6. We do not agree that it would be virtually impossible to administratively track and control a limit on premium subsidies. Most farmers participating in the crop insurance program also participate in other farm programs that FSA administers. Many of the farm programs FSA administers already limit the payments an individual can receive. Therefore, we believe that FSA’s methods—which account for complicating factors such as the organization of farm businesses and multiple crops in multiple counties, and even multiple programs—could be applied to a limit on premium subsidies for crop insurance and that any addition to administrative burdens would not be significant. Moreover, as we stated in our report, premium subsidy rates vary by the level of insurance coverage that the farmer chooses and the geographic diversity of the crops insured. If RMA is capable of tracking these different subsidy rates, we believe USDA can also administer a subsidy limit. 7. We believe it would not be impractical to administer a limit on premium subsidies because of differences in dates and insurance periods. FSA attributes benefits to each individual or entity for each program that it administers. For each participant in a given program, payments are summed across all entities, crops, and counties for the crop year. Regarding livestock insurance, the amount of insurance purchased in comparison with crop insurance is very small. Moreover, this report did not discuss combining limits on premium subsidies for livestock insurance and crop insurance. 8. We do not agree that a limit on premium subsidies would prevent farmers from making sound and informed insurance choices. Under the crop insurance program, the amounts of a farmer’s premium subsidy and premium expense are estimated during the period before planting, when the farmer is making insurance choices. However, insurance companies determine the actual premium later in the growing season and bill the farmer at the end of the growing season. Therefore, to the extent that a limit on premium subsidies introduces additional uncertainty, it would likely be marginal. 9. We believe it is unlikely that a limit on premium subsidies would affect agricultural lenders’ decisions in providing farm operating loans. It is not clear how a limit on premium subsidies would introduce so much uncertainty about the amount of a farmer’s premium expenses that a lender could not decide whether to provide financing. Agricultural lenders already deal with a level of uncertainty about farmers’ revenues and expenses. In addition, lenders could require borrowers to purchase crop insurance. 10. As we stated in this report, the amount of savings from a limit on premium subsidies may depend on whether, and to what extent, farmers and legal entities reorganized their business to avoid or lessen the effect of limits on premium subsidies. In addition, some farmers would likely begin to report their spouse as a member of the farming operation, which, under payment limit rules, enables an operation to double the amount of benefits it can receive. Regarding potential reorganizations, most of the farmers and legal entities who participate in the crop insurance program also participate in FSA programs, and many of them have already reorganized their business because of these programs’ payment limits. These farmers and legal entities would be unlikely to reorganize further in response to a limit on premium subsidies. In addition, in some instances, the requirement that an individual or entity be actively engaged in farming to receive farm program benefits is likely to prevent the creation of entities in order to avoid a limit on premium subsidies. Furthermore, the 2008 farm bill decreased the incentive to reorganize a farming operation in order to avoid a limit on farm program payments by eliminating the “three-entity rule” and requiring direct attribution of payments to individuals. 11. This report includes information about how crop insurance participation and coverage levels may relate to spending on ad hoc disaster assistance. The report also notes that in view of the nation’s budgetary pressures, Congress may be less willing to approve ad hoc disaster assistance payments than it has in the past. In addition, the Administration’s proposed fiscal year 2013 budget addresses participation and ad hoc disaster assistance and states, “With current participation rates, the deep premium subsidies are no longer needed.” 12. In addition to federal cost savings, our report discussed several considerations that would come into play with limits on premium subsidies. Furthermore, we noted that FSA has extensive experience in administering limits on farm program benefits, which USDA does not recognize in its comments. We believe RMA could benefit from FSA’s experience in administering payment limits. 13. We recognize that FSA, like most federal agencies, faces resource constraints. However, as we have previously reported, effective strategies help set priorities and allocate resources to inform decision making and help ensure accountability. Such priority setting and resource allocation is especially important in a fiscally constrained environment. 14. We clarified the language to say that insurance companies should receive the results of all inspections that have been completed. This effort would not entail additional work on the part of FSA. RMA’s data mining contractor told us that it could complete this activity within a few days after an inspection was completed. 15. We are pleased that RMA is developing guidance and believe that this guidance may be a good first step towards increasing insurance companies’ focus on anomalous agents and loss adjusters, who warrant greater attention. However, we continue to believe that directing insurance companies to focus more attention on these agents and loss adjusters during annual performance reviews would produce additional benefits. 16. It is unclear from RMA’s response whether it agrees or disagrees with our recommendation. However, we continue to believe that the data mining contractor needs additional data from insurance company reviews in order to improve data mining and specific direction from the government to collect these data.", "", "", "In addition to the individual named above, Susan Offutt, Chief Economist; Thomas M. Cook, Assistant Director; Kevin S. Bray; Gary T. Brown; Barbara J. El-Osta; Beverly Peterson; Anne Rhodes-Kline; Jeremy Sebest; and Carol Herrnstadt Shulman made key contributions to this report.", "Crop Insurance: Opportunities Exist to Reduce the Costs of Administering the Program. GAO-09-445. Washington, D.C.: April 29, 2009.\nCrop Insurance: Continuing Efforts Are Needed to Improve Program Integrity and Ensure Program Costs Are Reasonable. GAO-07-944T. Washington, D.C.: June 7, 2007.\nCrop Insurance: Continuing Efforts Are Needed to Improve Program Integrity and Ensure Program Costs Are Reasonable. GAO-07-819T. Washington, D.C.: May 3, 2007.\nClimate Change: Financial Risks to Federal and Private Insurers in Coming Decades Are Potentially Significant. GAO-07-760T. Washington, D.C.: April 19, 2007.\nClimate Change: Financial Risks to Federal and Private Insurers in Coming Decades Are Potentially Significant. GAO-07-285. Washington, D.C.: March 16, 2007.\nSuggested Areas for Oversight for the 110th Congress. GAO-07-235R. Washington, D.C.: November 17, 2006.\nCrop Insurance: More Needs to Be Done to Reduce Program’s Vulnerability to Fraud, Waste, and Abuse. GAO-06-878T. Washington, D.C.: June 15, 2006.\nCrop Insurance: Actions Needed to Reduce Program’s Vulnerability to Fraud, Waste, and Abuse. GAO-05-528. Washington, D.C.: September 30, 2005.\nCrop Insurance: USDA Needs to Improve Oversight of Insurance Companies and Develop a Policy to Address Any Future Insolvencies. GAO-04-517. Washington, D.C.: June 1, 2004.\nDepartment of Agriculture: Status of Efforts to Address Major Financial Management Challenges. GAO-03-871T. Washington, D.C.: June 10, 2003.\nCrop Insurance: USDA Needs a Better Estimate of Improper Payments to Strengthen Controls Over Claims. GAO/RCED-99-266. Washington, D.C.: September 22, 1999.\nCrop Insurance: USDA’s Progress in Expanding Insurance for Specialty Crops. GAO/RCED-99-67. Washington, D.C.: April 16, 1999.\nCrop Insurance: Increases in Insured Crop Prices and Premium Rates Raise the Administrative Expense Reimbursement Paid to Companies. GAO/RCED-98-115R. Washington, D.C.: March 20, 1998.\nCrop Insurance: Opportunities Exist to Reduce Government Costs for Private-Sector Delivery. GAO/RCED-97-70. Washington, D.C.: April 17, 1997.\nCrop Insurance: Federal Program Faces Insurability and Design Programs. GAO/RCED-93-98. Washington, D.C.: May 24, 1993.\nCrop Insurance: Program Has Not Fostered Significant Risk Sharing by Insurance Companies. GAO/RCED-92-25. Washington, D.C.: January 13, 1992." ], "depth": [ 1, 2, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 1, 1, 1, 2, 1, 2, 2, 1 ], "alignment": [ "h2_full", "", "", "", "", "", "h0_title h2_title", "h0_full", "h0_full h2_full", "h3_title h1_full", "h1_full", "", "", "h3_full h1_full", "h1_full", "h3_full", "", "h3_full", "", "", "", "", "", "h0_title", "h0_full", "", "", "", "" ] }

{ "question": [ "How much would the federal government would have saved with a limit of $40,000 to farmer's crop insurance premium?", "How much did GAO select as a subsidy limit and what was it based on?", "If this limit was applied in 2011, what population of farmers would it have affected?", "How would this have affected those farmers?", "How has the USDA been detecting abuse by farmers and agents and to what extent in regards to savings?", "What caused this oversight?", "How does the USDA inform farmers of inspection?", "What has this done to claims and the value of identifying these farmers?", "What is an example of the number of failure of inspection results?", "How does the RMA negatively impact insurance companies?", "What is the U.S. Department of Agriculture (USDA) role in crop insurance?", "What the program provide in 2011?", "What did the program costs include?", "What are the program costs for the fiscal years 2013 through 2022?", "How can congress reduce crop insurance costs?", "What is GAO's opinion on field inspections?", "What does GAO believe on fam income and how is this different from the USDA's actions?", "What did the USDA agree to?" ], "summary": [ "If a limit of $40,000 had been applied to individual farmers’ crop insurance premium subsidies, as it is for other farm programs, the federal government would have saved up to $1 billion in crop insurance program costs in 2011, according to GAO’s analysis of U.S. Department of Agriculture (USDA) data.", "GAO selected $40,000 as an example of a potential subsidy limit because it is the limit for direct payments, which provide fixed annual payments to farmers based on a farm’s crop production history.", "Had such a limit been applied in 2011, it would have affected up to 3.9 percent of all participating farmers, who accounted for about one-third of all premium subsidies and were primarily associated with large farms.", "For example, one of these farmers insured crops in eight counties and received about $1.3 million in premium subsidies. Had premium subsidies been reduced by 10 percentage points for all farmers participating in the program, as recent studies have proposed, the federal government would have saved about $1.2 billion in 2011.", "Since 2001, USDA has used data mining tools to prevent and detect fraud, waste, and abuse by either farmers or insurance agents and adjusters but has not maximized the use of these tools to realize potential additional savings.", "This is largely because of competing compliance review priorities, according to GAO’s analysis. USDA’s Risk Management Agency (RMA), which is responsible for overseeing the integrity of the crop insurance program, has used data mining to identify farmers who received claim payments that are higher or more frequent than others in the same area.", "USDA informs these farmers that at least one of their fields will be inspected during the coming growing season.", "RMA officials told GAO that this action has substantially reduced total claims. The value of identifying these farmers may be reduced, however, by the fact that USDA’s Farm Service Agency (FSA)—which conducts field inspections for RMA—does not complete all such inspections, and neither FSA nor RMA has a process to ensure that the results of all inspections are accurately reported.", "For example, RMA did not obtain field inspection results for about 20 percent and 28 percent of these farmers, respectively, in 2009 and 2010.", "In addition, RMA generally does not provide insurance companies with FSA inspection results when crops are found to be in good condition, although USDA’s Inspector General has reported this information may be important for followup.", "The U.S. Department of Agriculture (USDA) administers the federal crop insurance program with private insurance companies.", "In 2011, the program provided about $113 billion in insurance coverage for over 1 million policies.", "Program costs include subsidies to pay for part of farmers’ premiums.", "According to the Congressional Budget Office, for fiscal years 2013 through 2022, the program costs—primarily premium subsidies—will average $8.9 billion annually.", "To reduce crop insurance program costs, Congress should consider limiting premium subsidies for individual farmers, reducing subsidies for all farmers, or both.", "GAO also recommends, in part, that USDA encourage the completion of field inspections.", "In commenting on a report draft, USDA did not agree that Congress should consider limiting premium subsidies, but GAO believes that when farm income is at a record high and the nation faces severe fiscal problems, limiting premium subsidies is an appropriate area for consideration.", "USDA agreed with encouraging the completion of field inspections." ], "parent_pair_index": [ -1, -1, -1, 2, -1, 0, -1, 2, 2, -1, -1, 0, 0, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 0, 0, 0, 0, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "The Entry Point: Massachusetts vs. EPA", "The Advance Notice of Proposed Rulemaking (ANPR)", "Potential Implications for Stationary Sources", "Potential Paths for GHG Stationary Source Control", "Path 1: Regulating GHG through National Ambient Air Quality Standards (NAAQS)", "Importance of NAAQS", "NAAQS and Controlling GHGs", "Setting a Standard", "Identifying Nonattainment Areas", "Developing State Implementation Plans", "Attaining the Standard", "Path 2: Regulating GHGs through Section 112 as Hazardous Air Pollutants", "Importance of Section 112", "Section 112 and Controlling GHGs", "Path 3: Regulating GHGs through Sections 111 as Designated Air Pollutants", "Importance of Section 111", "Controlling GHG through Section 111", "Going Off the Beaten Path: Regulating under Section 115 or Title VI", "Section 115: International Pollution", "Title VI: Stratospheric Ozone Protection", "Section 612: Safe Alternatives Policy", "Section 615: Authority of Administrator", "Potential Control Approaches for Stationary Sources", "Forcing Commercialization of Technology Through a Regulatory Requirement: An Example from the SO2 New Source Performance Standards", "Potential for Cap-and-Trade", "Potential Under Section 111", "Potential Under Other Sections", "Implementation Issues", "New Source Review", "Issue of Case-by-Case BACT Determinations", "Title V and the Size Threshold", "Legal or Regulatory Interpretations that Increase Flexibility", "General Permits", "Section 304: Citizen Suits", "Conclusion" ], "paragraphs": [ "", "This report was originally published in May 2009, and the majority of the text reflects the authors' analysis of EPA's potential regulation of stationary sources under the Clean Air Act at that time. That analysis has not changed substantially, but s ince that time , EPA has given several further indications of its intentions with regard to the regulation o f stationary sources of greenhouse gases, in congressional testimony, proposed regulations, and proposed guidance . T he agency has formally proposed greenhouse gas emission standards for new motor vehicles, and stated that it intends to promulgate such standards by March 31, 2010. An \"endangerment finding,,\" which is a prerequisite for the motor vehicle and other greenhouse gas standards, was finalized December 7, 2009. The agency has stated in several venues that promulgation of motor vehicle GHG standards would make GHGs \"subject to regulation\" for the purposes of triggering permitting requirements for new and modified stationary sources under the Prevention of Significant Deterioration requirements of Section 165 of the Clean Air Act, and also for the purposes of the operating permit requirements of Title V. And it has p r oposed a Greenhouse Gas Tailoring Rule to limit the applicability of the PSD and Title V permitting requirements to sources that emit more than 25,000 tons per year of carbon dioxide equivalents.\nNew legislation to address greenhouse gases is a leading priority of the President and many members of Congress, but the ability to limit these emissions already exists under various Clean Air Act (CAA) authorities that Congress has enacted, a point underlined by the Supreme Court in an April 2007 decision (discussed below). Indeed, the U.S. Environmental Protection Agency (EPA) has already begun the process that could lead to greenhouse gas regulations for new mobile sources in response to court decisions.\nWhen EPA finalizes the regulation of greenhouse gases from new mobile sources, legal and policy drivers will be activated that will lead to regulation of stationary sources as well. The legal drivers are beyond the scope of this report, which is focused on the policy options and control alternatives available to EPA as it uses existing authorities to regulate greenhouse gases from stationary sources.\nStationary sources are the major sources of the country's greenhouse gas emissions. Overall, 72% of U.S. emissions of greenhouse gas come from stationary sources (the remainder come from mobile sources). As indicated in Table 1 , relatively large sources of fossil-fuel combustion and other industrial processes are responsible for about one-half the country's total emissions. If EPA were to embark on a serious effort to reduce greenhouse gas emissions, stationary sources, and in particular large stationary sources, would have to be included. This concentration of greenhouse gas emissions is even more important from a policy standpoint: reductions in greenhouse gas emissions from these sectors are likely to be more timely and cost-effective than attempts to reduce emissions from the transport sector.\nThis report discusses three major paths and two alternate paths of statutory authorities that have been identified by EPA and others as possible avenues the agency might take in addressing greenhouse gas emissions under existing CAA provisions. After discussing the approaches, we identify categories of control options EPA could consider, including an EPA-coordinated cap-and-trade program. Then we discuss the administrative difficulties in using the Clean Air Act for greenhouse gas control, particularly New Source Review – Prevention of Significant Deterioration and Title V permitting requirements. Finally, we conclude by putting the issue into the context of previous environmental challenges the CAA has faced.", "A regulatory approach using existing Clean Air Act authorities has been under consideration at EPA for more than a decade. In 1998, EPA's General Counsel, Jonathan Cannon, concluded in a memorandum to the EPA Administrator that greenhouse gases were air pollutants within the Clean Air Act's definition of the term, and therefore could be regulated under the Act. Relying on the Cannon memorandum as well as the statute itself, on October 20, 1999, a group of 19 organizations petitioned EPA to regulate greenhouse gas emissions from new motor vehicles under Section 202 of the Act. Section 202 gives the EPA Administrator broad authority to set \"standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles\" if in her judgment they contribute to air pollution which \"may reasonably be anticipated to endanger public health or welfare.\"\nEPA denied the petition in 2003 on the basis of a new General Counsel memorandum issued the same day in which the General Counsel concluded that the CAA does not grant EPA authority to regulate CO 2 and other GHG emissions based on their climate change impacts. The denial was challenged by Massachusetts, eleven other states, and various other petitioners in a case that ultimately reached the Supreme Court. In an April 2, 2007 decision ( Massachusetts v. EPA ), the Court found by 5-4 that EPA does have authority to regulate greenhouse gas emissions, since the emissions are clearly \"air pollutants\" under the Clean Air Act's definition of that term. The Court's majority concluded that EPA must, therefore, decide whether emissions of these pollutants from new motor vehicles contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. If it makes this finding of endangerment, the Act requires the agency to establish standards for emissions of the pollutants.", "For nearly two years following the Court's decision, the Bush Administration's EPA did not respond to the original petition nor make a finding regarding endangerment. Its only formal action following the Court decision was to issue a detailed information request, called an Advance Notice of Proposed Rulemaking (ANPR), on July 30, 2008.\nThe ANPR occupied 167 pages of the Federal Register . Besides requesting information, it took the unusual approach of presenting statements from the Office of Management and Budget, four Cabinet Departments (Agriculture, Commerce, Transportation, and Energy), the Chairman of the Council on Environmental Quality, the Director of the President's Office of Science and Technology Policy, the Chairman of the Council of Economic Advisers, and the Chief Counsel for Advocacy at the Small Business Administration, each of whom expressed their objections to regulating greenhouse gas emissions under the Clean Air Act. The OMB statement began by noting that, \"The issues raised during interagency review are so significant that we have been unable to reach interagency consensus in a timely way, and as a result, this staff draft cannot be considered Administration policy or representative of the views of the Administration.\" It went on to state that \"... the Clean Air Act is a deeply flawed and unsuitable vehicle for reducing greenhouse gas emissions.\" The other letters concurred. The ANPR, therefore, was of limited use in reaching a conclusion on the endangerment issue and, in any event, it presents the views of an Administration no longer in office.\nThe current Administration made review of the endangerment issue a high priority. On April 17, 2009, EPA proposed a finding that GHGs do endanger both public health and welfare and that GHGs from new motor vehicles contribute to that endangerment. Publication of the proposal in the Federal Register on April 24 began a 60-day public comment period. In addition, public hearings were held May 18 in Arlington, VA, and May 21 in Seattle, WA. The endangerment finding was finalized December 7, 2009.", "While there has been considerable speculation in the literature about the meaning of Massachusetts v. EPA for stationary sources, there have also been several attempts to invoke the various authorities of the Clean Air Act to begin controlling greenhouse gas emissions from stationary sources. Among the legal initiatives currently underway are the following:\nIn 2006, the EPA revised the New Source Performance Standard (NSPS) for electric utilities and other steam generating units without including any CO 2 standard, or other requirement. Led by New York, several states filed a petition for review of the new NSPS, challenging the omission of any CO 2 requirement. In September 2007 the D.C. Circuit Court of Appeals remanded the case back to EPA for further proceedings \"in light of Massachusetts v. EPA .\" In 2007, EPA Region 8 granted a Prevention of Significant Deterioration (PSD) permit authorizing construction of a waste-coal-fired electric generating plant near Bonanza, Utah. Appealing the decision, the Sierra Club argued to the Agency's Environmental Appeals Board (EAB) that because the Court had found in Massachusetts v. EPA that CO 2 was an air pollutant under the Act, and that EPA has imposed CO 2 monitoring and reporting requirements, the Bonanza plant was required to install Best Available Control Technology (BACT) for CO 2 emissions. The EAB rejected the Sierra Club's interpretation of the PSD-NSR language, but remanded it back to Region 8 for reconsideration of a CO 2 BACT requirement. In a second case, on February 18, 2009, the EAB remanded a permit issued by the Michigan Department of Environmental Quality for reconsideration of its decision not to regulate CO 2 from a new cogeneration boiler at Northern Michigan University. In a third PSD-NSR (New Source Review) case, EPA Region 9 filed a motion with the EAB in April 2009 for a voluntary remand of the PSD permit for the Desert Rock coal-fired power plant in New Mexico to allow for a reconsideration of its permit to include a CO 2 limitation. Region 9 wants to reconsider its decision not to require Desert Rock to install \"carbon-ready\" integrated gasification combined-cycle technology instead of allowing current pulverized-coal technology. The EAB remanded the permit September 24, 2009. In 2009, the Environmental Integrity Project, an environmental group, filed a complaint with the D.C. Circuit Court to force the EPA to review nitrous oxide (N 2 O) emissions from nitric acid plants. The group argues that EPA has not reviewed the NSPS for such plants since 1984, despite the statutory requirements for periodic reviews.\nIt should be noted that amidst this legal activity and EPA's commitment to move forward with an endangerment finding, EPA Administrator Jackson and others in the Administration have made clear that their preference would be for Congress to address the climate issue through new legislation. In the press release announcing the proposed endangerment finding, the agency stated, \"Notwithstanding this required regulatory process, both President Obama and Administrator Jackson have repeatedly indicated their preference for comprehensive legislation to address this issue and create the framework for a clean energy economy.\" Similar language was used in the press release accompanying the finalization of the endangerment finding, December 7.", "When looking at the CAA from the point of view of reducing GHGs from stationary sources, three existing paths are available. As indicated in Table 2 , the three paths are (1) to regulate GHGs as criteria air pollutants, (2) to regulate GHGs as hazardous air pollutants, or (3) to regulate GHGs as designated air pollutants. Each of these paths are discussed below, along with two lesser explored trails: Section 115 and Title VI.", "", "The backbone of the Clean Air Act is the creation of National Ambient Air Quality Standards (NAAQS). The need to attain NAAQS, which are set at levels designed to protect public health without consideration of costs or economic impact, is the driving force behind much of clean air regulation.\nThe authority for NAAQS is found in Sections 108 and 109 of the Act. Under Section 108, EPA is to identify air pollutants that, in the Administrator's judgment, endanger public health or welfare, and whose presence in ambient air results from numerous or diverse sources. Under Section 109, EPA is required to set NAAQS for the identified pollutants.\nSection 109 requires the EPA Administrator to set both primary and secondary NAAQS. Primary NAAQS must be set at a level that will protect public health with an adequate margin of safety. Secondary NAAQS are required to protect public welfare from \"any known or anticipated adverse effects associated with the presence of such air pollutant in the ambient air.\" Public welfare covers damage to crops, vegetation, soils, wildlife, water, property, building materials, etc., and such broader variables as visibility, climate, economic values, and personal comfort and well-being.\nOver the years, EPA has identified six air pollutants or categories of air pollutants for NAAQS: sulfur dioxide (SO 2 ), particulate matter (PM 2.5 and PM 10 ), nitrogen dioxide (NO 2 ), carbon monoxide (CO), ozone, and lead. These six are referred to as \"criteria\" pollutants. Each of the criteria pollutants was identified for NAAQS regulation in the 1970s. Since that time, although the specific standards (the allowed concentrations) have been reviewed and modified, no new criteria pollutants have been identified.", "If carbon dioxide (CO 2 ) or other greenhouse gases were identified as criteria pollutants, NAAQS would then have to be set. CO 2 , the most important greenhouse gas, is an air pollutant that EPA has determined endangers both public health and welfare, and its presence in ambient air results from numerous or diverse sources. Thus, it meets the basic criteria of Section 108. But setting a NAAQS for CO 2 raises a number of potential issues, four of which are discussed in the following sections.", "An initial difficulty would arise in choosing a level at which to set a NAAQS. Primary and secondary NAAQS are expressed as concentrations of the pollutant in ambient air that endanger public health or welfare. For the six current criteria pollutants, the focus has been on setting primary (health-based) standards—i.e., identifying a concentration in ambient air above which ambient concentrations of the pollutant contribute to illness or death. These standards are based on both concentration-response studies undertaken in laboratory conditions (often animal studies, but some involving humans), and on epidemiology that demonstrates a correlation between greater exposure to the pollutant and higher rates of morbidity and mortality.\nFor CO 2 at current and projected levels, there are not the same direct linkages between higher concentrations and health as there are for each of the current NAAQS. A person exposed to current ambient levels of CO 2 will not be sickened. Nor is it likely that one could demonstrate a connection between CO 2 and morbidity or mortality through epidemiology, in part because CO 2 concentrations are relatively uniform across the globe and change very slowly. The argument that can be made is more indirect: that higher levels of CO 2 are likely over time to cause higher temperatures, and higher temperatures and associated changes in climate-related processes are likely to have health consequences.\nIf EPA concluded that this connection between CO 2 , higher temperatures, and human health were sufficient to justify establishing a primary NAAQS, it would still be difficult to pick out a specific CO 2 concentration for a standard. Among scientists concerned about greenhouse gas concentrations, some argue for a level of 350 parts per million (ppm) as the concentration that must be attained, others argue for 450 ppm, and some for levels of 550-600 ppm. Current concentrations in the Earth's atmosphere are about 385 ppm, increasing by 1 or 2 ppm per year. The mechanics of implementing a standard will be discussed in greater detail below, but it is important to note here that unless one chose a standard at or below the current ambient level, establishing a primary NAAQS would have no consequence. It is only if ambient concentrations of the pollutant exceed the standard that action must be taken.\nA further point regarding the setting of a NAAQS is the importance of distinguishing primary from secondary standards. If one were to set a NAAQS for CO 2 or other GHGs, it is perhaps the secondary NAAQS that is most relevant to the discussion. As noted above, secondary NAAQS are designed to prevent damage to crops, vegetation, soils, wildlife, water, property, building materials, etc. and such broader variables as visibility, climate, economic values, personal comfort and well-being.\nEPA—under both Democratic and Republican Presidents—has generally given short shrift to the setting of secondary NAAQS: most have been set at a level identical to the primary standard, with little discussion of the agency's reasoning. In part, this is because secondary NAAQS have no deadlines attached to their attainment and there is no enforcement mechanism or penalty for failure to attain them.\nThus, it would hardly be worth the effort to establish a NAAQS for GHGs unless one could establish a defensible case for a specific primary standard that was below ambient levels. Primary NAAQS, unlike their secondary kin, do have deadlines: there are consequences for a failure to attain them in a timely manner.", "If a CO 2 or GHG NAAQS were set by EPA, the next step would be to identify nonattainment areas (i.e., areas where ambient concentrations of CO 2 and/or other GHGs exceed the NAAQS). The procedure for doing so is specified under Section 107 of the Act. For the six current criteria pollutants, there are distinct local and regional concentrations of each pollutant that can generally be linked to stationary or mobile sources in the area. In some cases, the sources may be relatively distant, with pollutants (or precursors) emitted hundreds of miles away. But with all of the current criteria pollutants, there are significant variations in local and regional concentrations, and only those areas with pollutant readings higher than the NAAQS are designated \"nonattainment.\"\nFor CO 2 , this would not be the case. Concentrations are relatively homogeneous across the entire country—indeed, across the world. Thus, the entire United States would need to be designated nonattainment if concentrations exceeded the standard.", "A third element of NAAQS that appears ill-suited to the regulation of GHGs is the mechanism used to bring about compliance with NAAQS, the State Implementation Plan (SIP) provisions in Section 110 and Sections 171-179B. SIPs describe the sources of pollution in a nonattainment area and the methods that will be used by the area to reduce emissions sufficiently to attain the standard. They are required to be developed and submitted to EPA for each nonattainment area within three years of its designation.\nSIPs build on some national standards (for new motor vehicles and new or modified power plants, for example), but they assume that most sources of the pollution to be controlled are local, and therefore, that the measures needed to reach attainment are measures tailored to local conditions. To the extent that significant emission sources are located in other states, downwind states are authorized under Section 126 to petition EPA for controls on such upwind sources.\nIf pollution is uniform throughout the country, there is no reason why the measures taken to reduce it should vary from locality to locality. Nor will a nonattainment area be able to demonstrate that its pollution control measures will have any measurable impact on the ambient concentration of most greenhouse gases. Thus, State Implementation Plans tailored to each nonattainment area would be ill-suited to the nature of the problem.", "It is also unlikely that any state or nonattainment area on its own could demonstrate reasonable further progress toward attainment of the standard (as is required by Section 172), particularly within the 5- to10-year period specified in Section 172 for attainment of a NAAQS. Greenhouse gases accumulate in the atmosphere, and some can take hundreds of years to diminish, even if current global emissions decline. Global emissions are increasing. Individual states and nonattainment areas would have little chance of reversing this trend through any set of actions they might undertake on their own.\nDespite all of these difficulties, two groups (the Center for Biological Diversity and 350.org) petitioned EPA on December 2, 2009, to designate carbon dioxide a criteria air pollutant and set a NAAQS for it at no greater than 350 ppm. They further requested that EPA designate six other greenhouse gases as criteria pollutants and establish pollution caps for them \"at science-based levels.\"", "", "As revised by the 1990 CAA amendments, Section 112 contains four major provisions: Maximum Achievable Control Technology (MACT) requirements for major sources; health-based standards to be imposed for the residual risks remaining after imposition of MACT standards; standards for stationary \"area sources\" (small, but numerous sources, such as gas stations or dry cleaners, that collectively emit significant quantities of hazardous pollutants); and requirements for the prevention of catastrophic releases. The MACT and area source provisions would appear to be the most relevant, if GHGs were to be controlled under this section.\nThe MACT provisions require EPA to set standards for sources of the listed pollutants that achieve \"the maximum degree of reduction in emissions\" taking into account cost and other non-air-quality factors. MACT standards for new sources \"shall not be less stringent than the most stringent emissions level that is achieved in practice by the best controlled similar source.\" The standards for existing sources may be less stringent than those for new sources, but generally must be no less stringent than the average emission limitations achieved by the best performing 12% of existing sources. Existing sources are given three years following promulgation of standards to achieve compliance, with a possible one-year extension; additional extensions may be available for special circumstances or for certain categories of sources.\nIn addition to the technology-based standards for major sources of hazardous air pollution, Section 112 requires EPA to establish standards for stationary \"area sources\" (small, but numerous, sources such as gas stations or dry cleaners, that collectively emit significant quantities of hazardous air pollutants). In setting these standards, EPA can impose less stringent \"generally available\" control technologies, rather than MACT.", "Could EPA regulate GHG emissions as hazardous air pollutants under Section 112? In its comments on the ANPR, the Bush Administration's Department of Energy stated that \"... it is widely acknowledged that a positive endangerment finding could lead to ... the listing of one or more greenhouse gases as hazardous air pollutants (HAP) under section 112.\" EPA, on the other hand, was more circumspect in its analysis, stating:\nThe effects and findings described in section 112 are different from other sections of the CAA addressing endangerment of public health discussed in previous sections of today's notice. Given the nature of the effects identified in section 112(b)(2), we request comment on whether the health and environmental effects attributable to GHG fall within the scope of this section.\nThe language of Section 112 refers to pollutants that may present a threat of adverse human health effects or adverse environmental effects. This language might be broad enough that GHGs could be categorized as hazardous air pollutants and subjected to the regulatory tools provided by the section, but because the section was written to apply to carcinogenic and other toxic air pollutants present in emissions in small quantities, there would be questions as to whether Congress intended the use of the section's authority for pollutants such as GHGs. The legislative history of the Act makes clear that it was designed primarily to regulate pollutants commonly referred to as \"air toxics.\" Hazardous air pollutants are defined as \"any pollutant listed pursuant to subsection [112](b).\" Congress provided an initial list of 189 hazardous air pollutants in that subsection, and it established criteria and procedures for revising the list in Section 112(b)(2). In the 18 years since the criteria were established, EPA has not added any substances to the list.\nThe procedures for revising the list provide that the Administrator may do so \"by rule,\" adding pollutants that may present, through inhalation or other routes of exposure, a threat of adverse human health effects, or, through a variety of routes of exposure, adverse environmental effects. The human health effects language is qualified with wording that suggests the type of pollutants Congress had in mind when it drafted this section: substances that include, but are not limited to, ones known or reasonably anticipated to be carcinogenic, mutagenic, teratogenic, neurotoxic, acutely or chronically toxic, or which cause reproductive dysfunction.\nThe section is also not well-suited to the most common GHGs, such as CO 2 , that are emitted in very large quantities. For example, it defines a major source as one that emits 10 tons per year or more of any hazardous air pollutant. Annual CO 2 emissions in the United States are about 6 billion metric tons, and hundreds of thousands, perhaps millions of sources (including large residential structures) might qualify as major sources if CO 2 were listed as a hazardous air pollutant under this section.\nSection 112 might be useful, if at all, for regulating small volume chemicals that are very potent greenhouse gases: sulfur hexafluoride (SF 6 ), for example. SF 6 has a global warming potential 22,800 times as great as CO 2 and accounted for about one-quarter of one percent of total U.S. GHG emissions in 2007, when measured by its global warming potential. SF 6 emissions were 16.5 million metric tons of CO 2 -equivalent in that year. Actual emissions expressed as SF 6 , however, were only 690 metric tons. Nitrogen trifluoride (NF 3 ), another chemical with low emission levels but high global warming potential, might be another candidate, if EPA chose this regulatory route. Section 112 generally considers a major source of emissions to be one that emits more than 10 tons per year of a hazardous air pollutant, and it allows the Administrator to establish a lesser quantity as the major source threshold, based on the potency of the air pollutant or other relevant factors.\nOnce the source categories for hazardous air pollutants are identified, Section 112 establishes a presumption in favor of regulation of the designated pollutants; it requires regulation unless EPA or a petitioner is able to show \"that there is adequate data on the health and environmental effects of the substance to determine that emissions, ambient concentrations, bioaccumulation or deposition of the substance may not reasonably be anticipated to cause any adverse effects to human health or adverse environmental effects.\"", "Given the difficulties in following the first two paths, much of the attention, including EPA's, has been on the third path. The term \"designated pollutant\" is a catch-all phrase for any air pollutant that isn't either a criteria air pollutant under Section 108 or a toxic air pollutant under Section 112. Examples of these include fluorides from phosphate fertilizer manufacturing or primary aluminum reduction, or sulfuric acid mist from sulfuric acid plants.", "The authority to regulate such pollutants is Section 111. Section 111 establishes New Source Performance Standards (NSPS), which are emission limitations imposed on designated categories of major new (or substantially modified) stationary sources of air pollution. A new source is subject to NSPS regardless of its location or ambient air conditions.\nSection 111 provides authority for EPA to impose performance standards on stationary sources—directly in the case of new (or modified) sources, and through the states in the case of existing sources (Section 111(d)). The authority to impose performance standards on new and modified sources refers to any category of sources that the Administrator judges \"causes, or contributes significantly to, air pollution which may reasonably be anticipated to endanger public health or welfare\" (Sec. 111(b)(1)(A)). In establishing these standards, the Administrator has the flexibility to \"distinguish among classes, types, and sizes within categories of new sources\" (Sec. 111(b)(2)).\nThe performance standards themselves are to reflect \"the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reduction and any nonair quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated\" (Sec. 111(a)(1)). Both the Administrator and the individual states have the authority to enforce the NSPS.", "Section 111 appears to provide a strong basis for EPA to establish a traditional regulatory approach to controlling greenhouse gas emissions from large stationary sources. As noted, the section gives EPA considerable flexibility with respect to the source categories regulated, the size of the sources regulated, the particular greenhouse gases regulated, along with the timing and phasing in of regulations. This flexibility extends to the stringency of the regulations with respect to costs, and secondary effects, such as nonair quality, heath and environmental impacts, along with energy requirements. This flexibility is encompassed within the Administrator's authority to determine what control systems she determines have been \"adequately demonstrated.\" As discussed later, this determination has been used to authorize control regimes that extended beyond the merely commercially available to those technologies that have only been demonstrated, and thus are considered by many to have been \"technology-forcing.\"\nIn sum, Section 111 has several advantages in considering greenhouse gas controls including that it (1) has flexibility with respect to the size of the source controlled (Section 111(b)(2)), (2) can prioritize its schedule of performance standards (Section 111(f)(2)), (3) can consider costs and other factors in making determinations, and (4) has discretion with respect to determining technology that has been adequately demonstrated. Essentially, using Section 111, EPA can determine who gets controlled, when they get controlled, how much they get controlled, and at what price.", "", "On the face of it, Section 115 would appear the ideal provision to address the global issue of climate change. It is focused on international problems and has unique international triggers. Specifically, Section 115 could be invoked by EPA on one of two bases.\nFirst, EPA could act if it receives reports, surveys, or studies from \"any duly constituted international agency\" that gives EPA:\nreason to believe that any air pollutant or pollutants emitted in the United States cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare in a foreign country….\nUnlike the endangerment triggers under other sections of the Act, the endangerment finding under Section 115 refers to international effects based on data from internationally recognized sources. Many would argue that reports by the Intergovernmental Panel on Climate Change (IPCC) would fit this requirement. A United Nations body, created by the World Meteorological Organization and United Nations Environment Programme, the group and its results are referenced by EPA in its ANPR and its endangerment finding under Section 202, announced December 7, 2009.\nSecond, in addition to a unique international endangerment trigger, Section 115 can be invoked without any EPA endangerment finding at all. Specifically, EPA is directed to act \"whenever the Secretary of State requests him to do so with respect to such pollution [that endangers public health or welfare in a foreign country] which the Secretary of State alleges is of such a nature.…\" (Section 115(a)). Thus, an allegation by the Secretary of State is sufficient cause for EPA to act.\nThe action called for under Section 115 is implemented through Section 110(a)(2)(H)(ii) that requires states to revise their SIPs to prevent or eliminate the endangerment identified. Apparently, based on this reference to SIPs, EPA states in its ANPR that Section 115 could only be exercised if EPA were to promulgate a NAAQS for greenhouse gases. However, this is arguable. Section 110(a)(2)(H)(ii) states that SIPs must be crafted to provide for revisions:\n…whenever the Administrator finds on the basis of information available to the Administrator that the plan is substantially inadequate to attain the national ambient air quality standard which it implements or to otherwise comply with any additional requirements established under this Act . [emphasis added]\nIn their article arguing in favor of using Section 115 to address climate change, Martella and Paulson state their opposition to EPA's blanket assertion that a greenhouse gas NAAQS would be necessary to invoke Section 115:\n… based on the plain language of the statute, however, this is unlikely to have been what Congress intended. Section 115 is not in any way limited to criteria pollutants. In fact, the opposite is true. It applies specifically to \"any air pollution.\" Clean Air Act Section 110(a)(2)(H)(ii) makes it clear that SIP must provide for the revision of the plan not only when the plan is inadequate to attain a NAAQS, but also to otherwise comply with any additional requirements, such as a revision required by Section 115. [footnotes omitted]\nThe above actions are prefaced on a condition of reciprocity; Section 115 applies \"only to a foreign country which the Administrator determines has given the United States essentially the same rights with respect to the prevention or control of air pollution occurring in that country as is given that country by this section.\" (Section 115(c)) EPA notes in its ANPR that reciprocity with one or more affected countries may be sufficient to trigger Section 115. Many countries currently attempting to comply with the Kyoto Protocol, such as the European Union, could argue that their efforts to reduce greenhouse gases are being hindered by absent or inadequate U.S. controls. Such countries could argue they meet the criteria under Section 115(c) with respect to reciprocity and point to international studies supporting their position. Secondly, countries at substantial risk from climate change, such as low-lying island countries, could argue endangerment from the lack of U.S. action. Thirdly, countries that only contribute a de minim i s level of emissions, such as virtually all of Africa, could argue that their low emissions meet the criterion for U.S. action.\nSubject to the limitations of the SIP process, EPA notes that Section 115 would provide it with some flexibility in program design. Martella and Paulson take a much more expansive view of the flexibility available, arguing:\nWhile designating SIPs as the implementation vehicle, Section 115 otherwise does not impose strictures on the contours and requirements of any prospective program(s) to reduce greenhouse gas emissions…. A Section 115-based program could therefore include model thresholds and source categories set by EPA, similar to the Northeast Ozone Transport.\nAdditionally, EPA could develop a holistic model plan to be implemented by the states. Multiple model approaches also could be presented to the states allowing each state to pick the most appropriate solution for its particular mix of greenhouse gas sources….\nAdditionally, Section 115 provides a mechanism to limit the scope of the program in terms of the sources….\nBecause EPA asserts that invoking Section 115 would require a greenhouse gas NAAQS, the action would also invoke NSR under Part C and Title V permitting requirements. One of Martella and Paulson's primary arguments in favor of Section 115 is their belief that Section 115's unique endangerment requirements (or no endangerment requirement if the Secretary of State alleges endangerment) should not trigger PSD-NSR or Title V permitting requirements.\nFinally, it should be noted that Section 115 has never been implemented, and many countries would prefer a negotiated settlement on climate change, rather than this approach.", "Added to the Clean Air Act in 1990, Title VI is the country's implementing legislation for the Montreal Protocol and succeeding agreements to address ozone depletion by human-made substances. Some of the substances that deplete the ozone layer also contribute to climate change (e.g., CFCs, HCFCs). In addition, some substances chosen as substitutes for ozone depleting chemicals are themselves greenhouse gases (e.g., HFC-134a, PFCs). Finally, the process of making acceptable substitutes for more powerful ozone-depleting chemicals (e.g., HCFC-22) produces greenhouse gases as a byproduct of production (e.g., HFC-23).\nBeyond these chemical relationships, there is continuing research on the atmospheric relationship between the stratosphere (and the ozone layer) and climate change.\nThere are two provisions of Title VI that could be used to address greenhouse gas emission under certain conditions. They are discussed below.", "As noted above, some substitutes for ozone-depleting substances are greenhouse gases, such as HFCs and PFCs. Section 612 authorizes EPA to the maximum extent practicable, to identify substitutes for ozone-depleting chemicals that reduce overall risks to human health and the environment. Specifically, Section 612(c) requires the EPA to make it unlawful to replace an ozone-depleting substance with any substitute substance which EPA determines \"may present adverse effects to human health or the environment\" where EPA has identified an available, less harmful substitute. The resulting program is called the Significant New Alternatives Policy (SNAP). With appropriate substitutes identified, SNAP could be used to reduce emissions of HFCs and PFCs without invoking any other provisions of the CAA.", "Like Section 115, Section 615 is potentially a powerful mechanism to control greenhouse gas emissions under certain circumstances. Like Section 115, it has a unique endangerment finding requirement and even broader discretionary authority for EPA to respond. Section 615 states:\nIf, in the Administrator's judgment, any substance, practice, process, or activity may reasonably be anticipated to affect the stratosphere, especially ozone in the stratosphere, and such effect may reasonably be anticipated to endanger public health or welfare, the Administrator shall promptly promulgate regulations respecting the control of such substance, practice, process or activity, and shall submit notice of the proposal and promulgation of such regulation to the Congress.\nInvoking Section 615 in the case of greenhouse gases would involve a two-part judgment by the EPA: First, that greenhouse gases may reasonably be anticipated to affect the stratosphere (particularly the ozone layer) and, second, that the effect on the stratosphere may reasonably be anticipated to endanger public health or welfare. In its ANPR, EPA determined that it was beyond the scope of its ANPR to assess and analyze the available scientific information on the effects of greenhouse gases on the stratosphere.\nIf EPA were to judge the scientific data adequate to meet the two-part test, the authority available would be broad and deep. As stated by EPA in its ANPR: \"... depending on the nature of any finding made, section 615 authority may be broad enough to establish a cap-and-trade program for the substance, practice, process or activity covered by the finding.... \"", "In its Technical Support Document for its ANPR, EPA took a narrow view of the alternatives available to it in imposing greenhouse gas performance standards. For existing electric generating sources, the EPA focused on incremental improvements in the heat rates of existing units through options that \"are well known in the industry\" with an overall improvement in efficiency likely to be less than 5%. For new electric generating sources, EPA noted the availability of more efficient supercritical coal units, the future availability of ultra-supercritical units, and the possibility of limited biomass co-firing.\nContinuing along this line of reasoning, EPA also suggested that it could develop regulations that anticipate future technology. For example, a phase-in approach to applying CO 2 standards to powerplants would be to mandate that \"carbon-ready\" generating technology be required for new construction. The objective would be to anticipate the widespread need for some form of carbon capture technology in the future by preparing for it with compatible fossil-fuel combustion technology now. The technology most discussed is integrated-gasification, combined-cycle (IGCC). As noted earlier, EPA is considering this option with respect to the Desert Rock PSD-NSR permit reconsideration. With respect to some of the carbon capture technology under development, IGCC has certain advantages over pulverized coal technology. However, just how much IGCC is \"carbon ready\" is subject to debate. EPA states in its ANPR that it believes such a staged approach is available to it under section 111:\nEPA believes that section 111 may be used to set both single-phase performance standards based upon current technology and to set two-phased or multi-phased standards with more stringent limits in future years. Future-year limits may permissibly be based on technologies that, at the time of the rulemaking, we find adequately demonstrated to be available for use at some specified future date.\nThe technical support document does not mention some more aggressive options. These include a fuel-neutral standard or a technology-based standard. For example, for carbon dioxide emissions from a newly-constructed powerplant, a fuel-neutral standard could follow the example set by the 1997 and 2005 NOx NSPS and the 2005 NOx NSPS for modified existing sources. Under those regulations, the NOx emissions standard is the same, regardless of the fuel burned—solid, liquid, or gaseous. This standard is much more expensive for coal-fired facilities to comply with than for natural-gas-fired facilities, thus encouraging the lower-carbon gas-fired technologies. Likewise, EPA could choose to set a newly-constructed powerplant standard based on the performance of natural gas burned in a combined-cycle configuration – the fuel and technology of choice for construction of new powerplants for the last two decades. If EPA wanted to encourage the rollover of the existing coal-fired powerplant fleet to natural gas, nuclear, or renewable sources, it could apply a fuel-neutral standard to modified sources as well. For example, a CO 2 emission standard of 0.8 lb. per kilowatt-hour output could be met by a new natural gas-fired, combined-cycle facility, as well as any non-emitting generating technology, such as nuclear power or renewables. In contrast, the standard would require a 60% reduction in emissions from a new coal-fired facility – forcing the development of a carbon control technology, such as carbon capture and storage (CCS), in order for a new coal-fired facility to be built or modified.\nThe viability of these options, or even more aggressive technology-forcing standards, would depend on how EPA determined whether a technology had been \"adequately-demonstrated\" and the seriousness of its costs and energy requirements. As discussed below, EPA has used the NSPS to encourage the installation of pollution control equipment on powerplants, even while the equipment's development status was still being debated.", "It is an understatement to say that the new source performance standards promulgated by the EPA were technology-forcing. Electric utilities went from having no scrubbers on their generating units to incorporating very complex chemical processes. Chemical plants and refineries had scrubbing systems that were a few feet in diameter, but not the 30- to 40-foot diameters required by the utility industry. Utilities had dealt with hot flue gases, but not with saturated flue gases that contained all sorts of contaminants. Industry, and the US EPA, has always looked upon new source performance standards as technology-forcing, because they force the development of new technologies in order to satisfy emissions requirements.\nThe most direct method to encourage adoption of carbon capture technology would be to mandate it. Mandating a performance standard on stationary sources is not a new idea: The process of forcing the development of emission controls on coal-fired powerplants is illustrated by the 1971 and 1978 SO 2 NSPS for coal-fired electric generating plants. As noted earlier, the Clean Air Act states that NSPS should reflect \"the degree of emission limitation achievable through the application of the best system of emission reduction which (taking into account the cost of achieving such reductions and any non-air quality health and environmental impact and energy requirements) the Administrator determines has been adequately demonstrated.\" In promulgating its first utility SO 2 NSPS in 1971, EPA determined that a 1.2 pound of SO 2 per million Btu of heat input performance standard met the criteria of Sec. 111—a standard that required, on average, a 70% reduction in new powerplant emissions, and could be met by low-sulfur coal that was available in both the eastern and western parts of the United States, or by the use of emerging flue gas desulfurization (FGD) devices.\nAt the time the 1971 Utility SO 2 NSPS was promulgated, there was only one FGD vendor (Combustion Engineering) and only three commercial FGD units in operation—one of which would be retired by the end of the year. The number of units and vendors would increase rapidly, not only because of the NSPS, but also because of the promulgation of the SO 2 NAAQS, the 1973 Supreme Court decision preventing significant deterioration of pristine areas, and state requirements for stringent SO 2 controls, which opened up a market for retrofits of existing coal-fired facilities in addition to the NSPS focus on new facilities. Indeed, most of the growth in FGD installations during the early and mid-1970s was in retrofits. Taylor estimates that between 1973 and 1976, 72% of the FGD market was in retrofits. By 1977, there were 14 vendors offering full-scale commercial FGD installation.\nHowever, despite this growth, only 10% of the new coal-fired facilities constructed between 1973 and 1976 had FGD installations. In addition, the early performance of these devices was not brilliant. In 1974, American Electric Power (AEP) spearheaded an ad campaign to have EPA reject FGD devices as \"too unreliable, too impractical for electric utility use\" in favor of tall stacks, supplementary controls, and low-sulfur western coal. This effort was ultimately unsuccessful as the Congress chose to modify the NSPS requirements for coal-fired electric generators in 1977 by adding a \"percentage reduction\" requirement. As promulgated in 1979, the revised SO 2 NSPS retained the 1971 performance standard but added a requirement for a 70%-90% reduction in emissions, depending on the sulfur content of the coal. At the time, this requirement could be met only through use of an FGD device. The effect of the \"scrubber requirement\" is clear from the data provided in Figure 1 . Based on their analysis of FGD development, Taylor, Rubin, and Hounshell state the importance of demand-pull instruments:\nResults indicate that: regulation and the anticipation of regulation stimulate invention; technology-push instruments appear to be less effective at prompting invention than demand-pull instruments; and regulatory stringency focuses inventive activity along certain technology pathways.\nThat government policy could force the development of a technology through creating a market should not suggest that the government was limited to that role, or that the process was smooth or seamless. On the latter point, Shattuck, et al., summarize the early years of FGD development as follows:\nThe Standards of Performance for New Sources are technology-forcing, and for the utility industry they forced the development of a technology that had never been installed on facilities the size of utility plants. That technology had to be developed, and a number of installations completed in a short period of time. The US EPA continued to force technology through the promulgation of successive regulations. The development of the equipment was not an easy process. What may have appeared to be the simple application of an equipment item from one industry to another often turned out to be fraught with unforeseen challenges.\nThe example indicates that technology-forcing regulations can be effective in pulling technology into the market—even when there remain some operational difficulties for that technology. The difference for carbon capture technology is that for long-term widespread development, a new infrastructure of pipelines and storage sites may be necessary in addition to effective carbon capture technology. In the short-term, suitable alternatives, such as enhanced oil recovery needs and in-situ geologic storage, may be available to support early commercialization projects without the need for an integrated transport and storage system. Likewise, with economics more favorable for new facilities than for retrofits, concentrating on using new construction to introduce carbon capture technology might be one path to widespread commercialization. As an entry point to carbon capture deployment, a regulatory approach such as NSPS may represent a first step, as suggested by the SO 2 NSPS example above.", "Whether EPA can set up a cap-and-trade program under the Clean Air Act is the subject of considerable debate in the literature. Much of the debate surrounds the provisions of Section 111(d). However, there are other authorities in the Act that might serve as a basis for a EPA-coordinated cap-and-trade program.", "EPA, along with other commenters, has linked the potential effectiveness of Section 111(d) to whether it can be interpreted to allow a cap-and-trade program for CO 2 . As stated by EPA: \"EPA also believes that because of the potential cost savings, it might be possible for the Agency to consider deeper reductions through a cap-and-trade program that allowed trading among sources in various source categories relative to other systems of emissions reduction.\" As noted, Section 111 explicitly allows EPA to take cost into consideration in developing performance standards. Whether that consideration could justify a trading program across different greenhouse gases, and across different source categories with different best available systems of emissions reduction is not known. A lead author of the winning brief in Massachusetts v. EPA makes a case against such authority:\nNumerous parties have argued that section 111 does not authorize the creation of a cap-and-trade program. Among other things, section 111(h) provides a contingency plan in the event performance standards are \"not feasible\" to implement. In that case, section 111(h) gives EPA the authority to \"promulgate a design, equipment, work practice, or operational standard, or combination thereof, which reflects the best technological system of continuous emissions reduction which … the Administrator determines has been adequately demonstrated.\" 42 U.S.C. Section 7411(h)(1). One of the ways a performance standard might prove \"not feasible\" is if \"a pollutant or pollutants cannot be emitted through a conveyance designed and constructed to emit or capture such pollutants.\" 42 U.S.C. 7411(h)(2)(A). Clearly, Congress thought the most likely scenario under section 111 was for pollutants to be \"emitted through a conveyance designed and constructed to emit or capture such pollutant[s]\" – an assumption at odds with the operation of a trading program. Other aspects of section 111 also point away from the creation of a trading program under this provision [reference omitted].\nIn sum, whether this authority can be expanded to creating a comprehensive cap-and-trade program is under debate. Focused on existing sources, EPA used Sec. 111(d) to justify its promulgated rule (now vacated) to reduce mercury emissions from powerplants. Although some have argued that the court decision in this case repudiated EPA's reasoning, the case was actually not decided on the basis of Section 111(d).", "Three other sections of the Act, (Sections 110, 115, and 615) might also be considered as possible authority for establishing an economy-wide cap-and-trade program for GHG emissions, although each has its own weaknesses. Section 110 of the Act establishes requirements for State Implementation Plans (SIPs). While primarily designed to demonstrate how a state with nonattainment areas will bring those areas into attainment with NAAQS, the section also contains language that might serve as the basis for the use of broader GHG regulatory tools once emission standards were issued under any section of the Act. Specifically, Section 110(a)(2)(A) says that each SIP shall\n... include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules and timetables for compliance, as may be necessary or appropriate to meet the applicable requirements of this Act ....\nThe predicate is that there must first be an applicable requirement under the Act. Thus, Section 110 would not be an authority that EPA could use to initiate regulation of GHGs. Also, although the section mentions economic incentives, marketable permits, and auctions, it is not clear that such authority could be used for economy-wide control measures. The precedents for the authority's use that EPA cited in the ANPR, for example, included such regulations as the NOx SIP call, which established a cap-and-trade program for powerplant emissions of NOx, and the Clean Air Interstate Rule, which also allowed trading of emission allowances by powerplants.\nAs stated in the ANPR:\nEPA has often incorporated market-oriented emissions trading elements into the more traditional performance standard approach for mobile and stationary sources. Coupling market-oriented provisions with performance standards provides some of the cost advantages and market flexibility of market-oriented solutions while also directly incentivizing technology innovation within the particular sector, as discussed below. For example, performance standards for mobile sources under Title II have for many years been coupled with averaging, banking and trading provisions within a subsector. In general, averaging allows covered parties to meet their emissions obligation on a fleet- or unit-wide basis rather than requiring each vehicle or unit to directly comply. Banking provides direct incentives for additional reductions by giving credit for overcompliance; these credits can be used toward future compliance obligations and, as such, allow manufacturers to put technology improvements in place when they are ready for market, rather than being forced to adhere to a strict regulatory schedule that may or may not conform to industry or company developments. Allowing trading of excess emission reductions with other covered parties provides an incentive for reducing emissions beyond what is required.\nThe two other possible authorities for a cap-and-trade program, Sections 115 and Section 615, have never been used to control any pollutant, much less to establish a cap-and-trade program. Assuming Section 115 could be invoked without a supporting NAAQS, there might be sufficient flexibility to institute a cap-and-trade program. The program would have to be created by each state under Section 110 to comply with EPA-determined state GHG emission caps in response to Section 115. Because it would function through Section 110, EPA could not impose a cap-and-trade system on the states; rather, the states would have to voluntarily agree to cooperate in a EPA-coordinated cap-and-trade scheme.\nAs noted earlier, if Section 615 could be successfully triggered by the science, EPA's discretion in setting up a regulatory scheme would be substantial. As stated by EPA in its ANPR: \"... depending on the nature of any finding made, section 615 authority may be broad enough to establish a cap-and-trade program for the substance, practice, process or activity covered by the finding.... \"", "", "Any new or modified facility emitting (or potentially emitting) over 250 tons of any regulated pollutant must undergo preconstruction review and permitting, including the installation of Best Available Control Technology (BACT), except those pollutants regulated under Sections 112 (hazardous air pollutants) and 211(o) (renewable fuels). New sources under the Prevention of Significant Deterioration provisions of Part C (PSD-NSR) must undergo preconstruction review and must install BACT as the minimum level of control. State permitting agencies determine BACT on a case-by-case basis, taking into account energy, environmental, and economic impacts. BACT cannot be less stringent than the federal NSPS, but it can be more so. More stringent controls can be required if modeling indicates that BACT is insufficient to avoid violating PSD emission limitations, or the NAAQS itself.\nPSD-NSR is required for any pollutant \"subject to regulation\" under the Clean Air Act, but there are varying interpretations of what the phrase \"subject to regulation\" means. Environmental groups have argued that CO 2 is already subject to regulation because utilities are required under Section 821 of the Clean Air Act Amendments of 1990 to monitor and report CO 2 emissions to EPA. Others argue that an endangerment finding would make GHGs subject to regulation, and, therefore, trigger PSD-NSR requirements for new sources. In its endangerment finding and in the preamble to the proposed Greenhouse Gas Tailoring Rule, EPA noted its current interpretation of the law is that a final positive endangerment finding for motor vehicles under Section 202 would not per se make greenhouse gas emissions subject to PSD-NSR. Rather, as stated in a September 30, 2009 proposal, \"Although several possible triggering events may be considered ..., the latest of these events would be the one that applies under EPA's current interpretation: a nationwide rule controlling or limiting GHG emissions.\" However, the interpretive memorandum on which this conclusion is based, issued in December 2008, is currently under review by the new Administration.", "Two aspects of the New Source Review provision create potential difficulties in using the CAA to control greenhouse gases. First, as noted earlier, PSD-NSR has specified thresholds for triggering its provisions: a \"major emitting facility is generally defined as emitting or having the potential to emit either 100 tons or 250 tons annually of a regulated pollutant (Sec. 169(1)). With respect to greenhouse gases, this is a fairly low threshold. By comparison, several bills introduced in the 110 th Congress set thresholds for inclusion in the reduction program at 10,000 metric tons annually, and the Waxman-Markey bill ( H.R. 2454 ) generally uses 25,000 tons as a regulatory threshold.\nThe second administrative issue for PSD-NSR is the requirement that BACT be determined on a case-by-case basis. Combined with a 100-ton or 250-ton threshold, this could mean a massive increase in state-determinations of BACT: the resulting increased permit activity would be at least two orders of magnitude, according to EPA (discussed below).\nOn this second issue, it should be noted that several commenters believe this would not be a major problem (unless a cap-and-trade program is implemented). As stated by the Institute for Policy Integrity:\nSince including GHGs in the PSD program may greatly expand the number of permits issued, making case-by-case determinations for each individual source may stretch the resources of EPA and state permitting authorities. Moreover, traditional technological controls may not exist for every GHG emitted by every regulated facility. However, there is flexibility in the statute to resolve these problems.\nThough BACT determinations are generally to be made on a case-by-case basis, the D.C. Circuit recognized in Alabama Power that exceptions can be made if \"case-by-case determinations would, as a practical matter, prevent the agency from carrying out the mission assigned to it by Congress.\" The development of \"presumptive BACT\" determinations should be permissible and may help streamline the permitting process [footnote omitted].\"\nIn addition, assuming PSD is triggered by regulation under Section 111, the BACT requirements may be identical to the NSPS determinations under Section 111. It is also likely that most small sources would not have an NSPS as EPA applied its discretion under Section 111 in determining the most cost-effective emissions reductions. With no NSPS floor for a BACT determination, it is possible that NSR requirements for sources not covered under Section 111 could be quite lax.\nIn addition, EPA has proposed to address the threshold problem in a Greenhouse Gas Tailoring Rule. The proposal would set a 25,000-ton CO 2 -equivalent threshold for new source permitting under the PSD-NSR program, and would establish a significance level for determining major modifications of 10,000-25,000 tons of increased annual emissions.", "In the ANPR, EPA discussed the possibility that an endangerment finding and subsequent regulation of GHGs as air pollutants under any section of the Act could trigger Title V permit requirements, and that all facilities that have the potential to emit a GHG pollutant in amounts of 100 tons per year or more would be required to obtain permits. Under this reasoning, the regulation of CO 2 from motor vehicles under Section 202, for example, could lead to Title V permit requirements for CO 2 from powerplants and other sources. In the ANPR, the agency stated:\nUsing available data, which we acknowledge are limited, and engineering judgment in a manner similar to what was done for PSD, EPA estimates that more than 550,000 additional sources would require Title V permits, as compared to the current universe of about 15,000–16,000 Title V sources. If actually implemented, this would be more than a tenfold increase, and many of the newly subject sources would be in categories not traditionally regulated by Title V, such as large residential and commercial buildings.\nIn the preamble to its September 30, 2009 Tailoring Rule, EPA increased its estimate to more than 6 million sources potentially subject to Title V if the threshold remains at 100 tons per year of emissions.\nThus, like PSD-NSR, a major complication that Title V introduces is the potential for very small sources of greenhouse gases to need permits in order to operate. Furthermore, Title V requires that covered entities pay fees established by the permitting authority, and that the total fees be sufficient to cover the costs of running the permit program.\nThe potential for increased permitting activity has led to speculation on its potential extent. For example, some agricultural interests have spun the possibility that Title V could be invoked for emissions from agricultural activities and the requirement for permit fees into something they refer to as the \"cow tax.\" On November 18, 2008, for example, Cattle Network stated \"EPA Proposes 'Cow Tax.'\" The article even generated specific amounts for the \"tax\": $175 per dairy cow and $87.50 per beef cow. EPA says that it has no plans to regulate agricultural activities' GHG emissions. Indeed, the agency currently exempts most major agricultural sources from any Clean Air Act controls on conventional air pollutants under an arrangement known as the Air Compliance Agreement. Thus, it would seem unlikely that the agency would now make a priority of subjecting small agricultural sources to GHG requirements.\nHowever, the need to deal with the size issue has been noted by EPA and other commenters. Alternatives to lessen the extent and cost of these provisions fall into three categories: (1) legal or regulatory interpretations that increase EPA's flexibility to determine what sources would need permits and when; (2) the expanded use of general permits; or (3) interpretation of different endangerment findings to exclude Title V and/or PSD-NSR.", "EPA noted two possible legal theories under which it could avoid imposing PSD-NSR or Title V permitting requirements on small sources. Under \"the judicial doctrine of administrative necessity,\" the agency stated that it might be able \"to craft relief in the form of narrowed source coverage, exemptions, streamlined approaches or procedures, or a delay of deadlines.\" The agency also stated that in rare cases, the courts will apply statutory provisions in a manner other than that indicated by the plain meaning, if \"absurd, futile, strange, or indeterminate results\" would be produced by literal application.\nFollowing up on these interpretations, EPA proposed a Title V and PSD-NSR permitting threshold of 25,000 tons per year of CO 2 -equivalents (CO 2 -e) on September 30, 2009. The preamble to the rule states:\nThis proposal is necessary because EPA expects soon to promulgate regulations under the CAA to control GHG emissions and, as a result, trigger PSD and title V applicability requirements for GHG emissions. If PSD and title V requirements apply at the applicability levels provided under the CAA, state permitting authorities would be paralyzed by permit applications in numbers that are orders of magnitude greater than their current administrative resources could accommodate. On the basis of the legal doctrines of \"absurd results\" and \"administrative necessity,\" this proposed rule would phase in the applicability thresholds for both the PSD and title V programs for sources of GHG emissions.\nWhile setting a new threshold for permitting, the proposal does not exempt smaller sources. Rather, the agency and state-permitting authorities, within five years of the rule's promulgation, would conduct a study of the permitting authorities' ability to administer the programs going forward and, within a year of the study's completion, would conduct a rulemaking for the second phase of the program. The study might confirm the threshold, revise it, or establish other streamlining techniques for subsequent permitting activity.\nWhere EPA has the authority, such as under Section 111, it will almost certainly focus on the large sources first. As noted in the introduction, when it comes to stationary sources, size matters. Twenty-eight percent of the country's GHGs comes from an Energy Information Administration (EIA) estimated 670 coal-fired electric powerplants. Farms, by contrast, number more than 2 million, and emit less than 4% of total GHGs. Methane (CH 4 ) provides another interesting contrast in potential priorities: about 1.8% of GHG emissions, in the form of methane, are generated by 1,800 landfills; a slightly larger amount (2.4%) is emitted by roughly a million cattle and swine operations. As stated by the Institute for Policy Integrity:\nCourts grant agencies much more leeway in deferring full implementation of a statute than in creating permanent exemptions. Invoking the doctrine of administrative necessity, EPA should be able to justify expanding NSR permit applicability to the largest sources first, and then gradually including smaller sources. The timeline set for phasing in smaller sources could not take longer than reasonably necessary given EPA's administrative burdens, but EPA will have a good deal of discretion to determine its own resources and capability [footnotes omitted].\nA second means of reducing the administrative burden is to increase the effective size of an affected source by defining \"potential to emit\" in terms of potential actual emissions. In particular, EPA suggested in its ANPR that determining the potential to emit in terms of actual usage instead of maximum potential could have some benefit in some cases. For example, if a small boiler's potential to emit was based on actual usage of 1000 hours a year, instead of continuous potential usage (8760 hours), many fewer boilers would be subject to NSR.", "Perhaps the most straightforward method of reducing administrative burden is for EPA to adopt a general permit scheme for PSD-NSR and Title V. For categories with numerous similar sources of emissions, the Clean Air Act provides in Section 504(d) that the permitting authority—be it EPA or a delegated state agency—may issue a \"general permit\" covering all sources in the category. This provision substantially reduces the administrative burden of issuing permits, allowing notice and opportunity for public hearing on the category as a whole and the provisions of the general permit, rather than requiring the same for each individual source. General permits have been widely used by the agency under the Clean Water Act, and are used by about half the states for control of various air pollution sources. Thus, there is precedent for their use in a Clean Air Act greenhouse gas control program for multiple, relatively minor sources of emissions.\nA general permit does not relieve the permittee from filing a permit application or from complying with permit conditions, which would include some sort of monitoring and reporting requirements. But a permit application for a general permit can be relatively simple, and since there are few costs to issuing the permit, permit fees, which are required by Section 502(b) to cover the reasonable costs of the permit program, but are to be utilized only to cover such costs, would be relatively low. A sampling of states using general permit fees for other types of air pollutants found fees ranging from $100 to $350 per permittee.\nSuch an approach may also be available to small sources potentially caught under PSD-NSR. Both EPA in the ANPR and the Institute for Policy Integrity provide arguments for PSD-NSR general permits for small sources to avoid absurd results or respond to administrative necessity.", "If an endangerment finding triggered emissions standards or limitations under the CAA (e.g., Section 111, Part C), it would also bring into play Section 304, Citizen Suits. Section 304 allows any person to commence a civil action against any other person (including government entities and instrumentalities) for violation of an emissions standard or limitation under the Act. It also provides for suits against EPA for failing to perform a nondiscretionary act or duty. Most specifically, Section 304 provides for suits\nagainst any person who proposes to construct or constructs any new or modified major emitting facility without a permit required under part C of title I (relating to significant deterioration of air quality) or part D of title I (relating to non-attainment) or who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be in violation of condition of such permit.\nCitizen suits have been widely used by environmental groups to force the Administrator to undertake nondiscretionary duties and to enforce the Act's requirements against emitting facilities. Should the agency fail to move forward with GHG standards following an endangerment finding, suits seeking to force action would almost certainly be filed.", "The current debate on the appropriateness of using the Clean Air Act to regulate greenhouse gas emissions is not the first such debate that has occurred when a new environmental challenge has been directed at the Act. During the 1980s, suggestions were made that acid rain and/or stratospheric ozone depletion could be addressed via then-existing provisions, rather than by new Amendments. For example, in 1985, the CRS stated the following with respect to addressing acid rain through the existing Clean Air Act:\nVarious Clean Air Act provisions could be used to address acid precipitation , including issuing more stringent secondary ambient air quality standards, setting a sulfate standard, and enforcing SO2 reductions more vigorously. (a) Typically, however, such actions require a demonstration of cause-effect relationship that has not been obtained, at least in the view of many policymakers; and/or they require actions under peripherally related provisions such as visibility protection—which are already subject to controversy on their own right. (b) Any such actions would likely be expensive, both in resources and in political/administrative capital. (c ) Program administrators have therefore said they will not use the Clean Air Act aggressively and innovatively to combat acid precipitation without an explicit Congressional mandate and/or compelling new evidence linking specific damages to specific pollutants [emphasis in original] .\nIn both cases, the Congress moved to add new Titles to the Act (Title IV to address acid rain, and Title VI to address stratospheric ozone depletion). In the case of Title IV, a new market-based approach to reducing pollutants was introduced to implement a statutory reduction requirement (i.e., the SO 2 emissions cap) in hope that the cost would be optimized. The result was so successful that it was used by states and EPA to begin addressing interstate transport of smog (i.e., the NOx SIP Call) and has been suggested by some as the optimal approach to controlling greenhouse gases.\nHowever, controlling greenhouse gases is a substantially more complex environmental, technical, economic, and social issue than either acid rain or stratospheric ozone depletion are. It is possible that one size does not fit all in this debate. Some sources may not respond significantly to a market-based approach because they are not particularly price-sensitive. Others may be too small or dispersed to include. For example, the European Union's market-based approach covers only about 40% of the EU's emissions. Other instruments are used to address difficult sectors, such as transportation.\nThus, initiatives to use the current Clean Air Act could be designed as a substitute for what is perceived by some as a protracted congressional debate, or as a complementary effort to address sources or gases that a future market-based system may choose to exclude from its provisions. As summarized in 2008 by Lisa Heinzerling in testimony to the Subcommittee on Energy and Air Quality of the House Energy and Commerce Committee:\nthe Clean Air Act contains numerous provisions that might be used to regulate greenhouse gases. The advantages of using these provisions include: they can be deployed now; they use regulatory strategies that are familiar to, indeed are the bread and butter work of, the Environmental Protection Agency; they call for regulation of numerous and diverse sources and thus, taken as a group, they have an inherent fairness to them; they do not pose unusual enforcement difficulties or untoward administrative burdens.\nThere are also disadvantages to using existing Clean Air Act provisions to address climate change. Most of the provisions do not have statutory deadlines.... To the extent one favors cap-and-trade as a regulatory mechanism for addressing climate change, one might worry about the lack of clear authority for such a scheme under the existing statute. The NAAQS program is an ungainly framework for regulating globally harmful pollutants. PSD requirements are triggered for sources that are \"large\" when it comes to conventional pollution but \"small\" from the perspective of global pollutants.\nA final endangerment finding presents EPA with many options. However, the ultimate decision on what the Nation's greenhouse gas policy should be rests with the Congress. If it disagrees with any approach undertaken by EPA, it can override the agency's decision, or respond as it did with acid rain and stratospheric ozone depletion—with new statutory authorities." ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 3, 3, 4, 4, 4, 4, 2, 3, 3, 2, 3, 3, 2, 3, 3, 4, 4, 1, 2, 2, 3, 3, 1, 2, 2, 2, 3, 3, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h2_full h1_full", "h2_full h1_full", "h2_full", "h1_full", "h1_title h3_title", "h1_title", "", "h1_title", "", "", "h1_full", "", "", "", "", "h3_title", "h3_full", "", "", "", "", "", "", "", "", "", "", "", "h0_title h3_title", "", "h0_full", "h0_title h3_title", "h0_full h3_full", "", "", "" ] }

{ "question": [ "How did the agency take a step towards the Clean Air Act regulation of GHGs?", "What is the Greenhouse Gas Tailoring Rule?", "What is the proposed threshold for the Greenhouse Gas Tailoring Rule?", "What is the purpose of tailoring the permit requirements to the largest sources?", "What does the Tailoring Rule do?", "What two tracks does the Tailoring Rule take?", "What is the problem with the second track?", "What is the first step in using the Clean Air Act's existing authority for the EPA Administrator?", "How was the endangerment finding proposed?", "What can the agency do with the finding finalized?", "What does this report review?", "What are the PSD and Title V?", "Why should particular attention be paid to Section 111 of the Act?", "Why is Section 111 important?" ], "summary": [ "On September 30, 2009, the agency took another step toward Clean Air Act regulation of GHGs, proposing what it calls the Greenhouse Gas Tailoring Rule.", "The rule would define when Clean Air Act permits would be required for GHG emissions from stationary sources.", "The proposed threshold (annual emissions of 25,000 tons of carbon dioxide equivalents) would limit which facilities would be required to obtain permits; for the next six years, the nation's largest GHG emitters, including power plants, refineries, cement production facilities and about two dozen other categories of sources, would be the only sources required to obtain permits.", "By tailoring the permit requirement to the largest sources, EPA says it would focus on about 13,000 facilities accounting for nearly 70% of stationary source GHG emissions.", "Like the proposed standards for motor vehicles, the Tailoring Rule is part of a two-track approach to controlling emissions of GHGs.", "On one track, Congress and the Administration are pursuing new legal authority (for cap-and-trade, carbon tax, or other mechanisms) to limit emissions. At the same time, on a parallel track, the Administration, through EPA, has begun to exercise the Clean Air Act's existing authority to regulate GHGs.", "Despite EPA's commitment to move forward on this second track, EPA Administrator Jackson and others in the Administration have made clear their preference that Congress address the climate issue through new legislation.", "The first step in using the Clean Air Act's existing authority is for the EPA Administrator to find that GHG emissions are air pollutants that endanger public health or welfare.", "The Administrator proposed this endangerment finding in the April 24, 2009 Federal Register and finalized it December 7.", "With the finding finalized, the agency can (indeed, must) proceed to set GHG emission standards for new motor vehicles, as it proposed to do, September 28.", "This report reviews the various options that EPA could exercise to control GHG emissions from stationary sources under the Act.", "The PSD and Title V permitting requirements that are automatically triggered may be the most immediate point of interest, but an endangerment finding for GHGs would present the agency with other options, as well.", "Among these, particular attention should be paid to Section 111 of the Act, which provides authority to set New Source Performance Standards and, under Section 111(d), requires the states to control emissions from existing sources of the same pollutants.", "As EPA moves forward, Section 111 appears to be the most likely authority it will use to establish emission standards for stationary sources." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, 1, -1, -1, 1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 5, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "Background", "The Development of the Mérida Initiative", "Funding the Mérida Initiative: FY2008-FY2010", "Mexico", "FY2008 Supplemental Appropriations", "FY2009 Appropriations", "FY2010 Appropriations", "Non-Mérida Assistance for Mexico", "Central America", "FY2008 Supplemental Appropriations", "FY2009 Appropriations", "FY2010 Appropriations", "The Caribbean", "Other Mérida Legislation in the 111th Congress", "Status of Implementation", "Policy Issues", "Is Mérida the Right Drug Control Approach?41", "Balancing \"Hard-side\" and \"Soft-side\" Assistance", "Monitoring Progress", "Interagency Coordination", "Role of the Department of Defense", "U.S. Pledges Under the Mérida Initiative", "Weapons Trafficking62", "Drug Demand", "Bulk Cash Smuggling and Money Laundering", "Mexico Policy Issues", "Domestic Counterdrug Efforts and Strategy", "Police Reform and Anti-Corruption Efforts", "Implementation of Judicial Reforms", "Protection of Human Rights", "Beyond the Mérida Initiative: the FY2011 request", "U.S.-Mexican Security Cooperation", "Cooperation with Central America and the Central American Regional Security Initiative (CARSI)", "The Caribbean Basin Security Initiative (CBSI)" ], "paragraphs": [ "", "Escalating drug trafficking-related violence in Mexico and the increasing presence of Mexican drug traffickers and Central American gangs in the United States have focused congressional concern on the pace of implementation of the Mérida Initiative. These concerns have been heightened since the March 13, 2010, killing of three individuals, including two U.S. citizens, with ties to the U.S. Consulate in Ciudad Juarez, Mexico. In a statement, Secretary of State Hillary Clinton said that \"these appalling assaults on members of our own State Department family are, sadly, part of a growing tragedy besetting many communities in Mexico. They underscore the imperative of our continued commitment to work closely with the Government of President Calderón to cripple the influence of trafficking organizations at work in Mexico.\" Secretary Clinton also reaffirmed the Obama Administration's commitment to supporting the counterdrug and anticrime efforts of Central American governments prior to a meeting with leaders from that region in Guatemala on March 5, 2010.\nTo date, Congress has appropriated some $1.3 billion to support Mérida programs in Mexico, $248 million for Mérida and a new Central America Regional Security Initiative (CARSI) in Central America, and $42 million for Caribbean countries, including funds for the Caribbean Basin Security Initiative (CBSI). With funding for the original Mérida Initiative ending with the FY2010 budget cycle, much focus has centered on how the initiative and related programs in Central America and the Caribbean should move forward. Detailed strategy documents for CARSI and CBSI are not yet available. However, the Obama Administration included a new four-pillar strategy for U.S.-Mexican security cooperation in its FY2011 budget request, which was more clearly defined after Secretary of State Hillary Clinton led a Cabinet-level delegation to Mexico on March 23, 2010.\nShortly after this high-level delegation, the U.S. State Department released a joint statement from Secretary Clinton and Mexican Foreign Secretary Patricia Espinosa expressing both countries' commitment to the continuation of U.S.-Mexican security cooperation. Their strategy for the coming years seeks to \"ensure continuity of bilateral actions already in place and advance new opportunities and areas of cooperation.\" The four pillars of the new bilateral strategy will focus on (1) disrupting organized criminal groups; (2) institutionalizing the rule of law; (3) building a 21 st -century border; and (4) building strong and resilient communities While the first two pillars largely build upon efforts that began under the Bush Administration, pillars three and four broaden the scope of bilateral cooperation to include efforts to facilitate \"secure flows\" of people and goods through the U.S.-Mexico border and to promote social and economic development in violence-prone communities (see \" Beyond the Mérida Initiative \" section below).\nThe 111 th Congress is likely to continue overseeing how Mérida and related funds have been used, any planned adjustments in the uses of funds appropriated during the FY2008-FY2010 budget cycles, and the degree to which the Obama Administration's new strategies for Mexico, Central America, and the Caribbean complement each other and U.S. domestic counterdrug and border security efforts.", "Mexico is a major producer and supplier to the U.S. market of heroin, methamphetamine, and marijuana and the major transit country for cocaine sold in the United States. According to the Department of State's 2010 International Narcotics Control Strategy Report , as much as 90% of all cocaine entering the United States flows through Mexico or its territorial waters, with at least 42% of that cocaine first stopping in Central America. A small number of Mexican drug trafficking organizations (DTOs), often mistakenly referred to as \"drug cartels,\" control the most significant drug distribution operations along the Southwest border. Mexican DTOs have expanded their dominance of the U.S. drug market by increasing their transportation and distribution networks, as well as displacing other Latin American DTOs, primarily Colombians.\nSince taking office in December 2006, Mexican President Felipe Calderón has made combating the DTOs a centerpiece of his domestic policy agenda. The Calderón government has scored some significant victories against the DTOs, such as the killing of Arturo Beltrán Leyva and capture of Teodoro Garcia Simental. However, the government's crackdown, as well as turf wars among rival DTOs, has fueled an escalation in violence throughout the country, including states along the U.S.-Mexico border. In 2008, more than 5,100 people in Mexico were killed in drug trafficking-related violence, a 126% increase over 2007. In 2009, conservative estimates indicate that more than 6,500 people, including 35 soldiers and close to 500 police officers, died as a result of drug trafficking-related violence homicides, with the violence largely concentrated in five states. In many areas of those states, such as Ciudad Juarez in Chihuahua, violence has remained at elevated levels despite the presence of large numbers of federal troops and police. Thus far in 2010, drug trafficking-related violence has escalated even further, with record levels of violence occurring in new \"hot spots\" in Tamaulipas, Nuevo Leon, and Sonora.\nMexican DTOs are also expanding their operations into Central America , a volatile region where the governments of some countries—particularly Guatemala, El Salvador, and Honduras—are already dealing with some of the highest violent crime rates in the world. Central American law enforcement officials have even less training and equipment to deal with DTOs, organized crime, and criminal gangs than their Mexican counterparts, making them highly susceptible to drug-related corruption. In addition, as with Mexico, Central American countries continue to have problems with impunity and human rights abuses by security forces that have hindered the performance and reputation of their law enforcement and judicial systems.", "Prior to 2007, neither Mexico nor any of the countries in Central America had received large amounts of U.S. counterdrug assistance. In FY2007, for example, Mexico received $36.7 million in counterdrug assistance and the only Central American countries to receive counterdrug funds were Guatemala ($1.9 million) and Panama ($3.3 million).\nIn response to the Mexican government's request for increased cooperation and assistance, in October 2007 the United States and Mexico proposed the Mérida Initiative, a package of U.S. counterdrug and anticrime assistance to Mexico and Central America. As proposed, the Mérida Initiative was to provide some $1.4 billion in assistance, largely in the form of equipment and training, from FY2008 through FY2010. The four primary goals of the Mérida Initiative, as originally conceived, were to (1) break the power and impunity of criminal organizations; (2) assist the Mexican and Central American governments in strengthening border, air, and maritime controls; (3) improve the capacity of justice systems in the region; and (4) curtail gang activity in Mexico and Central America and diminish drug demand in the region. Within these over-arching goals, the State Department developed specific objectives and performance measures for evaluating the Mérida Initiative. These indicators are likely to expand, however, given the new, broader focus for Mérida programming efforts.\nAccording to its proponents, the Mérida Initiative is more than just a foreign assistance package, it is a new kind of regional security partnership between the United States, Mexico, and Central America. Analysts and U.S. officials have repeatedly said that for the initiative to be successful, all the countries involved will have to accept their \"shared responsibility\" to tackle domestic problems contributing to drug trafficking and crime in the region, including U.S. drug demand. Since President Calderón took office, Mexico has increased security spending (to $6.9 billion in 2010), mobilized thousands of soldiers and police to drug trafficking \"hot-spots\" throughout the country, and enacted judicial and law enforcement reforms. The Obama Administration has, for its part, launched a Southwest Border Initiative that has resulted in record seizures of arms and bulk cash flowing into Mexico, carried out multi-agency law enforcement operations against Mexican DTOs, and increased intelligence-sharing with Mexican counterpart agencies. Central American leaders have regularly met to develop ways to better coordinate their security and counterdrug efforts through the Central American Integration System (SICA).", "", "", "In June 2008, the 110 th Congress appropriated $352 million in FY2008 supplemental assistance and $48 million in FY2009 bridge fund supplemental assistance for Mexico in P.L. 110-252 , the FY2008 Supplemental Appropriations Act (see Table 1 for funding for Mexico by year and aid account). In contrast to the Bush Administration, which requested all Mérida funding in the International Narcotics Control and Law Enforcement (INCLE) account, Congress divided the funding for Mexico in P.L. 110-252 between the INCLE, Foreign Military Financing (FMF), and Economic Support Fund (ESF) aid accounts. Congress earmarked $73.5 million for judicial reform, institution building, rule of law, and anti-corruption activities. Congress also stipulated that none of the funds may be used for budget support or as cash payments. Congress limited the amount of FMF and INCLE available to provide equipment to the Mexican Army/Air Force and Navy and made 15% of FMF and INCLE contingent on meeting certain human rights conditions. (See Appendix A for the final language of the human rights conditions in P.L. 110-252 .) The State Department issued a somewhat favorable human rights progress report to Congress on August 13, 2009, thereby meeting the statutory requirements in P.L. 110-252 for the release of the FMF and INCLE funds that had been on hold.\nAccording to the Department of State, which is leading Mérida Initiative implementation, the first tranche of $400 million for the foreign aid program provided in P.L. 110-252 included funding for the following:\nhelicopters (up to five Bell 412 helicopters) and surveillance aircraft (up to two CASA maritime patrol aircraft) to support interdiction and rapid response of Mexican law enforcement agencies; non-intrusive inspection equipment, ion scanners, and canine units for Mexican customs, the new Mexican federal police and the military to interdict trafficked drugs, arms, cash, and persons; technologies and secure communications to improve data collection and storage; and, technical advice and training to strengthen the institutions of justice in order to improve vetting for the Mexican police force, to provide case management software to track investigations through the legal process, to support offices of citizen complaint and professional responsibility, and to promote the establishment of witness protection programs.", "In March 2009, the 111 th Congress passed the Omnibus Appropriations Act, ( P.L. 111-8 ) providing $300 million for Mexico within the INCLE, ESF, and FMF accounts with not less than $75 million for judicial reform, institution building, anti-corruption, and rule of law activities. The measure continued the same human rights conditions originally set forth in P.L. 110-252 . In P.L. 111-8 , human rights conditions affected 15% of the total funds provided, not including assistance for judicial reform, institution building, anti-corruption, and rule of law activities. The same human rights progress report submitted to Congress in mid-August 2009 by the State Department met the statutory requirements in P.L. 111-8 for the release of roughly $31.5 million in FMF and INCLE funds that had been on hold.\nOn April 9, 2009, the Obama Administration submitted a FY2009 supplemental request that included an additional $66 million in INCLE assistance to acquire three Blackhawk helicopters, along with spare parts and support for those helicopters, for Mexico's civilian Secretariat for Public Security (SSP). On June 24, 2009, President Obama signed the FY2009 supplemental appropriations measure passed by Congress ( P.L. 111-32 ), which included $160 million in INCLE assistance and $260 million in FMF for Mexico, $354 million more than the Administration's request. Congress made 15% of the INCLE assistance provided in P.L. 111-32 subject to the same human rights conditions set forth in the FY2009 omnibus measure ( P.L. 111-8 ), but did not include conditions on the FMF provided. P.L. 111-32 also appropriated significant funds to other U.S. agencies, including the Departments of Justice and Homeland Security, to increase security on the Southwest border.", "For FY2010, the Obama Administration requested $450 million in INCLE assistance for Mexico for helicopters, fixed-wing aircraft, and surveillance systems for Mexico's SSP; helicopters for the Mexican Navy; and non-intrusive inspection equipment for the SSP, the Mexican military and Customs. The Administration sought support for law enforcement training programs in investigative techniques and ethics, as well as anti-corruption training for internal watchdog units within the Attorney General's Office (PGR) and SSP. The Administration's FY2010 request also included funding for ongoing rule of law reforms.\nOn December 13, 2009, Congress passed the FY2010 Consolidated Appropriations Act ( H.R. 3288 / P.L. 111-117 ), which included $210.3 million for Mexico in the INCLE, ESF, and FMF accounts subject to the same human rights conditions as P.L. 111-8 . While Congress provided less funding for Mérida-related programs in Mexico and Central America than the Administration's FY2010 request, Congress had appropriated significantly more for Mexico than requested in the FY2009 supplemental spending measure, and considered $254 million of this as forward funding of FY2010. In the Joint Explanatory Statement to P.L. 111-117 , the conferees directed the Secretary of State to submit a report to within 90 days of the enactment of the Act addressing how prior Mérida funds have been used, progress to date, any planned adjustments in the uses of funds, and post-Merida plans. Table 1 describes the various funding levels addressed above.", "In addition to funding provided through the Mérida Initiative, Mexico continues to receive U.S. assistance through other State and Defense Department assistance accounts, some of which is for security and counterdrug programs. For example, in FY2009 Mexico received roughly $0.8 million for military training programs funded through the State Department's International Military Education and Training Account (IMET), up from $0.4 million in FY2008. Apart from the Mérida Initiative, the U.S. Department of Defense (DOD) provided a $13 million counterterrorism training and equipment package to the Mexican military in FY2008. In addition, while DOD only provided some $12.2 million in CN training assistance to Mexico in FY2008, DOD assistance expanded to roughly $34.2 million in FY2009 in order to complement Mérida programs. On December 16, 2009, Congress appropriated an additional $50 million in funding for counternarcotics communication equipment for Mexico in the FY2010 Department of Defense Appropriations Act ( H.R. 3326 / P.L. 111-118 ).", "", "The FY2008 Supplemental Appropriations Act ( P.L. 110-252 ) included $60 million in Mérida funds for Central America. As with Mexico, Congress divided the funding for Central America between several different accounts (see Table 2 ). In addition to changing the account structure, Congress shifted the bulk of funding for Central America from public security and law enforcement programs to institution building, rule of law, and development programs. It did so by earmarking $25 million in ESF funds for the creation of an Economic and Social Development Fund for Central America. Of the ESF funds provided, $20 million are being administered by the U.S. Agency for International Development (USAID) for youth violence prevention, community policing, and community development programs in violence-prone areas. The other $5 million in ESF funds are supporting educational and cultural exchange programs administered by the State Department. Congress also earmarked $1 million to support the International Commission against Impunity in Guatemala (CICIG).\nAs with Mexico, P.L. 110-252 required that 15% of INCLE and FMF assistance be withheld until the Secretary of State reports that the Central American governments are taking steps to create police complaints commissions, reform their judiciaries, and investigate and prosecute military and police forces who have been credibly alleged to have committed human rights violations. (see Appendix A for the final language of the human rights conditions). The State Department submitted human rights progress reports for Belize, Costa Rica, the Dominican Republic, El Salvador, Haiti, Honduras, and Panama on April 30, 2009, and for Guatemala on August 18, 2009. The State Department was unable to report on progress made by Nicaragua, and on August 13, 2009, reprogrammed $252,600 in FY 2008 INCLE funds withheld from Nicaragua to support efforts in Belize, Costa Rica, and Panama.", "In the FY2009 Omnibus Appropriations Act, P.L. 111-8 , Congress provided $105 million in funding for Central America subject to similar human rights conditions as in P.L. 110-252 . The explanatory statement to the FY2009 omnibus bill provided $70 million in INCLE for the region. It also stipulated that $15 million of the FMF funds appropriated must support maritime security programs and that $12 million of the ESF appropriated must fund USAID's Economic and Social Fund for Central America. On August 27, 2009, the Secretary of State reported on progress made by Belize, Costa Rica, El Salvador, Guatemala, and Panama, meeting the 15% withholding statutory requirement. Some $1.73M in FY 2009 INCLE funds remains withheld pending the submission of a 15% report to Congress for Honduras, and a report defining how assistance that was originally destined for programs in Nicaragua will be reprogrammed.", "For FY2010, the Obama Administration requested $100 million in INCLE assistance for Central America to enhance regional capability to protect citizen security, combat illegal trafficking and build stronger justice sector institutions. According to the request, funding would support U.S. anti-gang efforts, provide equipment and technical assistance for community policing and juvenile justice systems, and implement anti-corruption measures.\nOn December 13, 2009, Congress passed the FY2010 Consolidated Appropriations Act ( H.R. 3288 / P.L. 111-117 ), included $83 million for Central America to combat drug trafficking and organized crime, and for judicial reform, institution building, anti-corruption, rule of law, and maritime security. The Act placed Central America funding into a new Central America Regional Security Initiative (CARSI), which split Central America from the Merida Initiative. It made CARSI funds subject to the same human rights conditions as those provided in P.L. 111-8 . The Joint Explanatory Statement to P.L. 111-117 directed the Secretary of State to submit a report within 90 days of the enactment of the Act detailing the threats to be addressed, goals, and expected results of the programs that have been funded thus far in Central America (as well as Haiti and the Dominican Republic) through Mérida and CARSI.", "Although not included in the original Mérida request, Congress dedicated $2.5 million in INCLE funding for Haiti and $2.5 million for the Dominican Republic, two major drug transit countries in the Caribbean, in P.L. 110-252 and again in P.L. 111-8 . In Haiti, Mérida funds are being used to install a secure communications network for the Haitian National Police (HNP), support the HNP's drug interdiction efforts, and provide training for Haitian judicial officials. In the Dominican Republic, Mérida funds are being used to support police professionalization programs, provide logistical support to interdiction units, and train judicial authorities in implementing the new criminal procedure code.\nFor 2010, the Obama Administration did not seek Mérida Initiative funding for Haiti and the Dominican Republic in its budget request, but proposed a new security regime for the Caribbean, the Caribbean Basin Security Initiative (CBSI). The FY2010 Consolidated Appropriations Act ( H.R. 3288 / P.L. 111-117 ) provided $37 million for CBSI, of which \"not less than\" $21 million is to be used for social justice and education programs.", "H.R. 2410 (Berman) Foreign Relations Authorization Act , Fiscal Years 2 010 and 2011. Introduced May 14, 2009; House Committee on Foreign Affairs held markup and ordered the bill reported. House approved June 22, 2009. Title IX, Subtitle A of the bill, as introduced, consists of actions to enhance the Mérida Initiative, including the designation of a high-level coordinator within the Department of State to implement the program; the addition of Caribbean Community (CARICOM) countries to the Mérida Initiative; the establishment and implementation of a program to assess the effectiveness of assistance provided under the Mérida Initiative; within 180 days and not later than December 1 of each year thereafter, a reporting requirement regarding the programs and activities carried out under the Mérida Initiative. Title IX, Subtitle B of the bill would require the President to establish an inter-agency task force on the prevention of illicit small arms trafficking in the Western Hemisphere; increase penalties for illicit trafficking in small arms and light weapons; and express congressional support for the ratification by the United States of the Inter-American Convention Against the Illicit Manufacturing of and Trafficking in Firearms, Ammunition, Explosives, and Other Related Materials (CIFTA).\nH.R. 3239 (Kirkpatrick) Introduced July 16, 2009; referred to Committees on Homeland Security and Foreign Affairs. House Committee on Homeland Security ordered the bill reported March 9, 2010. The bill would require the Secretary of Homeland Security, in consultation with the Secretary of State, to submit a report on the effects of the Mérida Initiative on the border security of the United States.", "There has been increasing concern in Congress about the slow delivery of Mérida assistance. U.S. officials reportedly attributed early delays in disbursal of FY2008 funds to U.S. government contracting regulations, negotiations with Mexico and other countries about what equipment is actually needed, and the difficulty of delivering an aid package that involves so many agencies and offices. More recent delays in Mérida implementation have also occurred because Congress did not pass the FY2009 or FY2010 appropriations bills until well into those fiscal years, and as a result of ongoing consultations between the State Department and congressional appropriators on the contents of the spending plans and human rights progress reports required by the Mérida appropriations legislation.\nOn December 3, 2009, the Government Accountability Office (GAO) issued a preliminary report for Congress on the status of funding for the Mérida Initiative. By the end of September 2009, GAO found that $830 million of the $1.3 billion in Mérida funds appropriated for Mexico and Central America had been obligated by the State Department, but only $26 million of the funds had actually been spent. The report attributed delays in Mérida implementation to \"(1) statutory conditions on the funds, (2) challenges in fulfilling administrative procedures [required for obligation and expenditure of the funds] , and (3) the need to enhance institutional capacity on the part of both recipient countries and the United States to implement the assistance.\"\nIn a written response to the GAO report, the State Department acknowledged that implementation delays had occurred, but stated that it had devoted significant time to working with partner governments to prepare for the disbursement and coordination of Mérida assistance. The State Department criticized the GAO's use of \"expended funds\" as its primary performance measure, since this measure did not account for ongoing training programs or equipment that had been ordered. As of late November 2009, the State Department reported that approximately $359 million in Mérida funding was actively supporting projects in Mexico and Central America.\nState Department officials in Mexico City have continued to report significant progress in Mérida implementation since the GAO reporting period ended. According to a State Department equipment report, roughly $113 million worth of equipment had arrived in Mexico by March 23, 2010, including five Bell helicopters valued at $66 million for the Mexican Army and a $28 million software package for the Attorney General's Office. Another $151.2 million in equipment is scheduled to be delivered by the end of 2010, including three UH-60 helicopters valued at $76.5 million for the SSP. Among Mérida-funded training programs, police professionalization programs appear to have advanced the furthest. Approximately 4,300 university-educated police officers have graduated from the basic investigative training course offered at the refurbished federal police institute at San Luis Potosi. And, although many judicial training programs are just getting underway, at least 87 judges and prosecutors had completed U.S.-funded courses on administering oral trials by late March 2010.\nAs with Mérida-Mexico, Mérida/CARSI programs in Central America have taken longer to get off the ground than originally anticipated by the Administration, but are now showing progress in implementation. Police equipment is beginning to arrive throughout the region, as well as Spanish \"e-Trace\" firearms tracking technology provided by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). A Transnational Anti-Gang (TAG) unit should begin working in Guatemala later this year; another will then be created in Honduras. A regional legal advisor from the FBI is scheduled to arrive in May to be based in El Salvador, while Immigration and Customs Enforcement is supplementing vetted units in Honduras, El Salvador, Guatemala and Panama with Merida/CARSI funding. USAID has awarded contracts for most of its Mérida-related crime prevention and institution-building programs, including funding to support an impact evaluation survey on the effects of its programs on municipal-level crime statistics and citizen perceptions of crime. U.S. Customs and Border Protection conducted land border port of entry assessments in each of the Central American countries and is now determining how to meet the needs identified in those assessments. Similarly, regional firearms assessments have been initiated, and a review of El Salvador has been completed. Mérida funding is also being used to support Central American officials' participation in courses taught at the International Law Enforcement Academy and the Center for Hemispheric Defense Studies.", "A broad consensus appears to be shared by the Administration, Congress and the policy community on the need for the United States to support neighboring governments in Mexico and Central America that are struggling to address drug trafficking-related violence. President Obama reaffirmed his commitment to supporting Mexico's counterdrug efforts during two visits to Mexico that took place in April and August 2009. He has invited President Calderón to Washington, DC, for an official visit and state dinner to be held on May 19, 2010, during which bilateral security efforts are likely to be discussed. The 111 th Congress has held numerous hearings on the heightened drug trafficking-related violence in Mexico and how to combat the DTOs. In early April, a high-level congressional delegation met with President Calderón and Mexican legislators in Mexico City to discuss the future of U.S. assistance to Mexico and plans to address drug trafficking-related violence in Ciudad Juarez. The 111 th Congress is closely monitoring the efficacy of assistance provided through the Mérida Initiative and compliance with Mérida's human rights conditions.\nWhen Secretary of State Hillary Clinton traveled to Mexico on March 25-26, 2009, she commented on the importance of bilateral cooperation under the initiative. During her trip, she stated that an \"insatiable demand for illegal drugs\" in the United States \"fuels the drug trade.\" With regard to the United States as a source of the weapons that arm the drug traffickers, Clinton also acknowledged that \"our inability to prevent weapons from being smuggled across the border to arm these criminals causes the deaths of police, soldiers and civilians.\" Secretary Clinton made similar comments on March 23, 2010, after chairing a Cabinet-level meeting in Mexico City on the future of the Mérida Initiative when she asserted that the United States \"must and is doing its part\" to counteract U.S. drug demand and illegal firearms purchases. Congress is continuing to examine how well the U.S. government is demonstrating its \"shared responsibility\" to tackle domestic problems contributing to drug trafficking and crime in the region.\nThis section of the report raises some questions and policy issues that Congress is likely to consider at it oversees implementation of the Mérida Initiative.", "Unless programs like the Mérida Initiative are woven into a more holistic U.S. drug policy focusing on reducing demand as well as supply, many analysts predict that they are unlikely to have a significant impact on drug flows in the region. In February 2009, a non-governmental, independent study group called the Latin American Commission on Drugs and Democracy—co-chaired by former presidents from Brazil, Colombia, and Mexico—concluded that the current international drug control model has failed and called for a new policy focused more on \"harm reduction\" through prevention and treatment than on criminalizing drugs. Many studies, including an October 2008 report by the Government Accountability Office (GAO), have concluded that while Plan Colombia, a centerpiece of U.S. international drug control efforts, improved security conditions in Colombia, it did not significantly reduce the amount of drugs flowing into the United States.\nThese concerns have recently been echoed by Members of Congress. The Western Hemisphere Drug Policy Commission Act of 2009, H.R. 2134 (Engel), passed by the House on December 8, 2009, would establish a commission to evaluate U.S. drug control policies and programs directed at the Western Hemisphere and to provide recommendations on how to improve U.S. international and domestic drug policies. On March 26, 2010, Senators Menendez and Kerry introduced S. 3172 , the Counternarcotics and Citizen Security for the Americas Act of 2010, which would, among other things, require the State Department to submit a multi-year, Inter-American counternarcotics strategy report to Congress. S. 3172 would also encourage the State Department to focus U.S. counterdrug and other security-related assistance on strengthening civilian institutions in recipient countries.\nEarly assessments of the likely impact of the Mérida Initiative varied significantly. Mérida supporters described the initiative as a security cooperation partnership against drug traffickers and organized criminal groups, rather than a foreign assistance program. They urged Congress to fully fund Mérida in order to help build the capacity of both military and civilian institutions in partner nations to carry out bilateral and regional counterdrug efforts. Others were more skeptical, maintaining that fighting the drug trade will require more than providing equipment and training for Mexican and Central American military and police forces. They asserted that Mérida needs to include more funding to address the weak civilian judicial and law enforcement institutions, as well as the underlying societal problems, such as poverty and corruption, which have allowed the drug trade to flourish in the region. They also emphasized the importance of addressing U.S. and European drug demand.", "During the 110 th Congress, debates emerged within Congress about the balance of security vs. institution-building funding in the Bush Administration's FY2008 supplemental request for Mexico. Several Members of Congress opposed the request's apparent emphasis on providing expensive equipment to the Mexican military with its poor human rights record. In response, Administration officials contended that the Calderón government specifically requested security assistance from the United States because Mexican law enforcement and military forces were being outgunned by the drug cartels. They assured Members of Congress that military and police units receiving U.S. equipment and training would be properly vetted.\nAs noted above, Congress has employed a variety of measures to ensure that various \"soft-side\" programs receive support from the Mérida Initiative. These have included limiting the FMF and INCLE funds available to provide equipment to the Mexican military, and earmarking $73.5 million in FY2008 supplemental funds and $75 million in FY2009 assistance for institution building, rule of law, and anti-corruption activities in Mexico. Similarly, Congress reduced border security and counterdrug assistance for Central America in the FY2008 supplemental in order to free up $25 million in ESF funds for an Economic and Social Development Fund for the region. Congress provided an additional $12 million for the Economic and Social Development Fund in the FY2009 omnibus measure, but did not set aside specific money to support it in FY2010.\nWith respect to funding for Mexico, several studies have criticized the Mérida Initiative for focusing too much on technology transfer and not enough on capacity-building and institutional reform. In addition to increasing funding for existing rule of law, human rights, and anti-corruption programs, these studies have identified several other \"soft-side\" programs and approaches that could be implemented. One study urged U.S. support for the establishment of constabulary forces and community policing programs in order to improve police-community relations. Another suggested financing micro-credit, job training, and alternative livelihoods programs aimed at addressing the poverty that has led some people to collaborate with the DTOs. Still another urged the United States to consider channeling a larger proportion of assistance to state and local entities, particularly initiatives aimed at improving transparency and accountability in government. Some of these studies appear to have influenced the Obama Administration's \"Beyond Mérida\" strategy.", "U.S. and Mexican security experts have urged Congress to look at a range of indicators when evaluating the Mérida Initiative, rather than merely measuring its effects on drug seizures and flows. Congress asked the State Department to include a list of performance measures for each portion of the Mérida Initiative in its FY2008 supplemental spending plan. For example, some indicators that might indicate that Mérida is helping break the power and impunity of criminal organizations, might include trends in narcotics flows from Mexico to the United States, changes in the amount of illicit materials seized, and the number of high-profile drug traffickers arrested. As previously stated, the Joint Explanatory Statement to the FY2010 Consolidated Appropriations Act directed the State Department to submit a report to congressional appropriators within 90 days on progress that has been made thus far in implementing the Mérida Initiative. That report, which has yet to be submitted, is likely to contain a number of new performance indicators.\nState Department officials have warned, however, that sometimes certain indicators can be misleading. For example, drug seizures in Mexico decreased in 2008 as compared to 2007. Rather than attributing a decline in seizures to some deficiency in Mexican counterdrug efforts, U.S. law enforcement officials believe that traffickers have been forced to seek alternate routes because of better enforcement in Mexico. In 2009, Mexico seized record amounts of methamphetamine and slightly more cocaine than in 2008, but marijuana seizures declined.\nU.S. officials also maintain that some of the most important results of Mérida thus far may be impossible to quantify, such as the increase in communication and cooperation that has developed as a result of the initiative among U.S., Mexican, and Central American law enforcement and security officials. There appears to be a particularly strong sense of co-responsibility and high level of cooperation in implementing the Mérida Initiative among high-ranking U.S. and Mexican officials. This is in sharp contrast to the past, when mutual mistrust hindered bilateral counterdrug efforts. The U.S. and Mexican governments have designed a multi-level working group structure to design and implement bilateral security efforts. By May 2010, U.S. policy-planners from the State Department's Narcotics Affairs Section (NAS), which oversees Mérida implementation, and Mexican officials from 16 partner agencies will be co-located in a new bilateral office, the first of its kind at any U.S. Embassy.", "The Mérida Initiative is a wide-ranging foreign assistance package with diverse program components that are being carried out by a wide range of U.S. agencies under the leadership of the State Department. For NAS in Mexico City, which is still in the process of hiring all of its Mérida-related positions, tracking the funding and implementation of all 43 FY2008 Mérida programs in Mexico has proven to be no small feat. (Most FY2009-funded programs have yet to commence.) NAS has had to negotiate a large number of complicated inter-agency agreements to delineate funding streams and agency responsibilities for particular programs, some of which are still being finalized.\nIn addition, as noted in the GAO report, it has taken time for U.S. agencies charged with implementing Mérida programs to deploy \"sufficient personnel to effectively manage the seven-fold increase in U.S. law enforcement-related assistance to Mexico\" that has occurred as a result of the Mérida Initiative. Some agencies, such as the State Department, are further along in that process than others, which has caused delays in some training programs involving expertise that can only be provided by particular U.S. agencies and offices. Other agencies, like the Federal Bureau of Investigation, have had to shift their staff's focus away from strictly engaging in operations in Mexico towards planning and carrying out training programs for their Mexican counterparts.", "In contrast to Plan Colombia, the Mérida Initiative does not include an active U.S. military presence in Mexico or Central America, largely due to Mexican concerns about national sovereignty stemming from past conflicts with the United States. DOD did not play a primary role in designing the Mérida Initiative and is not providing assistance through Mérida aid accounts, but is administering assistance provided through the FMF account. As an implementing agency, DOD's role has largely involved overseeing the procurement and delivery of Mérida-funded equipment for Mexican and Central American security forces.\nApart from the Mérida Initiative, DOD has its own legislative authorities to provide certain counterdrug assistance. DOD programs in Mexico are overseen by the U.S. Northern Command (NORTHCOM), which is located on Peterson Air Force Base in Colorado, whereas programs in Central America are managed by U.S. Southern Command (SOUTHCOM), which is based in Miami, FL. DOD can provide counterdrug assistance under certain circumstances outlined in Sec. 1004 of P.L. 101-510 , as amended through FY2010, and can provide additional assistance to 22 countries as provided for in Sec. 1033 of P.L. 105-85 , as amended through FY2010. Under these authorities, DOD counternarcotics assistance to Mexico totaled roughly $12.1 million in FY2008 and $34.2 million in FY2009. DOD counternarcotics assistance to the Central American countries totaled approximately $16.8 million in FY2008 and $17.7 million in FY2009.\nIn the FY2006-FY2010 annual Department of Defense (DOD) authorization bills, Congress also provided DOD with authority to train and equip foreign military forces to perform counterterrorism operations. DOD used this \"Section 1206\" authority, as it is known, to provide a total of $13.9 million in counterterrorism training and equipment to the Mexican military in FY2007 and FY2008. The Dominican Republic, Honduras, Panama, Nicaragua, and Belize have also benefitted from maritime security programs that have been supported by Section 1206 funds. Congress has prohibited section 1206 funds from being used for counterdrug efforts.\nDefense Secretary Robert Gates and Joint Chiefs Chairman Admiral Mike Mullen recently traveled to Mexico along with Secretary Clinton to offer increased military assistance and collaboration to their Mexican counterparts. DOD officials in Mexico City have predicted that while DOD is unlikely to provide Mexico with the same amount of funds it has provided to Colombia, the same variety of programs may be funded, including training in how to work with police forces, conduct anti-drug operations and investigations, and pursue the leaders of drug trafficking organizations. DOD counterdrug support to foreign countries must be requested by the U.S. Embassy to that country. While DOD counterdrug programs supporting Mexico and Central America do not fall under the Mérida Initiative, DOD programs are designed to complement the Merida Initiative.", "In the U.S. and Mexico joint statement announcing the Mérida Initiative, the United States government pledged to \"intensify its efforts to address all aspects of drug trafficking (including demand-related portions) and continue to combat trafficking of weapons and bulk currency to Mexico.\" Many security experts argue that this pledge may be even more important to the success of regional counterdrug and anticrime efforts than any amount of U.S. foreign aid provided to Mexico or Central America. However, Mérida was proposed and funded as a foreign assistance package without any companion legislation on the domestic side. As such, it may prove difficult for Congress to monitor the degree to which the U.S. government is fulfilling its domestic pledges under the Mérida Initiative.", "In recent years, Mexican drug traffickers and enforcer gangs have increasingly relied on military-style firearms, a large percentage of which are purchased in the United States. The cartels often obtain their weapons through \"straw purchases,\" whereby people who are legally qualified buy the weapons from licensed gun dealers or at gun shows in border states and sell them to smugglers who take them across the border.\nATF began a Southwest border initiative dubbed Project Gunrunner in FY2004 that aims to disrupt illegal flows of weapons from the United States into Mexico. In FY2006 and FY2007, around 100 ATF special agents and 25 industry operations investigators were dedicated to Project Gunrunner, while by February 2010, the numbers had increased to 190 special agents and 145 industry operations investigators. To date, ATF has referred 984 cases for prosecution involving more than 2,034 defendants and almost 14,923 guns.\nIn addition to these efforts in the United States, ATF received $4.5 million in Mérida funds and $4.5 million in asset forfeiture funds from the Department of the Treasury for the deployment of eTrace firearms tracking technology to U.S. Consulates in Mexico to combat arms trafficking. In FY2008, Mexico submitted more than 7,500 recovered guns for tracing, showing that most originated in Texas, Arizona, and California. Roughly 93% of those firearms were either made in, or imported to, the United States. On December 30, 2009, ATF announced that it had deployed a bilingual version of its \"e-Trace\" firearms tracing technology to Mexico and Central America.\nThe Department of Homeland Security, especially ICE and CBP, are also involved in taking action to stop the southbound flow of weapons to Mexico. Both ICE and CBP have the authority to enforce export provisions of the Arms Exports Control Act. In collaboration with Mexican law enforcement authorities, ICE launched a new bilateral program against weapons smuggling in June 2008 known as Operation Armas Cruzadas . Among other activities, the program involves intelligence sharing and joint law enforcement efforts with vetted Mexican units. It has resulted in more than 749 criminal arrests and the seizure of more than 3,877 weapons.\nMexico, for its part, began a pilot program in February 2009 to screen incoming traffic to look for guns, bulk cash, and other contraband, and is expanding the program across the entire border. On August 16, 2009, the Mexican government replaced all of the customs inspectors posted at the country's airports and border crossings with 1,454 new, better-trained inspectors. Those inspectors are now using non-intrusive inspection equipment provided through the Mérida Initiative to check vehicles entering Mexico for arms and cash smuggled from the United States.\nIn light of intensified U.S. efforts to curb weapons trafficking to Mexico, some advocates have called for the U.S. Senate to act on a pending treaty, the Inter-American Convention Against the Illicit Manufacturing of and Trafficking in Firearms, Ammunition, Explosives, and Other Related Materials (CIFTA). The treaty, which was signed by the United States in 1997 entered into force in July 1998, was submitted to the Senate for its advice and consent in June 1998. President Obama called for congressional action on CIFTA while in Mexico in April 2009.", "U.S. drug demand fuels a multi-billion dollar illicit industry that has enhanced the power of DTOs and other allied gangs and organized criminal groups. In 2008, more than 25 million people in the United States reported using an illicit drug or abusing a prescription drug in the past year. Some studies have suggested that addressing drug demand through a combination of treatment programs for heavy users and prevention programs is more successful and cost-effective than supply reduction programs. Nevertheless, the U.S. drug control budget has, until recently, continued to emphasize supply-side programs, including drug crop eradication in source countries, interdiction, and domestic law enforcement efforts, rather than demand reduction efforts. From FY2002 through FY2009, for example, funding for supply-side programs reportedly increased by 64%, whereas support for demand reduction efforts increased by only 9%.\nPresident Obama and other high-ranking U.S. officials have pledged to intensify domestic demand reduction efforts in order to complement the Merida Initiative and other counterdrug programs in Latin America. Gil Kerlikowske, the Director of the Office of National Drug Control Policy, has stated that the Obama Administration's drug control strategy, which was required to be submitted to Congress by February 2009, but has not yet been released, will have a \"renewed focus on evidence-based approaches to reduce demand for drugs, through prevention as well as treatment.\" Kerlikowske reiterated those pledges in written testimony prepared for an April 14, 2010, House hearing on ONDCP's FY2011 budget request, stating that \"we must address the number one cause of our problem: our Nation's enormous demand for drugs.\" Drug policy experts have praised those types of comments, but criticized the Administration's budget request for including a relatively modest increase in funding for treatment programs of 3.7% as compared to FY2010. They further maintain that while the request includes an increase in funding for prevention efforts of 13.4%, the funds requested are still less than what was spent in the early 2000s and 5.3% lower than what the Bush Administration funded in FY2009.", "Interrupting the flow of money from drug sales in the United States to Mexico, estimated to range from $15 billion to $25 billion annually, may be one of the most effective ways to disrupt the activities of the Mexican DTOs. A portion of this money is used to buy weapons in the United States to arm the DTOs and their drug enforcers. Other drug proceeds are used to corrupt law enforcement and public officials enabling the DTOs to continue to operate with impunity. Some analysts believe that the U.S. Treasury is doing a good job of making it difficult to launder money within financial institutions. Therefore, the preferred mode to transfer drug proceeds by the Mexican DTOs is through shipments of bulk cash.\nIn order to address the problem of bulk cash smuggling, the DEA has carried out bulk cash seizures with the FBI, ICE, and CBP. In 2005, ICE and CBP launched a program known as \"Operation Firewall,\" which increased operations against bulk cash smuggling in the U.S.-Mexico border region. Since 2005, Operation Firewall has resulted in 679 arrests and the seizure of more than $302 million.\nAs a result of the Mérida Initiative, bilateral efforts against bulk cash smuggling and money laundering have also expanded, particularly since the recent formation of a bilateral working group on the subject. Many U.S. operations have been carried out in coordination with the money laundering vetted unit in Mexico's Finance Ministry. More than 350 Mexican officials from the Attorney General's Office, SSP, and Finance Ministry have been trained in advanced techniques to investigate money laundering. A bi-national study on illicit criminal proceeds should be published later this spring, which is likely to inform future efforts.", "As the U.S. Congress oversees implementation of the Mérida Initiative, it is likely to maintain an interest in what the Mexican government is doing to combat the drug cartels and reform its law enforcement and judicial systems. Congress may want to ensure that U.S. and Mexican counternarcotics programs are complementing, rather than duplicating each other's efforts. Congress may also want to monitor the Mexican government's anti-corruption efforts, as well as its ability to hold police and military forces accountable for human rights abuses.", "President Calderón has made combating drug trafficking and organized crime a top priority of his administration. He increased Mexico's security budget from roughly $2 billion in 2006 to a reported $9.3 billion for 2009. He has mobilized thousands of soldiers and federal police to arrest drug traffickers, establish check points, burn marijuana and opium plants, and interdict drug shipments. President Calderón has also used extradition as a major tool to combat drug traffickers, extraditing 95 individuals in 2008 and a record 107 individuals in 2009. These efforts, combined with increased collaboration with U.S. law enforcement agencies, have resulted in some significant government victories against the DTOs—including the recent killing of Arturo Beltrán Leyva and capture of Teodoro Garcia Simental.\nDespite these victories, the persistent and increasingly brazen violence committed by the drug traffickers, which has occurred partially in response to government pressure, has led to increasing criticism of Calderón's aggressive anti-drug strategy. Many experts assert that, in order to maintain popular support for its security policies, the Calderón government will have to show success in dismantling the DTOs, while also reducing drug trafficking-related violence. President Calderón and his top advisers began consulting with local and state officials to revise the government's military-led strategy for Ciudad Juarez after the massacre of 15 civilians, many of them teenagers, at a private home there in late January 2010. The new strategy that the Calderón government has developed, \"We Are All Juarez\" will include significant federal government investments in education, job training, and community development programs to help address some of the underlying factors that have contributed to the violence. U.S. officials have pledged to reprogram FY2009 Mérida funding to complement Mexican government efforts. In early April 2010, Mexican military forces began to withdraw from Ciudad Juarez, leaving primary security responsibilities to the federal police.", "Instances of corruption of law enforcement and government officials have been a significant problem that has made the campaign against drug cartels more difficult. In October 2008, an elite unit within the federal Attorney General's office for Special Investigations of Organized Crime (SIEDO) was implicated in a scandal involving payoffs for sensitive information about antidrug activities, with at least 35 officials fired or arrested. In November 2008, the former head of SIEDO was arrested and accused of accepting bribes from a drug cartel. The former investigative agency within the PGR, the Federal Agency of Investigations (AFI), which was created in 2001, was also widely criticized for corruption by 2005 and largely disbanded in June 2009. Corruption has also plagued federal, state, and municipal police forces.\nPresident Calderón has taken steps to reform Mexico's federal, state, and municipal police forces. He has reorganized the two federal police agencies under a single commander, enhanced police training at the federal level, created a national database through which police can share information and intelligence, and sped up implementation of a national police registry. President Calderón initially proposed the creation of one unified federal police force under the SSP, but two laws passed in 2009 created a federal police force under the SSP and a federal ministerial police force under the PGR to replace the discredited AFI, both with some investigative functions. As of March 2010, 4,300 university-educated SSP officers had graduated from a newly established basic investigative training course at the federal police institute. The Calderón government has recently put forth a proposal to have the country's municipal police forces be absorbed by state-level police agencies that would then coordinate their efforts with the SSP, a change that would require legislative approval. In the meantime, the government has rewarded state and municipal units whose officers meet certain standards with federal subsidies. A law passed in January 2009 gives the federal government a four-year deadline by which to ensure that all state and municipal police officers are vetted and certified.\nThe Calderón government has also cracked down on corruption within the police and other government institutions. Critics maintain, however, that a large percentage of those who have been arrested on charges of colluding with organized crime have been subsequently released for lack of evidence. In May 2009, for example, federal agents arrested ten mayors and seventeen other officials from Michoacan for allegedly colluding with DTOs, but a majority of those individuals have since been released.\nSecurity experts have praised the Calderón government's federal police reform efforts, but expressed concern that \"advances in police reform are being undermined by the slow pace of judicial reform.\" Analysts have suggested that the Calderón government consider implementing other reforms, including, but not limited to, strengthening police professionalization programs, establishing a career track within federal and state police forces, encouraging community-oriented policing, and developing internal and external review mechanisms for police performance. The Calderón government has recently sought U.S. technical assistance in how to develop in-service evaluations and internal investigative units.", "The Mexican judicial system has been widely criticized for being opaque, inefficient, and corrupt. It is plagued by long case backlogs, a high pre-trial detention rate (some 40% of Mexican inmates are simply awaiting trials), and an inability to secure convictions. In June 2008, President Calderón signed a judicial reform decree after securing the approval of Congress and Mexico's states for an amendment to Mexico's Constitution. Under the reform, Mexico has eight years to replace its trial procedures, moving from a closed door process based on written arguments to a public trial system with oral arguments and the presumption of innocence until proven guilty. In addition to oral trials, the judicial system is expected to adopt additional means of alternative dispute resolution, which should help make it more flexible and efficient.\nImplementing these judicial reforms has brought with it significant challenges, which include the need to update law school curricula, retrain current legal professionals, build new courtrooms, improve forensic technology, and encourage the use of alternative dispute resolution. Many observers hope that the federal government can learn how to identify and overcome those challenges by looking at the experiences that states such as Chihuahua and Oaxaca have had with support from USAID, in adopting an accusatorial justice system. Others predict that progress \"is likely to be very slow as capacity constraints and entrenched interests in the judicial system delay any changes.\" Still others have echoed the concerns expressed in the previously cited Woodrow Wilson Center briefing paper, which argued that \"the Calderón government is devoting more of its political and economic capital to modernizing the police ... [than to] strengthening the independence and capacity of the justice system [including the PGR].\"", "Both the Mexican police and military have poor human rights records. According to the State Department's most recent human rights report, there were credible reports of police involvement in extrajudicial killings, kidnappings for ransom, and torture. There has been increasing concern that the Mexican military, which has had less human rights training and is less accountable to civilian authorities than the police, is committing human rights abuses as it is increasingly tasked with carrying out public security functions. According to Mexico's Human Rights Commission (the CNDH), complaints of human rights abuses by the Mexican military increased from 182 in 2006 to 1,230 in 2008. Amnesty International released a report in December 2009 on alleged cases of human rights abuses committed by Mexican military forces engaged in counterdrug efforts that occurred between October 2008 and August 2009.\nIn addition to expressing concerns about current human rights abuses being committed, Mexican and international human rights groups have criticized the Mexican government for failing to hold military and police officials accountable for past abuses. On July 13, 2009, Human Rights Watch issued a statement asserting that \"Mexican military courts ... have not convicted a single member of the military accused of committing a serious human rights violation.\" In November 2009, Mexican Interior Minister Fernando Gomez Mont reported that, as of that time, one soldier had been convicted of abuses during the Calderón Administration.\nHuman rights organizations generally lauded the inclusion of human rights conditions (described in Appendix A ) in Mérida Initiative appropriations legislation. In the summer of 2009, U.S. and Mexican human rights groups urged the State Department not to issue a favorable report on the Mexican government's human rights record. They maintained that the Mexican military has failed to investigate, prosecute, or punish human rights violations committed by its forces.\nOn August 13, 2009, the State Department submitted its human rights progress report for Mexico to Congress, thereby meeting the statutory requirements for FY2008 supplemental and FY2009 regular funds that had been on hold to be released. While acknowledging that serious problems remain, the report outlines steps that the Mexican government has made to improve police transparency and accountability, consult with Mexican human rights organizations and civil society on the Mérida Initiative, investigate and prosecute allegations of human rights abuses by security forces, and prohibit the use of torture. The report acknowledges that human rights complaints against the Mexican military have \"increased almost six-fold\" since the beginning of the Calderon government. It also states that \"the opaqueness of the [Mexican] military court system makes it difficult to analyze the nature and type of complaints filed, the status of cases against members of the military alleged to have violated human rights, or the results of the military prosecution.\" Human rights groups have sharply criticized the State Department's assessment of Mexico's human rights progress.", "", "With the arrival of U.S. Ambassador Carlos Pascual in August 2009 and as part of the FY2011 budget preparation process, U.S. and Mexican officials began to revise the strategic framework underpinning U.S.-Mexican security cooperation. After several months of consultations, the Obama and Calderón governments agreed to a new strategy, which has been called \"Beyond Mérida,\" that broadens the scope of bilateral security efforts and focuses more on institution-building than on technology and equipment transfers. The Obama Administration outlined the strategy in its FY2011 budget request, which includes $310 million for Merida-related programs in Mexico: $292 million in INCLE funds, $10 million in ESF, and $8 million in FMF. The Administration did not formally announce the new strategy until the Mérida High-Level Consultative Group meeting in Mexico City on March 23, 2010. Its four pillars include\n1. Disrupting the operational capacity of organized crime; 2. Institutionalizing Mexico's capacity to sustain the rule of law (police and judicial reform); 3. Creating a 21 st -century border structure; and, 4. Building strong and resilient communities.\nThe Calderón government has, until recently, focused most of its efforts on pillar one, dismantling the power of drug trafficking organizations. To that end, the government has conducted joint police-military operations to arrest DTO leaders, investigated and indicted public officials suspected of collusion, and begun to go after DTOs' illicit assets. A significant percentage of U.S. assistance provided during the first phase of the Mérida Initiative, including at least $421 million in FMF funding, has been used to purchase equipment for those efforts. The Obama Administration has asked for just $8 million in FMF for FY2011.\nAs the Mexican government has increasingly begun to conceptualize the DTOs as corporations, its strategy, and U.S. efforts to support it, has begun to focus more attention on disrupting the illicit weapons and funding flowing to the traffickers from the United States. These efforts, as well as increased intelligence-sharing and cross-border law enforcement operations and investigations (such as have occurred in areas around Nogales, AZ ), have been suggested as possible areas for increased cooperation under pillar one. As the DTOs increasingly evolve into poly-criminal organizations, perhaps as a result of drug interdiction efforts cutting into their profits, some analysts have also urged both governments to focus more on combating other types of organized crime, such as human trafficking and alien smuggling.\nMany security experts also maintain that the Mexican government, with U.S. support, needs to focus more on addressing the country's weak law enforcement and judicial institutions than it has in the last three years (pillar two). Federal police reform is well underway, but serious questions remain as to when and how the federal police will take over the anti-drug functions currently being carried out by the Mexican military. It also remains to be seen how federal reform efforts (and U.S. efforts to support them) will be expanded to include state and municipal police forces. Some FY2009 Mérida funding is likely to be reprogrammed in order to extend U.S.-funded police training and corrections reform efforts to Chihuahua and Juarez as part of a pilot project. Designed by a binational team, the project has been designed to support the Mexican government's plan for Juarez through training, equipment, professional exchanges, and targeted information-sharing. Security experts have also identified improving police-community relations, respect for human rights, and the prevention and punishment of street crime as important issues that need to be addressed in Juarez and elsewhere in Mexico.\nWith impunity rates hovering around 98%, experts maintain that it is crucial for Mexico to implement the judicial reforms passed in the summer of 2008 and focus on fighting corruption at all levels of government. In order for Mexico to transition to an accusatorial system with oral trials by 2016, some argue that U.S.-funded judicial training programs, some of which are just getting started, may have to be significantly expanded. They are encouraged that $207 million of the Obama Administration's FY2011 request for Mérida-related programs in Mexico are under the \"Governing Justly and Democratically\" aid category.\nPillar three—creating a 21 st -century border—seeks to facilitate \"secure flows\" of commerce and people across the U.S.-Mexico border while curtailing illicit flow of drugs, people, arms, and cash. It may involve the establishment of a \"model port\" and the expansion of trusted travel and shipper programs. It may even involve moving some customs and security checkpoints away from the border, possibly to sites in Monterrey or Guadalajara, and then using smart seals to ensure that checked goods arrive from those sites to the United States without tampering. Pillar three also seeks to help Mexico deploy new technology to better patrol its southern border with Guatemala and Belize.\nPillar four will be a new focus for U.S.-Mexican cooperation, and may include targeted efforts to assist at-risk youth and curb unemployment and other social problems in communities plagued by drug trafficking and violence. Experts have lauded the inclusion of social development and crime prevention programs in the new Mérida framework, but expressed concern about the limited funds the programs are likely to receive from the United States. It appears that the funding and implementation of pillar four will primarily be the responsibility of the Mexican government, possibly with support from multilateral institutions like the Inter-American Development Bank.\nBilateral efforts under pillar four are focusing on pilot projects in Ciudad Juarez and Chihuahua, but may also be expanded to Tijuana and the state of Baja California. These efforts involve the continuation and expansion of some existing Mérida-funded initiatives, such as school-based \"culture of lawfulness\" programs and demand reduction and treatment services. They may also involve USAID or other agencies providing technical expertise in how to re-zone neighborhoods to prevent crime, issue municipal bonds to fund infrastructure projects, and/or launch public-private partnerships. It is also still possible that the Mexican government may request additional U.S. support to carry out President Calderón's \"We Are All Juarez\" plan, which includes 160 different initiatives that the federal government, in collaboration with state and local officials, will implement in the city.", "A number of policy issues have emerged involving the Central American portion of the Mérida Initiative, which, as of FY2010, has been split away from the Mérida Initiative into a new Central American Regional Security Initiative (CARSI). According to H.Rept. 111-187 , addressing drugs and crime in Central America requires a longer term commitment than the three-year Mérida program. Some analysts specializing in Central American security issues hope that by splitting Central America away from U.S.-Mexican security cooperation programs, the sub-region will receive more focus, funding, and attention from Congress and the Administration. Others disagree, asserting that it is important to have an integrated approach to counterdrug and anti-crime programs in Mexico and Central America, as the Mérida Initiative was initially designed to do. The Obama Administration requested $100 million for CARSI in its FY2011 budget request: $70 million in Western Hemisphere Regional INCLE funds and $30 million in Western Hemisphere Regional ESF funds.\nSome policy issues that have emerged during congressional consideration of the Central American portion of the Mérida Initiative include\nFunding: When the Mérida Initiative was announced, Central American leaders and some Members of Congress expressed concerns about the funding disparity between the Mexican and Central American portions of the initiative. Lingering questions remain about the adequacy of the funds provided, as well as how much of those funds should be spent on regional programs versus bilateral programs in the seven Central American countries. Type of Funds Provided: In the FY2008 Supplemental Appropriations Act, Congress reduced the funds appropriated for law enforcement programs in Central America in order to increase funding for institution-building, rule of law, and development programs. The FY2008 supplemental and FY2009 omnibus appropriations measures included earmarks for those types of programs, but the FY2010 appropriations bill did not. Members have and will likely continue to debate how funding should be balanced between the various program components in CARSI, particularly how much funding should support law enforcement programs and drug interdiction efforts versus institution-building and rule of law activities. Pace of Implementation: As previously stated, the December 2009 GAO report on the status of Mérida funding has raised serious concerns among Members of Congress about the slow pace of implementation. While the pace of implementation in Mexico has quickened, many projects in Central America continue to be stalled. Inst ability in Particular Countries: As a result of the June 2009 ouster of President Zelaya, some Mérida assistance for Honduras was put on hold until February 2010. The issue of how to deal with instability in particular countries is likely to arise again during Mérida and CARSI implementation. Interagency Coordination: Debates are likely to continue concerning what U.S. agency is best equipped to carry out Mérida and CARSI programs, including the issue of whether there is a role for DOD acting through U.S. Southern Command, and how U.S. programs should be coordinated with those funded by other donors. Anti-gang Policies: There is ongoing disagreement over the level and combination of preventive and suppressive policies that should be used in Central America to address the gang problem. Proponents of law enforcement solutions maintain that Central American law enforcement officials lack the capacity and resources to target gang leaders effectively, share data, and conduct thorough investigations that lead to successful prosecutions. Human rights groups tend to emphasize the importance of prevention and rehabilitation programs. U.S. Deportation Procedures: Congress may also maintain an interest in how U.S. deportation procedures for individuals with criminal records might be improved and whether U.S. assistance should be provided to help receiving governments reintegrate deportees.", "The Obama Administration did not include Haiti and the Dominican Republic in its FY2010 request for Mérida. Instead, the Administration requested $45 million in initial funding for projects that are being developed as part of a new security dialogue with Caribbean Community (CARICOM) member states and the Dominican Republic. When President Obama announced the new security cooperation plan, the Caribbean Basin Security Initiative (CBSI), at the Summit of the Americas in April 2009, he said that it would likely involve increased U.S. assistance to help the region address challenges such as transnational crime, illicit trafficking, and maritime and aviation security.\nThe CBSI is being developed through a process of dialogue with Caribbean nations, which are expected to establish complementary programs with their own funding. Initial U.S.-Caribbean meetings were held in Suriname, Barbados, and the Dominican Republic in 2009, and a ministerial meeting is expected to take place in Washington in 2010 where a political declaration, action plan, and framework for the Caribbean Basin Security Initiative will be adopted. As discussed with Caribbean nations, the initiative will likely have three strategic priorities: (1) to reduce illicit trafficking substantially (including measures to reduce drug trafficking, money laundering, trafficking in small arms and light weapons, and human smuggling); (2) to advance public safety and security (including measures to deal with crime and violence, border security, trafficking in persons, terrorism threats, criminal gangs, and natural disasters); and (3) to promote social justice (including crime prevention, justice sector reform, and anti-corruption measures).\nCongress provided \"not less than\" $37 million in FY2010 for the CBSI in P.L. 111-117 , of which \"not less than\" $21 million should be for social justice and education programs. The Administration's FY2011 request for CBSI is for $79 million : $37.5 million in INCLE, $17 million in ESF, $18 million in FMF, and $6.4 million in Non-Proliferation, Antiterrorism. Demining and Related programs (NADR) funds.\nAppendix A. Conditions on FY2008 Supplemental Assistance for Mérida\nMexico\nThe FY2008 Supplemental Appropriations Act ( P.L. 110-252 ), which includes the first tranche of funding provided for the Mérida Initiative, has softer human rights conditions than earlier House and Senate versions, in large part because of Mexico's objections that some of the conditions would violate its national sovereignty. The Secretary of State, after consultation with Mexican authorities, is required to submit a report on procedures in place to implement Section 620J of the Foreign Assistance Act (FAA) of 1961. That section of the FAA \"prohibits assistance to any unit of the security forces of a foreign country if the Secretary of State has credible evidence that such unit has committed gross violations of human rights.\" An exception to this prohibition is provided in Section 620J if the Secretary of State determines and reports to Congress that the government of such country is taking effective measures to bring the responsible members of the security forces unit to justice.\nIn P.L. 110-252 , human rights conditions require that 15% of INCLE and FMF assistance be withheld until the Secretary of State reports in writing that Mexico is taking action in four human rights areas:\nimproving transparency and accountability of federal police forces; establishing a mechanism for regular consultations among relevant Mexican government authorities, Mexican human rights organizations, and other relevant Mexican civil society organizations, to make consultations concerning implementation of the Mérida Initiative in accordance with Mexican and international law; ensuring that civilian prosecutors and judicial authorities are investigating and prosecuting, in accordance with Mexican and international law, members of the federal police and military forces who have been credibly alleged to have committed violations of human rights, and the federal police and military forces are fully cooperating with the investigations; and enforcing the prohibition, in accordance with Mexican and international law, on the use of testimony obtained through torture or other ill-treatment.\nCentral America, Haiti and the Dominican Republic\nP.L. 110-252 includes similar conditions on assistance provided to Central America, Haiti and the Dominican Republic. As with Mexico, The Secretary of State is required to submit a report on procedures in place to implement Section 620J of the Foreign Assistance Act (FAA) of 1961 in order for Mérida funding to be released.\nOther human rights conditions require that 15% of INCLE and FMF assistance be withheld until the Secretary of State reports in writing that the governments of the countries in Central America, Haiti, and the Dominican Republic are taking action in three areas:\nestablishing police complaints commissions with authority and independence to receive complaints and carry out effective investigations; implementing reforms to improve the capacity and ensure the independence of the judiciary; and investigating and prosecuting members of the federal police and military forces who have been credibly alleged to have committed violations of human rights." ], "depth": [ 0, 1, 1, 2, 1, 2, 3, 3, 3, 3, 2, 3, 3, 3, 2, 1, 1, 1, 2, 2, 2, 2, 2, 2, 3, 3, 3, 2, 3, 3, 3, 3, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h2_full h1_full", "h0_full h1_title", "h1_full", "h1_title", "", "", "", "", "", "h1_title", "h1_full", "", "h1_full", "h1_full", "", "", "h2_title", "", "", "", "", "", "", "", "", "", "h2_full", "", "", "", "", "h2_title", "", "", "h2_full" ] }

{ "question": [ "What is threatening citizen security in Mexico and Central America?", "What statistics are associated with drug trafficking-related violence?", "How does Mexican drug trafficking affect the United States?", "What is the Merida initiative?", "What did Congress appropriate for the Merida programs?", "What do these appropriations contain?", "What is the 11th Congress maintaining a strong interest in?", "What is Congress monitoring?", "What is Congress playing a role in?", "How is Congress playing a role?" ], "summary": [ "Increasing violence perpetrated by drug trafficking organizations and other criminal groups is threatening citizen security in Mexico and Central America.", "Drug trafficking-related violence claimed more than 6,500 lives in Mexico in 2009, and several Central American countries have among the world's highest homicide rates.", "Mexican drug trafficking organizations (DTOs) dominate the illicit drug market in the United States and are expanding their operations by forming partnerships with U.S. gangs.", "On October 22, 2007, the United States and Mexico announced the Mérida Initiative, a package of U.S. counterdrug and anticrime assistance for Mexico and Central America that would begin in FY2008 and last through FY2010.", "Congress has appropriated some $1.3 billion for Mérida programs in Mexico, $248 million for Mérida and related programs in Central America, and $42 million for Caribbean countries in P.L. 110-252, P.L. 111-8, P.L. 111-32, and, most recently, in the FY2010 Consolidated Appropriations Act, P.L. 111-117.", "Each of these acts contains human rights conditions on 15% of certain law enforcement and military assistance provided to Mexico and Central America. P.L. 111-117 places Central America funding into a new Central America Regional Security Initiative (CARSI), which splits Central America from the Mérida Initiative. The act also provides $37 million for a new Caribbean Basin Security Initiative (CBSI).", "The 111th Congress is maintaining a strong interest in how well U.S. agencies and their foreign counterparts are implementing the Mérida Initiative and the degree to which the nations involved are fulfilling their domestic obligations under Mérida.", "The 111th Congress is maintaining a strong interest in how well U.S. agencies and their foreign counterparts are implementing the Mérida Initiative and the degree to which the nations involved are fulfilling their domestic obligations under Mérida. Congress has also monitored enforcement of Mérida's human rights conditions, particularly with respect to Mexico.", "Congress is playing a role in the design of post-Mérida security cooperation with Mexico, Central America, and the Caribbean Basin during its consideration of the Obama Administration's FY2011 budget request.", "For FY2011, the Administration has asked for $310 million in assistance for Mérida programs in Mexico, $100 million for CARSI, and $79 million for CBSI. Detailed strategy documents for CARSI and CBSI are not yet available, but Secretary of State Hillary Clinton announced a new strategy for U.S.-Mexican security cooperation after a high-level meeting in Mexico City on March 23, 2010." ], "parent_pair_index": [ -1, -1, 1, -1, 0, 1, -1, -1, 1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Mid-Career Households Spent More than Older Households, and Spending Patterns Varied by Expenditure and Income Level", "Older Households Spent about 20 Percent Less than Mid-Career Households in 2013", "Housing Was the Top Expense Regardless of Age, and Older Households Spent More Out-of-Pocket on Health Care", "Unlike for Other Households, Spending Was Relatively Flat Across Low-Income Households Regardless of Age", "Spending, Household Characteristics, and Earnings Are Key Factors Used by Researchers and Financial Professionals to Develop Target Replacement Rates", "Changes in Spending Are Important to Account for When Deciding How Much Income Should Be Replaced in Retirement", "Household Size Also Affects Income Needs in Retirement", "Target Replacement Rates Can Vary by Pre- Retirement Earnings Level or if Different Definitions of Earnings Are Used", "Some Financial Professionals Recommend Target Replacement Rates While Others Question Their Usefulness", "Limited Explanation of Replacement Rates in Department of Labor Retirement Planning Materials May Leave Workers Uncertain about How to Use Them", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Section I: Analyzing Spending Patterns Using Consumer Expenditure Survey Data", "Consumer Expenditure Survey", "Cross-Sectional Spending Analysis", "Regression Analysis", "Section II: Identifying Key Factors Used by Researchers and Financial Professionals to Develop Target Replacement Rates", "Section III: Assessing the Usefulness of Information on Replacement Rates Provided by Federal Agencies to Workers", "Appendix II: Home Mortgage Outlays", "Appendix III: Confidence Intervals for Select Spending Estimates", "Appendix IV: Other Factors That Could Inform Target Replacement Rates", "Appendix V: Long-term Care Costs and Effect on Retirement Resources", "Appendix VI: Comments from the Department of Labor", "Appendix VII: Comments from the Social Security Administration", "Appendix VIII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments", "Bibliography", "Related GAO Products" ], "paragraphs": [ "Some key sources of retirement income are Social Security benefits, defined benefit plans, defined contribution plans, Individual Retirement Accounts (IRAs), as well as personal savings. In recent years, employment-based retirement plan coverage, especially in the private sector, has shifted from defined benefit to defined contribution plans. Under “traditional” defined benefit plans, workers typically receive benefits—based on factors such as salary and years of service—in the form of a lifetime annuity that provides a guaranteed monthly payment. Defined benefit plans are, in most cases, financed by employers, who are responsible for managing plan assets. Defined contribution plans and IRAs are two primary types of retirement savings vehicles in which benefits accrue in the form of account balances, which grow from contributions made by workers (and sometimes by their employers) and investment returns. Workers and employers who contribute to retirement savings accounts generally receive favorable federal tax treatment, such as tax deductions for contributions and tax-deferred or even tax-free returns on investment. In addition to tax advantages, defined contribution plans and IRAs provide portability of savings and transparency of known account balances. However, they also place the primary responsibility on individuals to participate in, contribute to, and manage their accounts throughout their working careers. Moreover, individuals must manage their savings throughout retirement, including deciding whether and how to convert an account balance into an income stream, in order to avoid running out of money.\nThis shift in responsibility is further compounded by the low levels of financial literacy in the United States. As we have previously reported, numerous studies have found that many Americans lack basic financial literacy, including an understanding of fundamental investment concepts, such as the benefits of compounding interest and risk diversification and the potential impact of inflation. We concluded that such basic financial literacy is necessary for making well-informed decisions and evaluating recommendations. Financial literacy research has also pointed to the need to educate individuals to improve their investment decision-making and savings outcomes. For example, one study found that a large percentage of American workers has not conducted meaningful retirement planning, even when retirement is in the near future. Another study found that most workers acknowledge they do not know as much as they should about retirement planning and that many workers actually guessed at their retirement savings needs. Further, our past work has found that ensuring income in retirement requires workers to make difficult choices and that workers may not have sufficient information to determine which choices are in their best interest.\nMany studies have evaluated the retirement readiness of workers and the economic well-being of retirees. These studies have used a variety of benchmarks for assessing retirement readiness or well-being, including assorted measures of retirement saving, income, consumption, wealth, and standard of living. Economists broadly agree that a conceptual benchmark measure for adequate retirement saving is an amount that will, along with other sources of retirement income, allow a household to maintain its pre-retirement standard of living into retirement. A key concept underlying such a measure is the lifecycle model of savings, which suggests that individuals will adjust their saving and spending to ensure a consistent level of consumption over their lifetime.\nIncome replacement rates, measured as a percentage of pre-retirement income, are one common method for analyzing the retirement readiness of individuals and providing information to help individual workers plan for retirement. Plan sponsors and researchers have long used them to assess the adequacy of pension plan benefit levels. Replacement rates can also show the extent to which individuals are able to replace their pre-retirement earnings with other sources of income in retirement, such as Social Security benefits, pension benefits, or retirement savings. While there is no consensus about how much income is required to ensure a stable standard of living, economists and financial planners generally agree that many retirees do not need to replace 100 percent of their pre- retirement income to maintain their standard of living because most retirees probably have reduced expenses relative to when they were working. For example, spending on transportation may be reduced for those who no longer need to commute to work. As a benchmark of how much income will be needed in retirement, a target replacement rate can help alert workers about how much to save as well as how long to work or how much to spend. However, while a replacement rate provides an individual with important information for developing a long-term savings goal, it does not provide a plan for achieving it. Converting a target replacement rate to a savings plan—such as how much to set aside from each paycheck—over a number of years is a complicated exercise and may prove daunting, especially in light of the limited financial literacy of many Americans.\nDOL is responsible for providing guidance on retirement income savings for workers. The Employee Retirement Income Security Act of 1974, as amended (ERISA), directs the Secretary of Labor to “maintain an ongoing program of outreach to the public designed to effectively promote retirement income savings by the public.” With regard to replacement rates specifically, ERISA also directs the Secretary of Labor to establish a website that includes a “means for individuals to calculate their estimated retirement savings needs, based on their retirement income goal as a percentage of their preretirement income.”", "", "Based on our analysis of 2013 CE data, mid-career households had one of the highest spending levels, while older households generally spent less. More specifically, in 2013, mid-career households—those aged 45- 49—spent an estimated average of about $58,500, while young retiree households—those aged 65-69— spent about $46,800, or 20 percent less overall (see fig. 1). We also analyzed spending across two broader age groups: pre-retirement households (aged 50-64) and post-retirement households (65-79) (see table 1). We found that the difference in spending between broader age groups was similar to the comparison between mid-career and young retiree households using 5-year age groups. The estimated average total spending for post-retirement households was about 77 percent of the spending levels for pre- retirement households.\nSpending was lower among mid-retiree and older retiree households compared to mid-career and young retiree households (see table 2). For example, mid-retiree households (aged 75-79) spent an average of around $34,700, or 26 percent less, than young retiree households. Average spending for older retiree households (aged 80 and older) was slightly less than mid-retiree households at around $31,400, although differences were not statistically significant.\nThe patterns in total spending may, in part, reflect variations in average household size and priorities. The average household size for mid-career households was about 2.9 people as compared to about 2.1 people for young retiree households. The average household size was approximately 1.7 people for mid-retirees and 1.5 people for older retirees. Patterns in spending may also be affected by the age composition of other members of the household. Lower spending for older households could also be indicative of different priorities. For example, one large relative difference in spending was attributable to the personal insurance and pensions category. Mid-career households may be more concerned with contributions toward retirement resources than older households who could already be retired. Moreover, we found that in 2013, age groups varied in how much they spent, including on basic needs, such as food, and non-essential items, such as entertainment. Such fluctuations in spending have implications for the resources households will need to maintain their standard of living. More specifically, spending levels are indicative of how households allocate resources based in part on different needs and lifestyle preferences, and are an important consideration when planning for retirement.", "While the share of spending was relatively consistent across age groups in some categories, there were larger variations by age for other categories. On average, housing was the largest spending category for all age groups. For example, households aged 45 and older consistently spent about a third of total expenditures on housing. More specifically, young retiree households spent about 83 percent of the amount that mid- career households spent for housing, on average (see fig. 2). However, the composition of homeowners varied widely by age group. For example, the proportion of homeownership without a mortgage for young retiree households was three times higher than for mid-career households. Housing expenditures include expenses such as maintenance, operations, and utility costs that can be incurred regardless of ownership status.\nIn contrast to other spending categories, health care was a larger expense for older households. For example, young retiree households spent an average of around $4,900 on health care, compared to about $3,500 for mid-career households. Older retiree households spent a large share on health care—15 percent of total spending—which was more than double the share that mid-career households spent on health care.\nThe age at which expenditures peak also shows how spending patterns varied. For example, the amount a household spends on apparel was estimated to peak at age 42, which was significantly younger than for entertainment, where the amount a household spends was estimated to peak around age 52. Spending on items such as apparel and transportation may be more relevant during a household’s working years. Further, spending in some categories may increase with age as households have more time or resources for certain expenses, such as recreational activities.", "Spending levels across age groups were relatively similar for low-income households, while spending levels were more variable for high-income households (see fig. 3). More specifically, the difference in average total spending for low-income households between the mid-career and young retiree age groups was not statistically significant, while the difference across these same age groups was over $20,000 for the highest income quartile.\nThough low-income households had much lower overall spending than mid- or high-income levels, they spent a larger share on necessities like housing and food, which could have implications for their respective replacement rates. Low-income young retiree households had an average of around $23,500 in out-of-pocket spending, with 39 percent spent on housing and 19 percent on food. In comparison, high-income households in the same age group spent about $82,200, of which 31 percent was spent on housing and 12 percent on food. While spending levels provide information on consumption, expenditures do not necessarily equate to a household’s level of consumption. For example, a household could consume the same amount of food at different expenditure levels based on the difference in cost between preparing food at home versus eating out. Additionally, households may spend money on goods they are not consuming themselves, such as charitable contributions or gifts. Alternatively, some low-income families may receive benefits from public assistance programs that allow for higher levels of consumption than out-of-pocket spending indicates. For example, households may be eligible for programs that offset some of the costs of certain expenses, such as reduced-price school lunch or subsidized housing. Nevertheless, with a substantial portion of spending going toward basic expenses, households with limited resources may not have much flexibility to adjust spending levels. Consequently, a household’s socioeconomic status could affect the level of resources required to plan for future spending needs.", "", "We found that accounting for how a household’s spending may change in retirement is an important step in determining a target replacement rate— that is, a recommendation for how much pre-retirement income an individual or household needs to replace in retirement. According to the articles and reports we reviewed, assumptions need to be made about the direction and size of a number of expenses, including housing, health care, entertainment, and consumer goods. For example, a retired household may spend less on housing if it pays off a mortgage or downsizes at retirement (see table 3). Alternatively, spending on housing may increase if a retiree moves into specialized senior housing. The amount a retired household will spend on health care may fluctuate because health care costs can be variable and premiums and out-of- pocket medical costs may rise. Further, spending on entertainment and consumer goods may also fluctuate, according to the articles and reports we analyzed. Entertainment spending could increase because retirees have more leisure time, or alternatively, it is possible that it decreases due to the prevalence of entertainment-related senior discounts. In addition, spending on consumer goods and services, such as ready-to- eat foods or car repairs, may be less in retirement than before because retired households have more free time to engage in in-home production, which includes activities like cooking and household chores and repairs. Moreover, consumer durables purchased prior to retirement, such as furniture or household appliances, may continue working well into retirement and may not need to be replaced.\nFurther, researchers make assumptions about why overall spending might change in retirement and the role of socioeconomic status, or income level, before retirement. For example, some researchers have proposed that consumption, for which spending is a proxy, declines in retirement and households are generally content with consuming less as retirement progresses. Alternatively, households may aim to smooth their consumption over their lifetime and, thus, the goal in retirement is to maintain the same level of consumption or spending as prior to retirement. Under this theory, households that spend less in retirement may do so because of income constraints. Some researchers have explored the role that socioeconomic status plays in determining target replacement rates. They have found that targets may vary by income level. Lower-income households may need a higher replacement rate because they spend a relatively high proportion of their income on nondiscretionary items, such as food. Theoretical perspectives about spending could influence the assumptions used to calculate a target replacement rate.\nAssumptions about households’ tax liabilities also affect estimates of how much income is needed to cover expenses in retirement, and target replacement rates. Not only do tax liabilities vary across households, they can also vary before and after retirement. For example, retirees may be in a lower tax bracket after retirement. In addition, Social Security benefits are partially or fully tax free, and according to some researchers, there are more income tax deductions for those aged 65 and older.", "According to the articles and reports we reviewed, household characteristics, particularly household size, play an important role in determining a household’s expenses, its income needs in retirement, and a target replacement rate (see table 4). For example, the presence of children could also affect what a target replacement rate should be. Researchers do not agree on how having had children affects a retired household’s income needs. According to some researchers, retirees will focus on maintaining spending on themselves and will not need to replace income that went toward their children’s consumption. Further, some researchers have hypothesized that after children move out, the household will save more; and because the household saves more, leaving less money to spend during its remaining working years, the percentage of income that needs to be replaced in retirement is reduced. On the other hand, other researchers have theorized that once children move out, households may not actually consume less. Instead, the parents may choose to use the money they had spent on their children on themselves. Thus, the percentage of income needed to be replaced in retirement may not be lower for retirees who had children versus those who did not.\nHowever, household characteristics may not be static, making choosing a target replacement rate even more complex. For example, spouses may not retire at the same time. Further complicating matters is the fact that retirees may marry, divorce, or become widowed, changing the size of their household and the replacement rate needed to cover the household’s income needs.", "Low earners had the highest target replacement rates and high earners the lowest target rate, according to studies we reviewed. Some of the studies in our review developed different target rates for workers based on earnings level before retirement. While these studies did not use the same earnings-level groups, their conclusions were consistent. Specifically, Aon Hewitt projected that workers earning under $30,000 would need a 98 percent replacement rate and that workers earning $90,000 would need to replace 79 percent of their income. Lower earners may need a higher replacement rate for three reasons. First, as discussed earlier, they may spend a relatively high amount of their income on non-discretionary items. Second, research has shown low- income households save less than higher-income households. Thus, the reduction in saving in retirement will be less substantial for low-income households and they may need a higher replacement rate. Third, because low-income households pay little in taxes, they receive little in the way of tax saving in retirement.\nIn addition, how pre-retirement earnings are defined and calculated can have important implications for target replacement rates. More specifically, developers of target replacement rates must decide upon a period of earnings to use (see table 5). Two options cited by the articles and reports in our review are final average earnings and average earnings over the course of a career. A final average earnings measure uses the average of annual earnings for a period of time leading up to retirement. Career average earnings measures, on the other hand, use the average of annual earnings over the course of someone’s career, adjusted for inflation or wage growth. Furthermore, because different definitions of earnings can affect the final target replacement rate, it is important to understand how earnings were calculated and indexed. For example, adding up separate replacement rates provided by defined benefit plans and Social Security benefits to come up with a total replacement rate may not be accurate if the two rates did not use the same type of pre-retirement earnings or index these earnings the same way.\nOther decisions may need to be made about how to account for work histories or changes in earnings or phased retirement. For example, women often have shorter careers than men. They tend to take a greater number of breaks from the labor force to care for children and elderly relatives. As a result, a replacement rate that uses career average earnings could be distorted by these breaks. In addition, changes to earnings late in a career can have a substantial effect on target replacement rates if final average earnings are used to calculate pre- retirement income. Phased retirement could also change a target replacement rate, depending on how it is incorporated into the calculation. For example, if workers phase into retirement by reducing their hours and earnings over a number of years, then using the average of the final 5 years of earnings could result in a much lower measure of pre-retirement income than using career average earnings. Similarly, how retirement income is defined can have implications for target replacement rate recommendations. For more information on how the definition of retirement income and other factors can affect target replacement rates, see appendix IV.", "Six of 14 (or 43 percent) of the service providers, consultants, and financial planners who responded to our questionnaire recommend a target replacement rate to plan participants or clients. Four of the six developed customized replacement rate targets for plan participants and used information such as asset levels, expected spending, and household composition to calculate target rates. One service provider told us it uses answers to five multiple-choice questions that ask about lifestyle preferences and spending patterns, along with information about retirement accounts, to calculate customized target replacement rates for most plan participants. Two other respondents reported using simplified “rules of thumb.”\nThe remaining eight service providers, consultants, and financial planners do not recommend a retirement replacement rate and questioned their usefulness for plan participants or clients. For example, according to one consultant, using a set rate or a rule of thumb is not appropriate for everyone. In addition, two financial planners told us that income needs in retirement are typically expense- or goals-based or income-based. Further, they explained each household’s income needs are unique and may change over time.\nResearchers have also cited concerns about the usefulness of replacement rates in their current form. In particular, a 2011 report by MacDonald and Moore found that any one target rate fits relatively very few individuals. Further, the authors explained that there is no consensus on the best approach to estimate replacement rates and that its conceptual grounding in past research has often been weak.\nThe number of different replacement rates cited in the literature also calls into question the extent to which replacement rates are useful. We identified about 500 references to target replacement rate recommendations in 52 articles and reports (see fig. 4). These recommendations were either cited as rules of thumb or analysis results. The recommendations ranged from 43 to 476 percent of pre-retirement income, with the majority of the references being between 70 and 85 percent of pre-retirement income; the median recommended target replacement rate was 77 percent.\nDespite their inherent limitations, particular groups of workers may find replacement rates to be a useful planning tool, making it important that these groups receive clear information on replacement rate recommendations, according to the articles and studies in our review. For example, target replacement rates may be more useful for low- and middle-income households in part because they are more likely to face budget constraints in retirement and will likely need a higher replacement rate compared to high-income households. Also, many individuals lack basic financial knowledge, and lower- and middle-income individuals scored lower on a recent national financial capability assessment. Replacement rates may also be useful for younger individuals because they can use a replacement rate as a metric to estimate if their projected retirement savings are reasonable.\nFurther, the 2011 MacDonald and Moore report concluded that the replacement rate literature is becoming more sophisticated and capable of providing better guidance. It found that incorporating some individual characteristics—such as income and family size—could improve the usefulness of replacement rate calculations. Customizable replacement rates could be one alternative to universal target replacement rate recommendations. We found that there are numerous calculators and tools available online to help individuals determine how much they need to save, but research has found wide variability in how such programs work and in the outcomes they produce. Given that variability, some researchers have expressed concern that individuals may be unable to identify tools that are relevant for their individual circumstances. With regard to target replacement rates, we found some online tools that used target replacement rates in calculations did not permit users to adjust the value of the rate. Though we also found several that allowed users to adjust the rate used and provided additional—but still concise— information to help users select an appropriate rate. For example, AARP’s retirement saving calculator provides replacement rate defaults corresponding to three different lifestyle options as well as the ability to adjust the replacement rate to any whole number.", "DOL’s Employee Benefits Security Administration (EBSA) provides guidance on retirement income savings for workers via a number of publications available in print and online. For example, EBSA provides a brief and simple explanation of retirement replacement rates in retirement planning materials and guidance for workers. Among EBSA’s retirement planning publications is one that is intended to help younger workers understand how much they need to save for retirement. The publication includes worksheets to help workers calculate their savings needs and it is available in print and as an interactive online tool. This document notes that replacement rates might vary depending on an individual’s circumstances (see fig.5).\nThe publication notes that no rule of thumb is appropriate for all individuals and also includes information that some expenses may change in retirement and descriptions of some lifestyle choices that may affect how much income workers need to replace (see fig. 5). Despite DOL’s appropriate acknowledgement of such considerations, its worksheet for calculating how much to save each year assumes a fixed replacement rate of 80 percent. The worksheet assumes that Social Security benefits will provide about 40 percent of pre-retirement income and the remaining 40 percent would need to come from savings. While the previous page explains that the replacement rate provided is an estimate and the user may need more or less depending on their circumstances, “x .40” is pre-printed in the worksheet for users to calculate the amount of savings needed when they retire (see fig. 6).\nSimilarly, in the interactive online version of Savings Fitness, the fixed target replacement rate is coded into the calculation and cannot be changed. DOL officials told us that they worked to balance accuracy with simplicity by presenting information in a concise manner that will not overwhelm users. Specifically, they said that they did not make the rate adjustable in order to limit user flexibility and prevent too wide a range in assumptions. They also indicated that they limited the information on factors that could affect replacement rates to keep the document from being too complex and cluttered. ERISA calls for DOL to provide on its website “a means for individuals to calculate their estimated retirement savings needs based on their retirement income goal as a percentage of their preretirement income”. While the planning tool allows workers to estimate their savings needs based on a percentage of their preretirement income, they are constrained in setting an individual retirement income goal as the replacement rate is preset by DOL. Without the ability to adjust the replacement rate used in the tools, workers may over- or under-estimate how much they need to save for retirement.\nIn addition, the Savings Fitness explanations provided concerning the replacement rate in the calculation do not include specific information on demographic groups that studies suggest generally need higher or lower replacement rates, such as low-income and single workers. For example, one study found that the median optimal target replacement rate for singles was 55 percent compared to 75 percent for married couples. Also, we found no discussion in the EBSA materials about how much the replacement rate provided might need to be adjusted for the examples of circumstances that might affect an individual’s desired replacement rate. For instance, though it suggests that someone who wants to travel extensively will need more money in retirement, there is no information on how to adjust the replacement rate to account for such a situation. Such information and guidance could help workers assess whether they need to customize the rate used in their own calculations.\nAcademic and industry-based researchers consistently state that there is no one-size-fits-all target, and some note that averages can be misleading and dangerous for personal planning purposes. They also highlight particular demographic groups that often need higher or lower income replacement (married vs. single; with/without children; by income level). Financial literacy research highlights the necessity of using relatable examples and realistic scenarios, targeting by income, and tailoring communications as effective means of educating and motivating. For instance, one review of retirement planning software suggests that such tools should provide the user assistance in setting a target replacement rate and should recognize the different needs of those with and without children. Similarly, an ERISA Advisory Council report cited research that found that communications specifically targeted to participants based upon their interests, background, and/or economic status were more successful than providing general communications.", "Income replacement rates may be a helpful gauge for younger workers who have time to contribute more to retirement plans or adjust their saving. They can also be a useful metric for low- and middle-income households that may find they need to plan for replacing a substantial portion of their pre-retirement income in retirement. These households, in particular, may find they need to spend a sizable portion of their retirement income on basic needs, such as housing and health care. Social Security’s progressive benefit structure will help these households, but they will need other sources of income in retirement through defined contribution plans, pension benefits, or other means to make up the difference. At the same time, however, reports and articles we reviewed demonstrate that developing a customized replacement rate requires careful consideration to appropriately balance all of the underlying assumptions, including those related to determining pre-retirement and retirement income. The wide range of recommended target replacement rates cited in research indicates that there is no rule-of-thumb that will work for everyone.\nGiven these factors, workers may have difficulty understanding what target replacement rate to use based on their circumstances. Further, workers may have trouble operationalizing this information into a realistic savings strategy. This difficulty could be compounded by challenges in understanding how to convert defined contribution account balances into a potential income stream. If workers are unable to translate retirement account balances into income replacement goals, the benefit of replacement rates as a metric or guide is limited.\nDespite their complexity, replacement rates are used in some of the retirement planning tools produced by the financial industry to give workers a general sense of their progress toward achieving a secure retirement. DOL’s tools, however, lack targeted information and guidance that could help different groups of workers make reasonable adjustments to the replacement rates used in estimating their savings needs. This type of clarifying information is particularly important given the challenges workers may face in understanding the multitude of factors that could affect a target replacement rate. Additionally, DOL’s tools do not provide flexibility to allow a user to customize or compare rates. Stating a rule-of- thumb target replacement rate, for example, and then using it in planning tools without an option to adjust it, may inadvertently and implicitly endorse a “right” rate. Without additional information and guidance on how to estimate how much money they will need in retirement and the flexibility to adjust the rate used in the calculations, workers could over- or under-estimate how much they need to save. As a result, they may give up on saving if estimates seem unattainable or they could unknowingly save too little. In both cases, workers could reach retirement without adequate savings.", "To help workers make appropriate adjustments to the replacement rates used in calculating their specific retirement income needs, the Secretary of Labor should take the following two actions: Include in its retirement planning tools information about examples of individual circumstances that research has shown to result in higher or lower income replacement needs (e.g., household characteristics and income level) and guidance on the direction and magnitude of the changes attributable to such circumstances as well as those due to particular lifestyle choices.\nModify its retirement planning tools to allow for some user flexibility in adjusting the replacement rate used in calculating retirement income needs.", "We provided a draft of this product to the Department of Labor (DOL), Department of the Treasury, Social Security Administration, and Consumer Financial Protection Bureau. DOL provided written comments which are reprinted in appendix VI. DOL also provided technical comments that were incorporated as appropriate. The Social Security Administration (see letter in app. VII), the Department of the Treasury, and the Consumer Financial Protection Bureau did not have any comments on our report.\nIn its written comments, DOL generally agreed with our findings and recommendations. In its response, DOL cited steps taken by the Employee Benefits Security Administration (EBSA) to ensure that retirement planning materials balance key information with usability of the tools, including working with key stakeholders and experts to develop and test materials. DOL also noted that EBSA has worked to identify the most common circumstances relevant to replacement rates to help make workers aware of the possible impacts, rather than to create an individualized tool. To address our recommendations for providing more information on using replacement rates and modifying tools to allow for more flexibility, EBSA plans to make two changes by June 2017. First, EBSA plans to add an example about replacement rates specifically for married couples. Second, EBSA plans to add options to its online retirement savings rate tool to allow users to adjust their income replacement rate and their Social Security replacement rate within an accepted range. We agree that additional information on using replacement rates and increased user flexibility will further help workers make appropriate adjustments in calculating their specific retirement income needs.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of Labor, the Secretary of the Treasury, the Acting Commissioner of the Social Security Administration, and the Director of the Consumer Financial Protection Bureau. In addition, the report is available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202)-512-7215 or jeszeckc@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix VIII.", "To analyze consumption in retirement and how target replacement rates are defined and used to assess retirement readiness, we examined (1) whether and how spending patterns have varied by age; (2) the key factors used to develop target replacement rates for how much income workers need to replace in retirement; and (3) the usefulness of information on replacement rates provided to workers by the Department of Labor. This appendix provides a detailed account of the data sources used to answer these questions and the analyses we conducted. The appendix is organized into three sections. Each section presents the methods we used for the corresponding objective. Specifically, section I describes the information sources and methods we used to analyze whether and how spending patterns have varied by age. Section II describes the information sources and methods we used to identify key factors used to develop target income replacement rates for retirement. Section III describes the information sources and methods we used to examine the information on replacement rates provided by federal agencies.", "", "To understand how spending patterns varied by age, we analyzed data from the 2013 Consumer Expenditure Survey (CE). This was the most recently available data at the time of our review. CE is a program that consists of two ongoing surveys, the Quarterly Interview Survey and the Diary Survey, that provide information on the buying habits of American consumers, including data on their expenditures, income, and consumer unit characteristics. The survey data are collected for the Bureau of Labor Statistics (BLS) by the U.S. Census Bureau. Based on our interest in conducting a broad analysis of spending patterns, we chose to use the Interview Survey rather than the Diary Survey, since the Diary Survey is designed to capture information on small, frequently purchased items. In contrast, the Interview Survey is designed to collect data on major items of expense, which respondents can be expected to recall for 3 months or longer. In practice, the Interview Survey collects detailed data on an estimated 60 to 70 percent of total household expenditures. In addition, global estimates are obtained for food and other selected items, which account for an additional 20 to 25 percent of total expenditures. The Interview Survey does not collect expenses on housekeeping supplies, personal care products, and nonprescription drugs, which contribute about 5 to 15 percent of total expenditures. Thus, up to 95 percent of total expenditures are covered by the Interview Survey.\nCE uses a probability sample of households designed to be representative of the total U.S. non-institutionalized civilian population. Prior to 2015, the sampling frame was generated from the 2000 Census of Population. The Interview Survey is a rotating panel survey. According to a BLS official, consumer units in each panel complete four interviews conducted every 3 months and are then dropped. Each month new consumer units enter the survey as other consumer units complete their participation. The quarterly target sample size for the Interview Survey is 7,060 participating sample units. Data are weighted to adjust sample estimates to national population estimates. The results for our weighted data represent approximately 125.7 million households. We also accounted for the number of months a household is interviewed. Sample surveys are subject to two types of errors, sampling and non-sampling. Sampling errors occur because observations are not taken from the entire population. To estimate sampling error, we calculated 95 percent confidence intervals. Total expenditure data estimates reported have 95 percent confidence intervals that are within +/- 17 percent of the estimate itself, and additional confidence interval information on individual spending categories are provided in appendix III. We followed BLS guidance and estimated standard errors using a replicate weight methodology, which involved taking the variance across 44 separate values of differently weighted estimates. Non-sampling error can be attributable to many sources, such as differences in interpreting questions, inability or unwillingness of the respondent to provide correct information, and mistakes in recording or coding data. These non- sampling errors can influence the accuracy of information presented in the report, although the magnitude of their effect is unknown.\nWe found the 2013 CE Interview Survey data to be reliable for the purposes of our report. To assess reliability, we reviewed survey documentation, compared results to published tables, and interviewed agency officials to ensure the variables we analyzed were reliable for our purposes. Estimates produced in this report may differ from published BLS tables. For our analysis, we only analyzed Interview Survey data, whereas BLS integrates some Diary Survey data into published tables. For the purposes of our analysis, we used different age groups than those in BLS published tables, which can also account for differences. Additionally, averages for some income and expenditure items in CE publications differ from those derived from Interview Survey public-use microdata because some variables are top coded or suppressed for public-use files.", "We compared estimates for average household spending levels and shares of expenditure categories across 5-year age groups. Expenditure data are tracked for each consumer unit, which can comprise (1) all members of a household related by blood, marriage, or other legal arrangement, (2) a person living alone or sharing a household but who is financially independent, or (3) two or more persons living together who make joint expenditures. For the purposes of this report, we refer to consumer units as households. Households were included in age groups depending on the age of the reference person of the consumer unit. The reference person is the first member mentioned by the respondent when asked to identify the name of the person or one of persons who owns or rents the home.\nWe defined spending as direct out-of-pocket expenditures. In our analysis, each household had an observation for each expenditure type. Indirect expenditures, which may be significant, may be reflected elsewhere. For example, consumer units with members whose employers pay for all or part of their health or life insurance would have lower direct expenses for these items than those who pay the entire amount themselves. All monthly expenses were summed to obtain quarterly estimates for each household. In cases where no expenditure was reported, the expenditure was coded as a zero. We then multiplied expenditures by four to annualize quarterly expenditure estimates. Households in the four quarters of data were then averaged to obtain annual expenditures. To analyze the shares of different categories of spending, we grouped detailed level expenditures into broader categories, such as health and housing, based on BLS’s aggregation method. One exception was that we combined some broad expenditure categories into an “other” category for reporting purposes.\nThe personal insurance and pensions category includes private pensions. According to BLS officials, private pensions capture contributions to defined benefit, defined contribution, and individual retirement accounts. CE expenditure variables do not include payments on loans, such as principal payments on home mortgages because BLS considers these data as shifts in assets and liabilities, and would be captured in outlays.\nOutlays include out-of-pocket expenditures plus spending that “stays within the consumer unit” such as paying down principal on a loan. The figures in this report that are based on our analysis of the Consumer Expenditure Survey reflect data that are defined as expenditures in BLS documentation. However, since mortgages can play an important role in homeownership, we conducted an additional analysis where we added lump sum and mortgage principal payments to housing expenditures to understand the difference between housing outlays and expenditures. We found that including mortgage outlays does not substantially alter the spending patterns observed. For information on home mortgage outlays, see appendix II. Property taxes are included in housing expenditures. Lastly, income tax estimates are separate from expenditure variables. In 2013, CE started using the National Bureau of Economic Research TAXSIM program to estimate tax liabilities because it can be difficult for respondents to accurately recall and estimate income taxes.\nWe also analyzed expenditure levels by age-specific income quartiles. The income quartile thresholds for each age group are presented in table 6.\nWe also analyzed spending patterns by age for expenditures related to long-term care services since long-term care costs may be a particularly salient issue for older households. Specifically, we looked at spending on long-term care insurance; care in convalescent or nursing home; adult day care; and care for elderly, those who are incapacitated, individuals with disabilities, etc. However, there are challenges with measuring household spending for long-term care because there is uncertainty surrounding the extent to which households will need long-term care services and how they will finance these costs. Since many people may not have spending in this area, average spending levels are not necessarily indicative of the potential costs people may face. Thus, to better understand how long-term care costs would factor into retirement considerations, we compared the results of four academic studies that studied the potential effect of these costs on retirement resources. We selected these articles based on our general literature search results and citations in relevant studies. See appendix V for more information on long-term care costs.", "Using the same CE Interview Survey data, we analyzed whether there were differences in spending patterns by category using a regression analysis. Specifically, we estimated the following aspects of spending patterns: (1) the age at which the expenditure category is at its maximum, and (2) whether there is a significant relationship between age and expenditures. Our regression model tested the effect of age on expenditures while controlling for education, race, and ethnicity. We used the natural log of expenditures as the dependent variable in order to obtain results for the percentage effect of age on expenditures rather than the absolute effect. Based on the results of our cross-sectional analysis, which showed a parabolic pattern in expenditure levels by age, we used a quadratic form of age. We included a limited set of control variables that were not affected by age so as to capture the effect of age as well as other characteristics that may change with age. Because we used cross- sectional data, the results may not accurately describe how an actual cohort might behave over time.\nOur regression model is represented by the following equation: Ln(expenditure) = α + β1*age + β2*age + control variables. We then solved for the age at which expenditure is maximized by taking the first derivative with respect to age, and solving for the age at which the first derivative is equal to zero, - β1/(2∗β2).", "To identify key factors used to develop target replacement rates, we (1) analyzed articles and reports published in academic journals or by research centers or international organizations and (2) gathered information from financial firms through questionnaires and interviews. To identify the range of target replacement rates recommended to U.S. workers, we catalogued references to such recommendations in the studies we selected for review. Our analysis focused on total replacement rates, that is, the ratio of all income in retirement—including from Social Security, pension benefits, and retirement savings—to pre-retirement earnings. We sought to identify a number of considerations that researchers, policy makers, and financial professionals incorporate into their assumptions when developing, calculating target, or evaluating replacement rates. However, because analyzing the merits and disadvantages of each consideration was outside the scope of our work, GAO is not endorsing any of the considerations presented in this report.\nTo select articles and reports for our analysis, we used ProQuest, WorldCat, and PolicyFile to search various library databases such as EconLit and ABI/INFORM Global. We also searched the OECD library. We also reviewed websites of research centers and industry organizations that work on retirement security issues, such as the Center for Retirement Research at Boston College, the University of Michigan Retirement Research Center, the Society of Actuaries, the Employee Benefit Research Institute, and the World Bank. We also reviewed written statements of witnesses at congressional hearings held by the House Committee on Ways and Means; House Education and the Workforce Committee; Senate Committee on Finance; Senate Committee on Health, Education, Labor and Pensions; and Senate Special Committee on Aging. Our ProQuest and PolicyFile searches generated 555 results. Our OECD library searches generated 35 results and our web searches generated another 40 results. We reviewed relevant abstracts, when available, to determine which articles (1) contained information on target replacement rates or assumptions needed to calculate a replacement rate and (2) were published in or after 2005, and reviewed those articles. We selected 59 articles and reports for analysis (see bibliography at the end of this report for the list of reports and articles selected). We performed these searches and identified articles from January 2015 through January 2016. We included reports published by international organizations because these reports include detailed information on assumptions and methods used to calculate replacement rates. These reports generally use replacement rates primarily for cross-country comparisons. For example, the OECD’s Pensions Outlook calculates replacement rates for cross-country comparisons. This OECD report considers several definitions of pre-retirement earnings to compute replacement rates and shows the proportion of workers in a given country who may fail to reach the OECD average replacement rate and the country-specific target replacement rate, if any.\nTo gather information from financial industry firms, we used a combination of questionnaires and interviews. To determine which firms to contact, we relied on suggestions from several researchers and actuaries who have studied replacement rates. We collected information from 14 firms—7 service providers, 3 retirement services consulting firms, and 4 financial planners. While these firms provided valuable insight into target replacement rate recommendations, our findings are nongeneralizable. We asked the firms to respond to a questionnaire we developed, either by completing the questionnaire and sending it back to us or by going through the questionnaire during an interview. The questionnaire asked about how, if at all, the firm uses replacement rates in its work. If the firm uses target replacement rates, we asked a series of questions about the origin of the target rate used by the firm, when and how it was developed, and the various economic and demographic factors considered, if any, when the firm developed the replacement rate. For example, the questionnaire asks about individual or household demographic factors, economic factors specific to an individual or a household, and macroeconomic factors, like inflation and wage growth. If the firm does not use a target replacement rate, we asked about alternative measures it uses in lieu of replacement rates.\nTo identify target replacement rates recommended to U.S. workers, we reviewed our selected studies for (1) references to rules of thumb for income replacement rates in retirement, (2) references to target rates recommended by other researchers or organizations, and (3) target replacement rates recommended or developed by the report’s authors. For this particular part of analysis, we excluded articles and reports written by international organizations because of our focus on recommendations for U.S. workers.", "To identify the information on replacement rates provided to workers by federal agencies, we interviewed officials and reviewed relevant retirement planning materials produced by the Department of Labor (DOL), the Social Security Administration (SSA), and the Consumer Financial Protection Bureau (CFPB). We also interviewed officials at all three agencies. In addition to reviewing documents provided to us by agency officials, we conducted web searches to identify any additional relevant materials. We also reviewed the websites of the Pension Benefit Guaranty Corporation, the Securities and Exchange Commission, and the Administration on Aging for retirement planning documents that might contain references to replacement rates. We included these agencies because of references we found in DOL and SSA retirement planning materials. Although we found references to replacement rates in SSA and CFPB documents, we focused our review on DOL materials as DOL is required by law to provide a means of calculating retirement savings needs using a replacement rate. and 2013 Advanced Notice of Proposed Rulemaking on Pension Benefit Statements for remarks specific to the provision of information about replacement rates or pension benefits in individual benefit statements.\nSee 29 U.S.C. § 1146(d).", "Housing is unique from most spending categories in that certain financial aspects of homeownership are considered an asset for households, and financing plays an important role in purchasing a home. For several age groups, we found that a large portion of households owned a home with a mortgage (see fig. 7).\nWhile certain out-of-pocket expenses associated with homeownership, such as mortgage interest payments and property taxes, are captured by the Consumer Expenditure Survey (CE) expenditure variables, mortgage principal payments are not included in expenditures. Rather, payments of mortgage principal are considered a shift in a household’s assets and liabilities. To get a sense of the household’s total outlays for housing, we conducted an additional analysis of 2013 CE data on owned and vacation home mortgage principal and lump sum payments, referred to here as mortgage outlays. When mortgage outlays were added to housing expenditures, the share of spending on housing increased somewhat (see table 7).\nMortgage outlays were larger for some age groups than others. For example, estimated average mortgage outlays were around $3,000 for mid-career households (aged 45-49). However, for some age groups, such as households aged 75 and older, average mortgage outlays were quite small. While mortgage principal payments are an important expense for some households, their inclusion does not substantially alter the spending patterns observed. More specifically, housing was a major household expense across all age groups regardless of whether or not mortgage outlays are included.", "The tables below provide the underlying spending estimates and confidence intervals for table 1, table 2, and figure 2.", "We identified four factors from the articles and reports we reviewed in addition to spending, household characteristics, and pre-retirement earnings that raised important considerations for developing the underlying assumptions behind a target replacement rate. As shown in table 11, these four factors are (1) the income to be replaced, (2) sources of income in retirement, (3) saving patterns, and (4) risks.", "Based on the studies we reviewed in table 12, long-term care (LTC) is an important consideration for retirement, particularly since a majority of users for these services are elderly. About 70 percent of those aged 65 and older are likely to need long-term services and supports at some point in their lives. However, it is difficult to plan for LTC costs as part of income replacement in retirement because of challenges in determining spending needs, high service rates, and limited government coverage for financing costs. Average LTC spending is not necessarily indicative of the potential costs individuals may face because the distribution of costs is skewed. While many may not require LTC services, those who do may have significant spending. For example, in our analysis of 2013 Consumer Expenditure Survey data, we found that only 3 percent of households we analyzed had out-of-pocket spending on LTC-related expenses. Estimated expenditures were sizeable in some age groups for those who had spending on these services. For example, households aged 80 and older that did have long-term care expenses spent an average of about $6,900 in 2013. Further, LTC service rates can be expensive. According to 2015 Genworth Cost of Care Survey data, the national median annual service rate for nursing homes was $80,000 and was $46,000 for full-time home health care. Although government programs can help individuals finance LTC costs, coverage from these programs is limited. For example, Medicaid does provide coverage for some long-term care services, but coverage is limited to individuals who are within certain eligibility categories and meet functional and financial criteria. Individuals who pay for an extended stay in a nursing home can quickly deplete their resources for retirement and subsequently quality for Medicaid.\nTo understand how the potential for LTC costs affects retirement adequacy, we reviewed four academic studies (see table 12). The results show that incurring long-term care costs can have a negative impact on retirement readiness, particularly for low- and middle-income households.", "", "", "", "", "In addition to the contact named above, Kimberley Granger (Assistant Director), Jennifer Gregory (Analyst in Charge), Mindy Bowman, and Amrita Sen made key contributions to this report. Also contributing to this report were Benjamin Bolitzer, David Chrisinger, John Dicken, Gustavo Fernandez, Alexander Galuten, Mark Glickman, Isabella Johnson, Kathy Leslie, Mimi Nguyen, Oliver Richard, Frank Todisco, Walter Vance, and Seyda Wentworth.", "Altman, Nancy. “A Silver Lining to the Economic Crisis: The Case for Improving Social Security and Medicare.” Generations, vol. 33, no. 3 (2009).\nAon Consulting. Aon Consulting’s 2008 Replacement Ratio Study: A Measurement Tool for Retirement Planning. Global Corporate Marketing and Communications, 2008.\nAon Hewitt. The Real Deal: 2012 Retirement Income Adequacy at Large Companies. 2012.\nBajtelsmit, Vickie, Anna Rappaport, and LeAndra Foster. Measures of Retirement Benefit Adequacy: Which, Why, for Whom, and How Much? Sponsored by the Society of Actuaries’ Pension Section and Pension Section Research Committee. Schaumburg, IL: Society of Actuaries, January 2013.\nBeshears, John, James J. Choi, David Laibson, and Brigitte C. Madrian. “Behavioral Economics Perspectives on Public Sector Pension Plans.” Journal of Pension Economics & Finance, vol. 10, no. 2 (2011).\nBiggs, Andrew G. “Will You Have Enough to Retire On? The Retirement Security ‘Crisis’.” Retirement Policy Outlook, no. 2 (2009).\nBiggs, Andrew G. Resident Scholar, American Enterprise Institute for Public Policy Research. What Workers Need to Know about Social Security as They Plan for Retirement. Statement before the United States House of Representatives, Committee on Ways and Means, Subcommittee on Social Security, 113th Cong., 2nd sess., July 29, 2014.\nBiggs, Andrew G. Resident Scholar, American Enterprise Institute for Public Policy Research. Retirement Savings 2.0: Updating Savings Policy for the Modern Economy. Statement before the United States Senate, Committee on Finance, 113th Cong., 2nd sess., September 16, 2014.\nBiggs, Andrew G. Better No Social Security Replacement Rates Than Wrong Replacement Rates. 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Sponsored by the Society of Actuaries and the Actuarial Foundation. Schaumburg, IL: Society of Actuaries, December 2009.\nVanDerhei, Jack. “Measuring Retirement Income Adequacy: Calculating Realistic Income Replacement Rates.” Employee Benefit Research Institute Issue Brief, no. 297 (September 2006).\nWu, April Yanyuan, Nadia S. Karamcheva, Alicia H. Munnell, and Patrick Purcell. “How Do the Changing Labor Supply Behavior and Marriage Patterns of Women Affect Social Security Replacement Rates?” Center for Retirement Research at Boston College Working Paper, vol. 2013, no. 16 (July 2013).\nYuh, Yoonkyung. “Assessing Adequacy of Retirement Income for U.S. Households: A Replacement Ratio Approach.” The Geneva Papers, vol. 36 (2011).", "Federal Low-Income Programs: Multiple Programs Target Diverse Populations and Needs. GAO-15-516. Washington, D.C.: July 30, 2015.\nRetirement Security: Most Households Approaching Retirement Have Low Savings. GAO-15-419. Washington, D.C.: May 12, 2015. 401(k) Plans: Other Countries’ Experiences Offer Lessons in Policies and Oversight of Spend-down Options. GAO-14-9. Washington, D.C.: November 20, 2013.\nMedicare Supplemental Coverage: Medigap and Other Factors Are Associated with Higher Estimated Health Care Expenditures. GAO-13-811. Washington, D.C.: September 19, 2013. 401(k) Plans: Labor and IRS Could Improve the Rollover Process for Participants. GAO-13-30. Washington, D.C.: March 7, 2013.\nRetirement Security: Women Still Face Challenges. GAO-12-699. Washington, D.C.: July 19, 2012.\nFinancial Literacy: Enhancing the Effectiveness of the Federal Government’s Role. GAO-12-636T. Washington, D.C.: April 26, 2012.\nDefined Contribution Plans: Approaches In Other Countries Offer Beneficial Strategies In Several Areas. GAO-12-328. Washington, D.C.: March 22, 2012.\nRetirement Income: Ensuring Income throughout Retirement Requires Difficult Choices. GAO-11-400. Washington, D.C.: June 7, 2011. 401(k) Plans: Improved Regulation Could Better Protect Participants from Conflicts of Interest. GAO-11-119. Washington, D.C.: January 28, 2011.\nRetirement Savings: Better Information and Sponsor Guidance Could Improve Oversight and Reduce Fees for Participants. GAO-09-641. Washington, D.C.: September 4, 2009." ], "depth": [ 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 2, 3, 3, 3, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2, 1, 1 ], "alignment": [ "h3_full", "h0_title", "h0_full", "h0_full", "h0_full", "h1_title h3_title", "", "h3_full h1_full", "h1_full", "", "h2_full", "h2_full", "", "", "h3_full h2_title h1_title", "", "", "", "", "h1_full", "h2_full", "h0_full", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "How did household spending patterns vary by age?", "How did household spending patterns vary by spending category?", "How did spending compare between low-income households?", "What do spending patterns have implications for?", "How do researchers and financial industry professionals develop target replacement rates?", "What did GAO's analysis find about replacement rates?", "What can a worker's pre-retirement earnings be defined as?", "What do target replacement rates range between?", "What do some financial industry professionals do regarding target replacement rates?", "How are are the information and tools on replacement rates that the DOL provides?", "What does the EBSA website provide?", "What do EBSA's materials not have?", "Why is this problematic?", "Why is it problematic that users can't adjust replacement rates on EBSA's online tools and worksheet?", "What is part of DOL's mission?", "What is the purpose of the replacement rate?", "Why should replacement rates vary widely?", "What was GAO asked to review?" ], "summary": [ "Household spending patterns varied by age, with mid-career households (those aged 45-49) spending more than older households.", "While the share of spending was consistent for some categories, other categories had larger variations across age groups. For example, housing expenses comprised the largest share of spending regardless of age, while older households spent more out of pocket on health care than mid-career households.", "Spending was less variable across age for low-income households compared to other households.", "These variations in spending patterns have implications for the resources households need to maintain their standard of living in retirement.", "Researchers and financial industry professionals develop target replacement rates—the percentage of income to aim for in retirement— based on certain key factors, including spending, household characteristics, and pre-retirement earnings.", "GAO's analysis of the literature found that calculating an appropriate replacement rate can be complex.", "In addition, a worker's pre-retirement earnings could be defined as earnings at the end of the worker's career or as average earnings over the course of the career.", "Despite these complicated considerations, target replacement rates cited in the articles and reports GAO reviewed typically range between 70 and 85 percent.", "Some financial industry professionals told GAO that they develop customized targets that take into account workers' assets and expected spending, while others questioned the usefulness of replacement rates.", "The information and tools on replacement rates that the Department of Labor (DOL) provides may be too limited to help workers understand how to use such rates for retirement planning.", "DOL's Employee Benefits Security Administration's (EBSA) website provides information and tools to help American workers better plan for retirement, including a tool to help workers calculate their retirement income needs as a percentage of preretirement income.", "While EBSA's materials note that a target replacement rate can vary based on individual circumstances, they do not include specific examples of demographic groups that research indicates can result in higher or lower income replacement needs, or how much a replacement rate might need to be adjusted for those groups or for other individual circumstances.", "Without additional information, workers may not understand how to adjust target replacement rates when planning for retirement.", "Without the ability to adjust the replacement rates used in planning tools, workers may over- or under-estimate how much they need to save for retirement.", "Part of DOL's mission is to promote the retirement security of America's workers, a goal that has become increasingly challenging.", "One tool for assessing the adequacy of retirement income is the replacement rate.", "However, recommendations for the replacement rate that a household should target vary widely, in part because of the diverse underlying assumptions used to develop the rates.", "GAO was asked to review what consumption in retirement looks like and how target replacement rates are developed." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, -1, -1, -1, -1, -1, -1, 2, -1, -1, -1, 1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 4, 4, 0, 0, 0, 0 ] }

{ "title": [ "Background", "Federal and State Laws to Combat Human Trafficking", "Federal Agency Roles and Responsibilities to Combat Human Trafficking in the United States and Assist Victims", "Examples of Federal Collaboration Efforts to Combat Human Trafficking in the United States", "Federal Agencies Have Initiated Efforts to Determine Prevalence of Human Trafficking; Existing Trafficking Data Rely on Information Reported to Authorities", "Federal Agencies Have Made Efforts to Determine Prevalence of Human Trafficking in the United States and Are Taking Steps to Improve Data Collection", "Federal Agencies and Other Entities Maintain Data on Human Trafficking Activity Reported to Law Enforcement and Others; Data Vary in Scope and Comprehensiveness", "Selected Law Enforcement Officials and Prosecutors Reported Lack of Victim Cooperation, Limited Services, and Difficulty Detecting Victims as Challenges, and Have Taken Steps to Mitigate Them", "Limited Victim Cooperation and Victim Services Hinder Investigations and Prosecutions of Human Trafficking", "Limited Victim Cooperation", "Limited Victim Services", "Law Enforcement and the Public Face Challenges in Identifying and Distinguishing Human Trafficking from Other Crimes, and Have Taken Steps to Enhance Training and Public Awareness", "Law Enforcement Officials and Prosecutors Reported Other Challenges in Combating Human Trafficking", "DOJ and HHS Administer Human Trafficking Grants to Promote Stakeholder Collaboration and Provide Victim Services, and They Have Processes to Minimize Grant Duplication", "At Least 42 Federal Grant Programs Are Available to Combat Human Trafficking in the United States and Assist Victims", "Overlap Exists Across Grant Programs Intended Solely to Combat Human Trafficking, but Processes Exist to Help Avoid Duplication, Both Within and Between Agencies", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope and Methodology", "Appendix II: Federal Human Trafficking Investigation and Prosecution Data", "Human Trafficking Investigations", "Human Trafficking Prosecutions", "Appendix III: Extent to which Human Trafficking Victims Were Granted T-visas, U- visas, and Continued Presence", "Appendix IV: Grant Programs for Human Trafficking", "Appendix V: Data from Interactive Map", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgements" ], "paragraphs": [ "Federal law generally recognizes two forms of human trafficking—sex trafficking and labor trafficking. The Trafficking Victims Protection Act of 2000 (TVPA), as amended, defines human trafficking under the term “severe forms of trafficking in persons.” Pursuant to the TVPA, as amended, sex trafficking is the recruitment, harboring, transportation, provision, obtaining, patronizing, or soliciting of a person for the purpose of a commercial sex act. Sex trafficking is a “severe” form of trafficking where it involves force, fraud or coercion, or where the victim has not attained 18 years of age, in which case force, fraud or coercion are not necessary elements. In the case of sex trafficking, a perpetrator—which could be a pimp, intimate partner or relative of the victim—generally forces the victim to engage in commercial sexual activity. For instance, victims may be forced to act as hostesses in a “cantina,” which is a bar at which payment for drinks includes the company of women. Additional payment can be made for sexual contact, and officials told us that many cantinas may contain rooms for the purpose of sexual acts, while others pay for the transaction at the bar and then engage in the sexual act in a nearby hotel. The TVPA defines labor related trafficking generally as 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. Labor trafficking can take various forms, such as debt bondage, domestic servitude, and forced labor. For example, in one case, workers from Thailand were brought to the United States with the understanding that they would have highly-paid work as welders. However, once they arrived in the country, they were forced to work in restaurants without pay, had their passports confiscated, and were confined to cramped apartments without any electricity, water, or gas.", "Federal efforts to combat and prevent human trafficking in the United States have evolved over time, including various laws that have established federal agencies’ roles in these efforts. During the 1990s, the United States began to take steps to address human trafficking at home and abroad. DOJ prosecuted trafficking cases under several federal criminal statutes, including the involuntary servitude statutes, the Mann Act, and labor laws on workplace conditions and compensation. However, involuntary servitude was restricted to cases of physical abuse including force, or threats of force, or threats of legal coercion, and did not include psychological coercion, which is often used by today’s traffickers. These statutes spread enforcement authority across the federal government and resulted in different case outcomes, depending on the charges brought or which agency learned of the allegations of abuse.\nOver the past few decades, Congress has taken numerous legislative actions to help combat human trafficking and ensure that victims have access to needed services. In October 2000, the TVPA was enacted to combat trafficking in persons, ensure just and effective punishment of traffickers and protect trafficking victims. Among other things, the TVPA, as amended, makes it illegal to knowingly or recklessly use force, fraud, or coercion to recruit, entice, harbor, transport, provide, obtain, advertise, maintain, patronize, or solicit any person to engage in a commercial sex act. The TVPA also makes it illegal to take the above actions, and thus cause a person under 18 years of age to engage in a commercial sex act, with or without the use of force, fraud, or coercion. In addition, the TVPA criminalizes the use of certain means, including force, threats of force, physical restraint, or serious harm or threats of such harm to knowingly provide or obtain persons for any labor or services, such as working in farms, factories, and households. The act also updated and supplemented existing involuntary servitude statutes used to prosecute trafficking crimes, enhanced the penalties for trafficking crimes, and provided a range of new protections and assistance for victims of trafficking. The TVPA provided for the creation of the Interagency Task Force to Monitor and Combat Trafficking, now known as the President’s Interagency Task Force to Monitor and Combat Trafficking in Persons, as a cabinet-level entity that convenes routinely to advance and coordinate both federal policies and the implementation of the TVPA.\nAs amended by the Trafficking Victims Protection Reauthorization Act of 2003, the TVPA also established the Senior Policy Operating Group (SPOG), consisting of senior officials from 14 federal agencies and the White House National Security Council and the Domestic Policy Council, to coordinate activities of federal departments and agencies regarding policies (including grants and grant policies) involving international human trafficking and the implementation of the TVPA. This multidisciplinary approach includes the enforcement of criminal and labor law, development of victim-centered identification and protection measures, support for innovations in data gathering and research, education and public awareness, enhanced partnerships and research opportunities, and strategically linked foreign assistance and diplomatic engagement. Congress also reauthorized the TVPA in 2005 and 2008; and, in 2013, further amended provisions of the act, its reauthorizations, and other related laws.\nIn 2015, the President signed into law the JVTA, which, among other things, required the Attorney General to ensure that law enforcement officers and federal prosecutors receive anti-trafficking training; required the Federal Judicial Center, the research and education agency of the federal judicial system, to provide training for judges on ordering restitution for victims of certain trafficking-related offenses under chapter 77 of title 18, U.S. Code; mandated that the Secretary of Homeland Security implement a human trafficking training program for department personnel; and required the Attorney General to implement and maintain a national strategy for combating human trafficking.\nIn addition to the federal statutes, the 50 states and the District of Columbia have laws that address human trafficking to some degree, whether explicitly under a “human trafficking” statute or pursuant to other relevant laws. State laws differ and may include various features that criminalize sex or labor trafficking or other related conduct; require training for law enforcement; lower the burden of proof for sex trafficking of minors by not requiring force, fraud or coercion as elements of the offense; and provide victim assistance, among other things.", "Several components within DOJ, DHS, Defense, Labor, and State have responsibility for investigating and prosecuting human trafficking crimes, as shown in figure 1.\nIn addition to federal investigative and prosecutorial agencies, other agencies play a role in helping to identify human trafficking, such as the Transportation Security Administration (TSA), U.S. Citizenship and Immigration Services (USCIS), U.S. Customs and Border Protection, Federal Emergency Management Agency, and Coast Guard. These agencies may also encounter human trafficking victims in their daily operations, including at airports, land borders, and seaports. EEOC and Labor’s Wage and Hour Division may encounter human trafficking when conducting investigations related to their statutory authority. For example, EEOC investigates alleged violations of Title VII of the Civil Rights Act of 1964 prohibiting employment discrimination based on, race, color, religion, sex, and national origin, which in certain circumstances involve human trafficking victims.\nIn addition to investigating and prosecuting human trafficking crimes, federal agencies, primarily DOJ and HHS, support state and local efforts to combat human trafficking and assist victims. Several components within DOJ’s Office of Justice Programs, including the Office of Juvenile Justice and Delinquency Prevention, Office for Victims of Crime (OVC), Bureau of Justice Assistance (BJA), and National Institute of Justice (NIJ), administer grants to help support state and local law enforcement in combating human trafficking and to support nongovernmental organizations and others in assisting trafficking victims or conducting research on human trafficking in the United States. HHS also provides grant funding to entities to provide services and support for trafficking victims, primarily through components of the Administration for Children and Families (ACF), including the Children’s Bureau, Family and Youth Services Bureau, Administration for Native Americans. Further, ACF established the Office on Trafficking in Persons in 2015 to coordinate anti-trafficking responses across multiple systems of care. Specifically, HHS supports health care providers, child welfare, social service providers and other first responders likely to interact with potential victims of trafficking through a variety of grant programs. These efforts include integrated and tailored services for victims of trafficking, training and technical assistance to communities serving high-risk populations, and capacity-building to strengthen coordinated regional and local responses to human trafficking. HHS also established the HHS Task Force to Prevent and End Human Trafficking in 2015 to strengthen the health and well-being of victims of trafficking through strategic initiatives and policies.", "The federal government has a number of efforts underway to combat human trafficking and assist victims in the United States, including task forces, working groups, as well as training and public awareness campaigns. In 2011, partly in response to a 2007 GAO report that recommended a federal coordinating body to combat human trafficking, DOJ, in collaboration with DHS and Labor, established Anti-trafficking Coordination Teams (ACTeams). The teams are located in six U.S. cities and are comprised of federal investigators and prosecutors from the USAO, FBI, ICE HSI, and Labor’s Inspector General and Wage and Hour Division. The Federal Enforcement Working Group, which oversees the ACTeams, selected these cities based on the agencies’ commitment to combat human trafficking and to reflect a diversity of city size, federal agency staffing levels, nature of human trafficking threats, and federal agency experience with human trafficking investigations and prosecutions. The purpose of the ACTeams is to coordinate federal criminal human trafficking investigations and prosecutions to protect the rights of human trafficking victims, bring traffickers to justice, and dismantle human trafficking networks.\nPursuing trafficking investigations and prosecutions also involves the support of state and local law enforcement, which may be in the best position to find trafficking victims because of their familiarity with their respective jurisdictions; and nongovernmental organizations, where victims may more readily seek assistance. Moreover, victim service organizations assist human trafficking victims by providing assistance to address their short-term and long-term needs—such as legal and immigration services, housing, employment, education, food, clothing, job training, medical care, and child care. Since 2004, OVC and BJA have partnered to support multidisciplinary task forces that bring together law enforcement and victim service providers. This partnership supports a state, local, or tribal law enforcement agency and a victim service provider. OVC awards support the provision of a comprehensive array of culturally and linguistically appropriate direct services to trafficking victims, while BJA awards support the coordinated efforts of local, state, federal, and tribal law enforcement to investigate and prosecute traffickers. In fiscal year 2014, OVC and BJA undertook an analysis of the enhanced collaborative model and examined how well the funded task forces were operating. Based on both qualitative and quantitative analyses, program improvements were made, and a new solicitation incorporating these improvements was issued in fiscal year 2015. During fiscal year 2015, OVC and BJA provided nearly $22.7 million to 16 task forces in 14 states.\nAnother key federal effort to combat human trafficking in the United States is DHS’s Blue Campaign, which the department describes as the unified voice for DHS’s efforts to combat human trafficking. The Blue Campaign raises public awareness about human trafficking, leveraging partnerships to educate the public to recognize human trafficking and report suspected instances. The Blue Campaign also offers training to law enforcement and others to increase detection and investigation of human trafficking, and to protect victims and bring suspected traffickers to justice.", "", "Federal agencies have begun efforts to assess the prevalence of human trafficking in the United States and develop data standards and definitions to help facilitate prevalence studies. The Human Smuggling and Trafficking Center (HSTC) is an interagency federal effort designed to be an all source clearinghouse and information center for human trafficking, smuggling, and terrorism information. The HSTC disseminates information, conducts strategic assessments, and identifies issues needing facilitation among multiple agencies. In July 2014, HSTC completed a Human Trafficking National Assessment, which focused on identifying federal data sources useful for human trafficking analysis and provided some initial assessment of the data for the purposes of identifying trends and patterns. HSTC officials noted, however, that they faced challenges understanding the landscape of the data collected, assessing the quality of the data, and identifying the gaps in data collection. As a result, the officials were unable to infer high levels of human trafficking in areas with high numbers of victims or cases or prosecution. Thus, several member agencies expressed concern over the methodology, data collected, and data analysis used in the assessment, and because HSTC products require the approval of all of the member agencies, the report was not released. HSTC has released other assessments of human trafficking, including regional assessments and industry assessments for particular industries where human trafficking may occur, including fishing, agriculture, garment, and sex tourism.\nIn addition, HHS’s Office on Trafficking in Persons, which is part of the Administration for Children and Families, and the Office on Women’s Health are sponsoring the Human Trafficking Data Collection Project. The purpose of the project is to inform the development of an integrated data collection platform regarding human trafficking victimization; establish baseline knowledge of human trafficking and victim needs; and support effective prevention and intervention responses. According to HHS officials, the project takes a public health approach to human trafficking in order to (1) better collect data from federal and state data systems and national surveys to support analysis that will uncover specific risk factors for human trafficking among high-risk populations; (2) improve coordination of data collection on human trafficking across multiple health and human service systems such as refugee resettlement, child welfare, runaway and homeless youth, community health, and domestic violence programs; and (3) explore new data collection strategies, through public health methodologies, for compiling prevalence estimates. HHS, in consultation with key stakeholders, has developed draft data fields and definitions for human trafficking and expects to begin piloting the data collection effort in fall 2016.\nFurther, NIJ has focused its resources on improving the science that lies behind prevalence estimates of human trafficking in the United States, among other topics. NIJ has awarded grants for the development and testing of methodologies that could be used to calculate human trafficking prevalence. In fiscal year 2015, NIJ awarded two grants for nationwide research on the prevalence of human trafficking. Abt Associates was awarded $996,870 to conduct a study on “Advancing Human Trafficking Prevalence Estimation,” and Northeastern University was awarded $462,973 for a study on “Capturing Human Trafficking Victimization through Crime Reporting”. According to Abt Associates, the study being performed by Abt Associates will not give numbers on the prevalence of human trafficking; rather, it will provide a methodology to calculate prevalence.", "In addition to federal efforts designed to determine the prevalence of human trafficking in the United States, federal agencies and federally- funded entities maintain data that, although not specifically intended to do so, could give an indication of human trafficking and where it is occurring across the country. However, considering that human trafficking is likely underreported, as with most clandestine crimes, and most of these data are based on information reported to law enforcement authorities or hotlines, these data cannot be used to assess prevalence.\nIn 2008, Office of Justice Programs’ Bureau of Justice Statistics, in partnership with BJA, established the Human Trafficking Reporting System, which is a database used to collect data on human trafficking cases from OVC- and BJA-funded anti-trafficking task forces. However, these task forces represent a small percentage of law enforcement agencies. Further, these task forces are unlikely to be a representative sample of human trafficking in the United States since areas with high trafficking are more likely to have a task force.\nSince 2012, OVC also requires victim service providers that receive OVC grant funding under the trafficking victims services grants to biannually report the number of human trafficking victims that received services as a result of that funding. OVC maintains this data in the Trafficking Information Management System. According to OVC, in 2015, 54 grantees across 3 grant programs were required to report information. OVC grantees reported providing services to 3,889 human trafficking victims from July 2014 to June 2015. However, OVC grantees likely represent a small subset of service providers working with human trafficking victims.\nACF also requires victim service providers that receive ACF funding under the trafficking victim service grants to report the number of human trafficking victims and eligible family members who received services as a result of that funding. According to ACF, in 2015, grantees reported providing services to 1,726 individual clients through the Trafficking Victim Assistance Program.\nIn January 2013, the FBI, through its Uniform Crime Reporting Program, began collecting data on human trafficking in the United States, and in 2014, the FBI reported 443 offenses that involved human trafficking. However, because the Uniform Crime Reporting Program primarily collects data on crime-related incidents that have been reported to state, local, and tribal police that have the ability to report the data to the Uniform Crime Reporting Program, the FBI’s human trafficking report does not include unreported incidents.\nThe Executive Office for U.S. Attorneys maintains data on the number of human trafficking matters received by each of the 94 USAOs, as well as matters that are ultimately prosecuted. In fiscal year 2015, the 94 USAOs reported prosecuting a total of 252 human trafficking cases. Other DOJ prosecuting units, including the Civil Rights Division, also maintain data on human trafficking prosecutions. In addition, federal investigative agencies, including FBI and ICE HSI, keep data on investigations and arrests. See appendix II for federal human trafficking prosecution and investigation data from fiscal years 2013 to 2015.\nOther federally-funded entities also collect human trafficking data based on victim reports that may not be referred to law enforcement, which may also provide an indication of human trafficking. For example, funded through an HHS grant, the NHTRC is a national anti-trafficking hotline and resource center serving victims and survivors of human trafficking and the anti-trafficking community in the United States. The NHTRC collects human trafficking data through its website and is based on aggregated information learned through signals—phone calls, emails, and online tip reports—received by the hotline. In 2015, NHTRC identified 5,544 potential trafficking cases. The NHTRC determined that 4,136 were related to sex trafficking, 721 were related to labor trafficking, and 178 were related to both sex and labor trafficking. The type of trafficking was not specified for 509 of the tips. Further, NHTRC was able to determine that 4,683 of the reports involved a female victim, 574 involved a male victim, 3,559 involved an adult victim and 1,621 involved a minor. Further, 1,660 involved U.S. citizen victims and 1,041 involved foreign national victims. However, the data do not define the totality of human trafficking or of a trafficking network in any given area.\nNCMEC is a private, nonprofit corporation supported by federal grant funding, as well as corporate in-kind and private donations, whose mission is to help find missing children, reduce child sexual exploitation and prevent future victimization. To advance its mission, NCMEC operates the CyberTipline in which the public and electronic service providers can report suspected child sexual exploitation, including child sex trafficking. NCMEC makes the CyberTipline reports available to international and domestic law enforcement agencies, including the FBI Child Exploitation Task Forces and the Internet Crimes Against Children Task Forces. From July 1, 2014 through March 31, 2016, NCMEC received 13,529 reports related to child sex trafficking.\nBased on the data collected by federal agencies and federally-funded entities, there was some consistency with respect to states that have had the most reported human trafficking activity. For example, 9 states— Arizona, California, Florida, New York, Ohio, Pennsylvania, Texas, Virginia, and Washington—were in the top one-third with respect to investigations referred by law enforcement agencies to the USAOs for federal prosecution and calls and tips related to human trafficking. We found that federal law enforcement efforts and grant funding have been targeted in these locations, as discussed later in this report.", "According to federal, state, and local law enforcement officials and prosecutors we interviewed, investigating and prosecuting human trafficking crimes is challenging for multiple reasons, including a lack of victim cooperation, limited availability of victim services, difficulty identifying human trafficking, and others. Federal, state and local agencies have taken or are taking some actions to address these challenges, such as increasing the availability of services, primarily by providing funding through grants.", "", "Officials in 25 of the 32 interviews we conducted with law enforcement and prosecutorial agencies reported that they faced challenges with victim cooperation. In general, officials stated that obtaining the victim’s cooperation is important for human trafficking investigations and prosecutions because the victim is generally the primary witness and source of evidence. The officials told us that human trafficking victims may be unable or unwilling to cooperate with the investigation or prosecution because they distrust law enforcement, may be traumatized by abuse or addicted to drugs, have a sentimental attachment to the trafficker, do not see themselves as victims, or fear retaliation from the trafficker. For example, some victims may not cooperate because the trafficker is holding or threatening the victim’s family abroad. Officials also stated that juvenile victims can present challenges because they may come from troubled homes or foster care and may feel that they are better cared for by the trafficker than at home and do not want to receive any help.\nLaw enforcement are to use a victim centered approach when combating human trafficking that may help improve the victim’s ability and willingness to cooperate. This approach seeks to minimize retraumatization associated with the criminal justice process by providing the support of victim advocates and service providers, empowering survivors as engaged participants in the process, and providing survivors an opportunity to play a role in seeing their traffickers brought to justice. Such an approach places value on the identification and stabilization of victims and providing immigration relief, as well as the investigation and prosecution of traffickers. Identifying, not criminalizing, victims is the first step in adopting a victim-centered strategy and to achieve this goal, officers must be committed to helping victims feel safe, secure, and stable. Officials in 12 of the 32 interviews we conducted with law enforcement and prosecutors told us there are strategies that may help improve the victim’s ability and willingness to cooperate, such as facilitating access to immigration relief and protecting the victim’s family abroad for foreign victims, or providing services to both foreign and domestic victims.\nImmigration relief: T visa, U visa, or Continued Presence. According to USCIS, immigration relief options encourage victims to report crimes and work with law enforcement. Trafficking victims may seek immigration relief in the form of T nonimmigrant status (T visa) for victims of a severe form of trafficking who meet certain criteria and U nonimmigrant status (U visa) for victims of qualifying criminal activity, including human trafficking and fraud in foreign labor contracting, who satisfy U visa-specific criteria. The T visa and U visa allow the victims to remain in the country, for up to 4 years, which may be extended under certain circumstances, so they can assist with the investigation or prosecution of human trafficking or qualifying crimes, respectively. Individuals with T or U visas are authorized for employment incident to their nonimmigrant status, and U visa applicants may receive work authorization while their application is still pending. U visa holders may be eligible for lawful permanent residence if, among other things, they have been physically present in the United States continuously for at least 3 years since admission as a U nonimmigrant. For T visa holders, the physical presence requirement may be satisfied by demonstrating continuous physical presence either for 3 years since the date of admission as a T nonimmigrant, or during the investigation or prosecution of trafficking, whichever period of time is less. Further, ICE can grant Continued Presence, which is a temporary form of protection available to foreign national victims of human trafficking without lawful immigration status if they are potential witnesses to that trafficking, and upon the application by federal law enforcement officials to DHS. Continued Presence allows victims to remain and work in the country temporarily, for 1 year, and may be renewed in 1 year increments, during the ongoing investigation into the human trafficking-related crimes committed against them. See appendix II for information on T and U visa applications and petitions, and Continued Presence approvals and denials for fiscal years 2013 through 2015. Further, working through ICE and FBI personnel stationed at U.S. embassies, U.S. investigative and prosecutorial agencies have protected U.S. trafficking victims’ family members in a foreign country.\nVictim services. Federal agencies have victim service coordinators who help navigate the victim through the criminal justice process and connect the victim with appropriate services. Additionally, OVC and ACF provide grants for comprehensive and specialized victim service programs to non- governmental organizations and others. These organizations utilize grant funding to provide services such as shelters, medical services, substance abuse treatment, legal services, food and clothing, mental health, literacy education, job training, interpreter and translation services, support groups, and mentoring programs for human trafficking victims. Officials in 9 of the 32 of interviews we conducted with law enforcement and prosecutors reported that providing these services helps stabilize victims and encourages them to cooperate. For example, the officials reported that mental health and substance abuse services are vital to stabilize the victim so that they can provide an accurate recount of the trafficking situation and may help them to testify.", "While victim services may help victims recover and possibly cooperate more fully, the availability of services is limited. Officials in 15 of the 32 interviews we conducted with law enforcement officials and prosecutors reported limited availability of services in their area of responsibility.\nBelow are examples of the types of limitations in services for human trafficking victims.\nShort-term assistance. Of the 15 officials who reported limited availability of services in their area of responsibility, 8 told us that short-term assistance, particularly shelters were needed. According to officials, many victim assistance service providers that typically serve other populations may not be prepared or willing to deal with human trafficking victims as very few shelters specialize in services for human trafficking victims. For example, in some cases these shelters are designed to address the needs of survivors of domestic violence, such as resources to become financially stable and access to government services and childcare, whereas, trafficking victims need medical and psychological assistance tailored to meet their unique needs. Further, officials told us that shelters may not accept human trafficking victims because they fear that the victim will recruit women from the shelter for the trafficker.\nLong-term assistance. Of the 15 officials who reported limited availability of services in their area of responsibility, 7 told us that there is insufficient long-term assistance, including housing, mental health services, and drug rehabilitation, available for trafficking victims. For example, law enforcement officials in one of our site visits told us that their areas of responsibility are ill-equipped to provide long-term services to human trafficking victims. As a result, victims are sent to other states to receive services. In addition, a service provider told us that finding long-term housing presents a challenge when the victim has a criminal background or bad credit history. Further, other officials told us that in some circumstances services are more limited for U.S. citizens than for foreign victims. The officials explained that, historically, the federal government’s efforts to combat human trafficking in the United States and assist victims have been focused primarily on foreign nationals. While the TVPA of 2000 included certain provisions for services for victims of human trafficking in the United States, its reauthorization in the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 established a program specifically to assist U.S. citizen and lawful permanent resident victims of trafficking.\nIn recent years, DOJ, HHS, and some states, including those within the scope of our review, have taken steps to increase the availability of services, primarily by providing funding through grants. Two of the six service providers we spoke with told us that in some instances no one service provider can provide all the services a human trafficking victim needs and organizations must work together to help victims. Further, 5 of the 6 service providers we spoke with reported that victim services are limited for human trafficking victims; in particular, they reported difficulty finding shelter or housing options for victims. When asked about actions the federal government could take to address this challenge, 2 of 6 service providers noted that it would be helpful if the federal government increased funding. In 2015, DOJ increased funding to support services specifically for human trafficking victims by $13.5 million, compared to the previous year. Specifically, in fiscal year 2014, DOJ awarded $13.1 million through two grant programs and, in fiscal year 2015, $26.6 million through four grant programs. HHS officials reported that in fiscal year 2015, the agency increased funding by $1.54 million to support services specifically for human trafficking victims. Specifically, officials reported that this included a $1.44 million increase for domestic victims of trafficking and $0.1 million for foreign victims of trafficking compared to fiscal year 2014. Further, multiple states, including those within the scope of our review, as well as the District of Columbia, have enacted laws to facilitate the provision of services to victims of trafficking. Laws in these selected jurisdictions are designed to, for example, develop plans to identify and assist trafficking victims, establish a program to address the rehabilitation and treatment needs of juvenile victims of sex trafficking, or create funding mechanisms for victim services.", "Officials in 9 of the 32 interviews we conducted with law enforcement and prosecutors reported challenges with identifying and distinguishing human trafficking from other crimes, or even from legal activities. Further, officials from 3 of the 6 service providers we met with reported distinguishing human trafficking from prostitution as a challenge. On the surface, human trafficking may appear to be voluntary prostitution or an undocumented laborer working under his or her own volition. Therefore, in these instances, individuals who are actually victims may instead be treated as criminals—prostitutes or undocumented workers. For example, officials and service providers in one of our selected areas told us that human trafficking is common in the area, but that it is difficult for local law enforcement to distinguish this illicit activity from voluntary prostitution. Further, of the 9 officials who reported challenges identifying human trafficking, 7 told us that it is more difficult to identify and detect labor trafficking compared to sex trafficking. According to these officials, sex trafficking takes place out in the open and is often advertised online, making it easier for law enforcement to identify the crime. However, labor trafficking often occurs behind closed doors—including sweatshops, massage parlors, agriculture, restaurants, hotels and households— making it harder to identify. For example, officials told us about one 2015 labor trafficking case that involved a nanny from Nigeria. According to officials, the victim had a contract with her trafficker which stipulated $100 per month to take care of five children. However, she had not been paid since she moved to the United States and was being physically and psychologically abused. The victim fled and sought shelter with a neighbor.\nFederal agencies, and state and local agencies in the locations we visited, have several training and public awareness initiatives underway that are intended to help identify, investigate and prosecute human trafficking, including the following: Federal Agency Initiatives. Each of the federal law enforcement and prosecutorial agencies with whom we met provide training to their employees and other law enforcement officials on how to identify human trafficking, among other things. For example, ICE HSI provides a human trafficking training course that uses video scenarios and group discussions to teach its agents how to identify human trafficking, how to distinguish human trafficking from smuggling, and how to conduct victim-centered investigations, among other things.\nThe FBI provides annual specialized training in the commercial sexual exploitation of children and dealing with victims of child sex trafficking. This course teaches law enforcement personnel investigative strategies to address the child sex trafficking threat, and methods in understanding the various types of victims in these cases, how to interact with them, and victim services available to them. The FBI also published a law enforcement sensitive investigative guide on sex trafficking of juveniles.\nThe Attorney General has provided guidance to USAOs for developing strategic anti-trafficking plans, including recommended practices for identifying, investigating, prosecuting, and tracking human trafficking offenses. The Executive Office for U.S. Attorneys also provided USAOs with guidance for establishing and coordinating human trafficking task forces.\nThe Federal Law Enforcement Training Center, in coordination with the Blue Campaign, offers a web-based human trafficking training course that teaches law enforcement officers at the federal, state, local, and tribal levels how to recognize human trafficking encountered during routine duties, how to protect victims, and how to initiate human trafficking investigations. In addition, the Federal Law Enforcement Training Center provides human trafficking training to federal officers and agents as part of its basic training program. In fiscal year 2015, 128 law enforcement officers took the training. Further, since July 2015, the Federal Law Enforcement Training Center has provided human trafficking awareness training by text or video to 3,007 students in basic training programs.\nIn addition, federal agencies provide training to state and local agencies, as well as the public, regarding human trafficking, including the following:\nFBI field offices conducted approximately 672 human trafficking training sessions in fiscal year 2014 to various groups, including, but not limited to, state and local law enforcement, social workers, healthcare providers, hotel workers, faith based groups, non- governmental organizations, students and educators.\nHHS piloted the Stop. Observe. Ask. Respond (SOAR) to Health and Wellness program, a human trafficking training program to help health care providers identify potential victims and appropriately refer them for services, in fiscal year 2014. According to HHS officials, the department will expand the training to social workers, substance abuse and mental health providers, and public health professionals in fiscal year 2016. In addition, the officials said that in fiscal year 2015, 15,265 professionals and first responders likely to interact with victims of trafficking were trained through a network of several HHS-funded anti-trafficking grantees.\nThe Blue Campaign, in collaboration with the ICE HSI Victim Assistance Program and other DHS components, provided human trafficking awareness training to government, nongovernment, and private industries, including those in hospitality, health care, and education.\nOther federal agencies, whose employees may come across human trafficking victims in their day-to-day operations—including U.S. Customs and Border Protection, TSA, USCIS, and the U.S. Coast Guard—also provide human trafficking training to their employees. Further, Labor’s Wage and Hour Division and the EEOC also look for human trafficking indicators when conducting their own investigative and enforcement work. According to officials, these agencies are to refer potential human trafficking cases to the appropriate law enforcement agencies for further investigation. For example, TSA officials we met with told us that from March 2015 to February 2016, they referred six reports of suspected human trafficking to ICE HSI. Figure 2 shows an example of a resource available to agencies and the public to help them identify human trafficking.\nFurther, some federal agencies also have efforts related to public awareness of human trafficking. For example, in January 2016, OVC released resources to raise awareness and serve victims, including a video series called “The Faces of Human Trafficking” and posters to be used for outreach and education efforts of service providers, law enforcement, prosecutors, and others in the community. The series includes information about sex and labor trafficking, multidisciplinary approaches to serving victims of human trafficking, effective victim services, victims' legal needs, and voices of survivors. Since 2010, DHS, through the Blue Campaign, reported it has worked to raise public awareness about human trafficking, leveraging partnerships with select government and nongovernmental entities to educate the public to recognize human trafficking and report suspected instances. According to DHS officials, Blue Campaign posters are displayed in public locations including airports and bus stops. Figures 3 and 4 show examples of resources used as part of these initiatives, which are available online, or by request, for public distribution.\nIn addition, HHS established the “Look Beneath the Surface” public awareness campaign through its Rescue and Restore Victims of Human Trafficking program. According to HHS officials, in fiscal year 2015, the department distributed over 883,000 pieces of material publicizing the NHTRC. These materials, which included posters, brochures, fact sheets, and cards with tips on identifying victims, were available in eight languages. According to HHS officials, in fiscal year 2016, the department is updating its public awareness campaign materials to be complementary to other federal resources. Figure 5 shows an example of resources used as part of this initiative.\nFederal Judicial Center Initiatives. In accordance with the JVTA, the Federal Judicial Center provided training to federal judges and judicial branch attorneys, including judicial law clerks, on human trafficking through a webinar in August 2015. The training walked participants through the provisions of the JVTA and addressed how child exploitation manifests in human trafficking cases, among other things. According to Federal Judicial Center officials we spoke with, 1,300 registered viewers participated in the webinar, which is now available for on-demand viewing on the Federal Judicial Center website. They also told us that, in April 2016, 198 district judges attended a workshop in which, among other topics, a human trafficking sentencing scenario was discussed. According to Federal Judicial Center officials, adjudicating human trafficking cases can be challenging for judges because they have to determine the role the victim played in the trafficking situation and it may be difficult to determine what kept the victims from escaping, and led them to instead obey the trafficker.\nState and Local Initiatives. The states and jurisdictions included in our review also provide for training of law enforcement personnel on human trafficking-related issues. Some of the states also have laws related to ensuring public awareness of human trafficking. For example:\nVirginia’s Department of Social Services is required to develop a plan providing for, among other things, preparation and dissemination of educational and training programs and materials to increase awareness of human trafficking and services available to victims among local departments of social services, public and private agencies and service providers, and the public; and\nNorth Dakota’s Department of Transportation is required to display in every transportation station, rest area, and welcome center, a public- awareness sign that contains state or local human trafficking resource information as well as the NHTRC Hotline number.", "Additional challenges reported by law enforcement officials and prosecutors we spoke with include the amount of time it may take for a USAO to decide whether federal charges will be pursued in certain human trafficking cases. USAOs would be expected to take the time that is needed to exercise prosecutorial discretion in a reasoned manner, considering the relevant laws and facts. However, one of the four state prosecutors we interviewed said that the length of time it takes the USAO to decide whether to accept or decline the case, which has taken over a year in certain instances, can make it difficult for them to obtain evidence once the case is referred to them. Human trafficking-related prosecutions can occur at both the federal and state level. Law enforcement officials told us that, in most instances, they refer cases to the state prosecutor when the USAO declines to prosecute the case. Based on our review of data provided by the Executive Office for U.S. Attorneys, the most common reasons that USAOs reported declining human trafficking cases were “insufficient evidence” and “matters being referred to another jurisdiction.”(See appendix II for additional information on declinations.) Two of the four state prosecutors we interviewed reported working with the USAO to make a joint decision on whether to prosecute the case at the federal or state level, which may help address this challenge.\nAdditionally, officials from FBI, ICE HSI and Bureau of Diplomatic Security whose area of responsibility includes North Dakota identified challenges such as having to drive long distances, sometimes under hazardous driving conditions, to do their investigative work and meet with victims. These officials told us that there has been an increase in human trafficking and other criminal activity in the Bakken area—a relatively remote area—due to the oil boom. According to FBI and ICE HSI officials, the agencies are taking steps to address this challenge. FBI officials told us that the agency opened a field office in spring 2016 in western North Dakota, which is closer to the area where crime, in general, has increased. FBI and ICE HSI officials also told us that the agencies are working together to station some ICE HSI agents in the FBI’s new facility.", "", "We identified 42 grant programs for which the federal government awarded funding in 2014 and 2015 that may be used to combat human trafficking or to assist victims of human trafficking (see appendix IV for a list of the grant programs and their objectives). Fifteen grant programs administered by DOJ and HHS are intended solely to combat human trafficking or assist victims. In fiscal years 2014 and 2015, 123 organizations were awarded funds under these grant programs. These initiatives include programs that provide training and technical assistance to service providers and law enforcement agencies; support multi- disciplinary task forces to ensure victim-centered responses to human trafficking; and provide services directly to victims of human trafficking. Further, each grant program may be used for more than one of these purposes. More specifically, the 15 grant programs can be used for: Collaboration and partnerships. 12 of the grant programs allow funds to be used for collaboration between or within law enforcement and service providers through mechanisms such as task forces, coalitions, and partnerships. For example, the Enhanced Collaborative Model grant program, administered by OVC and BJA, supports the development and enhancement of multidisciplinary human trafficking task forces. These task forces implement collaborative approaches to involve both law enforcement and service providers in implementing a victim-centered approach to human trafficking investigations, prosecutions, and assistance.\nData, research, and evaluation: 3 of the grant programs include an element of data collection on human trafficking cases, research on human trafficking, or evaluation of best practices. For instance, the Research and Evaluation on Trafficking in Persons grant program, administered by NIJ, has supported nine research projects evaluating, among other things, the prevalence of human trafficking in the United States, and victim experiences with law enforcement and service providers.\nVictim services: 9 of the grant programs can be used to provide services directly to victims of human trafficking, including provision of housing, health care, mental health and substance abuse services, and legal services. For example, HHS administers the Trafficking Victims Assistance grant program, which provides comprehensive services for foreign victims of human trafficking in the United States.\nPublic awareness: 8 of the grants may be used to raise public awareness of trafficking, which is intended to help the public recognize human trafficking and report suspected cases.\nTraining and technical assistance: 13 of the grant programs may be used to provide training and technical assistance to service providers or law enforcement stakeholders on elements of identifying and serving victims of human trafficking. For example, one grantee funded under HHS’s Rescue and Restore grant program provides peer-to-peer training in order to further develop coordinated, effective multidisciplinary coalitions to address human trafficking throughout its state.\nAn additional twenty-seven grant programs are not specifically for human trafficking, but may be used to combat trafficking or assist victims. For instance, DOJ’s Vision 21 Innovation Grants support training, technical assistance, capacity building, assessment, or strategic planning for eight issue areas, one of which was related to human trafficking in the fiscal year 2015 solicitation. Similarly, HHS’s Refugee and Entrant Assistance grant programs are intended primarily for refugees in the United States, but individuals who have been certified as victims of human trafficking by HHS’s Office of Refugee Resettlement or the Office on Trafficking in Persons are also eligible for services through these programs.", "As shown in table 1 above, each of the 15 grant programs that are intended solely for human trafficking contains at least some potential overlap with other human trafficking grant programs in authorized uses. For instance, with the exception of the Research and Evaluation on Trafficking in Persons grant program, funding under each of the remaining 14 grant programs can be used for either collaboration or training purposes. Similarly, 9 of the 15 grant programs provide support for direct services to victims of human trafficking. As described earlier, according to our prior work addressing overlap and duplication, overlap among programs occurs when multiple programs engage in similar activities or strategies, as many of the human trafficking grants do.\nOf the 123 organizations that were awarded grants specific to human trafficking in fiscal years 2014 or 2015, 13 received multiple human trafficking grants for either victim services or for collaboration, training, and technical assistance from DOJ and HHS. HHS officials stated that additional overlap may exist among sub-grantees, although we did not include subgrantees in our duplication analysis. Of the 13, 7 had multiple grants that could be used for victim services, and 3 had multiple grants that could be used for collaboration, training, and technical assistance. For instance, two organizations received a grant for Services to Victims of Human Trafficking in 2014 and a grant for the Enhanced Collaborative Model in 2015, both from DOJ. Both grants can be used to provide direct services to victims of human trafficking. Another organization received similar grants for victim services from DOJ and HHS in 2014, and a third grant to establish a task force and provide services in 2015. HHS officials noted that they were comfortable with awarding multiple services grants to this organization because different populations were served under each grant application. DOJ officials noted that the same organization received the task force grant because they had submitted a strong application and they believed a task force would benefit the area in which the organization worked.\nDOJ officials noted that geographical distribution is an important factor when making award decisions, and that they would not generally award two grants in a location that may be duplicative, such as two Enhanced Collaborative Model awards in the same city. However, they noted that they may award funds under the same grant program to multiple service providers in cities that may have a high need for services or have a high number of identified trafficking victims. HHS officials told us that they do attempt to achieve geographic dispersion when awarding grants under the Rescue and Restore program, Trafficking Victim Assistance Program, and Demonstration Grants for Domestic Victims of Human Trafficking. Officials from both agencies said that they do not consider the locations of grants awarded by other agencies when awarding grants. Five cities have multiple organizations located in their cities that have been awarded the same DOJ grants as one another, but in those cases, each organization serves a different population or provides different services, according to DOJ officials. Based on our analysis of DOJ and HHS grant data, over half of all grants were awarded in the 9 states that are in the top one-third with respect to matters referred for federal prosecution and calls and tips related to human trafficking. Figure 6 shows the number of human trafficking grants awarded within the United States by city.\nMove mouse over city, county, or state names for grant information. For noninteractive version see appendix V.\nGrant awards are categorized by the main city in the area in which they are being implemented. The map does not include grants that provide services throughout the United States or that provide services in multiple states.\nDOJ and HHS each have intra-agency processes in place to prevent unnecessary duplication. According to DOJ and HHS officials, each agency operates an internal working group to allow the components administering human trafficking grants to communicate on a regular basis. HHS officials indicated that offices that administer human trafficking grant programs meet monthly to exchange information, which may include grant-related announcements and coordination of anti- trafficking activities. Similarly, DOJ officials told us that all DOJ components that address human trafficking meet on a quarterly basis with the goal of ensuring coordination in policy and grant-making. Further, DOJ has taken action to implement recommendations from a prior GAO report to identify overlapping grant programs and mitigate the risk of unnecessary grant award duplication in its programs. In response to these recommendations, DOJ also requires grant applicants to identify in their applications any federal grants they are currently operating under as well as federal grants for which they have applied. Finally, in response to recommendations in the same GAO report, DOJ has conducted two studies of overlap and duplication among fiscal year 2012 grant programs administered by the Office of Justice Programs, the Office on Violence against Women, and the Office of Community Oriented Policing Services.\nDOJ and HHS officials also reported that they routinely share grant announcements with one another in an informal manner. For instance, officials from both agencies said they coordinate on grant-related activities through the implementation of the Federal Strategic Action Plan on Services for Victims of Human Trafficking in the United States, a government-wide plan which lays out a 5-year path for further strengthening coordination, collaboration, and capacity across governmental and nongovernmental entities. DOJ and HHS officials told us that they conduct regular meetings to monitor progress in advancing the goals laid out in the strategic plan, one of which is to coordinate victim services effectively through collaboration across multiple service sectors to, among other things, reduce duplication of efforts. In addition, HHS officials noted that DOJ and HHS meet bi-weekly during co-chair meetings for the SPOG Victim Services Committee and both agencies participate in the SPOG Grantmaking Committee meetings, which provide additional opportunities to share information for the purposes of coordination and collaboration. According to HHS officials, this coordination prevents duplication because they are aware of the actions of all of the agencies involved in administering grants targeted at human trafficking. Officials from DOJ and HHS also told us that the agencies are working together to develop guidance for grantees that have been awarded human trafficking grants from both agencies so that grantees can avoid using grant funds for duplicative activities. HHS officials noted that the first set of guidance, for serving foreign victims of human trafficking, would be released in summer 2016. Finally, the officials noted that the community of individuals who administer human trafficking grants is small, and that there is frequent formal communication through respective agency grantee calls and informal communication over e-mail regarding the grants between the two agencies.\nIn addition to HHS’s and DOJ’s internal and intra-agency processes for addressing potential duplication, since November 2006, the SPOG has provided a formal mechanism for all agencies administering human trafficking grants to communicate with one another. SPOG guidance was updated in March 2016, and according to officials who administer the SPOG Grantmaking Committee, the updated guidance encourages enhanced information sharing among participating agencies. Specifically, the updated guidance directs participating agencies to share information with members of the Grantmaking Committee prior to final decisions in at least one of the following ways: (1) share plans for programs containing anti-trafficking components during the grant program development process; (2) notify the SPOG of grant solicitations within a reasonable time after they are issued; or (3) notify SPOG partner agencies of proposed funding recipients prior to announcing the award. In each case, SPOG agencies are allotted 5 days for comment on the information. Further, agencies are also to share information with members of the Grantmaking Committee after final decisions are made.", "We provided a draft of this report for review and comment to the Departments of Defense, Health and Human Services, Homeland Security, Justice, Labor, and State; the Equal Employment Opportunity Commission; and the Administrative Office of the United States Courts. We received technical comments from the Departments of Defense, Health and Human Services, Homeland Security, Justice, and State; and the Administrative Office of the United States Courts, which we incorporated as appropriate. The Department of Labor and the Equal Employment Opportunity Commission did not provide comments.\nWe are sending copies of this report to the appropriate congressional committees, the Attorney General; the Secretaries of Defense, Health and Human Services, Homeland Security, Labor and State; the Chair of the Equal Employment Opportunity Commission; and the Director of the Administrative Office of the United States Courts. In addition, the report is available at no charge on the GAO website at http://www.gao.gov If you or your staff have any questions about this report, please contact me at (202) 512-8777 or goodwing@gao.gov . Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.", "The Justice for Victims of Trafficking Act (JVTA) of 2015 includes a provision for GAO to report on federal and selected state efforts to combat human trafficking in the United States, as well as identify federal grant programs that can be used to assist victims of trafficking. This report addresses the following questions: 1. What federal efforts have been made to determine the prevalence of human trafficking in the United States? 2. What challenges, if any, do federal and selected state law enforcement and prosecutorial agencies face when combating human trafficking in the United States, and what actions have they and others taken to address identified challenges? 3. What federal grant programs are intended to combat human trafficking and assist victims within the United States, and what steps have federal agencies taken, if any, to reduce the potential for duplication among grant programs?\nFor purposes of this report, we focused on human trafficking within the United States, which includes U.S. citizens or nationals, or those with or without lawful immigration status who are trafficked within the United States, as well as foreign persons who are brought to the United States from abroad for the purpose of trafficking.\nTo address the first objective, we reviewed prior GAO human trafficking reports, the Justice for Victims of Trafficking Act of 2015 and other federal laws related to human trafficking, and we interviewed Department of Justice (DOJ), the Department of Homeland Security (DHS), and the Department of Health and Human Services (HHS) officials, to learn whether their component agencies had efforts underway to collect human tracking data that could be used to determine the prevalence of human trafficking in the United States. We also reviewed documentation issued by the President’s Interagency Task Force to Monitor and Combat Trafficking to learn about additional federal efforts to collect information on the prevalence of human trafficking. We obtained and analyzed data from federal investigative and prosecutorial agencies and federally- funded entities that, while not specifically intended to do so, could give an indication of where human trafficking is occurring in the United States. We assessed the reliability of the data the agencies and other entities provided by questioning knowledgeable officials and reviewing the data for obvious errors and anomalies. We determined that the data were sufficiently reliable for the purposes of our reporting objectives. We identified potential sources of human trafficking information, including National Human Trafficking Resource Center (NHTRC) and the National Center for Missing and Exploited Children (NCMEC). We received data related to calls, tips, and reports received by NHTRC and NCMEC and interviewed officials to determine how the information was collected and what criteria were used to determine whether a call or report was categorized as related to human trafficking. We also obtained prosecution and investigations data from DOJ, DHS, Department of Labor (Labor), and Department of State (State). Further, we reviewed DOJ’s grants to identify studies funded to assess human trafficking in the United States. We also interviewed DOJ grantees to understand their ongoing research to quantify human trafficking.\nTo identify challenges federal and selected state law enforcement and prosecutorial agencies face when combating human trafficking and efforts undertaken to address these challenges, we identified relevant federal law enforcement and prosecutorial agencies based on our previous work and review of legislation related to human trafficking. We then interviewed headquarters officials from the Department of Defense, DOJ, DHS, Labor, State, and the Equal Employment Opportunity Commission (EEOC) who are responsible for identifying or investigating human trafficking and other unlawful activities, or prosecuting or litigating cases involving human trafficking-related violations. At DOJ, we interviewed officials from the Office of the Deputy Attorney General, Federal Bureau of Investigation (FBI), Civil Rights Division/Criminal Section, Criminal Division/Child Exploitation and Obscenity Section, and the Executive Office for U.S. Attorneys. At DHS, we interviewed officials from the Office of the Deputy Secretary, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), Transportation Security Administration, U.S. Customs and Border Protection, and U.S. Coast Guard. At Labor, we interviewed officials from the Wage and Hour Division and Office of the Inspector General, and at State we interviewed officials from the Bureau of Diplomatic Security. For the FBI, U.S. Attorney’s Office (USAO), ICE HSI, Bureau of Diplomatic Security, and EEOC, we interviewed investigators and prosecutors (or litigators) located in field offices that cover four jurisdictions—Washington, DC/ Northern Virginia; Houston, Texas; Los Angeles, California; and Bismarck, North Dakota.\nWe selected these four jurisdictions because they are located in states that are among the top 10 in terms of human trafficking tips, per capita, that were sent to the NHTRC or to NCMEC. We also selected these jurisdictions because they reflect a variation in geography and receipt of federal funding to establish or continue a human trafficking task force through the Enhanced Collaborative Model to Combat Human Trafficking during fiscal year 2015. In addition, all of the jurisdictions we selected are within geographic priority areas identified by DHS through the Blue Campaign. The purpose of the Blue Campaign is to provide training and raise public awareness about human trafficking, among other things. The campaign has identified priority geographic areas and populations to focus its outreach efforts during fiscal year 2016.\nWe conducted 32 interviews with federal, state and local law enforcement and prosecutorial agencies who were part of the identified task forces in these jurisdictions. During the interviews, we asked officials whether they experienced any challenges in carrying out their duties related to combating human trafficking and to identify any efforts that have been or could be taken to address challenges. Officials identified challenges when we explicitly asked them to identify them or during the course of our discussion. When we report the number of agencies that identified a particular challenge, this does not necessarily mean that the remaining agencies did not also experience the challenge. It means that those stakeholders did not raise the challenge during the course of our interviews. While these officials’ perspectives cannot be generalized to all jurisdictions, they provided insights into federal, state, and local efforts to combat human trafficking. We also interviewed representatives from six non-governmental organizations that provide services to human trafficking victims in the selected jurisdictions. In addition, we interviewed officials from the Federal Judicial Center and the federal judge who conducted the required training for federal judges as mandated by the Justice for Victims of Trafficking Act, and the National Association of Attorneys General to further understand challenges faced when combating human trafficking.\nTo address our third objective, we asked the DHS, DOJ, HHS, Labor and State, which had been identified in a prior study as agencies administering grant programs related to human trafficking, to each provide us a list of grant programs that could be used to combat human trafficking in the United States or assist victims. We corroborated agencies’ lists with online resources, such as grants.gov, and also followed up with interviews at which we requested additional information and ensured that we were aware of all grant programs that could be used to address human trafficking. We identified a total of 42 grant programs that could be used to address human trafficking, although because services for human trafficking victims may be one of many allowable uses for some grant programs, it is possible that there are some programs that were not identified by granting agencies or by our analysis of public records. However, we limited our duplication analysis to the 15 that were intended solely for human trafficking purposes, because we determined that there would most likely be duplication across these grant programs as they were created to address the same issue. Using the established GAO framework for addressing overlap and duplication, we use the following definitions for purposes of assessing human trafficking grant programs:\nOverlap occurs when multiple granting agencies or grant programs have similar goals, engage in similar activities or strategies to achieve these goals, or target the same or similar beneficiaries. Overlap may result from statutory or other limitations beyond an agency’s control.\nDuplication occurs on multiple levels. It occurs when a single grantee uses grant funds from different federal sources to pay for the exact same expenditure. Duplication also occurs when two or more granting agencies or grant programs engage in the same or similar activities or provide funding to support the same or similar services to the same beneficiaries. Duplication thus stems from overlap. When granting agencies do not identify overlap, assess its impact, or coordinate their activities in acknowledgment of the overlap, there is a heightened risk of unnecessary duplication because one granting agency may not be knowledgeable of the ways in which its funding decision duplicates another’s. At times, federal funding is leveraged by design to achieve a single purpose through multiple federal funding streams. These funding arrangements are not characterized as unnecessary duplication for purposes of this review so long as federal agencies are aware of them or have deliberately planned for grant programs to be complementary.\nTo assess the possibility for overlap among the 15 grant programs intended solely to address human trafficking, we reviewed grant solicitations from fiscal years 2014 and 2015, the most recent two years in which grants had been awarded, to identify similarities and differences between the allowable activities and target beneficiaries. We divided allowable activities into five categories to determine how many of the grant programs could be used for the same purpose. We then examined the grant awards for each program to assess whether any organizations that had been awarded human trafficking grants were or could be using the grants to provide the same services to the same or similar groups of beneficiaries. We identified 14 organizations that were awarded multiple human trafficking grants in 2014 or 2015. To determine whether duplication was actually occurring, we interviewed officials responsible for administering grant programs at the Bureau of Justice Assistance, the National Institute of Justice, the Office of Juvenile Justice and Delinquency Prevention, and the Office for Victims of Crime in DOJ and the Administration for Children and Families in HHS about the specific organizations that had received multiple grants. We also spoke with three of the organizations regarding how they ensure that funds from each grant are being used for the approved purposes. We selected the organizations based on the number and similarity of grants they were awarded and whether the grants were from both federal agencies.\nTo evaluate what efforts, if any, have been made to prevent unnecessary duplication among human trafficking grants, we reviewed documentation on collaboration efforts, including the Attorney General’s Annual Report to Congress and Assessment of U.S. Government Activities to Combat Trafficking in Persons and guidance from the Senior Policy Operating Group’s (SPOG) Grantmaking Committee. We also interviewed federal agency officials, including members of the SPOG and officials responsible for administering grant programs from the Bureau of Justice Assistance, the National Institute of Justice, the Office of Juvenile Justice and Delinquency Prevention, and the Office for Victims of Crime in DOJ and the Administration for Children and Families in HHS regarding formal and informal mechanisms for coordinating with one another to prevent overlap among grants and duplication among grant awards.\nWe conducted this performance audit from July 2015 to June 2016 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Responsibility for addressing human trafficking crimes falls to multiple federal agencies. These agencies reported data on the investigations, prosecutions, indictments, and arrests related to trafficking crimes for fiscal years 2013 to 2015. These data are a general indicator of the level of agency effort on trafficking in persons, although they are limited by a number of factors. Because trafficking in persons is a hidden crime and victims are hesitant to come forward, it is difficult to estimate the extent of trafficking in persons crimes. Moreover, because prosecutors may charge traffickers with other crimes (e.g., kidnapping, the Mann Act, immigration violations, or money laundering) for strategic or tactical reasons, data on the number of trafficking in persons investigations and prosecutions do not provide a complete picture of the number of traffickers who have been thwarted. The data systems agencies use are primarily case management systems, which may not be able to extract trafficking data if trafficking was not listed as a charge. Additionally, if an investigation on smuggling later reveals a trafficking violation, some data systems will continue to store investigative data under the smuggling classification.\nThe complexity of the investigations and the limitations of data systems make providing data on human trafficking a labor-intensive effort for agencies. Therefore, these data are not comparable across the agencies and it is not possible to associate arrest and indictment data with a particular case because of differences in agency data systems. Moreover, agency officials noted that investigations do not always lead to prosecutions, because situations that appear to be trafficking may prove to be alien smuggling or prostitution accompanied by abuse and, therefore, do not meet the criteria to be prosecuted as trafficking cases. This appendix provides data on federal agencies’ investigations and prosecutions of human trafficking during fiscal years 2013 to 2015.", "Within the Department of Justice, the Federal Bureau of Investigation (FBI) has jurisdiction to investigate a broad range of violations of federal law including human trafficking. Within the Department of Homeland Security, U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI) investigates human trafficking as well as a range of cross-border and immigration-related criminal activity. Other agencies, also conduct human trafficking investigations as they relate to their statutory authority. Department of State’s Bureau of Diplomatic Security examines trafficking cases involving visa and passport fraud. Department of Labor’s Inspector General investigates human trafficking offenses that are discovered during investigations involving the Department of Labor’s Foreign Labor Certification programs. Department of Defense’s Defense Criminal Investigative Service, Army Criminal Investigation Command, Naval Criminal Investigative Service, and Air Force Office of Special Investigations investigate allegations of sex and labor trafficking involving service members, departmental contractors and civilians.\nThe data for fiscal years 2013 through 2015 related to investigations, indictments, arrests, and convictions of human trafficking offenses provided by the ICE HSI and the FBI are shown in tables 2, 3, and 4. The arrests, indictments, and convictions associated with ICE HSI and the FBI investigations could have occurred at either the federal, state, or local level.\nThe data related to investigations of human trafficking conducted by the Bureau of Diplomatic Security, the Department of Labor Inspector General, and the Department of Defense during fiscal years 2013-2015 are shown in tables 5, 6, and 7.", "Within the Department of Justice, the U.S. Attorney’s Offices, along with the Criminal Division and Civil Rights Division, prosecute human trafficking crimes. The Human Trafficking Prosecution Unit (HTPU) in the Civil Rights Division prosecutes labor trafficking and sex trafficking of adults. Within the Criminal Division, the Child Exploitation and Obscenity Section, prosecutes child sex trafficking cases.\nThe data for fiscal years 2013 through 2015 related to matters initiated, cases prosecuted, defendants charged, and defendants convicted of human trafficking offenses provided by the Criminal Division, Civil Rights Division and U.S Attorney’s Offices are shown in tables 8, 9, and 10.\nProsecutorial agencies may decline a matter for prosecution for many reasons. For fiscal years 2014 and 2015 the main reason for the U.S. Attorney’s Offices to decline to prosecute a case was insufficient evidence. Table 11 presents the declination statistics and reasons for the U.S. Attorney’s Office for years 2014 and 2015.", "U.S. Citizenship and Immigration Services (USCIS) within the Department of Homeland Security (DHS) provides immigration relief to foreign victims of human trafficking and other crimes by adjudicating applications for T nonimmigrant status (T visa) for victims of a severe form of trafficking who meet certain criteria and petitions for U nonimmigrant status (U visa) for victims of qualifying criminal activity, including human trafficking and fraud in foreign labor contracting, who satisfy U visa-specific criteria. The T visa and U visa allow the victims to remain in the country, for up to a 4 year period, which may be extended under certain circumstances, so they can assist with the investigation or prosecution of human trafficking or qualifying crimes, respectively. Further, Immigration and Customs Enforcement (ICE) can grant Continued Presence, which is a temporary form of protection available to foreign national victims of human trafficking without lawful immigration status if they are potential witnesses to that trafficking, and upon the application by federal law enforcement officials to DHS. Continued Presence allows victims to remain and work in the country temporarily, for 1 year and may be renewed in 1 year increments, during the ongoing investigation into the human trafficking-related crimes committed against them.\nT nonimmigrant status may be available for victims of severe forms of trafficking who meet the following criteria: physical presence in the United States on account of such trafficking; compliance with any reasonable request for assistance by law enforcement in the investigation or prosecution of the trafficking (unless the victim is unable to cooperate due to physical or psychological trauma, or is under 18 years of age); and would suffer extreme hardship involving unusual and severe harm if removed from the United States.The number of T visas that may be granted each fiscal year is limited by statute to 5,000 for victims. To obtain a T visa a victim must submit an application, which may include law enforcement certification that the applicant has been a victim of trafficking, to USCIS for review. Victims may also request a derivative T visas for family members, such as the spouse, children or other eligible family members. Derivative family members do not count towards the 5,000 statutory cap. Tables 12 and 13 present the number of T visa applications filed with USCIS for victims and their families for fiscal years 2013-2015.\nU nonimmigrant status may be available for victims of qualifying criminal activity who have suffered substantial physical or mental abuse as a result of being a victim of the qualifying crime, possess information about the qualifying crime, and have been, are being, or are likely to be helpful to law enforcement or government officials in the investigation or prosecution of the qualifying criminal activity, including trafficking and fraud in foreign labor contracting. The number of U visas that may be granted to principal petitioners each fiscal year is limited by law to 10,000. However, derivative family members do not count towards the 10,000 statutory cap. To obtain a U visa a victim must submit a petition, including a law enforcement certification that the petitioner has been a victim of a qualifying crime, to USCIS for review. See table 14 for the number of U visa petitions filed with USCIS for victims in human trafficking related cases.\nContinued Presence allows victims of human trafficking to remain in the United States temporarily during the ongoing investigation into the human trafficking-related crimes committed against them. For a victim to obtain Continued Presence federal law enforcement officials or prosecutors must submit an application to ICE for review. Continued Presence is initially granted for 1 year and may be renewed in 1-year increments. Table 15 present the number of Continued Presence applications filed with ICE for fiscal years 2013-2015.", "We identified 42 federal grant programs that can be used for the purpose of combating human trafficking or assisting victims of human trafficking in the United States. Fifteen are intended solely for these purposes. Each of the grant programs is administered by a component of the Departments of Health and Human Services, Homeland Security, or Justice.", "This appendix contains the data used in figure 5 of this report, Human Trafficking Grants Awarded within the United States, Fiscal Years 2014- 2015. As in the map, each grant program may have multiple purposes, but their main purpose is identified in the table. In addition, grant awards are categorized by the main city or area in which they are being implemented. The table does not include grants that provide services throughout the United States or that provide services in multiple states, or information on sub-recipients of Department of Justice (DOJ) and Department of Health and Human Services (HHS) grantees.", "", "", "In addition to the contact named above, Kristy Love, Assistant Director; Kisha Clark, Analyst-in Charge; Marycella Mierez; Miriam Hill; Jon Najmi and Michele Fejfar made significant contributions to the work." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 2, 3, 3, 2, 2, 1, 2, 2, 1, 1, 1, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h3_title", "h3_full", "", "", "h0_title", "h0_full", "", "h1_full", "h1_title", "h1_full", "h1_full", "h1_full", "", "h2_title h3_title", "h3_full h2_full", "h2_full", "", "h3_full h2_full h4_full", "h4_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What efforts have federal agencies begun?", "What is one of these efforts?", "How has HHS worked on this project?", "How has the National Institute of Justice aided this project?", "Why is investigating and prosecuting human trafficking cases difficult?", "Why is obtaining the victim's cooperation important?", "How can victim service programs be beneficial to this?", "How are agencies taking action to address challenges associated with human trafficking?", "What did GAO identify?", "How have federal agencies dealt with overlap in grant programs?", "What is a specific way in which overlap has been dealt with?", "What are agencies that participate in the Grantmaking Committee of the Senior Policy Operating Group encouraged to do?", "What is human trafficking?", "How does Congress deal with human trafficking?", "What departments lead federal investigations and prosecutions of trafficking crimes?", "Why do DOJ and HHS award grands?", "What is the Justice for Victims of Trafficking Act of 2015?", "What does this report discuss?", "How did GAO get information for this report?", "How were jurisdictions for the report selected?" ], "summary": [ "Federal agencies have begun efforts to assess the prevalence of human trafficking in the United States and develop data standards and definitions to help facilitate prevalence studies.", "For example, the Department of Health and Human Services (HHS) is sponsoring the Human Trafficking Data Collection Project, which seeks to inform the development of an integrated data collection platform regarding human trafficking victimization, establish baseline knowledge of human trafficking and victim needs, and support effective prevention and intervention responses.", "HHS, in consultation with key stakeholders, has developed draft data fields and definitions for human trafficking and expects to begin piloting the data collection effort in fall 2016.", "Further, the National Institute of Justice, within the Department of Justice (DOJ), has awarded grants for the development and testing of methodologies that could be used to estimate the prevalence of human trafficking.", "Federal, state and local law enforcement officials and prosecutors GAO interviewed reported that investigating and prosecuting human trafficking cases is challenging for multiple reasons, including a lack of victim cooperation, limited availability of services for victims, and difficulty identifying human trafficking.", "Officials told us that obtaining the victim's cooperation is important because the victim is generally the primary witness and source of evidence; however, obtaining and securing victims' cooperation is difficult, as victims may be unable or unwilling to testify due to distrust of law enforcement or fear of retaliation by the trafficker.", "According to these officials, victim service programs, such as those that provide mental health and substance abuse services, have helped improve victim cooperation; however, the availability of services is limited.", "Federal, state, and local agencies have taken or are taking actions to address these challenges, such as increasing the availability of victim services through grants and implementing training and public awareness initiatives.", "GAO identified 42 grant programs with awards made in 2014 and 2015 that may be used to combat human trafficking or to assist victims of human trafficking, 15 of which are intended solely for these purposes.", "Although some overlap exists among these human trafficking grant programs, federal agencies have established processes to help prevent unnecessary duplication.", "For instance, in response to recommendations in a prior GAO report, DOJ requires grant applicants to identify any federal grants they are currently operating under as well as federal grants for which they have applied.", "In addition, agencies that participate in the Grantmaking Committee of the Senior Policy Operating Group are encouraged to share grant solicitations and information on proposed grant awards, allowing other agencies to comment on proposed grant awards and determine whether they plan to award funding to the same organization.", "Human trafficking—the exploitation of a person typically through force, fraud, or coercion for such purposes as forced labor, involuntary servitude or commercial sex—is occurring in the United States.", "Congress has passed multiple laws to help ensure punishment of traffickers and protection of victims. DOJ and the Department of Homeland Security lead federal investigations and prosecutions of trafficking crimes.", "DOJ and the Department of Homeland Security lead federal investigations and prosecutions of trafficking crimes.", "DOJ and HHS award grants to fund victim service programs.", "The Justice for Victims of Trafficking Act of 2015 includes a provision for GAO to review law enforcement efforts and grant programs to combat human trafficking and assist victims in the United States.", "This report discusses (1) federal efforts to assess prevalence of human trafficking (2) challenges agencies face in investigating and prosecuting human trafficking cases, and 3) federal grants and steps taken to prevent duplication.", "GAO reviewed trafficking data and agency documents, and conducted 32 interviews with federal, state and local law enforcement officials and prosecutors in four jurisdictions.", "We selected these jurisdictions based on the number of human trafficking tips they received, receipt of human trafficking task force funding and geographic variation." ], "parent_pair_index": [ -1, 0, 1, 1, -1, -1, 1, -1, -1, -1, 1, -1, -1, 0, -1, -1, -1, -1, 1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "Recovery Act Funding", "Grant Programs Funded by the Recovery Act", "Recovery Act Oversight and Accountability Responsibilities of Key Participants", "Practices at Federal, State, and Local Levels Contributed to Improved Accountability of Recovery Act Grant Programs but Challenges Existed", "Strong Support by Top Leaders, a Collaborative Approach, and Systematic Use of Data Were Key to Managing Recovery Act Implementation", "Strong Support by Top Leaders", "Centrally-Situated Collaborative Governance Structures", "Regular and Systematic Use of Data to Support Management Reviews", "Heightened Accountability Requirements and Aggressive Implementation Timelines Led to Increased Coordination and Information Sharing", "Networks Provided a Mechanism to Share Information", "Organizations Worked Together in New Ways to Achieve Common Goals", "The Recovery Act Prompted Adjustments and Innovations in Oversight to Foster Accountability", "Increased Use of Up-Front Risk Assessments and Planning", "Increased use of “Real Time” Information", "Earlier Communication of Audit Findings", "Use of Advanced Data Analytics", "Limited Resources to Conduct Oversight at the State and Local Levels", "Accelerated Rollout of Recovery Act Programs Presented Oversight Challenges", "The Recovery Act Resulted in Increased Transparency but Also Presented Challenges", "Recovery Act Transparency Websites Embody Several Leading Practices", "Establish a Clear Purpose of the Website", "Use Social Networking Tools to Garner Interest in the Website", "Tailor Website to Meet Audience Needs", "Obtain Stakeholder Input When Designing the Website", "Enable Place-Based Performance Reporting", "Recovery Act Performance Was Mostly Measured by Outputs Rather than Outcomes, and Challenges with Both Existed", "Recipients and Agencies Were Required to Report Amount and Speed of Funding but Faced Challenges in Doing So", "Recipients Were Required to Report Outcome Measure of Jobs Created and Retained but Faced Some Challenges", "Program Specific Performance Measures Varied by Program and Agency with Some Focusing More on Outputs than Outcomes", "Concluding Observations", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The stated purposes of the Recovery Act are to: preserve and create jobs and promote economic recovery; assist those most impacted by the recession; provide investments needed to increase economic efficiency by spurring technological advances in science and health; invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits; and stabilize state and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.\nWhile many Recovery Act projects focused on immediately jumpstarting the economy, some projects—such as those involving investments in technology, infrastructure, and the environment—are expected to contribute to economic growth for many years. The Recovery Act established the Recovery Accountability and Transparency Board (Recovery Board) to provide additional monitoring and oversight. The board was originally scheduled to terminate operations by September 30, 2013, but its mission has been extended until September 30, 2015, to provide oversight and monitoring of assistance provided in response to Hurricane Sandy, which hit the northeast in October 2012.in figure 1 displays selected events related to the Recovery Act and its requirements.", "The Congressional Budget Office (CBO) initially estimated the cost of the Recovery Act to be approximately $787 billion; however, CBO’s most recent estimate projects that the Recovery Act will cost approximately $830 billion over the 2009-2019 time period. As of October 31, 2013, the federal government provided a total of approximately $812 billion related to Recovery Act activities. This includes funding to 28 federal agencies that were distributed to states, localities, and other entities; individuals through a combination of tax benefits and cuts; entitlements; and loans, contracts, and grants. See figure 2 for an overview of Recovery Act spending by category and program. Although Medicaid was the single largest Recovery Act grant program, we did not include it in our review because it is primarily an entitlement program and subject to specific rules that are not typical of program grants. Accordingly, we included the Recovery Act funds directed to Medicaid in the entitlement category, rather than the grant category, in figure 2. Emphasizing the importance of spending Recovery Act funds quickly, the President established a goal that by September 30, 2010, 70 percent of Recovery Act funding should be spent (that is, both obligated and outlayed). Therefore, agencies had approximately 19 months to spend almost three- quarters of their Recovery funds.", "Grants have played a key role in providing Recovery Act funds to recipients, with approximately $219 billion being awarded for use in states and localities through a wide variety of federal grant programs. With the intent of disbursing funds quickly to create and retain jobs and stabilize state and local budgets, a large majority of Recovery Act grant funding went to states and localities within 3 years of the law’s enactment. Recipients reported receiving approximately 88 percent of their grant awards by the end of the 2nd quarter of calendar year 2013. State and local spending was as follows:\nFiscal year 2009: spending totaled approximately $53 billion in actual outlays.\nFiscal year 2010: spending was at its highest level with approximately $112 billion in actual outlays.\nFiscal year 2011: spending decreased from its peak, with approximately $69 billion in actual outlays.\nThe 28 federal agencies that received Recovery funds developed specific plans for spending the money. The agencies then awarded grants and contracts to state governments or, in some cases, directly to schools, hospitals, or other entities. OMB guidance directed these federal agencies to file weekly financial reports detailing how the money was being distributed. Recipients of the funds, in turn, were required by the Recovery Act to file quarterly reports on how they were spending the Recovery Act funds that they received.\nRecovery Act grants provided to states and localities covered a broad range of areas such as transportation, energy, and housing. Education programs were the largest recipients of Recovery Act grant awards. Of the education programs funded in the Recovery Act, the largest in terms of funding was the newly created State Fiscal Stabilization Fund (SFSF) program, which provided assistance to state governments to stabilize their budgets by minimizing budgetary cuts in education and other essential government services, such as public safety. The Recovery Act appropriated $53.6 billion for the SFSF program.shows, grants represent over one-quarter of Recovery Act funding. Out of that category, funding received in the program areas of education, transportation, and energy and environment amount to approximately $137 billion, or 70 percent, of Recovery Act grant spending to date.\nAs figure 2 (above)", "The Recovery Act called for a large amount of federal funds to be spent (that is, obligated and outlayed) in a short period of time—approximately 19 months—by the end of September 30, 2010. To assure the public that their tax dollars were being spent efficiently and effectively, the Recovery Act placed increased emphasis on accountability and transparency through enhanced reporting, auditing, and evaluation requirements for users of Recovery Act funds. The Recovery Act delineated some of these increased accountability and transparency responsibilities to existing organizations and entities as well as newly-created ones. See table 1 for details regarding the primary accountability and oversight responsibilities of key organizations involved in implementing the Recovery Act.", "", "Under the Recovery Act, accountability for timely and effective implementation of the law was a shared responsibility that included agencies involved in directly implementing the law as well as the external oversight community. On the operational side, among the practices that facilitated accountability were (1) strong support by top leaders, (2) centrally-situated collaborative governance structures, and (3) the regular and systematic use of data to support management reviews.", "We have previously reported on the importance of having the active support of top leadership when undertaking large and complex activities. This was the case in the implementation of the Recovery Act where, at the federal level, the President and Vice President made clear that effective Recovery Act implementation was a high priority for them. The President assigned overall management responsibility for the Recovery Act to the Vice President and appointed a former OMB deputy director to head the newly-created Recovery Implementation Office with direct reporting responsibilities to both him and the Vice President. The former head of the Recovery Implementation Office told us that his position gave him access to top leadership in the administration. This official said he participated in daily morning staff meetings with the White House senior staff, briefing them on any issues related to the Recovery Act. He briefed the President directly approximately once a month. In addition, he typically met with the Vice President’s staff on a daily basis after the President’s staff meeting. He also met with the Vice President directly every 1 to 2 weeks. Finally, he frequently interacted with the head of OMB and sometimes also sat in on his staff meetings.\nIn each of these roles he had direct access to, and support from, the highest levels of government. The former head of the Recovery Implementation Office stated this was key to his ability to ensure cooperation and coordination with other federal departments during the Recovery Act. For example, he told us that senior government leaders knew that his office had the authority of the President and Vice President behind it, and if they did not do what was requested, they would have to explain their reasoning to senior White House officials. This awareness of the Recovery Implementation Office’s line of authority helped to ensure that federal officials coordinated and cooperated with the office. In turn, the involvement and engagement of top leaders at individual federal agencies was facilitated by OMB guidance that required each agency to identify a senior accountable official—generally at the deputy secretary or subcabinet level—to be responsible for Recovery planning, implementation, and performance activities within the agency.senior agency leaders were regularly involved with overseeing and reporting on Recovery Act efforts.\nAt the state level, several governors demonstrated top leadership support by establishing specific positions, offices, or both that were responsible for state Recovery efforts. For example, the Governor of Massachusetts created the Massachusetts Recovery and Reinvestment Office as a temporary program management office for the specific task of overseeing Recovery activities. The former director of the office stated that he reported directly to, and drew his authority from, the Governor. The Governor also elevated the office to the rank of a senior level office. This action increased the office’s visibility and gave it a seat at the Governor’s weekly cabinet meetings, where its director would regularly report on the status of Recovery Act projects. In addition, no state Recovery Act program could be approved without the director’s consent. The former director told us that the success of the office was attributable to the direct line of authority it had with the Governor of Massachusetts. In fiscal year 2012, Massachusetts’ Office of Commonwealth Performance, Accountability, and Transparency was created, in part, as a direct result According to Massachusetts’ state officials, this of the Recovery Act. office is the state’s attempt to take lessons from the state’s experience with the Massachusetts Recovery and Reinvestment Office and apply them post Recovery Act.", "Mass. Gen. Laws ch. 7, § 4A(e). and to run competitions in a manner consistent with their individual statutes, regulations, and agency practices. On the other hand, there was also centralization of oversight as demonstrated by the direct involvement of high-level officials such as the Vice President, cabinet secretaries, and senior accountable officials in federal agencies receiving Recovery Act funding, as well as centrally-placed policy and oversight organizations such as OMB and the Recovery Board. This combination of a centralized and decentralized approach to managing the implementation of the Recovery Act represented a new method of managing grant oversight, one which simultaneously recognized the importance of collaboration while increasing the role of the center.\nOfficials in the Recovery Implementation Office employed a collaborative, facilitative approach, while also leveraging the authority of the Vice President to facilitate the participation of stakeholders. The office functioned as a convener and problem-solver that engaged with a wide range of federal, state and local partners. This approach was embodied in the objectives identified by the Vice President when the office was established. These objectives included the expectation that office staff respond to requests and questions within 24 hours, cut across bureaucratic silos by reaching out to a variety of partners, and always be accessible. Toward this end, the office adopted the role of an “outcome broker,” working closely with partners across organizational silos at all levels of government in order to foster implementation of the Recovery Another role of the Recovery Implementation Act and achieve results. Office was to closely monitor Recovery Act spending. One way it did so was to monitor grants to ensure that they were consistent with the objectives identified by the Vice President. A second way the office monitored spending was to review weekly financial reports on agency obligations and expenditures for programs receiving Recovery Act funds and to meet with the agencies on a regular basis.\nFor more information on the concept of an “outcome broker”, please see Frank DiGiammarino, Can Government Work Like Open Table? Innovation in the Collaborative Era (2012), accessed January 22, 2014, http://www.scribd.com/doc/115361546/Can-Government-Work-Like-OpenTable.\nOMB sought to facilitate effective implementation of the Recovery Act by working to establish and strengthen relationships with state and local governments that would ultimately implement the programs on the ground. This was done in two ways: (1) by soliciting feedback from state and local partners when formulating and revising rules and policies governing the implementation of Recovery Act programs and (2) by developing its capacity to respond to questions from the many states and localities that would be implementing those rules and policies. A senior OMB official directly involved in this work told us the office had to move out of its traditional role as mainly a policy-making organization to adopt a more interactive and service-oriented approach. Under this approach, key activities involved engaging with and obtaining feedback from states and localities as well as providing technical support to these groups so that they could meet the Recovery Act’s numerous reporting requirements.\nFor example, to obtain feedback from state and local partners when developing key Recovery Act policies, OMB became actively involved in weekly conference calls that included a diverse group of federal, state, and local organizations. Starting in the spring of 2009, regular participants in these calls included OMB; GAO; the National Association of State Auditors, Comptrollers and Treasurers; the National Governors’ Association; the National Association of State Budget Officers; the Recovery Board; the National Association of Counties; the National Association of State Chief Information Officers; and the National Association of State Purchasing Officers. These weekly calls were scheduled after several of these organizations wrote to OMB and GAO to express their strong interest in coordinating on reporting and compliance aspects of the Recovery Act. An important outcome of this regular information exchange was to make OMB aware of the need to clarify certain reporting requirements. The Recovery Act required federal agencies to make information publicly available on the estimate of the number of jobs created and number of jobs retained as a result of activities funded by the act. Our previous Recovery Act work in the states raised the issue that some local officials needed clarification regarding definitions when reporting on job data. The local partners participating in these calls were able to corroborate what we reported and provide OMB with specific information about what additional guidance was needed. To obtain information to further guide refinements to the Recovery implementation process, at the end of 2009, OMB officials said they (1) interviewed and surveyed numerous stakeholders including governors and state and local recipients, and (2) worked with GAO to identify best practices. Based on these efforts, OMB subsequently revised its guidance, which focused on lessons learned around enhancing recipient reporting and compliance.\nTo improve technical support provided to state and local governments implementing the Recovery Act, OMB worked with the Recovery Board to establish an assistance center based on an “incident command” model.\nOne OMB official likened this approach to an extension of a traditional response model used during natural disasters, where the country’s economic condition during the Great Recession was the “incident” and the Recovery Act was the intervention to be rolled out through many partners. To help implement this approach, OMB worked with officials from the Department of Agriculture who offered the services of one of their national emergency management teams to help set up and coordinate this effort. Given the large number of state and local governments that needed to be supported, OMB requested that each agency with grant programs receiving Recovery Act funds contribute personnel to support the center. According to OMB officials, from September to mid-December of 2009, the center responded to approximately 35,000 questions from states and localities.", "Under the Recovery Act, some agencies used new data-driven approaches to inform how they managed programs, and some of those new approaches become institutionalized at the agencies post-Recovery. While the Government Performance and Results Act (GPRA) Modernization Act of 2010 (GPRAMA) laid out requirements for data- driven quarterly performance reviews, several Recovery Act efforts aided agencies in implementing those requirements. For example, in February 2013 we found that the Department of Energy (DOE) built on its Recovery Act-related performance reviews and established quarterly performance reviews, called business quarterly reviews, in 2011. Another control DOE implemented for large dollar projects was a “Stage-Gate” process, which did not allow the funds to be disbursed all at one time. It required the recipient to meet certain metrics before receiving additional funding at certain levels. DOE Office of Inspector General (OIG) officials believed this Stage-Gate approach was an effective internal control tool. Post- Recovery, DOE has institutionalized both the business quarterly reviews and Stage-Gate processes.\nAs part of the Department of Housing and Urban Development’s (HUD) implementation of the Recovery Act, the agency piloted a new approach to data management and accountability called HUDStat. HUD’s Recovery Act team collected data about the status of projects and progress towards financial goals. Armed with this information, HUD leaders could identify and neutralize spending delays across the agency’s 80 field and regional offices. In some cases, a senior HUD official would make a phone call to a mayor or a governor to stress the need to spend funds quickly. In other cases, staff would refocus on regions where progress was slow and would work with grantees to move more quickly to promote economic growth. After the Recovery Act, and in accordance with GPRAMA requirements, HUD continued to use HUDStat to share data and resources across the agency.", "The Recovery Act contained increased accountability requirements in the areas of reporting, audits, and evaluations to help ensure that tax dollars were being spent efficiently and effectively. At the same time, the act provided aggressive timelines—approximately 19 months—for the distribution of funds. The combination of these two factors placed high expectations on federal, state, and local governments and led to increased coordination both vertically across levels of government and horizontally within the same level of government to share information and work towards common goals.", "Organizations involved in overseeing and implementing grants funded by the Recovery Act made use of both new and established networks to share information. Shortly after the Recovery Act was signed into law, our then Acting Comptroller General and the Chair of the Council of the Inspectors General on Integrity and Efficiency hosted a coordination meeting with the OIGs or their representatives from 17 federal agencies to discuss an approach to coordination and information sharing going forward. We also worked with state and local auditors and their associations to facilitate regular conference calls to discuss Recovery Act issues with a broad community of interested parties. Participants included the Association of Government Accountants; the Association of Local Government Auditors; the National Association of State Auditors, Comptrollers, and Treasurers; the Recovery Board; and federal OIGs.\nAnother active venue for information sharing was the National Intergovernmental Audit Forum (NIAF). The NIAF, led during this period by our then Acting Comptroller General, is an association that has existed for over three decades as a means for federal, state, and local audit executives to discuss issues of common interest and enhance accountability. NIAF’s May 2009 meeting brought together these executives and others including OMB, to update them on the Recovery Act and provide another opportunity to discuss emerging issues and challenges. In addition, several Intergovernmental Audit Forum meetings were scheduled at the regional level across the country and sought to do the same. This regional coordination and information sharing directly contributed to our Recovery Act work in the states. For example, our western regional director made a presentation at the Pacific Northwest Audit Forum regarding our efforts to coordinate with state and local officials in conducting Recovery Act oversight. In conjunction with that forum and at other related forums, she regularly met with the principals of state and local audit entities to coordinate oversight of Recovery Act spending.\nOfficials from New York City also played a role in creating networks to share information. Believing that large cities were probably facing similar issues and challenges, Recovery officials in New York City established the American Recovery and Reinvestment Act Big City Network (BCN) to serve as a peer exchange group and facilitate information sharing among large municipalities across the country. The group was composed of over 20 large cities with geographical diversity, such as Los Angeles, Philadelphia, Phoenix, and Seattle, that received a significant amount of federal stimulus funding. The former head of the BCN told us that the organization held frequent teleconferences and used this collaboration to elevate issues unique to large cities with OMB, the White House’s Recovery Implementation Office, and the Recovery Board. For example, BCN informally surveyed its members in January 2010 concerning each grant and associated funds they received. From this survey, BCN officials assembled a list of cross-jurisdictional issues reflecting the perspectives and experiences of large cities and shared them with the White House, OMB, and the Recovery Board. Likewise, OMB, the Recovery Implementation Office, and the Recovery Board used BCN as a vehicle for getting information out to its partners on the ground.\nSimilarly, at the state level, a network was established where state Recovery Act coordinators shared information and lessons learned on a weekly basis. This state-level network also discussed ongoing Recovery Act policy and operational issues with the White House, OMB, and the Recovery Board to ensure successful implementation. Federal officials joined the state calls on a regular basis. Both BCN and the state network proved to be especially helpful in fostering intergovernmental communications. For example, the former head of the BCN stated that in response to a Senate Committee request in 2012, New York City leveraged both BCN and the state Recovery Act coordinators’ network to inform the current discussion on the Digital Accountability and Transparency Act, proposed legislation which seeks to improve grant transparency through increased reporting. Cities and states mobilized quickly and came together on key consensus principles for Congress’ consideration.", "Under the tight time frames set for implementation of the Recovery Act, federal agencies needed to work together to accomplish their goals. For example, HUD and DOE shared a goal of weatherizing low-income households through long-term energy efficiency improvements. To get the projects under way as quickly as possible, they worked together to ensure that homeowners met income standards. Before Recovery Act implementation, both DOE and HUD conducted their own independent income verifications. In May of 2009, DOE and HUD entered into a memorandum of understanding that eliminated the need for separate DOE income verification for people whose incomes had already been verified by HUD. According to DOE officials, this collaboration helped projects move faster, reduced the cost and administrative burden of duplicative verifications, and helped DOE weatherize numerous homes under the Recovery Act through 2013. DOE officials reported that between fiscal years 2010 and 2013, the joint effort helped weatherize approximately 1.7 million housing units, the majority of which were low- income. This policy of sharing low-income verifications for weatherizing homes has continued post-Recovery Act.\nAt the state level, Massachusetts is an example where officials developed new ways of working together to achieve Recovery Act goals. For example, Massachusetts state officials established the Stimulus Oversight and Prevention (STOP) Fraud Task Force in 2009 to fulfill the Recovery Act’s goal of preventing fraud, waste, and abuse of Recovery Act funds. This task force included the state OIG’s office, the Attorney General’s office, and the State Auditor. Over the next 2 years, the group met bimonthly to discuss fraud prevention and collaborated with several federal agencies including the Department of Justice, the Federal Bureau of Investigation, and HUD. The group also brought in federal OIGs including DOE and Education, the state Comptroller’s office, and the Massachusetts Recovery and Reinvestment Office to discuss our report findings and OMB guidance. According to officials from the Massachusetts Attorney General’s office, the task force improved communication and furthered efforts to avoid overlap.", "Faced with the short time frames and accelerated roll out of Recovery Act funds, both the oversight community and agencies adjusted their oversight approach and innovated to foster accountability for Recovery Act funds at the federal and state agency levels. These organizations became more engaged in up-front analysis and monitoring of programs under the Recovery Act and their reviews were often issued before money was spent. These practices included (1) assessing and planning for risks up front; (2) reviewing programs before and while they were being funded rather than waiting until after programs were implemented; (3) communicating findings quickly through informal processes as opposed to regular full reports; and (4) using advanced data analytics.", "At the federal level, several agency OIGs conducted up-front risk planning to proactively prepare for the influx of Recovery Act funds. For example, the Department of Transportation’s (DOT) OIG instituted a three-phase risk assessment process for DOT programs that received Recovery Act funds. The OIG first identified existing program risks based on past reports; it next assessed what the department was doing to address those risks; and it then conducted the audit work. DOT’s OIG is continuing to use this three-phase scan approach for its work on Hurricane Sandy.\nAt the Department of Education, when the OIG realized that Education’s discretionary grant budget would increase from a typical allotment of $60 billion annually to over $100 billion under the Recovery Act, officials put aside their initial work plan and developed a new one which focused on the Recovery Act. Toward this end, the OIG conducted up-front risk assessments by looking at its prior work to identify persistent implementation issues going back to fiscal year 2003. The OIG then issued a 2009 capping report that summarized these issues. This report and additional risk assessments on Recovery Act-specific issues guided the OIG's internal control audits that focused on the use of funds, cash management, subrecipient monitoring, and data quality for Recovery Act education programs.\nShortly after the Recovery Act was signed, DOE’s OIG reviewed the challenges the agency would need to address to effectively manage the unprecedented level of funding and to meet the goals of the Recovery Act. The resulting report was based on a body of work by the OIG to improve operations and management practices. The OIG identified specific risks that they discovered during past reviews and investigations. The OIG also suggested actions that should be considered during Recovery Act planning and program execution to help reduce the likelihood that these historical problems would recur. Further, the OIG described the department’s initial efforts to identify risks and to develop strategies to satisfy the Recovery Act’s goals and objectives. In addition, the report outlined the OIG’s planned oversight approach which adopted a risk-based strategy that included, among other things, early evaluations of internal controls and assessments of performance outcomes.\nAt HUD, regional offices conducted front-end risk assessments of programs that would be receiving Recovery Act funds. The HUD OIG considered these risk assessments when preparing its work plan and carrying out audits. The office also conducted capacity reviews for programs that field offices had identified as having known issues. The purpose of these capacity reviews was to enable the office to actively address and work to resolve known issues before Recovery Act funds were distributed to programs.\nAt the state level, audit organizations also adjusted their usual approaches when planning and conducting reviews of grant programs that received Recovery Act funds. Several state auditors conducted extra audit work of state programs up front in an effort to identify risks and inform their work moving forward. For example, the Office of the California State Auditor conducted “readiness reviews” that highlighted known vulnerabilities in programs receiving Recovery Act money. The office used the information coming out of these reviews to identify specific issues to focus on in future work as well as to inform the oversight committees of the state legislature and other state officials involved in Recovery Act oversight and implementation. As a result of one such review that focused on DOE’s Weatherization Assistance Program, the State Auditor was able to identify key implementation issues that needed attention at a joint meeting of state and federal officials organized by the Governor’s Recovery Act Task Force. The readiness review identified specific areas where the program needed to improve and informed the frequency with which state auditors would go back to program officials to check on progress. According to the California state auditor, among the benefits of this approach was the feedback it provided to state agencies on their level of readiness as well as the detailed information given to both the state legislature and the Governor’s Recovery Act Task Force on the agency’s progress. The use of readiness reviews has continued post- Recovery Act. Most recently, the office employed the approach in 2013 as it prepared to audit the implementation of the Affordable Care Act in California.", "The Recovery Act’s short time frames prompted the oversight community to carry out some of its reviews in “real time” as Recovery funds were being rolled out, as opposed to the traditional approach of reviewing a program after implementation. Under this approach, members of the oversight community looked for ways to inform program officials of challenges and needed improvements much earlier in the process. For example, as described previously in table 1, the Recovery Act specified several roles for us, including conducting bimonthly reviews of selected states’ and localities’ use of funds made available under the Act. We subsequently selected a core group of 16 states and the District of Columbia to follow over the next few years to provide an ongoing longitudinal analysis of the use of funds provided in conjunction with the Recovery Act. The Recovery Act also assigned us a range of responsibilities to help promote accountability and transparency. Some were recurring requirements such as providing bimonthly reviews of the use of funds made available under various provisions of the Recovery Act by selected states and localities and reviews of quarterly reports on job creation and job retention as reported by Recovery Act fund recipients. Other requirements included targeted studies in several areas such as small business lending, education, and trade adjustment assistance. In total, we issued approximately 125 reports on, or related to, the Recovery Act resulting in more than 65 documented accomplishments.\nThe interest in obtaining “real time” feedback concerning Recovery Act implementation was not limited to the oversight community. For example, DOT’s Federal Highway Administration (FHWA) established National Review Teams (NRT) within 3 months of the Recovery Act’s passage to help assist its division offices attain the greater level of accountability and transparency called for under the Recovery Act. As we previously reported, the NRTs were composed of FHWA staff—separated from the rest of FHWA—to act as a neutral third party to conduct oversight. The mission of the NRTs was to conduct quick reviews of FHWA programs and assess processes and compliance with federal requirements in six key risk areas: (1) preliminary plans, specifications, and estimates; (2) contract administration; (3) quality assurance of construction materials; (4) local public agencies; (5) disadvantaged business enterprises; and (6) eligibility for payments. As a review progressed, the NRT discussed findings with division office and state transportation staff. According to FHWA officials, independent reviews had several benefits: a consistent, comparative perspective on the oversight regularly conducted by division offices, and the collection of information at the national level on both best practices and recurring trouble spots across FHWA division offices; additional “boots on the ground” for project-level oversight and increased awareness of federal oversight activity among states, Metropolitan Planning Organizations, and other transportation organizations receiving Recovery Act funds; and an independent outside voice to examine Recovery Act projects and point out problems, keeping the partnering relationship between the division offices and the state DOTs intact.\nDivision offices and state officials with whom we spoke responded positively to the NRT reviews. The NRT was viewed as a success for FHWA and it has since added independent reviews based largely on the NRT model to provide independent corporate level review of projects and programs in addition to providing other support services.", "The rapid pace at which Recovery Act funds were being distributed also prompted audit organizations to communicate their findings earlier in the audit process. For example, DOT’s OIG issued periodic advisories within the agency rather than waiting until an audit was completed to share its findings. According to OIG staff, these advisories informed the department of issues or concerns shortly after they were discovered, thereby permitting program staff to take corrective action much more quickly.\nIn our first report on our bimonthly reviews of the use of Recovery Act funds by selected states and localities, we determined that the Single Audit process needed adjustment to provide the necessary level of focus and accountability over Recovery Act funds in a timelier manner than the current schedule. Subsequently, we recommended that the director of OMB adjust the Single Audit process to provide for review of the design of internal controls during 2009 over programs to receive Recovery Act funding, before significant expenditures in 2010. In response, in October 2009 OMB implemented the Single Audit Internal Control Project—a collaborative effort between 16 volunteer states receiving Recovery Act funds, their auditors, and the federal government—to achieve more timely communication of internal control deficiencies for higher-risk Recovery Act programs. The project encouraged auditors to identify and communicate significant deficiencies and material weaknesses in internal controls over compliance for selected major Recovery Act programs 3 months sooner than the 9-month time frame required under statute. The project allowed program management officials at an audited agency to expedite corrective action and help mitigate the risk of improper Recovery Act expenditures. In May 2010, we reported that the project met some of its objectives and was helpful in identifying critical areas where further OMB actions were needed to improve the Single Audit process over Recovery Act funding.\nAuditors at the local level also communicated their findings early. For example, the Denver City Auditor’s Office adopted new practices to provide more timely information on Recovery Act programs to the Mayor and other key officials, particularly on issues affecting compliance with Recovery Act reporting requirements. Using a tiered notification process, the auditor’s office would initially notify the appropriate city department informally through e-mail or a similar means of potential issues they were finding during an on-going audit. The auditor’s office would revisit the issues later and, if the office determined the issue had not been addressed, it would then formally communicate any substantive issue on a real-time basis through an “audit alert.” These alerts were typically brief documents and went to the affected departments as well as directly to the Mayor’s work group that oversaw the city’s Recovery Act implementation. If appropriate action was still not forthcoming, the city auditor might issue a public alert or maybe a full public audit report. According to a senior city audit official, the alerts were beneficial because the city auditor did not have to conduct a full audit to communicate risks and findings to decision makers, allowing them to more quickly address problems. The city auditor issued its first audit alert in October 2009 and subsequently issued another one in February 2010 when problems from the first one had not been addressed. After the second alert, the city administration corrected the identified problems.", "To further increase accountability under the Recovery Act, the Recovery Board utilized innovative data analytics in carrying out its oversight responsibilities. Data analytics is a term typically used to describe a variety of techniques that can be used to analyze and interpret data to, among other things, help identify and reduce fraud, waste, and abuse. Specifically, predictive analytic technologies can be used to identify potential fraud and errors before payments are made, while other techniques, such as data-mining and data-matching of multiple databases, can identify fraud or improper payments that have already been awarded, thus assisting agencies in recovering these dollars. In October 2009, the Recovery Board established an innovative center to analyze the use of Recovery Act funds by employing data analytics (see figure 3). The Recovery Operations Center (ROC) served as a centralized location for analyzing Recovery Act funds and their recipients through the use of such predictive analytic technologies.\nAccording to Recovery Board staff, the results of these approaches provided the OIG community and other oversight authorities with information they could use to focus limited resources on cities, regions, and high-risk government programs where historical data and current trends suggested the likelihood of future risk. ROC analysts would cross- reference lists of grant recipients or sub-recipients against a variety of databases to look for risk indicators such as criminal convictions, lawsuits, tax liens, bankruptcies, risky financial deals, or suspension/debarment proceedings.\nOne tool used to do this is link analysis, which assists the analyst in making connections by visually representing investigative findings. Link analysis charts visually depict how individuals and companies are connected, what awards an entity has received, and how these actors may be linked to any derogatory information obtained from the databases described above . Such tools, when combined with enhanced Geographic Information System capabilities, enable ROC analysts to conduct geospatial analysis by displaying data from multiple datasets on maps to help them make linkages and discover potential problems.\nFor example, the ROC helped a federal agency investigate possible contract fraud related to over-billing on multiple contracts. ROC analysts found 99 recipient awards made to a single company totaling over $12 million. In another example, the ROC helped to investigate allegations of false claims and major fraud against the United States. ROC analysts found officers of one company were also executives of more than 15 other companies, many of which were located at the same address, and collectively received millions in Recovery Act funds.\nMore recently, the ROC has been used to track funds and help reduce fraud, waste, and abuse related to the tens of billions of dollars that have been awarded to states and communities to assist in their recovery after Hurricane Sandy hit in October 2012. Recovery Board staff have sought to leverage the expertise they have developed in analyzing financial spending and identifying potential fraud and high-risk indicators based on their experience with the Recovery Act.\nFigure 3. An Analyst Working in the Recovery Board’s Recovery Operations Center and a Sample Output of One of ROC’s Link Analysis Tools.\nTo assure the public that their tax dollars were being spent efficiently and effectively, the Recovery Act called for increased oversight and accountability of those funds by oversight and program entities at the federal, state, and local levels. This increased emphasis on oversight and accountability presented challenges for those entities stemming from (1) a lack of financial resources to conduct oversight at the state and local levels, (2) human capital issues, and (3) the accelerated roll out of Recovery Act funds.", "Officials with whom we spoke in several states expressed concerns that the Recovery Act did not provide funding to state oversight entities, although it placed additional federal requirements on them to provide proper accounting and to ensure transparency. Federal agency OIG offices received a significant amount to conduct oversight of Recovery Act funds—ranging anywhere from $1 million to $48.25 million distributed to more than 28 agencies. In contrast, states and localities relied on their existing budgets and human capital resources (and, in some cases, supplemented by a small percentage of administrative funds) to carry out their additional oversight activities.\nDue to fiscal constraints, states reported significant declines in the number of management and oversight staff—limiting states’ ability to ensure proper implementation and management of Recovery Act funds. With oversight capacity already strained in many states, the situation was further exacerbated by increased workloads resulting from implementation of new or expanded grant programs funded by the Recovery Act. For example, Massachusetts officials explained that the state oversight community faced budget cuts of about 10 percent. According to officials from the OIG and the State Auditor’s office, their budgets are almost entirely composed of salaries, and any cuts in funding resulted in fewer staff available to conduct oversight. As a result of the cuts, the Inspector General stated that his department did not have the resources to conduct any additional oversight related to Recovery Act funds. Further, the Massachusetts State Auditor described how his department had to furlough staff for 6 days in fiscal year 2009. In recognition of this situation and reflective of the state’s desire to pursue fraud in the Recovery Act program, for state fiscal years 2009 through 2012, the Massachusetts Recovery and Reinvestment Office allocated funds from the state’s central administration account to the Attorney General, State Auditor, and OIG offices to ensure that oversight would take place.\nThe California State Auditor also cited the lack of federal funding for state and local oversight as a challenge to ensuring accountability in the implementation of the Recovery Act. In a 2009 testimony to the California state budget committee, the State Auditor said that her office would need to conduct an additional 14 audits based on an initial analysis of the estimated stimulus funds that California would receive. Furthermore, the programs that the office was auditing at the time received additional funds, which potentially increased the workload and cost to audit those programs as well. Finally, new requirements created by the Recovery Act for existing programs also impacted the State Audit Office’s efforts. The California State Auditor noted that given the additional responsibilities her office faced due to the influx of stimulus funds, any budget cuts would adversely affect the office’s ability to conduct audits.\nIn another example, Colorado’s state auditor reported that state oversight capacity was limited during Recovery Act implementation, noting that the Department of Health Care Policy and Financing had three controllers in 4 years and the state legislature’s Joint Budget Committee cut field audit staff for the Department of Human Services in half. In addition, the Colorado DOT’s deputy controller position was vacant, as was the Department of Personnel & Administration’s internal auditor position. Colorado officials noted that these actions were, in part, due to administrative cuts during a past economic downturn in an attempt to maintain program delivery levels.", "The President’s goal for quickly spending Recovery Act funds created a large spike in spending for a number of programs in the 28 agencies receiving Recovery Act funds. The act also created a number of new programs—requiring agencies to move quickly. As a result, under the Recovery Act’s accelerated rollout requirements, some federal agencies and states faced oversight challenges.\nFor example, DOT and states faced numerous challenges in implementing the Recovery Act’s maintenance-of-effort oversight mechanism due to the accelerated rollout of funds. The Recovery Act contains maintenance of effort provisions designed to prevent recipients, such as state DOTs, public housing agencies, and private companies, from substituting planned spending for a given program with Recovery Act funds. That is, the provisions ensured that the increased federal spending would supplement rather than replace state, local, or private spending. The maintenance-of-effort provision for DOT in the Recovery Act required the governor of each state to certify that the state would maintain its planned level of transportation spending from February 17, 2009, through September 30, 2010. Twenty-one states did not meet their certified planned spending levels, and a January 2011 preliminary DOT report found that some of these states were unclear on what constituted “state funding”. DOT also found some of the states were unclear about how well DOT guidance on calculating planned expenditures would work in the many different contexts in which it would have to operate. As a result, many problems came to light only after DOT had issued initial guidance and states had submitted their first certifications. DOT issued guidance seven times during the first year after the act was signed to clarify how states were to calculate their planned or actual expenditures for their maintenance-of-effort certifications. Further, many states did not have an existing means to identify planned transportation expenditures for a specific period, and their financial and accounting systems did not capture that data. Therefore, according to DOT and some state officials, a more narrowly focused requirement applying only to programs administered by state DOTs or to programs that typically receive state funding could have helped address the maintenance-of-effort challenges. DOT and state officials told us that while the maintenance-of-effort requirement can be useful for ensuring continued investment in transportation, allowing more flexibility for differences in states and programs, and adjustments for unexpected changes to states’ economic conditions, should be considered for future provisions.\nAt DOE, the department initially encountered some challenges with fully developing a management and accountability infrastructure because of the large amount of Recovery Act funding it received in a short period of time. According to an official in the DOE OIG’s office, this was especially true with the new Energy Efficiency Conservation Block Grant program.This official told us that some states and localities also did not have the infrastructure in place (including the necessary training) to manage the large amount of additional federal funding. Further, DOE required recipients’ weatherization plans to address how the respective state’s current and expanded workforce (employees and contractors) would be trained. In May 2010, according to DOE, the agency was in the process of developing national standards for weatherization certification and accreditation. DOE estimated that developing the standards would take about 2 years—a time frame that did not match the accelerated timing of the Recovery Act’s funds’ distribution. Several years after the Recovery Act was implemented, DOE reported that it had completed certain milestones toward developing national standards for weatherization, training, certification, and accreditation, but was still working to finalize other elements such as its national certification program.", "", "In an April 2009 memorandum, OMB directed agencies to follow leading practices for federal website development and management, such as those listed on HowTo.gov, a website managed by the Federal Web Managers Council and the General Services Administration.makes available a list of the “Top 10 Best Practices” for federal websites as a resource to improve how agencies communicate and interact with HowTo.gov customers and provide services.state and city Recovery websites, demonstrated several of these leading practices including establishing a clear purpose of the website, using social networking tools to garner interest in the website, tailoring websites to meet audience needs, and obtaining stakeholder input when designing the website. In addition, we found that some websites enabled place- based performance reporting.", "Consistent with leading practices for the development of federal websites on HowTo.gov, Recovery.gov and selected state Recovery websites clearly identify for the user the purposes of the site and the ways it can be used to accomplish tasks efficiently. According to HowTo.gov, this is important because people often visit government websites with a specific task in mind, and if it is not easy to find the information quickly that they need to complete that task, they will leave the site. Recovery.gov contains an entire page that outlines what users can do on the site, including how to use the raw data available through the website; report waste, fraud, and abuse; or find job and grant opportunities. Further, Recovery.gov has a “Get Started” page with an overview of the information on the site including Recovery Act goals, the Recovery Board’s mission, what information is not available on the website, and what users can do on the website.\nSimilarly, Massachusetts’ Recovery website has tabs on its homepage that link to information on how to use the website to track Recovery Act jobs, spending, vendors, and the impact of Recovery Act dollars in the state. For example, the “track jobs” page informs users how they can track jobs created and retained in their community and provides a user guide to assist them in their query.", "Another leading practice for federal websites includes the use of social networking tools. According to Howto.gov, social media is transforming how government engages with citizens, allowing agencies to share information and deliver services more quickly and effectively than ever before. Recovery.gov and selected state and local Recovery websites use social networking tools to garner interest in their websites. These websites integrated Web 2.0 technologies to help people share and use the information they provide. For example, to develop web-based communities of interest, Recovery.gov has a dedicated social media web page that has links to Recovery’s presence on various social-networking tools such as Facebook, Twitter, YouTube, and Flickr. Recovery.gov’s social media page enables users to (1) download a Recovery application for iPhones and for iPads with a mapping feature showing how Recovery Act funds were being spent, (2) sign up for a Recovery.gov month-in- review email, and (3) sign up to receive Recovery RSS web feeds.\nFinally, Recovery.gov also has a blog, written by Recovery Board staff, with a stated purpose to further a dialogue on transparency and accountability in government, as well as to provide a forum for thoughts, comments, and suggestions from the public.\nNew York City also made use of social networking to communicate information regarding Recovery Act implementation through the use of a Tumblr blog. City officials used this blog to communicate stories and examples to its residents about how it was using Recovery Act funds and the impact of those investments. City officials said the blog allowed them to get behind full-time equivalent numbers and dollar expenditures so that people could better understand how the Recovery Act was helping them tackle problems where they work and live. For example, the blog described one project that had no net increase in jobs but still made a valuable difference for the city because Recovery Act funds were used to repair 300,000 potholes and move to zero diesel fuel emissions for city vehicles.", "Organizing a website according to the needs of its audience is also a key leading practice for federal websites since an agency’s goal is to build the right website for the people who need it and serve them effectively by learning as much as possible about the website’s customers and what they do. Recovery.gov has dedicated pages for different audiences that compile and organize relevant resources according to their needs and interests. On its home page, Recovery.gov has a tab which provides links to pages designed with specific users in mind such as citizens, the press, and grant recipients. There are also links to pages on neighborhood Recovery Act projects, information on the Recovery Board, and other information users are looking for. For example, grant recipients have a dedicated page that provides resources such as reporting timelines, user guides, a service/help desk, recipient reporting information, and a recipient awards map. (See figure 4.)\nOn Recovery.gov’s “Developer Center” web page, users can access data reported by recipients of Recovery awards through the Recovery application program interface (API) and the Mapping API. Users can also find widgets providing data summaries by state, county, congressional district, or ZIP code as reported by recipients. The web page also has a tool for users to build customized charts and graphs displaying information such as funds awarded and received by state, agencies by number of awards, and spending categories by funds awarded.\nThe state of Massachusetts also tailored its Recovery Act website to meet its audience’s needs. Prior to its implementation of the Recovery Act’s transparency provisions, Massachusetts had little experience with electronic reporting and disclosure of federal contracts, grants, and loans. The MassRecovery website provided weekly citizen updates and testimonials of how spending has benefited lives. The Citizens’ Update web page provides a summary of where the state’s Recovery Act dollars are going, where jobs are being created and retained, and information on beneficiaries of funds received. In December 2009, MASSPIRG, an independent consumer research group, issued a brief pointing to the strengths of the Massachusetts Recovery website including the ability of the Citizens’ Update web page to show money spent and jobs created and retained in easy-to-read pie charts and tables; a summary of funds distributed through the state; and an interactive state map of Recovery Act spending. Further, in January 2010, Good Jobs First, a national policy resource center, reviewed and evaluated states’ Recovery Act websites. The organization ranked Massachusetts’ Recovery website on its top 10 list citing such beneficial features as the site’s comprehensive search engine, data download capability, and information on five key Recovery Act project elements—description, dollar amount, recipient name, status, and the text of the award.", "Leading website practices also recommend that developers obtain stakeholder input when designing federal websites by engaging potential users through focus groups and other outreach; regularly conducting usability tests to gather insight into navigation, the organization of content, and the ease with which different types of users can complete specific tasks; and collecting and analyzing performance, customer satisfaction, and other metrics. According to leading website practices, these efforts are important for collecting and analyzing information about audiences, their needs, and how they are using, or want to use, the website.\nThe developers of Recovery.gov followed this leading practice by using input from user forums, focus groups, and usability testing with interested citizens to collect feedback and recommendations, which then inform the development of the website from its initial stages. For example, teaming with OMB and the National Academy of Public Administration, the developers of Recovery.gov hosted a week-long electronic town hall meeting at the end of April 2009 entitled “Recovery Dialogue on Information Technology Solutions.” Over 500 citizens, information technology specialists, and website development experts registered for the event and submitted numerous ideas. Recovery.gov adopted some of the ideas right away and included others in the re-launched version of the website in September 2009. These changes included a standardized reporting system for recipients, a greater use of maps, and a feedback section for users. Additionally, in October 2009, Recovery.gov developers conducted remote usability testing with 72 users, where the developers received suggested changes, some of which they later implemented. Further, in 2012, significant changes were made to Recovery.gov based on user feedback on the website. These changes included creating a recipient and agency data page, agency profiles, and a new Recipient Projects Map with a series of dropdown menus and checkboxes that enable users to filter data so they can see it in a targeted fashion (for example, by state, agency, or category).", "For websites covering numerous projects at various locations, a place- based geographic information system can be a useful tool. According to the White House’s Digital Government Strategy, the federal government needs to be customer-centric when designing digital service platforms such as websites. In other words, agencies need to be responsive to customers’ needs by making it easy to find and share electronic information and accomplish important tasks. From the beginning, recipient reported data on Recovery.gov was geo-coded in a way that made it possible for users to find awards and track the progress of projects on a block-by-block basis. The presentation of information on Recovery.gov and on many state websites generally targeted individual citizens who were not experts in data analysis. The format and content of data prioritized mapping capabilities and invited people to enter their ZIP code and locate projects in their immediate area. For example, figure 5 shows the map a user sees if ZIP code 30318 in Georgia is entered into this web page. From this map, the user can click on any of the dots that represent Recovery projects to find out information such as the project recipient name, award amount, project description, number of jobs created, and completion status. Additional information available to users includes the amount of funds received by recipients as well as the overall distribution of grants by funding categories for that area.\nStates and localities also utilized mapping features on their Recovery websites. For example, in New York City, Recovery officials launched a Recovery Act website, the NYCStat Stimulus Tracker, as an interactive, comprehensive reporting tool. The federal government’s website, Recovery.gov, served as the design inspiration and, according to a senior city official, Stimulus Tracker was one of the first publicly-accessible websites to report Recovery Act data for a local jurisdiction. City Recovery officials were able to develop and launch New York City’s stimulus website more quickly than other locations—approximately 6 weeks from start to completion—because they were able to leverage a previously implemented information technology platform to support citywide performance reporting. Stimulus Tracker allowed the public to explore several levels deeper than what was at Recovery.gov, which reported at the funding award level. For example, Stimulus Tracker broke down each award into several projects, each of which had its own dashboard page that displayed information such as (1) the status of the project, (2) the percentage of total funds spent, (3) start date and spending deadlines, and (4) the number of jobs created or retained. Visitors to the site could drill into a record of every payment made with stimulus funds through the additional feature “Payment Tracker” and every contract to carry out stimulus-funded work through “Contract Tracker.”\nStimulus Tracker also offered an interactive map for site visitors who were interested in knowing how stimulus dollars were allocated geographically and where specific projects were located. This information was layered on top of the city’s existing online map portal. It included such items as the locations of schools, libraries, hospitals, and subways, as well as online property, building, statistics, and census information. As New York City’s existing online map portal could already be navigated either by entering a specific address or simply using zoom and scroll tools, city Recovery Act officials were able to build on this application and include a city mapping tool for Recovery Act funds where the public could find any project with a discrete location. See figure 6 for a screen shot of New York City’s mapping tool depicting the city’s Recovery Act projects.", "", "The Recovery Act requires recipients to report on their use of funding and agencies that provide those funds to make the reports publicly available. The Recovery Act’s recipient reporting requirements apply only to nonfederal recipients of funding, including all entities other than individuals receiving Recovery Act funds directly from the federal government such as state and local governments, private companies, educational institutions, nonprofits, and other private organizations. As required by section 1512(c) of the Recovery Act, recipients were to submit quarterly reports that included the total amount of Recovery Act funds received, the amount of funds expended or obligated to projects or activities, and a detailed list of those projects or activities. For each project or activity, the detailed list was to include the project’s name, description, and an evaluation of its completion status. Also, the recipient reports were to include detailed information on any subcontracts or subgrants as required by the Federal Funding Accountability and Transparency Act of 2006. For example, recipient reports are required to also include details on sub-awards and other payments.\nWith the Recovery Act’s enhanced reporting requirements on spending, agencies and recipients faced several challenges. Many agencies and state and local partners were limited in their capacity to meet the enhanced reporting requirements due to a lack of knowledge and expertise. Others struggled with the burden of double reporting when they had to report to federal systems tracking Recovery dollars as well as to agency systems because, in some cases, agencies required more data to manage their programs. Finally, some had trouble reporting data for certain projects within the operational limitations of place-based data mapping systems.\nCapacity to meet reporting requirements. Many state and local partners were limited in their capacity to meet spending reporting requirements because they lacked knowledge and expertise. Using a centralized mechanism like FederalReporting.gov to capture recipient reporting information was a new process that recipients and agencies had to learn. We have previously reported on the questions raised by state officials regarding the reporting capacities of some local organizations, particularly small rural entities, boards, or commissions, and private entities not used to doing business with the federal government. In addition, some state officials said that the Recovery Act’s requirement that recipients report on the use of funds within 10 days after a quarter ends was a challenge because some sub-recipients were unable to send them the needed data on time.\nOfficials at several agencies suggested that if FederalReporting.gov had allowed certain key award and identifying data fields to be pre-populated each quarter, it would have likely resulted in fewer data errors for agencies to address and eased the reporting burden on recipients. In our September 2013 report and testimony on federal data transparency, we concluded that the transparency envisioned under the Recovery Act for tracking spending was unprecedented for the federal government, requiring the development of a system that could track billions of dollars disbursed to thousands of recipients. Such a system needed to be operational quickly to enable posting of spending information rapidly for a variety of programs. However, because agency systems did not collect spending data in a consistent manner, the most expedient approach for Recovery Act reporting was to collect data directly from fund recipients. Recipients had the additional burden of having to provide this information and when the data had to be entered manually, it could impact the accuracy of the data. Thus, in September 2013 we recommended that the director of OMB, in collaboration with members of the Government Accountability and Transparency Board, develop a plan to implement comprehensive transparency reform, including a long-term timeline and requirements for data standards, such as establishing a uniform award identification system across the federal government.\nEarlier this year, the Recovery Board noted that agencies and OIGs also experienced difficulties adapting to the more frequent reporting (every quarter) and more detailed reporting (e.g., jobs created or individual project activities) required of most government grant recipients. Agency officials acknowledged spending considerable staff hours training recipients, providing technical assistance to them, verifying and validating their data, and following up with them when issues arose. Despite efforts to streamline and enhance existing review protocols, agencies still needed skilled people to review and process applications for awards. Although agencies and OIGs credited outreach to recipients for reducing noncompliance with reporting requirements, the amount of staffing resources it took to conduct that outreach was significant.\nDouble reporting. We have previously noted that recipients of Recovery Act funds were required to report similar information to both agency reporting systems and FederalReporting.gov. Several federal agency and state government officials we spoke with also mentioned that reporting to FederalReporting.gov resulted in double reporting for their agency and grantees as several of them deemed their existing internal systems superior and therefore would end up reporting to both. For example, at HUD, program offices were unable to abandon their established reporting systems because the agency’s systems collected data necessary to support HUD’s grants management and oversight processes. HUD officials told us that requiring grantees to report using two systems resulted in double reporting of data and proved burdensome to recipients and to HUD staff who spent many hours correcting inaccurate entries.\nAt DOT, officials preferred using the agency’s own data because it was more detailed and was reported monthly—more frequently than the Recovery.gov data. In a focus group involving state transportation officials, several echoed the redundancy of reporting systems. These officials indicated that having to report to three systems—the internal state system, DOT’s system, and FederalReporting.gov—increased their agencies’ burden. As we reported in our previously mentioned September 2013 report and testimony on federal data transparency efforts, the lack of consistent data and standards and commonality in how data elements are defined places undue burden on federal fund recipients. This can result in them having to report the same information multiple times via disparate reporting platforms. procedures for reporting on the use of federal funds, it directed recipients of covered funds to use a series of standardized data elements. Further, rather than report to multiple government entities, each with its own disparate reporting requirements, all recipients of Recovery Act funds were required to centrally report into the Recovery Board’s inbound reporting website, FederalReporting.gov.\nGAO-13-871T and GAO-13-758. the geospatial reporting presentation format on the website. For example, according to Recovery Board officials, the website only allowed one location to be reported per project even though some projects spanned multiple locations. Therefore, if a DOT highway project crossed multiple ZIP codes, only one location of performance could be reported. Further, certain locations were difficult to map such as rural roads, post office boxes, county level data, and consultant contractors who worked out of their homes.", "The other major performance measure required under the Recovery Act focused on the estimate of the number of jobs created or number of jobs retained as a result of funding provided by the act. In addition to the previously described reporting on funds spent and activities, recipients were required in their quarterly reports to estimate the number of jobs created or retained by that project or activity. OMB issued clarifying guidance for recipient reporting in June 2009 and recipients began reporting on jobs starting in October 2009. Among other things, the guidance clarified that recipients of Recovery Act funds were to report only on jobs directly created or retained by Recovery Act-funded projects, activities, and contracts. Recipients were not expected to report on the employment impact on materials suppliers (“indirect” jobs) or on the local community. Recipients had 10 days after the end of each calendar quarter to report. OMB’s guidance also provided additional instruction on calculating the number of jobs created or retained by Recovery Act funding on a full-time equivalent (FTE) basis.\nRecipients faced several challenges meeting these requirements. They had difficulty accurately defining FTEs, as various recipients interpreted and applied the FTE guidance from OMB differently. Further, many recipients struggled to meet reporting deadlines as they had little time to gather, analyze, and pass on information to the federal government at the end of each fiscal quarter.\nDefinitional challenges and discrepancies in reporting FTEs. Under OMB guidance, jobs created or retained were to be expressed as FTEs. In our November 2009 report we found that recipients reported data inconsistently even though OMB and federal agencies provided significant guidance and training. Specifically, we found that while FTE calculations should allow for different types of jobs—part time, full time or temporary—to be aggregated, differing interpretations of the FTE guidance compromised the recipients’ ability to aggregate the data. For example, in California, two higher education systems calculated FTEs differently. One chose to use a 2-month period as the basis for the FTE performance period. The other chose to use a year as the basis. The result was almost a three-to-one difference in the number of FTEs reported for each university system in the first reporting period. Although the Department of Education provided alternative methods for calculating an FTE, in neither case did the guidance explicitly state the period of performance of the FTE. We recommended that OMB clarify the definition of FTE jobs and encourage federal agencies to provide or improve program-specific guidance for recipients. Further, we recommended that OMB be more explicit that jobs created or retained are to be reported as hours worked and paid for by the Recovery Act. In general, OMB and agencies acted upon our recipient reporting-related recommendations and later reporting periods indicated significant improvements in FTE calculations. OMB’s guidance changed the original formula and consequently, agencies had to rush to educate recipients about the changes. Agencies spent extra time and resources that quarter reviewing and validating recipient data to reduce errors. In some cases, agencies communicated daily with recipients via phone or e-mail to ensure their report submissions were accurate.\nCapacity of recipients to meet deadlines. The requirement to regularly report on jobs created and retained further strained the capacity of some recipients. Recipients only had 10 days after the end of each fiscal quarter to determine this information and pass it on to the federal government.reporting should have been extended by 1 to 2 weeks so they were not rushing to input data. One of these officials said she was directed by other state officials to put in “the best data you have, even if it’s not correct…and go back and correct it later.” City officials also reported concerns with the quick turn-around time for reporting. For example, one city official stated that, in order to meet reporting deadlines, it was necessary had to enter data manually, which created additional work. The Recovery Board accepted these post-correction actions as it extended the quality assurance period to provide more time for agencies to review reports and recipients to make corrections in FederalReporting.gov. As a result, recipients could change their reports up to about 2 weeks before the start of the next reporting period.", "The administration required agencies receiving Recovery Act funds to submit performance plans that identified additional measures on a program-by-program basis. Consistent with existing GPRA requirements for agencies to set outcome-oriented performance goals and measures, OMB’s initial Recovery Act implementation guidance required federal agencies to ensure that program goals were achieved. OMB required agencies to measure specific program outcomes, supported by corresponding quantifiable output measures, and improved results on broader economic indicators. agencies typically resorted to existing measures in their grant programs’ performance plans. This information is reported by agency and by program within each agency, as opposed to government-wide. While Recovery.gov provided a template for facilitating the reporting of this information, the level of detail and specificity of outcomes varied greatly for some of the agencies we reviewed, making it difficult to determine the extent to which some were making progress toward their goals and demonstrating results.\nSee OMB Memorandum M-09-10 (2009). This information was to be provided by all agencies receiving Recovery Act funds, covering each grant program using these funds, in the agencies’ “Recovery Program Plans” submitted to OMB. Initially due on May 1, 2009, the plans were to be updated by the agencies as needed and were to be published on Recovery.gov as well as agency websites. These plans included information on each Recovery Act program’s objectives, activities, delivery schedule, accountability plan, monitoring plan, and program performance measures.\nFor example, Education’s performance plan described the agency’s accountability mechanisms, the type and scope of project activities, and specific program performance measures. With the exception of the number of jobs created or retained, Education’s plan stated the agency was primarily using existing established agency performance measures that applied to both Recovery and non-Recovery funds. For example to measure the success of one type of education grant fund (specifically, Title I of the Elementary and Secondary Education Act of 1965, as amended) which the Recovery Act made available to local educational agencies, Education used existing agency performance measures, such as the percentage of economically disadvantaged students in grades 3 to 8 scoring at the proficient or advanced levels on state reading and mathematics assessments.\nOn the other hand, DOT filled out the templates to report on its 12 programs, and its performance measures were generally less specific and outcome oriented. For example, DOT’s Capital Assistance for High Speed Rail Corridors and Intercity Passenger Rail Service performance plan metrics included whether interim guidance was published within time frames, the number of applicants received for the program, and the number of grants awarded for the program. Further, as we previously reported, DOT released a series of performance plans in May 2009 to measure the impact of Recovery Act transportation programs, but these plans generally did not contain an extensive discussion of the specific goals and measures to assess the impact of Recovery Act projects. For example, while the plan for the highway program contained a section on anticipated results, three of its five measures were the percent of funds obligated and expended and the number of projects under construction. The fourth measure was the percentage of vehicle miles traveled on pavement on the National Highway System rated in good condition, but the plan said that goals for improvement with Recovery Act funds were yet to be determined. The fifth goal was number of miles of roadway improved, and DOT’s plan reported that even with the addition of Recovery Act funds, the new target would remain the same as previously planned. As a result, we recommended in May 2010 that DOT ensure that the results of these projects were assessed and a determination made about whether these investments produced long-term benefits. DOT did not implement our recommendation.", "Created in response to the recent serious recession, the Recovery Act represents a significant financial investment in improving the economy. Grant programs were a key mechanism for distributing this support. By increasing accountability and transparency requirements while at the same time setting aggressive timelines for the distribution of funds, the Recovery Act created high expectations as well as uncertainty and risk for federal, state, and local governments responsible for implementing the law.\nFaced with these challenges, some of these organizations looked beyond their usual way of doing business and adjusted their usual practices to help ensure the accountability and transparency of Recovery Act funds. The oversight community adopted a faster and more flexible approach to how they conducted and reported on their audits and reviews so that their findings could inform programs of needed corrections before all Recovery funds were expended. They leveraged technology by using advanced data analytics to reduce fraud and to create easily accessible Internet resources that greatly improved the public’s access to, and ability to make use of, data about grants funded by the Recovery Act. These and other experiences, as well as the challenges identified in this report, provide potentially valuable lessons for the future. Underlying many of these lessons is the importance of increased coordination and collaboration, both vertically—transcending federal, state, and local levels of government—and horizontally—across organizational silos within the federal community—to share information and work towards common goals.\nOne question that remains unresolved is the extent to which good practices developed in response to the Recovery Act’s special challenges and conditions can ultimately be incorporated in everyday practice for managing and overseeing grants. Some of the practices we found, such as the use of the Recovery Operations Center and state readiness reviews, have been able to make this transition. Others, such as some of the information sharing networks established during the Recovery Act, have had more difficulty in doing so. Proposals under consideration by Congress and the administration to extend Recovery Act requirements for spending transparency to all federal grants suggest that this has been the case for tracking dollars. Still to be seen is whether it will be possible to provide this type of government-wide transparency to other measures of performance, such as grant outcomes.", "We provided a draft of this report to the Secretaries of the Departments of Education, Energy, Housing and Urban Development, and Transportation; and to the Director of the Office of Management and Budget. We also provided drafts of the examples included in this report to cognizant officials from the relevant state and local agencies to verify accuracy and completeness, and we made technical changes and clarifications where appropriate. The agencies generally agreed with our findings and provided technical comments which were incorporated in the report.\nWe are sending copies of this report to other interested congressional committees; the Secretaries of the Departments of Education, Health and Human Services, Housing and Urban Development, and Transportation; and the Director of the Office of Management and Budget. In addition, the report will be available on our web site at http://www.gao.gov.\nIf you or your staff have any questions regarding this report, please contact me at (202) 512-6806 or by email at czerwinskis@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix I.", "To better understand grant management lessons resulting from the American Recovery and Reinvestment Act of 2009 (Recovery Act), we focused on two key issues involving grant implementation during the Recovery Act: accountability and transparency. Specifically, this report identifies and provides examples of good practices employed and the challenges faced by select federal, state, and local agencies implementing grant programs funded by the Recovery Act, in the areas of accountability and transparency.\nTo obtain a broad view of lessons learned during the implementation of grants funded by the Recovery Act, we conducted a detailed literature review of relevant reports describing lessons learned from implementing grants funded by the Recovery Act from GAO; federal and state inspectors general; federal agencies; state and local governments; accountability boards; state and local government advocacy organizations; think tanks; and academia. We developed selection criteria to identify relevant federal agencies and state and local governments to obtain their views related to the implementation of grant programs funded by the Recovery Act. We then selected four federal agencies, three states, and two localities based on the extent to which they had information related to our focus areas of accountability and transparency; information from our colleagues, subject matter experts, and academics; and citations in the literature. To capture a diverse mix of Recovery Act grants and identify potential good practices and challenges, we selected a variety of grants—some that had their funding structures already well established, others that had their funding greatly increased as a result of the Recovery Act, as well as new programs. Although Medicaid was the largest grant program funded by the Recovery Act, we deemed it out of scope for the purposes of this review since it is primarily an entitlement and subject to specific rules that are not typical of program grants. Further, Medicare and unemployment insurance were not included in the recipient reports we examined.\nTo obtain illustrative examples of the good practices employed and the challenges faced during the implementation of grants funded by the Recovery Act related to accountability and transparency, we conducted interviews with a wide range of officials and experts. We interviewed cognizant officials and obtained supporting documentation from government-wide oversight entities at the federal level including the Recovery Implementation Office, Office of Management and Budget, and the Recovery Accountability and Transparency Board. In addition, we interviewed and obtained supporting documentation from select federal agency officials from the Departments of Education; Energy; Housing and Urban Development; and Transportation; and their respective inspectors general. At the state level, we interviewed and obtained supporting documentation from agency and audit officials from the states of California, Georgia, and Massachusetts. To get a broader state perspective, we also interviewed officials from the state Recovery Act coordinators’ network, which included key state officials involved in implementing the Recovery Act from several states. interviewed officials from Denver, Colorado and New York, New York.\nThe states represented in the state Recovery Act coordinators’ network meeting were Arizona, Arkansas, Delaware, Florida, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, Nevada, Oregon, Rhode Island, Tennessee, Texas, Utah, and Wisconsin.\nAssociation of State Budget Officers, and the National Association of Counties. We obtained additional information on lessons learned related to the Recovery Act from officials representing the Government Accountability and Transparency Board, Sunlight Foundation, Council of Government Relations, National Council of Non-profits, Center for Effective Government, the Federal Demonstration Project, and National Association of State Chief Information Officers. In addition, we conducted seven focus groups representing a range of federal fund recipients. Focus groups included: (1) state comptrollers; (2) state education and transportation officials; and (3) local government officials from both large and small municipalities. Each focus group had between four and eight participants who were recruited from randomized member lists provided by the recipient associations we interviewed.\nLastly, we reviewed and synthesized information provided in previously issued reports related to the Recovery Act that included the following sources: our previous work; inspectors general from the Departments of Education, Energy, Housing and Urban Development, and Transportation; the Recovery Accountability and Transparency Board; the White House; and various non-governmental sources including the IBM Center for The Business of Government. In addition, we reviewed and applied criteria established by HowTo.gov, a source of guidance and leading practices for government websites, to Recovery.gov and state and local Recovery websites. The scope of our work did not include independent evaluation or verification of the effectiveness of the examples we identified. We also did not attempt to assess the prevalence of the practices or challenges we cite either within or across levels of government. Therefore, entities other than those cited for a particular practice may or may not have employed the same or similar practice, and it is not possible to generalize how prevalent the practices and challenges may be across all Recovery Act grants.\nWe conducted this performance audit from December 2012 through January 2014, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "In addition to the contact named above, Peter Del Toro, Assistant Director; Mark Abraham; and Jyoti Gupta made significant contributions to this report. Also contributing to this report were Tom Beall, Robert Gebhart, Jacob Henderson, Donna Miller, Robert Robinson, Beverly Ross, and Andrew J. Stephens." ], "depth": [ 1, 2, 2, 2, 1, 2, 3, 3, 3, 2, 3, 3, 2, 3, 3, 3, 3, 3, 3, 1, 2, 3, 3, 3, 3, 3, 2, 3, 3, 3, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "", "h2_full", "", "h0_title h1_title h3_title", "h0_full h1_title h3_title", "", "h3_full h1_full", "", "", "", "", "h0_title h3_title", "h0_full", "h3_full", "", "h0_full", "", "h0_full", "h1_title", "h1_full", "", "", "", "", "", "h1_title", "h1_full", "h1_full", "h1_full", "h1_full", "", "h0_full h3_full", "", "", "" ] }

{ "question": [ "What practices did officials adopt to implement grants?", "What example is there of one of these practices?", "What challenges did the Recovery Act's emphasis on accountability present?", "How were these challenges addressed?", "What was one practice developed related to transparency of Recovery Act funds?", "What practices for effective websites did this practice show?", "What challenges were created by trying to increase transparency?", "How were these challenges addressed?", "Why was it difficult for GAO to determine the progress agencies made?", "Why did Congress enact the Recovery Act?", "How were the funds disbursed?", "What does these grants deal with?", "What was GAO asked to examine?", "What does this report examine?", "How did GAO get information for this report?", "What does this report use from the GAO's past work?" ], "summary": [ "Faced with aggressive timelines for distributing billions of dollars, they adopted a number of practices to foster accountability including (1) strong support by top leaders; (2) centrally-situated collaborative governance structures; (3) the use of networks and agreements to share information and work towards common goals; and (4) adjustments to, and innovations in, usual approaches to conducting oversight such as the increased use of up-front risk assessments, the gathering of \"real time\" information, earlier communication of audit findings, and the use of advanced data analytics.", "For example, in 2009, the Recovery Accountability and Transparency Board (Recovery Board) established the Recovery Operations Center which used advanced data analysis techniques to identify potential fraud and errors before and after payments were made.", "These included limited resources for oversight at the state and local levels, and the speed with which Recovery Act funds were distributed.", "One state addressed the challenge of limited resources by transferring funds from its central administration account to Recovery Act oversight. To facilitate the quick distribution of funds, maintenance-of-effort provisions concerning transportation projects (which prevented Recovery funds from being used for planned state projects) were rolled out before the Department of Transportation had time to issue sufficiently detailed definitions of what constituted \"state funding.\" To address this challenge, the department had to issue clarifying guidance to states seven times during the first year of the Recovery Act.", "An example of one good practice that was required by the Recovery Act was the creation of the Recovery.gov website.", "These included (1) establishing a clear purpose, (2) using social networking tools to garner interest, (3) tailoring the website to meet audience needs, and (4) obtaining stakeholder input during design.", "For example, some recipients lacked knowledge or expertise in using the data systems needed to report grant spending, while others faced challenges with reporting the same data to multiple systems. Early GAO reviews also found several problems with job reporting data including discrepancies in how full time equivalents were recorded and the capacity of recipients to meet reporting deadlines.", "The Office of Management and Budget (OMB) addressed these challenges by issuing additional guidance and providing technical support. Finally, agencies receiving Recovery Act funds were required to submit performance plans that identified measures on a program-by-program basis.", "The level of detail and the specificity of outcomes in these plans varied greatly for the agencies GAO examined, making it difficult to determine the extent to which some were making progress toward their goals and demonstrating results.", "In response to the recent serious recession, Congress enacted the Recovery Act to promote economic recovery, make investments, and minimize or avoid reductions in state and local government services.", "Approximately $219 billion was distributed as grants for use in states and localities, making grants a major component of the act.", "These grants covered a broad range of areas including education, transportation, energy, infrastructure, the environment, health care, and housing.", "GAO was asked to examine grant management lessons learned resulting from the Recovery Act.", "This report examines federal, state, and local experiences with implementing grants funded by the Recovery Act by identifying examples of good practices employed and challenges faced in meeting the act's accountability and transparency requirements.", "GAO reviewed relevant documents including OMB and Recovery Board guidance, relevant literature, and previous reports by GAO, federal inspectors general, and others. GAO also interviewed officials from OMB, the Recovery Board, four federal agencies, three state governments, and two local governments, among others.", "This report also draws on GAO's past bi-monthly reviews of selected states' and localities' use of Recovery funds." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, 2, -1, -1, 0, 1, -1, -1, 1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "State Has Improved Foreign Language Proficiency but Faces Gaps in Key Languages and Regions That May Adversely Affect Diplomatic Operations", "State Has Made Some Progress in Improving Foreign Language Proficiency since 2008", "State Faces Significant Proficiency Gaps in Priority Languages and Regions That Are of Critical Importance to U.S. Foreign Policy", "State Officials Identified Challenges That May Affect State’s Ability to Address Language Shortfalls", "Foreign Language Proficiency Can Positively Affect Various Aspects of U.S. Foreign Service, while Proficiency Gaps Have Negative Effects", "Post Officials Reported Using Locally Employed Staff to Help Mitigate Language Proficiency Gaps in Some Instances", "State Reviews Language Proficiency Requirements Every 3 Years, but Extent to Which This Process Addresses Posts’ Reported Needs Is Unclear", "State Determines Language Proficiency Requirements Primarily through Triennial Review of Existing LDPs", "Extent to Which Outcomes of State’s Triennial Review Address Posts’ Reported Language Proficiency Needs Is Unclear", "Post Officials’ Views Varied on Whether Designations Resulting from Triennial Reviews Meet Posts’ Language Needs", "State Officials Identified Factors besides Language Need That Influence LDP Designations", "Some State Officials Suggested the Triennial Review Process Lacks Rigor and Oversight", "State Is Implementing Efforts Outlined in Foreign Language Strategic Plan but Has Not Evaluated Their Effectiveness", "State’s Foreign Language Strategic Plan Outlines Efforts to Address Language Proficiency Requirements", "State Has Taken Steps to Implement Most Efforts Identified in the Foreign Language Strategic Plan", "State Has Not Evaluated Effects of Efforts Implemented under the Foreign Language Strategic Plan", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Department of State Criteria for 2017 Language-Designated Position Review", "Appendix III: Comments from the Department of State", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "To ensure that its diplomatic corps can communicate in the languages of host countries, State requires that FSOs assigned to LDPs at overseas posts meet minimum specified competency levels for both speaking and reading. As of September 30, 2016, State had 4,461 overseas positions worldwide that required language proficiency and 872 overseas positions where proficiency was preferred but not required, known as language- preferred positions.\nState categorizes foreign languages according to the time required for a native English speaker to learn them:\nCategory I—World languages (e.g., French and Spanish)\nCategory II—Difficult world languages (e.g., German)\nCategory III—Hard languages (e.g., Russian and Urdu)\nCategory IV—Super-hard languages (e.g., Arabic and Chinese)\nAccording to State documents, the time it takes to achieve general proficiency depends on the difficulty of the language. World languages require 24 to 30 weeks, difficult world languages require 36 weeks, hard languages require 44 weeks, and super-hard languages require 88 weeks to achieve general proficiency.\nState groups countries of the world into areas of responsibility under six geographic bureaus:\nBureau of African Affairs (AF)\nBureau of East Asian and Pacific Affairs (EAP)\nBureau of European and Eurasian Affairs (EUR)\nBureau of Near Eastern Affairs (NEA)\nBureau of South and Central Asian Affairs (SCA)\nBureau of Western Hemisphere Affairs (WHA)\nThe number of overseas LDPs varies significantly by bureau, with the highest number (1,491) at WHA posts and the lowest (233) at SCA posts. Most LDPs requiring category I and II languages are at AF, EUR, and WHA posts, while most LDPs requiring category III and IV languages are in EAP, EUR, NEA, and SCA. Three of the four super-hard languages (Chinese, Korean, and Japanese) are spoken in the countries in EAP’s area of responsibility; the remaining super-hard language (Arabic) is widely spoken throughout the NEA area. The percentages of Foreign Service positions that are LDPs also vary by geographic bureau, with the highest percentage under WHA.\nFigure 1 shows the geographic bureaus’ areas of responsibility and numbers of LDPs relative to the numbers of Foreign Service positions.\nState uses the foreign language proficiency scale established by the federal Interagency Language Roundtable to rank an individual’s language skills. The scale has six levels, from 0 to 5—with 0 indicating no practical capability in the language and 5 indicating highly articulate, well-educated, native-speaker proficiency—to identify a language learner’s ability to speak, read, listen, and write in another language. General professional proficiency in speaking and reading—3/3 (speaking/reading)—is the minimum level required for most Foreign Service generalist LDPs. According to State’s fiscal years 2016-2020 Five Year Workforce and Leadership Succession Plan, this level of proficiency provides officers with the ability to participate in most formal and informal discussions of practical, social, and professional topics. Some entry-level Foreign Service generalist and most Foreign Service specialist LDPs are designated at or below the 2/2 level. Table 1 shows the language skill requirements for each proficiency level.\nThe difference between the second and third proficiency levels—the ability to interact effectively with native speakers—is significant in terms of training costs and productivity for certain languages. For example, State provides about 44 weeks of training to bring a new speaker of a language classified as super-hard, such as Arabic, up to the second level. Moving to a level-3 proficiency usually requires another 44 weeks of training, which is generally conducted at field schools overseas. In contrast, State provides 24 weeks of training to bring a new speaker of most “world” languages to a level 3.\nState primarily uses language training—typically at the FSI—to meet its foreign language requirements. FSI’s School of Language Studies offers training in about 70 languages. State also offers full-time advanced training in super-hard languages at a few overseas locations, including Beijing, China; Seoul, South Korea; and Taipei, Taiwan, among other locations. In addition, overseas posts offer part-time language training through post language programs, and FSI offers distance learning courses to officers overseas.", "Since October 2008, State has reduced the number of LDPs staffed by FSOs who do not meet language requirements by 8 percentage points, from 31 to 23 percent. However, State continues to face notable shortfalls in meeting its foreign language requirements for overseas LDPs that may adversely affect diplomatic operations. State officials we met with in Washington, D.C., and at overseas posts identified various challenges that may affect State’s ability to address its foreign language shortfalls. Additionally, according to FSOs we interviewed, both language proficiency and gaps in proficiency have, in some cases, affected State’s ability to, for example, properly adjudicate visa applications, effectively communicate with foreign audiences, and perform other critical diplomatic duties.", "The percentage of overseas LDPs staffed by FSOs who did not meet the positions’ language proficiency requirements has decreased since October 2008 (see table 2). As of September 30, 2016, 23 percent of overseas LDPs were staffed by FSOs who did not meet both the speaking and reading proficiency requirements for their positions; According to State officials, State granted language waivers to most of these FSOs. In contrast, as of October 2008, 31 percent of FSOs in overseas LDPs did not meet these requirements.\nHowever, the proficiency shortfall widens when unstaffed positions are included. As of September 2016, 69 percent (3,077 of 4,461) of overseas LDPs were staffed by FSOs who met both the speaking and the reading requirements, while 31 percent (1,384 of 4,461) of LDPs either were staffed by FSOs who did not meet the positions’ requirements or remained vacant. State officials noted that, among other factors, the overall increase of LDPs from 2008 through 2016 contributed to the slow progress in improving the rate of LDPs filled by FSOs who meet the positions’ requirements. State officials also noted that many of the new LDPs require proficiency in hard or super-hard languages, which entails 44 to 88 weeks of training. The officials further stated that, given the absence of an existing cadre of foreign-language speakers who can be staffed to LDPs, many positions may go unstaffed.", "While language proficiency gaps vary among posts, State faces some of its largest proficiency gaps in several priority languages. According to State M/DGHR officials, State designates languages as priority for various reasons. For example, Mandarin Chinese, Dari, Farsi, Pashto, Hindi, Urdu, Korean, and Arabic—languages spoken in China, Iran, India, Korea, and throughout the Near East—are priority languages. State defines priority languages as languages that are of critical importance to U.S. foreign policy, are experiencing severe shortages or staffing gaps, or present specific challenges in recruiting and training. In addition, officials from State’s Bureau of Consular Affairs identified Mandarin Chinese and Spanish, among others, as priority languages, citing the need for language-qualified entry-level professionals to provide consular services in countries where these languages are spoken as well as reduced entry- level hiring and resultant staffing gaps in LDPs worldwide.\nAs figure 2 shows, as of September 2016, the largest proficiency gaps for priority languages were in Arabic, Dari, Farsi, and Urdu. According to State data, 36 percent of LDPs requiring Arabic (106 of 291 LDPs), 53 percent of LDPs requiring Dari (9 of 17 LDPs), 36 percent of LDPs requiring Farsi (9 of 26 LDPs), and 44 percent of LDPs requiring Urdu (12 of 27 LDPs) were staffed by FSOs who did not meet the proficiency requirements for the positions.\nState continues to face proficiency gaps worldwide, most notably in priority languages categorized as hard or super-hard. Some of the most significant gaps are found in NEA, AF, and SCA (see fig. 3). In NEA, 144 of 392 LDPs (37 percent) were staffed by officers who did not meet the positions’ proficiency requirements; 88 LDPs were vacant. In AF, 118 of 349 LDPs (34 percent) were staffed by officers who did not meet the positions’ proficiency requirements; 38 LDPs were vacant. In SCA, 66 of 210 LDPs (31 percent) were staffed by officers who did not meet the positions’ proficiency requirements; 23 LDPs were vacant.", "State officials we interviewed said that several challenges, including some that are unrelated to language proficiency, may affect the department’s ability to staff LDPs with officers who meet both the speaking and reading requirements for the positions. According to these officials, language proficiency shortfalls are partially attributable to the following factors:\nLong training periods. Training to achieve general proficiency in hard and super-hard languages can take up to 2 years. According to State officials, this may result in a position going unfilled, given the absence of an existing cadre of foreign-language speakers who can be staffed to LDPs. FSOs we spoke with stated that the length of time it takes to achieve a 3/3—the minimum standard for general proficiency—in a hard or super-hard language may discourage some officers from applying for positions that require proficiency in these languages. According to State, for an FSO with no previous language experience, achieving a 3/3 generally takes 44 weeks of study for a hard language and 88 weeks for a super-hard language.\nHeritage-speaker restrictions. Because of security concerns, in certain instances State does not allow Chinese or Russian “heritage speakers” to serve in their ancestral countries if they have relatives there. In addition, according to State officials, Egypt does not grant diplomatic status to Americans with dual citizenship or who have a claim to Egyptian citizenship, which limits State’s ability to staff LDPs in Egypt with FSOs who speak Arabic. According to a State official, heritage speakers can leverage their native level of proficiency to better understand subtle language cues that may be missed by non- native speakers. For example, State officials in China and Korea stated that to effectively monitor social media requires someone to be a near-native speaker in order to understand language tone and nuance.\nRestrictions on tour frequency and length. According to State officials, State does not encourage FSOs to serve consecutive tours in the same country and generally limits each tour to a maximum of 2 or 3 years. In a country that we visited, an official told us that State’s current system actively discourages FSOs from serving multiple tours in the same country because of concerns that the FSOs may lose objectivity or begin to view issues from the host country’s, rather than the U.S. government’s, perspective. In addition, according to State officials, there has been an increase in 1-year tours in countries where hard and super-hard languages are spoken. Given that language training can take up to 2 years for hard and super-hard languages, FSOs may not be willing to undergo such extensive training for a 1- year position.\nTour curtailments and staff rotations. According to some State officials, constant movement of staff—often because of officers’ curtailing their tours to attend family or medical issues or rotating to another location after they have reached the maximum allowed term in a given post—contributes to LDPs’ remaining vacant or being staffed with personnel who do not meet the positions’ language requirements. For example, a regional security officer (RSO) at a post we visited stated that although multiple RSOs at that post had ended their tours and left their positions, no replacement RSOs had met the positions’ foreign language proficiency requirements. As a result, several LDPs remained unfilled, and the remaining RSOs had to make up for the shortfall in staff. Additionally, according to State officials, certain LDPs in Iraq and Afghanistan that are deemed “no- gap posts” must be filled by available FSOs regardless of whether they meet the proficiency requirements.", "Current and former FSOs, including ambassadors, whom we interviewed, reported positive and negative effects, respectively, of language proficiency and of proficiency gaps on officers’ ability to perform critical diplomatic functions (see table 3). State documents also report such effects.", "To mitigate the impact of language proficiency gaps, post officials told us that in some instances they leverage the foreign language skills of locally employed staff (LE staff). According to post officials, FSOs may ask LE staff to draft or translate e-mails, schedule meetings, and translate during meetings, among other tasks. However, post officials said that there are limitations to using LE staff. For example, FSOs said that they cannot rely on LE staff for language support when discussing politically sensitive issues and that using LE staff as translators is less desirable than having a firsthand conversation with an external contact. In addition to using LE staff, officers also rely on professional translators and interpreters for language assistance.", "", "According to State officials, State conducts a review of all LDPs every 3 years to reevaluate posts’ language needs. State officials in Washington, D.C., described this triennial review as a post-driven exercise, stating that each post is best positioned to understand its language needs. According to a State memo, the triennial review is the foundation for applying foreign language designations and establishing State’s language policies.\nIn April 2010, in response to a recommendation in our 2009 report, State’s Director General of the Foreign Service and Director of Human Resources implemented an updated LDP review process to occur every 3 years, replacing a previously annual cycle. According to State documents, the updated process requires State’s geographic bureaus; Bureaus of Diplomatic Security, Consular Affairs, and International Narcotics and Law Enforcement Affairs; and worldwide missions to review all LDPs assigned to their area of responsibility, regardless of the bidding cycle, on a 3-year basis. According to State officials, the 3-year timeframe allows State to strategically plan for, and project, future LDP needs in an effort to minimize the overall number of LDPs that remain vacant or unstaffed. Figure 4 shows the triennial LDP review process.", "While State’s triennial review process is intended to address the language needs of its overseas posts, FSOs we interviewed expressed varying views on the extent to which the outcomes of the process meet posts’ reported needs. State’s policies indicate that operational need should determine designation of positions as LDPs and required proficiency levels. However, views expressed by geographic bureau officials and FSOs we met with at overseas posts suggest that State officials also consider other factors, such as staffing concerns, when making LDP decisions. In addition, some State officials said that the triennial reviews lack rigor, which may result in posts’ maintaining preexisting LDP numbers and levels without having adequately identified the current language needs of each position. Furthermore, in 2013, the State Office of Inspector General (OIG) identified various deficiencies with the triennial review process. For example, the OIG found that State’s oversight of LDPs is insufficient to identify over- or underdesignation of language requirements.", "While State’s process for designating LDPs is intended to address the language needs of its overseas posts, FSOs we interviewed expressed varying views on the extent to which the designations resulting from the triennial reviews meet their posts’ needs. Some post managers we interviewed said that their post or embassy section generally has the appropriate number of LDPs at adequate proficiency levels to meet diplomatic goals. However, some of these officials also said that, while the current proficiency level requirements are adequate, higher proficiency levels would be preferable. For example, consular section managers in countries where a hard or super-hard language is spoken said that while a speaking and reading proficiency of 2/1 or 2/0 is currently required for most of their consular employees, a higher proficiency level, such as a 3/3, would be preferable. State officials in headquarters explained that the language proficiency level set for entry- level consular positions in hard and super-hard languages is due to department policy with regard to training limitations for entry-level officers. One consular chief said that the section “gets by with what it has,” while another said that assistance from LE staff helps to fill the language gap. One post security manager said that the year of language training that security officers generally receive to operate in a country with a super-hard language provides only a “survival” level of proficiency and does not prepare them to function on a professional level.\nWhile State requires a proficiency level of 3/3 in speaking and reading for most Foreign Service generalist LDPs, post managers as well as junior FSOs said that greater proficiency would better equip them to communicate and negotiate with foreign counterparts and advance U.S. diplomatic goals. One public diplomacy manager said that, in an ideal, resource-neutral environment, he would like all of his public affairs officers to have a 4/4 level of proficiency. One political officer with 3/3 proficiency said she struggles to understand some of what is said during meetings and that a higher level of proficiency would be more appropriate for the needs of the job. Post officers said that high proficiency levels, for example, higher than 3, enable officers to detect nuance and subtle cues in conversations, build greater rapport, have more contacts and access to foreign audiences, participate in more unscripted conversations, and answer questions “off the cuff.” FSOs also suggested that certain political, economic, public affairs, and consular officer functions, in particular, could benefit from higher proficiency levels. However, post officials recognized that there are tradeoffs associated with requiring higher levels, including longer training and higher costs.\nIn addition, post officials indicated that current language designations do not always reflect the needs of their positions or embassy sections. An economic section chief said that while her position is not an LDP, she believes it should be. Some post managers, including two RSOs in LDPs, said that they felt they were able to successfully perform their duties without being language proficient. One post official said that language proficiency was not critical to the execution of his duties because he spends most of his time in the embassy supervising American staff and interacting with English-speaking counterparts and can obtain any needed translation assistance from LE staff. Some post officers recommended reducing the required proficiency levels for certain positions that entail limited interaction with foreign counterparts, such as human resource positions focused on management of U.S. staff.", "Although State’s policies indicate that operational need is the determining criterion for designating a position as an LDP, officials we spoke with cited other factors that may influence LDP designations. According to State’s Foreign Affairs Manual (FAM), State should designate positions as requiring language proficiency only when it is essential to enhancing U.S. effectiveness abroad. According to the FAM, factors that posts should consider when assessing their LDP needs include the necessity of using the language to successfully execute the requirements of the position, the importance host-nation interlocutors attach to U.S. diplomats’ ability to speak the language, and the English language capabilities of the embassy’s LE staff (see app. II for a full list of the FAM criteria). However, geographic bureau officials and post managers told us that they also consider factors such as staffing and cost concerns when designating LDPs and determining proficiency requirements.\nStaffing concerns. While State’s guidance states that the department must identify its language needs irrespective of the number of likely bidders, embassy section heads at the posts we visited said staffing concerns affect their decisions about designating positions as LDPs and requiring certain proficiency levels. For example, embassy managers in countries where super-hard or hard languages, such as Arabic and Russian, are spoken said that certain positions have been designated as not requiring language proficiency or designated at a lower proficiency level to increase the likelihood of filling the positions. Managers also said that, while they would prefer to require higher levels of language proficiency, they sometimes require lower levels to avoid delaying the arrival of FSOs at posts who would otherwise have to spend longer periods in language training. Some State geographic bureau officials spoke of significant tension between quickly filling a vacant position with an officer who lacks language skills versus waiting to fill the position with an officer who is trained and fully proficient. Our interviews with State officials suggest that such staffing concerns particularly affect the EAP, NEA, and SCA bureaus. One geographic bureau official said that the bureau had lowered reading requirements for LDPs at one of its posts because of difficulties in filling the positions. Further, according to a 2014 State memorandum, the Office of Overseas Building Operations does not support LDPs for any of its employees, citing a critical staffing shortage. Moreover, a December 2010 memorandum from State’s M/DGHR acknowledged that the designation of LDPs is often influenced by staffing realities and stated that posts usually adjust language levels down on the basis of the likelihood of finding language-qualified bidders.\nCost concerns. While guidance from State’s M/DGHR, including memorandums issued in December 2010 and April 2016, states that the department should assess its language needs in a “resource neutral” environment, geographic bureau and post officials said that the LDP review process is tempered by cost considerations. For example, a management official at a post where a super-hard language is spoken said that the substantial amount of time and money needed to train FSOs in hard and super-hard languages influences decisions regarding numbers of LDPs and proficiency levels requested. According to a 2013 State OIG report, the State OIG estimates that training students to the 3/3 level in easier world languages such as Spanish can cost $105,000; training in hard languages such as Russian can cost $180,000; and training in super- hard languages such as Chinese and Arabic can cost up to $480,000 per student. Students learning super-hard languages to the 3/3 level generally spend 1 year domestically at the FSI and then a second year at an overseas training facility.", "While, according to State officials, posts drive the LDP review process because they are best positioned to know their language needs, officials we interviewed—including officials at overseas posts—offered differing perspectives on whether posts’ assessment of these needs are sufficiently rigorous. Some post managers said that shifting the review from an annual to a triennial process represented an improvement, because the prior annual reviews were not taken seriously, and the 3- year cycle has allowed State to be more strategic in planning and allocating resources. Some post officials also said that the 3-year cycle is more structured and that the multiple levels of review and input have brought greater stability and consistency to posts’ request for LDPs.\nHowever, other officials at posts we visited said that State’s language designation process is insufficiently rigorous and systematic, describing it as ad hoc. Some of the geographic bureau and post officials we met with were unaware of State’s criteria for establishing LDP designations as outlined in the FAM. Remarks by some officials also suggest that posts tend to base LDP decisions on preexisting LDP numbers and levels. For example, some embassy managers said that they generally review the existing LDP numbers and levels and make minor adjustments. In addition, some geographic bureau officials said that they provide limited substantive review of posts’ submissions of LDP numbers and levels.\nFurther, comments from post officials suggest that posts have generally applied a “blanket” approach in determining LDP proficiency requirements, despite State guidance that instructs posts to conduct more targeted assessments of their needs. State cables providing posts with guidance for the 2017 and 2014 LDP reviews stated that posts should not automatically assume that a 3/3 proficiency level is required for every LDP in a particular section or embassy and instructed posts to examine the specific language needs for each position. Post managers and staff we interviewed also said that language needs vary by position and portfolio within an embassy section. However, according to State data, most generalist LDPs are designated at a 3/3 level.\nIn a 2013 report examining State’s LDP review process, the State OIG identified deficiencies in State’s process for developing language requirements. For example, the report noted that State’s oversight of LDPs is insufficient to identify over- or underdesignation of language requirements and that State does not review embassies’ and geographic bureaus’ language requirements “to facilitate consistent application of language designation criteria and appropriate distribution given U.S. policy priorities.” The report indicates that the lack of high-level review has led to anomalies, such as widely varying proficiency requirements for officers performing similar functions at different missions. Specifically, the OIG reported that State designated certain positions as LDPs for some European posts, such as France and Italy, but did not designate similar positions as LDPs in Haiti, Thailand, and Indonesia, where working conditions are more difficult and English language speakers are fewer. In response to an OIG recommendation to address this issue, State’s M/DGHR provided criteria to the geographic bureaus to use in the 2014 LDP review when determining whether language ability is necessary to advance U.S. foreign policy objectives. In October 2016, State headquarters sent out a cable to all posts, providing them with an updated set of criteria to be used in the 2017 LDP review.\nWe discussed the concerns expressed by FSOs concerning the LDP process with State’s M/DGHR. State M/DGHR officials responded that the department has undertaken initiatives to align LDP levels more closely with policy and operational requirements and intends to incorporate these initiatives into its 2017 triennial LDP review process. For example, according to State M/DGHR officials, M/DGHR has encouraged a dialogue between the bureaus and their posts to ensure that their LDP submissions reflect operational requirements and policy priorities and has sent official messages to all posts and bureaus on the process and the need for rigorous review. The officials also noted that State’s M/DGHR has asked participants to designate their requests for LDPs as high, medium, and low priority, to encourage rigor in considering the real needs of posts and to avoid any implication that all LDPs are of equal importance.", "", "State’s 2011 “Strategic Plan for Foreign Language Capabilities” (foreign language strategic plan), which it issued partly in response to a recommendation in our 2009 report, outlines a number of efforts intended to meet its current and projected needs for foreign language proficiency. The strategic plan sets a goal of increasing the percentage of LDPs filled by fully qualified employees by an annual rate of 3 to 5 percent and estimates that 90 percent of LDPs will be filled by fully qualified employees by 2016 or 2017. The strategic plan presents these efforts in connection with six broad objectives. Some of the listed efforts, such as the Recruitment Language Program (RLP) and the Language Incentive Pay (LIP) program, predate the development of the strategic plan.\nAs table 5 shows, in addition to outlining the efforts that State planned to implement for each of the six objectives, the foreign language strategic plan also identifies goals and performance measures associated with the objectives.", "According to information that State provided, State has taken steps to implement efforts addressing most of the six broad objectives identified in the foreign language strategic plan but has made limited progress in addressing others. According to information provided by State’s M/DGHR, as of October 2016, budgetary and operational pressures had precluded an expansion of the training complement (objective 1), and the prototype language training and assignment model described in the strategic plan remains under development (objective 3). However, State is implementing the following efforts to address the other four objectives:\nLDP reviews (objective 2). To improve the department’s language designation process, as discussed earlier, in 2010 State changed the frequency of the LDP review process from annual to triennial and has initiated its third triennial LDP review process, which it expects to complete in 2017.\nRLP (objective 4). Initiated in fiscal year 2004, the RLP aims to expand the number of candidates entering the Foreign Service with proficiency in languages in which State has current or projected deficits. To enhance the RLP, according to a State document, State has updated the list of recruitment languages to reflect those that are of critical importance to U.S. foreign policy, those in which posts are experiencing severe shortages or staffing gaps, and those that present specific recruiting and training challenges. According to State data, the percentage of entry-level officers hired through the RLP has varied from a peak of 40 percent (221 of 547 officers) in fiscal year 2011 to 5 percent (16 of 353 officers) in fiscal year 2016.\nLIP program (objective 5). To make language incentives more effective and maximize the impact of language and assignment policies, according to State’s M/DGHR, State reviewed the LIP in 2012, the first such review in over a decade, to clarify and streamline the program by aligning the designated languages (i.e., those eligible for incentives) with the department’s current needs and incentivizing employees to use and maintain proficiency in those languages. As a result of the review, State reduced the number of incentive languages from 52 to 34 to reflect the department’s highest strategic priorities. Also, according to information provided by State’s M/DGHR, FSI adjusts course offerings in priority languages, including some that are included in the LIP program, as needed, to address the department’s strategic planning and performance goals. According to State data, between 2010 and 2016 a total of 11,477 FSOs received LIP, amounting to $77.6 million.\nForeign language proficiency requirement (objective 5). One of the mechanisms State uses to ensure a strong contingent of foreign language speakers is the inclusion of sustained professional language proficiency in the promotion precepts for Foreign Service generalists. According to FSOs and other officials we spoke with, this policy may be creating an incentive for FSOs to learn “world” languages, such as Spanish, which generally take 6 months to reach a 3/3, instead of super-hard languages, which take 2 years to reach the same level of proficiency. According to a 2013 State OIG report, promotion and tenure policies tied to language skills influence the number and level of LDP designations. An official from the OIG who worked on the 2013 report explained that the promotion policy may also contribute to the discrepancy in the numbers of LDPs with proficiency in world and super-hard languages as well as shortfalls in language-proficient FSOs to fill LDPs in certain priority languages. Some FSOs told us that taking 2 years to learn a super-hard language makes them less competitive for promotion, expressing a perception that State’s promotion system undervalues language training. However, State’s M/DGHR said that overall, the promotion system does not disadvantage FSOs who study hard or super-hard languages because time spent in language training extends their years of promotion eligibility. We discussed this issue with State’s M/DGHR and inquired whether a review of this policy had been conducted to determine its potential impact on learning super-hard languages. In response, State informed us that the language proficiency requirement for promotion, along with other related policies, is currently under review.\nLanguage-related technology (objective 6). We found that State’s FSI has implemented various language-related technologies to improve the language acquisition process, such as the Smart Notebook, which offers language instruction via the Internet, as well as language learning applications and technology-enabled classrooms with screen-sharing applications. FSI staff said that technology has improved the language acquisition process by allowing students to engage in lifelike scenarios in the classroom while learning a language, giving students access to lessons that were previously available only in language labs, and accommodating students’ schedules and needs. In addition, State officials told us that they are using technology to complement language skills at the operational level. For example, the embassy in China identified 48 positions for which it could adjust the speaking and reading level from a 3/3 to a 3+/2, in part because the “advent of sophisticated translation technologies enables officers to access information from written materials in multiple ways and on a scale never before possible.” A senior FSO in Mexico indicated that both reading and speaking are important but that the reading requirement could possibly be lowered, since translation technology can be used to assist with reading. FSOs in countries we visited generally indicated that they use online translation tools to translate documents. However, some FSOs reported that they could not rely exclusively on the translation provided by the online tool because it is generally not entirely accurate. Some said they use it as an initial step in translating documents, while others said they use it to translate documents only for their own use or when they need an immediate translation.", "More than 5 years after State developed and began implementing its foreign language strategic plan, we found no evidence that State had conducted a systematic and comprehensive evaluation of all the actions identified in the plan to determine their effects on language proficiency gaps. According to State’s evaluation policy, the department is committed to using performance management best practices, including evaluation, to achieve the most effective U.S. foreign policy outcomes and greater accountability. State’s evaluation policy defines evaluation as the systematic collection and analysis of information about the characteristics and outcomes of programs, management processes, and delivery systems as a basis for judgments, to improve effectiveness and inform decision makers about current and future activities. Also, according to federal internal control standards, internal controls should provide reasonable assurance that the objectives of an agency are being achieved to ensure the effectiveness and efficiency of operations, including the use of the agency’s resources. We asked State’s M/DGHR office whether it had conducted any evaluations of the effects of these efforts, including the RLP and the LIP program, on language proficiency. M/DGHR officials responded that they were unaware of any such evaluations but noted that the relatively small number of personnel involved in the programs made it difficult to conduct quantitative assessments. However, State officials indicated that after completion of the ongoing triennial LDP review, the Language Policy Working Group would review both RLP and LIP, but they did not provide details on the nature of the planned review.\nState reports annually to Congress on the levels of foreign language proficiency at overseas posts. In addition, State provides updates on foreign language proficiency gaps and efforts to address them in its annually updated Five Year Workforce Leadership and Succession Plan. The workforce plan for fiscal years 2016 through 2020 includes updates on the number of LDPs staffed worldwide; challenges in filling LDPs; and efforts outlined in, or implemented in response to, the foreign language strategic plan. For example, the workforce plan highlights the use of recruitment incentive languages to provide extra points on the hiring register of FSO candidates who speak and read proficiently in these languages and pass the assessment process, which increases their chance of entering the Foreign Service. However, our examination of these documents found no evidence that State has conducted a systematic and comprehensive evaluation of efforts to address each of the objectives in the strategic plan. Without systematic and comprehensive evaluations, consistent with State evaluation policy and federal internal control standards, State is unable to determine the effects of the efforts outlined in the strategic plan in addressing language proficiency shortfalls, particularly in hard and super-hard languages, and to take corrective actions.", "Since 2008, State has increased its levels of foreign language proficiency at overseas posts, strengthening its overall capacity to advance U.S. foreign policy and economic interests worldwide. Nonetheless, significant proficiency gaps in priority languages such as Arabic and Chinese may adversely affect State’s ability to fulfill its diplomatic responsibilities in regions of critical importance to U.S. foreign policy. Although State has implemented efforts to enhance foreign language proficiency, as outlined in its 2011 “Strategic Plan for Foreign-Language Capabilities,” it has not conducted a systematic and comprehensive evaluation of these efforts’ effectiveness. As a result, State cannot determine the extent to which these efforts have contributed to progress in increasing language proficiency worldwide and has limited information on which to base future investments of its resources. Accordingly, State cannot determine whether adjustments to the plan are needed to enhance State’s capacity to address increasingly complex economic and national security challenges overseas.", "To strengthen State’s ability to address persistent gaps in foreign language proficiency at overseas posts and make informed future resource investments, we recommend that the Secretary of State evaluate the effectiveness of efforts implemented under the “Strategic Plan for Foreign-Language Capabilities.”", "We provided a draft of this report for review and comment to State. We received written comments from State, which are reprinted in appendix III. State agreed with our recommendation and indicated that “the Department will develop a process to evaluate implementation of the 2011 Strategic Plan and future plans. The Department will report on results of the evaluation within one year.” State also provided technical comments, which we have incorporated throughout the report, as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of State, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have questions about this report, please contact me at (202) 512-8980, or CourtsM@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix IV.", "In this report, we examine (1) the extent to which the Department of State (State) is meeting its foreign language proficiency requirements for overseas posts as well as the effects of language proficiency and any gaps in State’s ability to perform diplomatic duties, (2) State’s process for identifying overseas posts’ language proficiency needs and the extent to which the process addresses these reported needs, and (3) efforts State has taken to enhance foreign language proficiency and any effects of those efforts.\nTo address these objectives, we analyzed data and reviewed documents provided by State, including relevant provisions of the Foreign Affairs Manual. We interviewed officers from State’s Bureaus of African Affairs, Consular Affairs, European and Eurasian Affairs, East Asian and Pacific Affairs, Near Eastern Affairs, South and Central Asian Affairs, Western Hemisphere Affairs, and Human Resources in Washington, D.C., as well as officials from the Foreign Service Institute in Arlington, Virginia. In addition, we interviewed officials at the U.S. embassies in Beijing, China; Cairo, Egypt; Seoul, South Korea; Mexico City, Mexico; and Moscow, Russia. We selected these countries to examine language issues related to Mandarin Chinese, Arabic, Korean, Spanish, and Russian. Our criteria for selecting these countries included (1) countries in which priority languages, as identified by State, are spoken; (2) the number of language-designated positions (LDP) in selected countries, including countries with a relatively low and high number of LDPs; (3) gaps in filling LDPs; (4) the difficulty of the languages spoken in selected countries; and (5) the diplomatic and economic significance of selected countries to the United States. While overseas, we met with embassy officials, including senior and junior-level Foreign Service officers within the embassies’ consular, economic, political, public affairs, security, and management sections.\nTo examine the extent to which State is meeting its foreign language requirements, we obtained data from State’s Global Employee Management System database on all overseas LDPs and the language skills of the incumbents filling the positions as of September 30, 2016. We compared the incumbents’ reading and speaking scores with the reading and speaking levels required for the positions and determined that an incumbent met the requirements for the position only if his or her scores equaled or exceeded both the speaking and reading requirements. A limited number of positions are designated in two languages. We determined that the officer met the requirements of such positions if he or she met both the speaking and reading requirements for at least one of the designated languages. We also interviewed State officials responsible for compiling and maintaining these data and determined the data to be sufficiently reliable for identifying the number of LDPs filled by officers who met the requirements of the position. To assess the effects of language proficiency and any gaps in State’s ability to perform its diplomatic duties, we reviewed previous GAO reports as well as the December 2012 Accountability Review Board report on the attacks on the mission in Benghazi, Libya. We interviewed State officials in Washington, D.C., and at the overseas posts we visited. We also met with former senior State officials, including ambassadors and a former Director General of the Foreign Service and Director of Human Resources, to gain their insights on the consequences of language shortfalls at overseas missions. In addition, we conducted a literature review on the effects of language proficiency and any gaps in State’s ability to perform its diplomatic duties.\nTo examine State’s process for identifying overseas posts’ language proficiency requirements and the extent to which the process addresses these reported needs, we reviewed previous GAO reports and State documents, such as memorandums and cables on the language- designation process. We also reviewed State’s Office of Inspector General’s (OIG) 2013 review of State’s process for establishing LDPs and interviewed State OIG officials. In addition, we interviewed State officials in Washington, D.C., and at overseas posts.\nTo examine efforts State has taken to enhance foreign language proficiency and any effects of those actions, we reviewed State planning documents, including the State Department’s “Strategic Plan for Foreign Language Capabilities,” dated March 7, 2011, as well as the 2015 and 2016 versions of its Five Year Workforce and Leadership Succession Plan. We obtained information from State on steps it has taken to address key issues in the 2011 strategic plan. We compared steps State has taken to the objectives described in the “Strategic Plan for Foreign- Language Capabilities” and assessed whether they have been evaluated in accordance with State’s Evaluation Policy and federal internal control standards. We also reviewed State’s Report on Foreign Language Proficiency for Fiscal Year 2015 and its promotion policies. In addition, we interviewed State officials in Washington, D.C., and at overseas posts.\nWe conducted this performance audit from February 2016 to March 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "According to the Department of State’s (State) Foreign Affairs Manual (FAM 221.2), operational need is the determining criterion for language- designated positions (LDP) , where language proficiency is essential, rather than merely helpful or convenient, to enhancing U.S. effectiveness abroad. The FAM also outlines the following criteria for consideration by responsible offices in designating LDPs: the necessity of using the language to execute successfully the requirements of the position; the frequency of daily use of the language; the fluency level of that engagement; the official designation of the language as the national language(s); the importance host-nation interlocutors attach to our speaking their language; the prevalence of another language a significant segment of the population speaks; the general level of English language penetration; the English language capabilities of the embassy’s locally employed staff in the relevant section; the professionalism and availability of interpretation/translation services; the prevalence of corruption and the need for language proficiency to ensure necessary oversight; the importance of being able to speak certain language(s) in public or at representational events; the availability of media in the language(s); the importance of monitoring social media in the local language; the level of literacy in the country; the prevalence of documents published in the language; whether speaking or reading the language, or both, would notably increase the efficiency and scope of the employee’s tasks or work portfolio; the variety of interactions required for the job (speeches, formal demarches, receptions, visa interviews, travel and engagement with population in rural communities, key segments of society, or minority groups); the importance of building a cadre of speakers of the language within the Foreign Service: Does the department need to develop employees for future assignment at higher levels of responsibility with these language skills? and the necessity for employees who occupy positions in sections (for example, security or management) where the need for foreign language skills is so innate to the job (e.g., the work involves regular contact with foreign nationals in the local native language) that the post needs at least one or more LDP per section.\nAccording to an October 2016 State cable, an additional primary criterion, beyond the criteria referenced in 13 FAM 221.2, is the importance of understanding the language to manage one’s personal security. The State cable also notes other factors that should be considered in the LDP review process, including the following: In identifying LDPs, bureaus are encouraged to keep in mind that designations may vary from the usual S -3/R-3 level, including asymmetric designations in which a mandated speaking proficiency may be higher than the reading proficiency (e.g., S-3/R-2, S-2/R-1, or even S-2/R-0).\nBureaus should consider an asymmetric language designation and how it might affect employee productivity, personal security, and overall resource management.\nBureau requests for modifications to the career development plan and language incentive pay are under consideration. Missions are encouraged to set LDP levels for speaking and reading based on the level of language proficiency skills needed to do the work.\nIf job requirements call for either of two languages, bureaus should consider dual designations, with the preferred language listed first.\nIf language proficiency is preferred but not essential, the position should be marked with speaking and reading requirements of 0/0 to designate it as a language-preferred position. This designation will help identify future resource needs and indicate when first- and second-tour language training could be beneficial.", "", "", "", "In addition to the contact named above, Godwin Agbara (Assistant Director), Francisco M. Enriquez (Analyst-in-Charge), Juan Pablo Avila- Tournut, Mark Dowling, Justin Fisher, Emily Gupta, and Reid Lowe made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 2, 2, 1, 2, 2, 3, 3, 3, 1, 2, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_full h3_full h2_full", "h0_full", "h0_full", "", "", "", "h1_title", "", "h1_full", "", "", "h1_full", "h2_title h3_title", "h3_full h2_full", "", "h2_full", "h0_full h3_full h2_full", "h4_full", "", "h4_full", "", "", "", "", "" ] }

{ "question": [ "What were LDP filled by as of September 2016?", "How does this compare from records in 2008?", "What effects have language proficiency gaps had?", "What is the issue with reviews on posts' language needs?", "What do state policies indicate?", "What influences State's decisions regarding LDP?", "How is State improving how it deals with LDP?", "What has State not done yet?", "What is the State committed to doing?", "What actions has State committed?", "Why can State not determine the extent to which efforts contribute to progress in increasing language proficiency world wide and reducing proficiency gaps?", "What is a key skill for U.S. diplomats?", "What reports has GAO issued?", "What did GAO recommend in these reports?", "How did State respond to these reports?", "What was GAO asked to do?", "What does GAO examine in this report?", "How did GAO get data for this report?" ], "summary": [ "As of September 2016, 23 percent of overseas language-designated positions (LDP) were filled by Foreign Service officers (FSO) who did not meet the positions' language proficiency requirements.", "While this represents an 8-percentage-point improvement from 2008, the Department of State (State) still faces significant language proficiency gaps (see fig.).", "According to FSOs we interviewed, language proficiency gaps have, in some cases, affected State's ability to properly adjudicate visa applications; effectively communicate with foreign audiences, address security concerns, and perform other critical diplomatic duties.", "State reviews overseas posts' language needs every 3 years, but the extent to which the reviews' outcomes address these needs is unclear.", "State's policies indicate that operational need should determine the designation of positions as LDPs and required proficiency levels.", "However, views expressed by geographic bureau officials and FSOs whom GAO met at overseas posts suggest that other factors, such as staffing and cost concerns, influence State's decisions about LDP designations and proficiency requirements.", "State Human Resources officials noted that State is taking steps to better align its LDP policies with its operational needs.", "State has implemented most actions described in its 2011 “Strategic Plan for Foreign Language Capabilities” but has not evaluated the effects of these actions on language proficiency at overseas posts.", "According to State’s evaluation policy, the department is committed to using performance management, including evaluation, to achieve the most effective foreign policy outcomes and greater accountability.", "Actions State has implemented under the plan include reviewing the language requirements of overseas posts every 3 years; offering recruitment incentives for personnel with proficiency in critically important languages; providing language incentive pay only for languages that reflect the department’s highest strategic priorities; and using technology to strengthen and develop new approaches for language training and to complement FSOs’ language skills.", "However, more than 5 years after it began implementing its strategic plan, State has not systematically evaluated the results of these efforts. As a result, State cannot determine the extent to which these efforts contribute to progress in increasing language proficiency worldwide and reducing proficiency gaps.", "Proficiency in foreign languages is a key skill for U.S. diplomats to advance U.S. interests overseas.", "GAO has issued several reports highlighting State's persistent foreign language shortfalls.", "In 2009, GAO recommended that State, to address these shortfalls, develop a strategic plan linking all of its efforts to meet its foreign language requirements.", "In response, in 2011 State issued its “Strategic Plan for Foreign Language Capabilities.”", "GAO was asked to build on its previous reviews of State's foreign language capabilities.", "In this report, GAO examines (1) the extent to which State is meeting its foreign language proficiency requirements for overseas posts as well as the effects of language proficiency and any gaps in State's ability to perform diplomatic duties, (2) State's process for identifying overseas posts' language proficiency needs and the extent to which the process addresses these reported needs, and (3) efforts State has taken to enhance foreign language proficiency and any effects of those efforts.", "GAO analyzed data on State's overseas language-designated positions; reviewed State strategic planning and policy documents; interviewed State officials; and visited overseas posts in China, Egypt, Korea, Mexico, and Russia." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 2, -1, 0, 0, -1, -1, -1, 1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "Pre-FY2003 Funding", "FY2003-FY2006: The Emergence of \"Budget-Based\" Funding", "FY2003 Funding Changes", "FY2004 Funding Changes", "FY2005 Funding Changes", "FY2006 Funding Formula", "Implications of Changes, FY2003-FY2006", "FY2007-Present: A Cost and Utilization-Based Funding Model", "FY2007 Funding Formula", "FY2008 Funding Formula", "FY2009 Funding Formula", "CY2009 Shortfall", "FY2010 Funding Formula", "FY2011 and FY2012 Funding Formula", "Implications of Changes, FY2007-Present", "Legislative Reform Proposals", "Summary and Policy Considerations" ], "paragraphs": [ "", "Each year, Congress provides funding to the Department of Housing and Urban Development (HUD) to renew the more than 2.1 million Section 8 vouchers—also called Housing Choice Vouchers—authorized by Congress (see Table 1 below). The Section 8 voucher program is federally funded and governed by federal rules, but is administered at the local level by quasi-governmental public housing authorities (PHAs). Section 8 vouchers are rental subsidies that low-income families use in the private market to help make up the difference between their rent and their expected contribution toward that rent (30% of adjusted income). The cost of a voucher to a PHA is the difference between the lesser of a tenant's actual rent or the maximum subsidy level set by the PHA—called a payment standard—and 30% of a tenant's income. That cost increases or decreases with changes in tenant incomes and changes in rents and payment standards. (For more information on Section 8 voucher reform proposals, see CRS Report RL34002, Section 8 Housing Choice Voucher Program: Issues and Reform Proposals , by [author name scrubbed].)\nIn recent years, Congress has enacted, and HUD has implemented, a series of changes in the way that voucher renewal funding is distributed to local PHAs. These changes have led to funding uncertainty for many PHAs, and has put pressure on Congress to adopt a permanent funding formula, possibly through enactment of Section 8 voucher reform legislation.\nThis report discusses the renewal funding formula changes that Congress has enacted as a part of the annual appropriations process, starting in FY2003, and concludes with a discussion of their effects.", "Prior to FY2003, PHAs administering the voucher program were funded based on their average annual per-voucher cost from the previous year, adjusted by an inflation factor and multiplied by the number of vouchers that the PHA was authorized to lease. Each PHA was provided with a reserve equal to one month of voucher funding that could be used in the event that a PHA's voucher costs increased faster than the inflation factor established by HUD. Despite the fact that they received full funding, few PHAs were able to lease 100% of their authorized vouchers. Low utilization rates were a major concern of Congress for several years. While PHAs are expected to have utilization rates of at least 95%, in FY2000 and FY2001, national voucher utilization rates were just over 91%. Since PHAs were not utilizing all of their vouchers, they typically had low budget utilization as well, meaning that they had more money in their budgets than they needed, and they rarely had to dip into their one-month program reserves, even if their costs rose significantly. At the end of the year, HUD and each PHA would reconcile their budgets, and HUD was typically able to recapture excess funds from PHAs' reserves.\nHUD generally used this same formula—last year's actual costs, plus an inflation, times the number of authorized vouchers—each year to determine how much funding to request from Congress for the renewal of tenant-based Section 8 vouchers. HUD would also make available to Congress for rescission those unused funds that the agency had recaptured from PHAs. The end result of this system for PHAs was that their funding increased along with their costs. If their costs dropped, they were permitted to use some of their excess funds to create new vouchers, a process called maximized leasing. The end result of this system for Congress was that each year it provided more funds for voucher renewals than PHAs could reasonably be expected to use, and then recaptured those unused funds the following year to offset the cost of that year's appropriation.", "", "In FY2003, Congress changed the way PHAs were funded in an attempt to limit recaptures of unspent funds and provide funding levels that better reflected actual use. Since actual use of vouchers was lower than authorized use, this change reduced the amount of appropriations needed for the program. HUD was directed in the annual appropriations bill to fund PHAs based on their average annual per-voucher cost from the previous year, increased by the inflation factor, and multiplied by the number of vouchers the PHA could reasonably be expected to lease in that year (rather than the larger number of authorized vouchers). Specifically, the law stated,\nThe Secretary shall renew expiring section 8 tenant-based annual contributions contracts for each public housing agency ... based on the total number of unit months which were under lease as reported on the most recent end-of-year financial statement submitted by the public housing agency to the Department, adjusted by such additional information submitted by the public housing agency ... regarding the total number of unit months under lease at the time of renewal of the annual contributions contract, and by applying an inflation factor based on local or regional factors to the actual per-unit cost as reported on such statement. ( P.L. 108-7 , Title II, Section (1))\nHUD implemented this provision so that PHAs' budgets were based on their utilization rates and costs as reported on their end-of-the-year statements, or more recent data , if available. As stated in guidance released by HUD:\nRenewal calculations under the [Federal Fiscal Year] 2003 Appropriation will be based on the total number of unit months under lease and actual cost data, as reported on the PHA's most recent year-end settlement or as subsequently submitted to HUD by the PHA. Actual costs will be adjusted by applying the [Annual Adjustment Factors]. Expiring voucher funding increments will generally be renewed for terms of three months. The use of the most recent leasing and cost data and the short renewal terms will enable HUD to calculate funding more accurately than previous procedures allowed. (HUD Notice PIH 2003-23, Issued September 22, 2003)\nCongress also created a Central Reserve fund to be used by the Secretary to replenish PHA one-month reserves in the event that PHAs had to use their reserves to cover the costs of increased utilization or increased per-voucher costs. The language of the law stated, in regard to the Central Reserve fund:\nThe Secretary may use amounts made available in such fund, as necessary, for contract amendments resulting from a significant increase in the per-unit cost of vouchers or an increase in the total number of unit months under lease as compared to the per-unit cost or the total number of unit months provided for by the annual contributions contract. ( P.L. 108-7 , Title II, Section (2))\nFinally, the bill instituted restrictions on maximized leasing, stating that none of the funds provided in the act could be used to support more vouchers than a PHA was authorized to lease in a year. This presented problems for PHAs that were over-leased. Many had to refrain from reissuing vouchers once families left the program in order to get their leasing back to their authorized level.", "The FY2004 appropriations law continued in the direction of the FY2003 law, instructing HUD to fund PHAs based on actual utilization of vouchers—rather than on the total number of vouchers they were authorized to lease—and restricting the use of funds for maximized leasing. Moreover, the conference report that accompanied the FY2004 appropriations law stated that the conferees were concerned about \"spiraling\" cost increases in the voucher program and that they expected the Secretary to control costs. As stated in the conference report:\nThe conferees are aware that the Secretary has the administrative authority to control the rapidly rising costs of renewing expiring annual contributions contracts (ACC), including the budget-based practice of renewing expiring ACCs, and expect the Secretary to utilize these tools. ( H.Rept. 108-235 , Title II)\nThe FY2004 appropriations language was changed from FY2003 to state:\nThe Secretary shall renew expiring section 8 tenant based annual contributions contracts for each public housing agency ... based on the total number of unit months which were under lease as reported on the most recent end-of-year financial statement submitted by the public housing agency to the Department, or as adjusted by such additional information submitted by the public housing agency to the Secretary as of August 1, 2003 (subject to verification), and by applying an inflation factor based on local or regional factors to the actual per-unit cost. ( P.L. 108-199 , Title II, Section (1))\nThe FY2004 language also varied from the FY2003 language in terms of how the Central Reserve fund could be used: In FY2003, the Central Reserve fund could be used to replenish PHA reserves that had been depleted due to either increased utilization rates or increased costs. In FY2004, the Secretary could use Central Reserve funds only to replenish reserves depleted because of increased utilization, not increased costs:\nLanguage proposed by the House and Senate is not included to allow the Central Fund to also be used for increased per-unit costs as such costs have been reflected in the amount provided for renewals. ( H.Rept. 108-401 , Division G, Title II)\nHUD issued a notice on April 22, 2004 (PIH 2004-7) implementing the FY2004 appropriations law. According to the notice, PHAs' budgets would be based on their utilization rates from their end-of-the-year statements, or more recent data if available, and costs as reported on their end-of-the-year statements as of August 1, 2003, adjusted by the annual adjustment factor (AAF), but not adjusted by more recent data , even if available. The notice stated that PHAs could appeal to the Secretary only if they could document that rental costs in their areas had risen higher than the inflation factor adopted by HUD. The notice proved controversial. Some housing advocates contended that Congress gave HUD the authority to use a broader measure of inflation than the AAF, taking into account not just rental costs but also other changes in PHAs' costs, such as utility costs and changes in their tenant populations. The notice was not modified, and on August 31, 2004, HUD granted the appeals requests of 380 agencies out of approximately 400 that applied, distributing a total of $160 million from the Central Reserve. However, HUD did not necessarily provide the full level requested in each appeal.", "The final FY2005 Consolidated Appropriations Act ( P.L. 108-447 ) moved the program further in the direction of budget-based funding. It directed the Secretary to fund PHAs based on their voucher costs and utilization rates as of May-July 2004 plus the HUD-published AAF, adjusted for new tenant protection vouchers. If a PHA's May-July data were not available, HUD was directed to fund the agency based on February-April 2004 data, or if these data were not available, to fund the PHA based on its most recently submitted year-end financial statement, as of March 31, 2004. If the amount provided in the law was insufficient to fund all PHA budgets under this formula, then the Secretary was directed to prorate agency budgets. According to the conference report ( H.Rept. 108-792 ), PHAs were expected to manage their voucher programs within their budgets for CY2005, regardless of their actual costs. The report also stated that \"HUD shall provide agencies with flexibility to adjust payment standards and portability policies as necessary to manage within their 2005 budgets.\" Agency reserves were reduced from the one-month to the one-week level and no Central Reserve was provided to replenish depleted reserves. Finally, the act continued the prohibition on maximized leasing.\nThe FY2005 appropriations act made another important change to the way that PHAs received their voucher renewal funding. Rather than funding PHAs for the federal fiscal year (October 1, 2004-September 30, 2005), the act funded PHAs for the calendar year (January 1, 2005-December 30-2005). The accounting change allowed for some one-time budget authority savings in the appropriations process. As a result, PHAs had to alter the way in which they budget for their voucher programs to a calendar-year cycle.\nHUD published guidance implementing these provisions on December 8, 2004 (HUD Notice PIH 2005-1). Agencies received notification of their preliminary budget levels on December 17, 2004. At that time, PHAs were directed to inform HUD of any data errors within 10 days (although the deadline was later extended). The appeals were limited to data errors; agencies were told that they could not appeal the actual formula used for calculating their budgets. The final calculations, including a final proration factor, were published on January 21, 2005. Agencies were funded generally at 4.03% less than their May-July 2004 actual cost and utilization levels, plus the 2005 AAF. This proration factor of just less than 96% was implemented because the funding amount provided by Congress for voucher renewals was not sufficient to fund agencies at 100% of their formula eligibility.\nAccording to CRS analysis of HUD funding data, the median change in PHA renewal budgets from FY2004 to FY2005 was an increase of 0.17%. This number hides a wide variance; the change at the fifth percentile was a decrease of 12% and the change at the 95 th percentile was an increase of 14%. On February 25, 2005, HUD published Notice PIH 2005-9, entitled \"[PHA] Flexibility to Manage the Housing Choice Voucher Program in 2005.\" It identified administrative options available to PHAs to lower their costs in 2005. Suggestions included lowering payment standards; reducing utility assistance to families; restricting portability; reviewing rents to ensure they are reasonable in the market; suspending the reissuance of vouchers when families leave the program; restricting bedroom sizes; instituting minimum rents; monitoring income eligibility more strictly; and terminating assistance to families due to insufficient funds.", "The FY2006 HUD Appropriations Act ( P.L. 109-115 ) distributed renewal funding using roughly the same formula as FY2005. HUD allocated renewal funds to PHAs based on the amount they were eligible to receive in CY2005 (prior to proration), plus inflation (using the AAF), adjusted for additional tenant protection vouchers or vouchers that were reserved for project-based use, and prorated to fit within the amount appropriated. The act provided the Secretary with $45 million to adjust the budgets of agencies in two categories: (1) those for whom the May-July period used as the basis for CY2005 funding represented unusually low leasing or costs and who applied to the Secretary for an adjustment; and (2) those whose costs had risen due to unforeseen circumstances or portability billings. The prohibition on maximized leasing was retained in FY2006. HUD issued projected funding letters to all PHAs on January 19, 2006; PHAs were directed to respond with concerns by February 3, 2006. Again, the amount provided by Congress was insufficient to fund PHAs at their full CY2006 formula eligibility, so PHAs were funded at about 94% of their eligibility.", "The changes enacted up through FY2006, particularly those enacted in FY2005 and FY2006, gave incentives to PHAs to reduce their costs. Those changes, partnered with a cooled rental housing market, worked together to reverse the \"spiraling\" cost growth trend seen in 2003. According to CRS analysis of data provided by the Congressional Budget Office, average annual per voucher costs remained flat from calendar year 2004 to calendar year 2005 and declined by about 1.5% from calendar year 2005 through September 2006. Utilization also declined, from a peak of over 98% in 2004 to around 90% as of September 2006. This drop in utilization translated into nearly 100,000 fewer households receiving assistance in 2006 compared to 2004. Most PHAs were not spending all of their funding and therefore had accumulated reserve funds. CRS analysis of HUD data indicated that PHAs had accumulated, on average, unspent balances of 10% of their budget authority from January 2005 though September 2006. Nationally, budget utilization dropped from a high of over 98% in 2003 and 2004 to under 92% in 2006.", "", "In FY2007, the debate continued between a strictly \"budget-based\" funding formula, in which PHAs are given a fixed pot of funding in which to administer their programs (such as in FY2006), and a \"unit-based\" formula, in which PHAs are funded based on what they need to maintain a certain voucher level (such as pre-FY2003).\nFor FY2007, then-President Bush requested that Congress continue to fund the voucher program using a budget-based formula similar to the one adopted in FY2005 and FY2006. The then-President's budget also requested that Congress lift the prohibition on maximized leasing, noting that, in a budget-based funding environment, some PHAs may be receiving more funding than they are permitted to use. According to CRS analysis of HUD data, as of the end of September 2006, 168 PHAs (or about 7% of all PHAs), were at their cap on authorized vouchers, so had excess funding they were not permitted to use to serve additional families from their waiting lists.\nIn the final FY2007 appropriations law ( P.L. 110-5 ), Congress rejected President Bush's proposal. Instead, the law adopted a formula based on how much funding PHAs were using (similar to the formula enacted in FY2004), rather than a formula based on how much funding PHAs had received in the previous year. Specifically, in FY2007, PHAs received funding based on their leasing and cost data from their most recent 12 months of reported data, adjusted for the first-time renewal of tenant protection and HOPE VI vouchers and vouchers reserved for project-based contracts, inflated by the AAF, and prorated to fit within the amount appropriated. The law included a central reserve fund which the Secretary could use (1) for adjustments for PHAs that experienced a significant increase in renewal costs resulting from unforeseen circumstances or from voucher portability; and (2) for adjustments for public housing agencies experiencing a significant decrease in voucher funding, due to the formula shift, that could result in a loss of voucher units. The act continued the prohibition on over-leasing.\nP.L. 110-28 , an emergency supplemental funding bill, later amended the formula to provide exceptions for three categories of PHAs. First, certain Hurricane Katrina-affected agencies were funded on the basis of the higher of what they would have received under the FY2007 formula or what they received in FY2006. Second, agencies that would have lost funding under the FY2007 formula and had been placed under receivership within the prior 24 months were funded on the basis of the higher amount they received in FY2006. Third, agencies that spent more in FY2006 than their FY2006 allocations plus their unspent voucher and administrative fee balances were funded on the basis of what they received in FY2006.\nUnder the FY2007 formula change, PHAs (except for those noted above) were funded based on the amount of funding they were using in FY2006, rather than the amount of funding they received in FY2006. Those PHAs with higher costs and utilization rates relative to their FY2006 budgets did better under the FY2007 enacted formula than they would have done under President Bush's proposed formula; those PHAs with lower costs and utilization relative to their FY2006 budgets did worse. However, the funding provided was sufficient to fund all PHAs at more than 105% of their eligibility. And, given that the eligibility was set on current usage, the amount provided should have been sufficient for agencies to continue to serve at least the same number of families and, in some cases more (as long as they were within their caps).\nThe FY2007 formula contained elements of both a unit-based funding formula and a budget-based funding formula. The formula was unit-based, in that PHAs' funding allocations were based, in part, on the number of vouchers they were using, and they were subject to caps in the number of vouchers they could use. The formula was also budget-based, in that PHAs were given a fixed budget in which to administer their programs.", "Then-President Bush's FY2008 budget request again included a proposal for a strictly \"budget-based\" voucher funding formula, similar to the one requested in FY2007 and in place for FY2005 and FY2006. Specifically, he requested that agencies be funded in FY2008 based on what they were eligible to receive in calendar year 2007, adjusted for the AAF, and for costs associated with Family Self Sufficiency (FSS) program deposits and tenant protection vouchers, and pro-rated to fit within the amount appropriated. The accompanying text indicated that the President would seek to re-benchmark the formula using more recent cost and utilization data in the future, possibly in FY2009, as a part of a larger reform proposal.\nThe FY2008 Consolidated Appropriations Act ( P.L. 110-161 ) adopted a cost and utilization-based funding formula similar to the one adopted in FY2007. Specifically, it funded agencies based on their leasing and costs in the prior calendar year, adjusted for the AAF, and for costs associated with FSS deposits, tenant protection vouchers, and vouchers set-aside for project-based commitments. As in FY2007, it provided a central reserve fund to allow HUD to make adjustments to the budgets of certain agencies, and provided an alternative formula for several categories of agencies: Katrina-affected agencies, those under receivership, and those that spent beyond their allocations.\nUnlike FY2007, the FY2008 Act included a rescission that affected agencies' total funding. Specifically, the act reduced each PHA's funding level by the amount by which their unusable reserves exceeded 7% of the total they received in FY2007. Unusable reserves are reserves—or Net Restricted Assets (NRA)—in excess of what agencies need to reach 100% leasing. They were called \"unusable\" because the prohibition on maximized leasing (or over-leasing) had been maintained, so PHAs were legally unable to use those reserves, or NRA, to lease additional vouchers and serve additional families. The FY2008 Act rescinded $723 million in FY2008 renewal funding, which is the amount that PHAs were estimated to have in unusable reserves above 7% of their funding. These provisions \"freed-up\" unusable NRA, allowing Congress to reduce the total amount of new appropriations it provided for voucher renewals in FY2008, without reducing the total amount of funding available to PHAs to use for renewals in FY2008.", "Again in FY2009, then-President Bush asked Congress to adopt a strictly \"budget-based\" funding formula like the one adopted in FY2005 and FY2006, basing PHA renewal funding on the amount of funding they received in the previous year. Again, Congress rejected the President's request. The FY2009 omnibus funding bill directed HUD to fund PHAs using roughly the same hybrid, cost and utilization-based formula adopted in FY2008.\nIt directed HUD to fund PHAs based on the number of vouchers they had leased, and the cost of those vouchers in FY2008, adjusted for inflation and a few other factors. Then, each PHA's allocation was prorated, or reduced, by an amount that corresponded with HUD's estimate of a portion of their Net Restricted Assets (NRA), both usable and unusable. The aggregate NRA offset equaled the amount rescinded ($750 million). PHAs were expected to then supplement their allocations of new funding with their unused NRA. The act also included a $100 million renewal set-aside, to make adjustments for agencies under certain circumstances (i.e. PHAs that faced an increase in renewal costs due to portability or unforeseen circumstances, faced an increase in leasing between the end of the fiscal year and the start of the calendar year, or had unused project-based vouchers and special vouchers for veterans).", "As directed by Congress, HUD based the CY2009 allocations on the utilization and cost data submitted by PHAs for FY2008. HUD used this same data to estimate PHAs' NRA. In some cases, HUD's estimates of costs (plus inflation), utilization, and NRA did not accurately represent PHAs' CY2009 costs, utilization, and NRA balances. In some cases, the inaccurate estimates resulted from inaccurately reported data; in some cases, the difference resulted from significant changes in the cost and leasing conditions of agencies between the end of FY2008 and the start of CY2009 (a period not captured in the data).\nRegardless of the reason, some PHAs found that their CY2009 funding was insufficient to cover the costs of all the vouchers they were using to serve families. HUD estimated that as many as 15% of PHAs administering the voucher program faced such shortfalls. The department worked with agencies to determine which were facing shortfalls. Some were assisted with additional funding from the FY2009 $100 million renewal set-aside or $30 million in administrative fee funding that the department had set aside for this purpose. HUD had also been advising agencies as to how they could cut costs to stay within their budgets. Generally, if a PHA does not have sufficient funding to renew all of its vouchers, the PHA may have to stop issuing vouchers, and, in some cases, families may lose assistance. HUD asked that agencies that were facing shortfalls first contact the department before terminating assistance to families.\nIn response to concerns about families losing assistance, Congress enacted legislation permitting HUD to access some additional funding (up to $200 million) to shore-up the budgets of PHAs that were at risk of terminating assistance to families as a result of insufficient funding in CY2009. This policy change effectively increased the amount of set-aside renewal funding provided to HUD in FY2009 to adjust agencies' budgets (originally, $100 million) and expanded its purposes to allow it to be used to prevent the termination of assistance.", "FY2010 was the first budget request of the Obama Administration and it represented a different approach to voucher funding than that of the former Bush Administration. Specifically, the President's FY2010 budget requested a funding formula very similar to the model that had been in place since FY2007, based on PHAs' costs and utilization. The biggest difference in the request was that the Administration asked for the authority to offset agencies' budgets for excess reserves, at the Secretary's discretion, and then reallocate that offset funding to high-performing agencies or to agencies based on need. The budget also requested that the prohibition on over-leasing be lifted to allow PHAs to fully utilize their budgets.\nThe final FY2010 funding law ( P.L. 111-117 ) adopted a funding formula similar to the one requested by the Administration and based on FY2009 cost and leasing data, adjusted for inflation and other factors. However, it did not provide the Secretary with the authority to offset agency budgets based on reserves, nor did it lift the prohibition on over-leasing. Unlike FY2008 and FY2009, the FY2010 allocation formula included no offset for unspent agency reserves.", "As in FY2010 and each year since FY2007, in FY2011 and FY2012 Congress directed HUD to allocate Section 8 Housing Choice Voucher renewal funding to PHAs based on their costs and utilization. The FY2011 law ( P.L. 112-10 ) contained no offset from PHA reserves; the FY2012 law ( P.L. 112-55 ) included a rescission of $650 million, to be offset from allocations to PHAs with reserves above a certain level (to be determined by HUD).", "As noted earlier, just prior to, and shortly after, the formula changes that began in FY2003, PHAs were serving as many, and in some cases more families, than they were authorized to serve, and they were spending nearly every federal dollar they received. Following the funding formula changes that were enacted between FY2003 and FY2006, PHAs were serving fewer families and spending a smaller share of the federal funding they received. Low utilization of both funding and vouchers was prevalent when the voucher funding formula was changed again in FY2007.\nSince the change from a strictly \"budget-based\" funding formula to the recent hybrid cost and utilization-based model, the utilization patterns of PHAs have begun to change again. Funding utilization has begun increasing from a low of around 91% in 2006 to 95% by the end of 2009. Further, by the end of 2009, PHAs were serving over 150,000 more families than they were serving in 2006. This means that by 2009, PHAs were serving more families than they had in 2003, the previous high point in families served. While PHAs had accumulated large reserves during the budget-based formula days of 2005 and 2006, by the end of FY2009, much of those reserves had been spent down as a result of the rescissions enacted in FY2008 and FY2009. Per voucher costs, which remained relatively flat in CY2005 and CY2006, began rising again in CY2007, continued through CY2008 and CY2009, and were anticipated to continue rising in CY2012.", "In recent years, some Members of Congress from both parties have introduced voucher reform legislation containing statutory changes to the voucher renewal funding formula, generally similar to the cost and utilization based formulas contained in recent appropriations acts. However, it is important to note that even if a new funding formula were to be adopted through the authorizing process, the Appropriations Committees could override the formula by adopting a different allocation formula in the annual appropriations act, as they have each year since FY2003. It is unclear whether the Appropriations Committees would defer to the authorizing committees in this circumstance.", "Prior to FY2003, the Section 8 voucher program was funded much like an entitlement program; the amount provided by Congress was largely determined by a formula, limiting Congress's ability to constrain funding without facing the prospect of reducing the number of vouchers and providing little incentive for PHAs to restrain costs. In response to concern about inefficient funding allocations, as well as, later, rising costs, and in an attempt to obtain greater control over future cost growth, Congress enacted a series of funding changes, beginning with those enacted for FY2003. These changes resulted in a conversion of the program's funding structure into one more similar to other discretionary programs, in which grantees received an annual fixed sum of money, regardless of changes in their costs or the number of people served. While these changes gave Congress greater control over the program's budget, many PHAs argued the changes made the program more difficult to administer. PHAs have only limited control over their costs since the value of the subsidies provided to families is statutorily set (as roughly the difference between rent and 30% of income).\nIn areas where they did have control, such as in setting payment standards, selecting families from the waiting list, and issuing vouchers, many PHAs made changes. Some lowered their payment standards from 110% to 100% or less of local fair market rents. Since changes in payment standards only affect future families in the program, some PHAs undertook rent reasonableness reviews and reduced rents paid to landlords, some of whom accepted the cut, others of whom chose to no longer participate in the program. PHAs had the option of selecting higher-income families from their waiting lists (for whom subsidy costs are lower), although PHAs were still constrained by a requirement that 75% of all vouchers be targeted to the lowest-income families. Many PHAs intentionally reduced their utilization rates by not reissuing vouchers when families left the program. Agencies that intentionally lowered their utilization rates in order to save money in FY2004 likely encountered problems in FY2005, as their budgets were capped at their costs and utilization rates as of the third quarter of FY2004. It is likely that, at least for some PHAs whose costs had risen faster than their funding under the new formula, these changes resulted in fewer households receiving vouchers.\nData from HUD indicate that voucher costs leveled off and utilization rates declined from 2005 to 2006. According to CRS analysis of HUD data, average voucher costs declined by around 1.5% and average utilization declined by over 2% during that period. At the same time, some agencies were receiving more money than they were legally permitted to spend. Under the budget-based funding formulas in place in FY2005 and FY2006, PHAs' funding did not necessarily decrease if their costs decreased (for example, due to changes in the types of families served or changes in the rental market). Since maximized leasing was prohibited, some PHAs had funds that they were not permitted to spend, even if they had waiting lists for vouchers in their communities (7% of all PHAs had unusable funds, as of September 2006, according to CRS analysis).\nThe budget-based funding formula changes enacted through FY2006 were controversial with low-income housing advocates and PHA industry groups. Most low-income housing advocates called for a return to an actual-cost and unit-based formula. PHA advocacy groups were vocal about the difficult predicament they felt that the current formula put them in, given the statutory constraints under which they run their programs.\nThe FY2007 funding bill reversed recent trends by enacting a voucher renewal funding formula similar to the one that was in place when the changes first began. In FY2007, PHAs were funded based on the amount of funding they were using in the previous year, rather than the amount of money they had received in the previous year. As a result, PHAs that had large funding surpluses were eligible for less funding in FY2007, although funding for the program was sufficient to provide all PHAs with over 105% of their formula eligibility, meaning PHAs could continue to serve at least all of the families they had been serving, and additional families, as long as they were not overleasing. The FY2008 and FY2009 formulas followed the FY2007 formula closely, although they included reductions in the budgets of agencies that had more reserve funding than they were legally permitted to spend, paired with rescissions. These rescissions and offsets made unusable funding usable, and reduced the amount of appropriations needed to fund the program. The FY2010 and FY2011 formulas were similar to the FY2009 formula, except without a reduction related to reserves. In FY2012, again, agency reserves were used to offset the cost of renewals.\nNow that the strictly \"budget-based\" funding model has been replaced with a cost and utilization-based model, PHAs again have an incentive to increase their utilization and spend all of their funding. As a result, costs and utilization have begun rising again. Since costs and utilization are rising, so is the cost of the program to Congress. As in FY2003 and FY2004, these rising costs could put pressure on policy makers to find ways to again contain costs in the program. Past cost containment strategies have been effective at reducing costs, but have also led to a reduction in the number of families served, and accumulations of unspent and unusable funds. Policy makers wishing to pursue future cost containment strategies may want to tailor policies that attempt to maintain a level of service to families, while minimizing the accumulation of unspent funds. Section 8 voucher reform legislation has proposed formula changes designed to maximize the number of families served, but not necessarily to firmly cap future cost growth. Further, even if such legislation is enacted, it could be overridden by future appropriations legislation." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 2, 2, 1, 2, 2, 2, 3, 2, 2, 2, 1, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full", "h0_full h1_full", "h1_title", "h1_full", "", "", "", "", "h2_title h1_title", "h2_full h1_full", "", "h2_full h1_full", "h2_full", "h2_full", "", "", "h0_full", "h3_full h2_full h1_full" ] }

{ "question": [ "What have changes enacted by Congress during the appropriations process done?", "What did PHAs get prior to FY2003?", "Why were PHAs not using what was given to them?", "What concerns were addressed regarding this underutilization?", "What did Congress start doing in FY2003?", "What was the importance of Congress' actions?", "How were PHAs funded in FY2006?", "What happened to the funding needs of the program based funding in FY2006?", "What did the Bush Administration support?", "What was changed in FY2007?", "What was PHA funding based on?", "What did this result in?", "What was adopted in FY2008?", "What concerns were raised in FY2009?", "What happened during the period of budget-based funding formulas?", "What is the relationship between utilization and the cost of the program?", "What problems does the Section 8 voucher renewal funding formula have?", "How does this report deal with the formula?" ], "summary": [ "Changes enacted by Congress during the appropriations process in each of the past several years have significantly altered the way that public housing authorities (PHAs) receive funding to administer the Section 8 Housing Choice Voucher program.", "Prior to FY2003, PHAs received funding for each voucher they were authorized to administer, based on their average costs from the previous year, plus inflation, referred to as \"unit-based\" funding.", "Most PHAs were not using all of their vouchers, due in part to rental market conditions, and each year the Department of Housing and Urban Development (HUD) was able to recapture unspent funds.", "In FY2001 and FY2002, some Members of Congress began expressing concern about the underutilization of vouchers and the amount of recaptures.", "Beginning in FY2003, and culminating in FY2006, Congress fundamentally changed the way PHAs received voucher funding.", "The changes were designed to limit the amount of unspent funds held by PHAs and limit the cost of vouchers, which had begun to grow rapidly in 2001 and 2002, due in part to market changes and in part to policy changes.", "In FY2006, PHAs were funded based on the amount of funding they had received in the previous year (regardless of changes in their costs and utilization), plus an inflation adjustment, prorated to fit within the amount appropriated.", "Under this formula, the funding needs of the program became more predictable, but some agencies received more funding than they were legally permitted to spend, while other agencies did not receive enough funding for all of the vouchers they were authorized to administer.", "The Bush Administration supported this conversion to a \"budget-based\" formula and requested that Congress enact permanent reforms to complement the new funding method.", "In FY2007, Congress again changed the funding formula through the appropriations process.", "PHA funding was based on what they were spending in the previous year (rather than what they had been allocated in the previous year).", "As a result, PHAs that had not been spending all of their funding in FY2006 saw a reduction in funding in FY2007. Nonetheless, the funding provided was sufficient so that all PHAs received more than 100% of their 2006 costs and utilization.", "In FY2008 and FY2009, Congress adopted a cost and utilization-based formula similar to FY2007, but with a reduction in funding for PHAs with excess unspent funding in reserve.", "In FY2009, concerns were raised about how the implementation of the FY2009 formula may have left some PHAs without sufficient funding to continue serving all eligible families.", "During the period of solely \"budget-based\" funding formulas, utilization of both authorized vouchers and of available funding declined.", "Since the adoption of a cost and utilization-based funding model, utilization has begun to increase again. As utilization increases, the cost of the program to Congress increases.", "The Section 8 voucher renewal funding formula continues to be a source of debate in the annual appropriations cycle, as well as in Section 8 voucher reform bills, which have contained proposals for statutory formula changes.", "This report describes changes in the formula included in appropriations bills for FY2003 to the present." ], "parent_pair_index": [ -1, -1, 1, 2, -1, 0, -1, 2, -1, -1, -1, 1, -1, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction: The Role of the Balkans in U.S. Foreign Policy", "Current Challenges in the Region", "Impact of Kosovo's Independence", "Establishing Democracy and the Rule of Law", "Economic Reform and Improving Living Standards", "U.S. Policy Concerns", "Creating Self-Sustaining Stability in the Balkans", "Filling a Possible Security Gap", "Restructuring the International Role in the Region", "European Union", "NATO", "International Supervisory Bodies in Bosnia and Kosovo", "War Crimes Prosecutions", "U.S. Role", "U.S. and International Aid in the Balkans", "EU Aid to the Balkans", "The War on Terrorism and the Balkans", "The Role of Congress in U.S. Balkans Policy" ], "paragraphs": [ "", "The United States and the international community have achieved substantial successes in the Balkans since the 1990s. The wars in the former Yugoslavia were ended. All of the countries of the region are undertaking political and economic reforms and orienting their foreign policies toward Euro-Atlantic institutions. U.S. officials have stated that ensuring the stability of the Balkans is an important part of a U.S. vital interest in securing a Europe whole, free, and at peace.\nFor more than thirteen years, the United States has provided significant aid and troop deployments to the Balkans in support of this goal. Both aid amounts and the U.S. troop commitments have declined as the region has stabilized and more pressing U.S. foreign policy priorities have emerged. At the same time, the European Union has increased its role, with the ultimate goal of extending EU membership to the countries of the region. However, analysts believe the United States still may have an important role to play in the Balkans. Observers note that the United States has political credibility in the region, particularly among Bosniaks and Albanians, which the Europeans may lack. In particularly, some analysts say that greater U.S. diplomatic engagement is needed to re-energize constitutional reforms in Bosnia, which have languished since 2006. The region may have a higher strategic profile given U.S. use of military bases in Romania and Bulgaria, which could be useful for U.S. operations in the Middle East. Continued U.S. attention may also be needed to uproot possible terrorist networks in the region.", "", "On February 17, 2008, Serbia's Kosovo province declared its independence. The United States and 22 of the 27 European Union countries (including key states such as Britain, France, Germany, and Italy) have recognized Kosovo as an independent state. In all, at least 58 countries have recognized Kosovo so far. Serbia, which considers Kosovo as part of its territory, sharply condemned the move, and declared it to be null and void. Belgrade downgraded diplomatic relations with the United States and other countries that recognized Kosovo. Serbia has been joined in its opposition by Russia, China, and five EU countries (Spain, Greece, Cyprus, Romania and Slovakia, which have ethnic minority concerns of their own, and/or are traditional allies of Serbia).\nWhen it declared independence, Kosovo pledged to implement a status settlement plan proposed by U.N. envoy Martti Ahtisaari. The plan calls for an independent Kosovo to be supervised by the international community for an undefined period. Kosovo is not permitted to merge with another country or part of another country. The document contains provisions aimed at safeguarding the rights of ethnic Serbs and other minorities in Kosovo. Six Serbian-majority municipalities are to be given expanded powers over their own affairs. Local police in these areas are to reflect the ethnic composition of the locality. The judiciary and central government have to reflect the ethnic composition of Kosovo, and all laws having a special impact on an ethnic minority can only be adopted by a majority of that ethnic group's representatives in parliament. International missions led by the European Union supervise Kosovo's compliance with the Ahtisaari plan.\nThe pro-Western government that took power in Belgrade in July 2008 remains dedicated to opposing Kosovo's independence by diplomatic means. It scored a notable success on October 8, 2008, when the U.N. General Assembly voted to refer the question of the legality of Kosovo's declaration of independence to the International Court of Justice. A decision on the case is not expected for several years.\nMany experts believe Serbia is aiming at (and has largely achieved) a de facto separation of the Serbian-dominated northern part of Kosovo from the rest of the country. Local Serbs recognize only the authority of the Serbian government, and receive subsidies from Belgrade. On the other hand, the Serbian government reluctantly acquiesced in the deployment in December 2008 of EULEX, an EU-led law and order mission, to northern Kosovo. Belgrade was able to negotiate terms that formally placed EULEX under the U.N. umbrella, thereby politically distancing Serbia from the Ahtisaari plan, which recognizes Kosovo's independence. The security situation in Kosovo has stabilized somewhat since February 2008 although sporadic outbreaks of violence continue to occur. If there is large-scale violence between Serbs and Albanians in Kosovo, large numbers of Serbs could leave the province, particularly those living in isolated enclaves in the southern part of Kosovo.\nSerbia hopes that the ICJ case will keep the Kosovo status issue open by discouraging additional diplomatic recognitions. Indeed, the diplomatic stalemate over Kosovo's independence could indefinitely delay Kosovo's entry into the United Nations (due to the opposition of Russia) and, in the long term, into the EU and NATO. On the other hand, keeping Kosovo open as a diplomatic issue could negatively affect Serbia's EU membership prospects as well, given that all but 5 EU countries have already recognized Kosovo. Such countries currently support Serbia's early steps toward EU integration, despite differences on Kosovo. However, they could decide in the more distant future that Serbian membership itself should wait until Belgrade recognizes Kosovo, in order to avoid importing an intractable ethno-territorial dispute into the EU and foreclosing Kosovo's own possible future membership.\nSome observers have suggested that one possible way out of the impasse is a partition of Kosovo, presumably at the current de facto dividing line. Partition has been raised as a possibility (although not advocated) by Serbian President Boris Tadic. However, partition is vociferously opposed by Kosovo's leaders, who insist that their government must have sovereignty over all of Kosovo. The United States and the EU also oppose partition. Some experts fear that partition could destabilize the region by encouraging similar demands by Serbs in Bosnia or by ethnic Albanians in southern Serbia and perhaps Macedonia.", "The domestic political situation in the Balkan countries has improved since the end of the Yugoslav wars in the 1990s. All the countries in the region have held largely free and fair elections, although some problems with elections still need to be addressed. Civil society groups and independent media express a wide variety of views, but sometimes face pressure from government authorities. The countries in the region have redrawn their constitutions along more democratic lines, but some constitutional provisions in Serbia and other countries are still less than ideal.\nSerious problems remain. The legitimacy of democratic institutions is challenged by the weakness of government structures. The countries of the region lack effective, depoliticized public administration. The police and judicial systems in many countries are weak and often politicized. Government corruption is a serious problem in all of the countries of the region. Organized crime is a powerful force in the region and is often allied with key politicians, police, and intelligence agency officials. Albania, Macedonia, and other countries of the region have had problems in developing a stable, democratic political culture. This has resulted in excessively sharp tension between political parties that has at times hindered effective governance. Relatedly, ethnic tension remains a serious problem in many countries of the region, particularly in Bosnia, Kosovo, and Macedonia. Too often, party leaders, with their power to distribute patronage, contracts, and other sources of largesse, are the real power in these countries, overriding the rule of law. In countries where ethnic tensions are great, leaders of ethnically based parties can use such tensions as an additional means of popular manipulation and control.\nAlthough the international community has provided large amounts of aid and advice to strengthen local institutions and the rule of law, it may itself be responsible for some of the problems. The United States and its European allies helped craft the decentralized political system of Bosnia, which was a product of post-war political compromise. Since the late 1990s, they have viewed the arrangement as an unworkable one that hinders the country's Euro-Atlantic integration, and have pushed for the strengthening of central government institutions, but have faced resistance and obstruction, mainly from Bosnian Serbs leaders. Some observers have asserted that political tensions within Bosnia could even lead to a resumption of violence, particularly if the Bosnian Serbs attempt to secede from Bosnia. In both Bosnia and Kosovo, international officials frequently imposed policies from above, perhaps fostering a culture of dependency and political irresponsibility among local elites. Given these problems, the region's transition to democracy and the rule of law is likely to be lengthy and difficult.", "The economies of the region face the burden of a Communist legacy as well as well as resistance to economic transparency by many local leaders. Some of the region's economic problems are closely related to its political problems. Weak and corrupt state structures have been an obstacle to rationalizing tax and customs systems to provide adequate revenue for social programs and other government functions. The absence of the rule of law has hampered foreign investment in some countries due to concern over the sanctity of contracts. In Bosnia, the lack of a strong central government and the division of the country into two semi-autonomous \"entities\" has hindered the development of a single market.\nSubstantial progress has been made in economic reforms in many countries since the 1990s. Fiscal and monetary austerity, with the assistance of international financial institutions, permitted many countries to avoid hyperinflation and stabilize their currencies. The countries of the region embarked on the privatization of their industries. However, the process remains incomplete and there have been concerns within these countries and among foreign investors about corruption and a lack of transparency in some deals. High unemployment and poverty are serious problems in all of the countries of the region.\nUntil the global economic crisis, the countries of the region experienced substantial economic growth and increases in real wages. They also attracted increasing foreign investment, although totals remain low when compared to those of central European countries that joined the EU in 2004. Croatia has been particularly successful in economic reform and in attracting foreign investment, and expects to join the EU in 2011. Indeed, in per capital income, structural reforms, and foreign direct investment, Croatia has already surpassed several current EU member states, particularly Romania and Bulgaria.\nAlthough positive signs have emerged in recent years, the economic challenges faced by the countries of the region mean that many years could be required before the poorer countries even approach average EU living standards. As in the case of political reform, which is closely linked to successful economic reform, a long-term international commitment of aid, advice, and the prospect of EU membership may be required to build and maintain a local consensus for often painful measures.\nThe global economic crisis has dealt a painful setback to the region. The countries of the region generally have had large balance of payments deficits, due to a boom in imports. Since the economic crisis has hit, foreign financing has dried up. Many of the countries of the region have a narrow export base, vulnerable to downturns in western Europe. Exports have plummeted. Tourism, key for countries such as Croatia and Montenegro, is also likely to be heavily affected by the crisis. Remittances from persons working abroad, very important countries such as Albania and Kosovo, are also dropping. Currencies of many countries in the region have been under heavy pressure. Domestic tax revenues are declining. Unemployment, already a serious problem, is increasing.\nIn order to make ends meet, governments in the region have unveiled austerity policies, including sharp budget cuts. Such cuts could be politically destabilizing, given widespread poverty in the region. The countries are also seeking assistance from international financial institutions. In April 2009, the IMF agreed to give Serbia a $4 billion loan, which could unlock additional EU aid. On May 5, Bosnia and the IMF reached agreement on a $1.6 billion loan. However, Bosnia may have difficulty in meeting IMF conditions, due to the inability of a dysfunctional government in the Federation of Bosnia and Herzegovina, one of the two \"entities\" within Bosnia, to agree on deep cuts in social spending.", "", "The main goal of the United States and the international community in the Balkans is to stabilize the region in a way that does not require direct intervention by NATO-led forces and international civilian officials, and puts it on a path toward integration into Euro-Atlantic institutions. The United States and EU countries support a leading role for the EU in the region, with a smaller role by the United States, at least as far as troop levels and aid are concerned. These goals have been given greater urgency by competing U.S. and international priorities that have emerged since September 11, 2001, such as the war on terrorism, and efforts to stabilize Iraq and Afghanistan, which have placed strains on U.S. resources.\nSince the deployment of U.S. troops to Kosovo in 1999, U.S. officials have maintained the position that the U.S. peacekeeping forces went into the Balkans with the Europeans and would leave together with them. Nevertheless, as the situation in the region has stabilized, the United States and its allies have withdrawn troops from the region. Currently, about 1,500 U.S. troops are deployed in Kosovo.\nIn December 2004, the mission of SFOR, the NATO-led peacekeeping force in Bosnia, came to an end. Peacekeeping duties were handed over to a European Union force (EUFOR), now composed of about 2,000 troops. The EU force is tasked with helping to maintain a secure environment in Bosnia and support Bosnia's progress toward integration with the EU. No U.S. combat troops remain in Bosnia. Currently, there are about 15,500 NATO-led troops in KFOR in Kosovo, including the U.S. contingent.", "An important concern facing both Balkan deployments is who, if anyone, will fulfill the tasks that they are currently performing as military forces are withdrawn. EUFOR and KFOR do not play a direct role in policing duties in Bosnia and Kosovo. However, they do provide \"area security\" by regular patrolling. In Bosnia, an EU Police Mission monitors, inspects, and provides advice to promote multi-ethnic, professional police forces that act according to European standards. The Office of the High Representative (OHR), the leading international civilian body in Bosnia, has attempted to increase central government control over the police, reducing the role of the semi-autonomous \"entities\" within Bosnia. The United States and the EU believe such a move would make the police more efficient and effective, and increase Bosnia's unity. However, progress toward this goal has been slow, due to strong resistance from the Republika Srpska, the largely Serb entity. RS leaders see the police as a key bulwark of their power and do not want give up control over it. Police reforms passed by the Bosnian parliament in April 2008 were considerably weaker than those originally urged by the international community.\nMarch 2004 riots in Kosovo exposed serious weaknesses in policing and security in Kosovo. With notable exceptions, the local Kosovo Police Service did not perform very well, sometimes melting away in the face of the rioters and in a few cases joining them. CIVPOL, the U.N. police contingent in Kosovo, was hampered by a lack of cohesion and leadership. There were many reports of KFOR troops, outnumbered by the rioters and unwilling to fire on them, refusing to intervene to stop the destruction and looting of property. Some KFOR units reportedly failed even to protect Serb civilians and U.N. police from violence. KFOR officers have said the Alliance has taken steps to deal with these problems, including by supplying its forces with non-lethal riot control equipment, establishing clearer lines of authority, and consistent rules of engagement.\nKFOR and CIVPOL performed better during the violence in Mitrovica in northern Kosovo on March 17, 2008. U.N. police stormed a courthouse occupied by Serbian protestors. The police and KFOR stood their ground as rioters attacked them with rocks, Molotov cocktails, automatic weapons, and grenades. One U.N. policeman was killed, and more than 60 U.N. police and about 30 KFOR troops were hurt, as were 70 rioters. Since then sporadic, smaller-scale outbreaks of violence between Serbs and Albanians in Mitrovica have continued, and are likely to occur in the future.\nIn December 2008, EULEX personnel replaced U.N. police in Kosovo. Some observers have questioned the effectiveness of EULEX in northern Kosovo, given the small numbers of personnel deployed and continued opposition by local Serbs to their presence. EULEX sees as its primary mission to monitor and mentor the Kosovo Police Service (KPS), although it has the authority to take on police tasks if necessary. However, local Serbs refuse to work with the KPS, as they believe doing so would constitute recognition of Kosovo's independence.\nEUFOR and KFOR have also played important roles in overseeing the military forces of Bosnia and Kosovo. EUFOR inspects military arsenals in Bosnia. NATO and the Office of the High Representative have worked together to reform the two Bosnian entity armies and reduce them in size. These reforms include the unification of Bosnia's armies under a single command structure, including a Minister of Defense and Chief of Staff. However, although Bosnia now nominally has a unified armed forces, military units are not integrated at lower levels.\nEU leaders are considering a drastic reduction of EUFOR from about 2,000 troops to about 200. A decision may be made later this year. The remaining forces would support defense reform and would not have a peacekeeping role. Germany, France, and other supporters of the move say their forces are overstretched, given deployments in Afghanistan and elsewhere. They assert that the risk of conflict in Bosnia is slight. Other EU countries are more cautious, saying that withdrawing EUFOR would send a bad political signal while Bosnia's political situation remains unsettled.\nKFOR's presence deters possible Serbian aggression or military provocations against Kosovo, although an invasion of Kosovo by Serbian troops appears unlikely. Nevertheless, KFOR has been deployed to deal with violence in such flashpoints as the divided town of Mitrovica in northern Kosovo, and may face similar challenges in the future. KFOR also oversees the establishment of Kosovo's new army, the Kosovo Security Force, as foreseen by the Ahtisaari plan.. Press reports have quoted sources in several NATO governments as saying that they expect KFOR to be reduced significantly in late 2009, although NATO officials stress no decision has yet been made. Some countries, such as Spain, have already made a unilateral decision to withdraw their troops, citing an improved situation in Kosovo and a more pressing need for troops in Afghanistan. On the other hand, advocates of a continued strong troop presence in Kosovo caution that a substantial withdrawal may be inadvisable considering the continuing likelihood of violence in northern Kosovo and the vulnerability of Serbian enclaves elsewhere.", "Another issue, linked to EUFOR and KFOR's future, is how to reorganize the international civilian presence in the region. U.S. and European officials say that the ad hoc arrangements cobbled together at the end of the conflicts in Bosnia and Kosovo, under which local authorities are supervised and sometimes overruled by international bureaucracies (the Office of the High Representative in Bosnia, the EU-led missions in Kosovo) should be phased out. They believe that the two main forces for Euro-Atlantic integration, the European Union and NATO, should have a clear leading role in the region, but through advice and aid, not direct rule.", "At the June 2003 Thessaloniki EU summit with the countries of the Western Balkans, EU leaders recognized the countries of the region as prospective EU members. The EU has granted EU membership candidate status to Croatia and Macedonia. Croatia has made good progress in its membership negotiations, and hopes to join the EU in 2011. However, in 2009, Croatia hit a roadblock in its membership efforts, due to a border dispute with EU member state Slovenia. The EU has recognized Macedonia as a membership candidate, but has not started formal talks with Skopje, due to concerns about the pace of reforms there. A long-standing dispute between Macedonia and Greece has also been an important factor holding up progress.\nThe EU has concluded Stabilization and Association agreements (SAA) with the other countries in the region. The SAA provides trade concessions, aid, and advice aimed at accelerating reforms and integrating the recipients more closely with the EU, with the goal of eventual EU membership. Albania signed an SAA in 2006. In April 2009, Albania formally submitted its membership application to the EU. Montenegro signed an SAA in 2007, and submitted an application for EU membership in 2008..\nThe EU signed an SAA with Serbia on April 29, 2008. The move appeared to be aimed at strengthening the hand of pro-Europe forces in Serbia's May 2008 parliamentary elections. However, at the insistence of the Netherlands and Belgium, the agreement will not be implemented until all EU countries agree that Serbia is cooperating with the International Criminal Tribunal for the former Yugoslavia (ICTY).\nAfter the Bosnian parliament approved police reform legislation in April 2008, the EU announced that it would sign an SAA with Bosnia on June 16, 2008. The move was a softening of the EU's prior approach, as the police reform was a watered-down version of previous proposals and other EU conditions appear to have been dropped or postponed. Like the EU's decision to grant an SAA to Serbia, the signing of an SAA with Bosnia may have been intended to stabilize the region in the wake of Kosovo's independence.\nBefore Kosovo became independent, it participated in an SAA \"tracking mechanism\" that provides it with advice and support, with the aim of bringing Kosovo closer to the EU. Now that Kosovo is independent, it may be considered for a Stabilization and Association Agreement. However, a lack of consensus within the EU on Kosovo's recognition, as well as Kosovo's institutional weakness may slow this process.\nThe global economic crisis may slow possible EU membership for the countries of the region (with the possible exception of Croatia, which is already well along in the process), in part due to increasing political resistance to enlargement in major EU countries. In turn, the lack of a credible EU membership \"carrot\" could slow reform efforts in the region. Even shorter-term \"carrots,\" such as visa-free travel to the EU, may be delayed by the political climate in many EU countries. On the other hand, some reforms may be required by the IMF in exchange for stabilization loans.", "NATO's future role in the region will take place in part through the Partnership for Peace (PFP) program, which promotes the reform of the armed forces of these countries and their interoperability with NATO. In addition, the Membership Action Plan (MAP) process prepares selected PFP members for possible future NATO membership by providing them with detailed guidance on improving their qualifications. MAP participants Albania and Croatia were invited to join NATO at the Alliance's summit in Bucharest in April 2008. A membership invitation to Macedonia, also a MAP country, was withheld due to the dispute with Greece over the country's name. NATO countries pledged to admit Macedonia to the Alliance once the name issue is resolved.\nSerbia and Bosnia and Herzegovina were long excluded from PFP due to their failure to cooperate with the International Criminal Tribunal for the former Yugoslavia (ICTY). However, in what many experts viewed as an unexpected reversal of policy, they were permitted to join PFP by NATO in December 2006. This may have been done for the same reasons that motivated the EU to sign SAAs with these countries in 2008 – to bring them closer to Euro-Atlantic institutions as Kosovo's status was close to resolution and in order to encourage further reform. In the case of Serbia, both moves may have also been timed to assist pro-Western parties in upcoming elections. Montenegro is also a PFP participant.\nAt the April 2008 NATO summit, Bosnia and Montenegro were offered an \"Intensified Dialogue,\" a step toward Membership Action Plan status. The Alliance said it would consider Serbia for an \"Intensified Dialogue,\" if it requests one. However, Serbia's interest in NATO membership appears to have waned in the wake of the recognition of Kosovo's independence. As an independent state, Kosovo is setting up its own security force under KFOR tutelage. Kosovo may join PFP in the future, but may be blocked by disagreement within NATO over recognition of Kosovo's independence.", "The Office of the High Representative (OHR) in Bosnia may be eliminated by the end of 2009, if the country makes sufficient progress on a package of reforms and conditions that has been outlined by the international community. After OHR's departure, an EU Special Representative will remain but will likely not have powers to impose legislation and dismiss officials as OHR had. OHR has used these \"Bonn powers\" powers more sparingly in recent years. Nevertheless, it remains to be seen if aid conditionality and the distant prospect of EU membership will be sufficient to move the reform process forward in Bosnia.\nAfter Kosovo declared independence in February 2008, the European Union began to deploy an International Civilian Office (ICO), which would oversee Kosovo's implementation of the Ahtisaari plan. The role and powers of the ICO appear to be modeled on those of OHR in Bosnia. The head of the Office, the International Civilian Representative (ICR) was chosen by an international steering group of key countries. The ICR also serves as EU Representative in Kosovo. An American serves as his deputy. The ICR is the final authority on the implementation of the settlement, and has the power to void any decisions or laws he deems to be in violation of the settlement, as well as the power to remove Kosovo government officials who act in a way that is inconsistent with the settlement. The ICR's mandate will last until the international steering group determines that Kosovo has implemented the settlement. The first review of settlement implementation will take place in 2010.\nA mission under the EU's European Security and Defense Policy (ESDP), dubbed EULEX monitors and advises the Kosovo government on all issues related to the rule of law, specifically the police, courts, customs officials, and prisons. It also has the ability to assume \"limited executive powers\" to ensure that these institutions work properly.", "Responsibilities for prosecuting most war crimes in the region is shifting from the ICTY to local courts. U.S. and international officials have worked with local leaders and the ICTY to create a war crimes chamber to try lower-level war crimes suspects within Bosnia. The United States and other countries also assisted Serbia's efforts to set up its own war crimes court.\nHowever, perhaps the most notorious ICTY indictee, former Bosnian Serb army chief Ratko Mladic, has not been turned over to the Tribunal. In addition to Mladic, two other ICTY indictees are at large, both Serbs. U.N. Security Council Resolution 1503 called for the ICTY to complete its trials by 2008 and all appeals by 2010. This could create a situation where Serbia could \"run out the clock,\" if the ICTY is closed before the remaining indictees are brought to justice.", "The United States' role in the region, already substantially reduced since the 1990s, could be reduced even further as the EU's role increases. The United States could perhaps act largely through NATO and bilateral aid in selected areas, such as reform of intelligence and internal security bodies, military reform, and rule of law assistance. However, the prestige and credibility that the United States has in the region may still be needed to exercise political leadership in resolving some of the most difficult issues, such as creating viable central government institutions in Bosnia and ensuring the region's stability, given continuing tensions between Serbia and Kosovo. U.S. leadership is especially needed in cases where divisions among EU countries make it difficult for the EU to make difficult decisions quickly.", "Since the end of the wars in the region, U.S. aid has gradually declined, in part due to a natural shift from humanitarian aid to technical assistance and partly due to a focus on assistance to other regions of the world. U.S. bilateral assistance appropriated in the account for political and economic reform in eastern Europe (which now exclusively focuses on Balkan countries) fell from $621 million in FY2002 to $293.6 million in FY2009. For FY2010, the Obama Administration requested just under $284.8 million for political and economic aid to the region.\nThe overall goal of U.S. aid to the Balkans is to prepare the countries for integration into Euro-Atlantic institutions. U.S. programs are aimed at promoting good governance, fighting corruption, strengthening civil society and an independent media, enhancing market reforms, reducing threats of weapons of mass destruction, preventing trafficking in persons and contraband, and promoting the rule of law and human rights throughout the region.\nU.S. officials see the EU as playing the leading role in providing assistance to reform Balkan countries along EU lines, eventually leading to EU membership. As these countries move closer to EU standards, the more advanced countries will \"graduate\" from U.S. assistance. For example, Croatia graduated from SEED assistance at the end of FY2006. In addition to SEED funding, all of the countries of the region receive a few million dollars each year in military aid to help their military reform and NATO integration efforts. In the case of many countries, the funding also supports their participation in ISAF, the NATO-led peacekeeping force in Afghanistan.", "EU countries have a substantial interest in the stability of the Balkans. The region's problems already have a substantial impact on EU countries in such areas as trafficking in drugs and persons. The effect could be considerably worse if the region deteriorates into chaos and conflict. Some U.S. and European experts criticized what they view as a lack of vision by the EU in its policy toward the region. Under its Community Assistance for Reconstruction, Development, and Stabilization (CARDS) aid program for the region, the EU allotted 4.65 billion euro ($5.6 billion) from 2000-2006.\nSkeptics of EU policy said this level of resources appeared at odds with commitments made at the June 2003 Thessaloniki EU summit, when EU leaders recognized the countries of the region as prospective EU members. Critics pointed to generous EU pre-accession aid given to Central European countries and to neighboring Bulgaria and Romania as a model, saying more extensive aid would help the Balkan countries restructure their economies and legal systems more quickly to meet EU conditions for membership, while bringing local living standards somewhat closer to EU standards. The EU took steps that appeared to be aimed at dealing with these problems. CARDS was folded into the Instrument for Pre-Accession Assistance (IPA), which helps all countries seeking EU membership. The EU allocated 11.47 billion euro (over $17.8 billion) for the IPA for 2007-2013. According to the EU Commission, between 2007 and 2012, the average allocation for the western Balkans under the IPA is around 800 million euro (over $1 billion) per year.", "Since the September 11 attacks on the United States, the war on terrorism has been the United States' main foreign policy priority and has had an impact on U.S. policy in the Balkans. In the 1990s, wars and political instability provided an opportunity for Al Qaeda and other terrorist groups to infiltrate the Balkans. However, U.S. and European peacekeeping troops, aid, and the prospect of Euro-Atlantic integration helped to bring more stability to the region. Moreover, the September 11, 2001, attacks on the United States underscored for the countries of the region the dangers of global terrorism and resulted in increased U.S. attention and aid to fight the terrorist threat. In part as a result, many experts currently do not view the Balkans as a key region harboring or funding terrorists, in contrast to the Middle East, South Asia, Southeast Asia, and Western Europe.\nHowever, experts note that the region may play a role in terrorist plans, as a transit point for terrorists, as well as for rest and recuperation. Moreover, they agree that the region's continuing problems continue to leave it vulnerable to terrorist groups. In October 2005, Bosnian police captured an Islamic terrorist cell that was plotting to blow up the British Embassy in Sarajevo.\nU.S. officials have cited the threat of terrorism in the Balkans as an important reason for the need for continued U.S. engagement in the region. In addition to the need to take steps to directly combat terrorist infrastructure in the region, U.S. officials say that U.S. efforts to bring stability to the region also help to fight terrorism. They note that political instability, weak political and law enforcement institutions, and poverty provide a breeding ground for terrorist groups. U.S. objectives are also outlined in the 9/11 Commission Report and the President ' s National Strategy for Combating Terrorism , which calls for the United States to work with other countries to deny terrorists sponsorship, support, and sanctuary, as well as working to diminish the underlying conditions that terrorists seek to exploit.\nThe United States has a variety of instruments to fight terrorism in the Balkans. One is the presence of U.S. troops in Kosovo and intelligence personnel in Bosnia. The United States also provides bilateral counterterrorism assistance to the countries of the region. The overall U.S. aid program to the region, aimed at bringing stability through strengthening the rule of law and promoting economic reform, also serves to combat the sometimes lawless climate in which terrorists can thrive. U.S. aid helps to develop export control regimes in the region, including over weapons of mass destruction and dual-use technology. The United States has encouraged regional cooperation on terrorism and international crime through the Southeast European Cooperation Initiative (SECI). In the longer term, efforts to stabilize the region, and thereby perhaps reduce its attractiveness to terrorists, are also dependent upon integrating it into Euro-Atlantic institutions.", "Congress has played an important role in shaping U.S. Balkans policy. Members of Congress spoke out strongly against atrocities by Serbian forces in Croatia and Bosnia in the early 1990s. Some Members pushed for lifting the arms embargo against the Bosniaks, so that they could better defend themselves. Congressional pressure may have encouraged the Clinton Administration to play a bigger role in stopping the fighting in Bosnia, ultimately culminating in the Dayton Peace Accords in 1995. Congress also played an important role in supporting the International Criminal Tribunal for the Former Yugoslavia and pressing for the arrest and transfer of indictees.\nDespite the activism of some Members on these issues, many in Congress remained cautious about U.S. military involvement in the Balkans. The deployment of U.S. peacekeepers in Bosnia in 1995 and the air war in Kosovo in 1999 provoked heated debate in Congress, in part due to policy disagreements, in part due to partisan conflict between the Clinton Administration and a Republican-led Congress. However, despite sometimes harsh criticism, both military missions received full congressional funding. Nevertheless, concerns about the costs of open-ended missions led Congress to try several strategies to limit these uncertainties. These included pressing the Administration to set benchmarks for the deployments and to report on them. Congress also sought to limit U.S. engagement by pushing for greater burdensharing. As a result of legislation and congressional pressure, the U.S. aid and troop contributions in Bosnia and Kosovo were capped at no more than 15% of the total contributions of all countries.\nThe end of the wars in the Balkans and the shift in U.S. priorities in the wake of the September 11 attacks have moved the Balkans to the periphery of congressional concerns, at least when compared to the situation in the 1990s. However, Congress continues to have an important impact in several areas. Foreign operations appropriations bills have at times moderated SEED funding cuts proposed by the President.\nCongress has also played a critical role in helping to bring Serbian war criminals to justice. Since FY2001, Congress has included provisions in foreign operations appropriations bills that attached conditions on some U.S. aid to Serbia's central government, requiring cooperation with the war crimes tribunal, ending support to Bosnian Serb structures, and respect for minority rights. It can be argued that these provisions were a key catalyst for former Serbian leader Slobodan Milosevic's transfer to the tribunal in 2001, as well as the transfer of many others since then. However, the fear of suspected war criminals that they would be turned over to the Tribunal to comply with the aid criteria may have led to the murder of Prime Minister Djindjic in March 2003. Three major indicted war criminals remain at large, including former Bosnian Serb army chief Ratko Mladic.\nAnother Balkan issue on which some Members focused on is the status of Kosovo. In the 108 th Congress, several House and Senate resolutions ( H.Res. 11 , H.Res. 28 , and S.Res. 144 ) were introduced that dealt with the issue, some of them supporting independence for Kosovo. However, while some Members have strongly favored Kosovo's independence, others have been leery of taking steps that they believe could destabilize the region. H.Res. 28 was discussed at a House International Relations Committee hearing on Kosovo's future in May 2003 and at a markup session on the resolution in October 2004, but was not voted on by the Committee and did not receive floor consideration in the 108 th Congress.\nThe 109 th Congress also took up the issue of Kosovo's status. On January 4, 2005, Representative Tom Lantos introduced H.Res. 24 , which expresses the sense of the House that the United States should support Kosovo's independence. On October 7, 2005, the Senate passed S.Res. 237 , a resolution supporting efforts to \"work toward an agreement on the future status of Kosovo.\" The resolution said that the unresolved status of Kosovo is not sustainable. It did not express support for any particular status option but said that it should \"satisfy the key concerns\" of the people of Kosovo and Serbia and Montenegro. An identical House resolution was introduced on December 17, 2005 ( H.Res. 634 ).\nLegislation on Kosovo's status has been introduced in the 110 th Congress. On January 5, 2007, Representative Lantos introduced H.Res. 36 , which calls on the United States to express its support for Kosovo's independence. On March 29, 2007, Senator Lieberman introduced S.Res. 135 , which expresses the sense of the Senate that the United States should support Kosovo's independence. It says that if the U.N. Security Council does not pass a resolution supporting the Ahtisaari proposal in a timely fashion, the United States and like-minded countries should recognize Kosovo's independence on their own. A companion House measure, H.Res. 309 , was introduced by Representative Engel on April 17. On May 24, Representative Bean introduced H.Res. 445 , which expresses the sense of the House that the United States should reject an imposed solution on Kosovo's status and not take any unilateral steps to recognize Kosovo's independence. The second session of the 110 th Congress may also consider legislation on Kosovo's post-status development.\nCongress has supported NATO enlargement into the Balkan region. In March 2007, Congress approved the NATO Freedom Consolidation Act ( P.L. 110-17 ). The legislation offered support for the NATO membership aspirations of Albania, Croatia, and Macedonia, and designated them as eligible for U.S. military aid under terms of the NATO Participation Act of 1994 ( P.L. 103-447 ). On May 19, 2008, the Senate passed S.Res. 570 , which congratulated Albania and Croatia on the invitations they received to join NATO at the Alliance's April 2008 summit, as well as invitations to Bosnia, Montenegro, and Serbia to have an Intensified Dialogue with NATO. In the 111 th Congress, H.Res. 152 , passed by the House on March 30, 2009, reaffirmed U.S. support for NATO, and said the admission of Albania and Croatia to the Alliance would add to NATO's capabilities and bolster its capacity to integrate former Communists states into a community of democracies. It said that NATO should \"pace the process of NATO enlargement and remain prepared to extend invitations for accession negotiations to any appropriate European democracy meeting the criteria for NATO membership...\"\nThere has been debate in Congress and elsewhere about whether greater U.S. diplomatic involvement in the region is needed in order to fight a perceived tendency of drift in U.S. and European policy in the Balkans that could potentially lead to the destabilization of the region. This discussion has focused largely on the failure of Bosnia to establish effective central government institutions, in part due to Bosnian Serb obstructionism. In the 111 th Congress, Rep. Berman introduced H.Res. 171 , which calls for constitutional reform in Bosnia. It calls for the Administration to appoint a special envoy to the Balkans to assist reform efforts in Bosnia, as well as elsewhere in the region. It also warns against a withdrawal of OHR before the international conditions are met, and asks the EU reconsider plans for a withdrawal of EUFOR. It calls on the United States to work with the EU in the EU's efforts to transition from the OHR to a leading role for the EU Special Representative in Bosnia in a way that will aid Bosnia's EU integration. H.R. 171 was passed by the House on May 12, 2009." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 3, 3, 4, 4, 4, 4, 4, 2, 3, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h0_title", "", "h0_full", "", "h2_title h1_title h3_title", "h3_title h1_full", "", "h3_title", "", "h3_full", "", "", "", "", "", "h2_full", "h3_full" ] }

{ "question": [ "What has the US done in the Balkans?", "What has been the state of the Balkans since the mid-1990s?", "What challenges remain in the Balkans?", "What is the goal of the United States?", "Why has the US reduced cost of its commitments to the Balkans?", "What is an example of these reductions?", "What is the state of the US in Bosnia and Kosovo since December 2004?", "What has been the United States' main foreign policy priority?", "How did Al Qaeda operate before September 11?", "What did the Bush Administration say about the Balkans?", "What assets did the Bush Administration have in the Balkans?", "How did Congress members feel about US Balkans policy?", "What was the result of the end of the wars in the Balkans and the September 11 attacks?", "What has Congress continued do have an impact on?", "How has Congress continued to make an impact on the Balkans?" ], "summary": [ "The United States, its allies, and local leaders have achieved substantial successes in the Balkans since the mid-1990s.", "The wars in the region have ended, and all of the countries are undertaking political and economic reforms at home and orienting their foreign policies toward Euro-Atlantic institutions.", "However, difficult challenges remain, including dealing with the impact of Kosovo's independence; fighting organized crime, corruption, and enforcing the rule of law; bringing war criminals to justice; and reforming the economies of the region.", "The goal of the United States and the international community is to stabilize the Balkans in a way that is self-sustaining and does not require direct intervention by NATO-led forces and international civilian officials.", "The United States has reduced the costs of its commitments to the region, in part due to competing U.S. and international priorities, such as the war on terrorism, and efforts to stabilize Iraq and Afghanistan, which have placed strains on U.S. resources.", "SFOR and KFOR, the NATO-led peacekeeping forces in Bosnia and Kosovo, were reduced in size.", "In December 2004, SFOR's mission was concluded, and European Union troops took over peacekeeping duties in Bosnia. No U.S. combat troops remain in Bosnia. About 15,500 troops remain in Kosovo as part of KFOR, including 1,500 U.S. soldiers.", "Since the September 11, 2001 attacks on the United States, the war on terrorism has been the United States' main foreign policy priority, including in the Balkans.", "Before September 11, Al Qaeda supporters operated from Bosnia and Albania.", "However, the Bush Administration said that these countries and others in the region \"actively supported\" the war on terrorism, shutting down terrorist front organizations and seizing their assets.", "Although their efforts are hampered by the weakness of local government institutions, U.S. anti-terrorism efforts in the Balkans are aided by U.S. military and intelligence assets in the region, as well as a reservoir of good will among local Muslims of all ethnic groups.", "Some Members supported Clinton Administration efforts to intervene to stop the fighting in the region in the mid and late 1990s, while others were opposed. Members were leery of an open-ended commitment to the region and sought to contain these costs through adoption of benchmarks and limiting U.S. aid and troop levels to the region.", "The end of the wars in the Balkans and the shift in U.S. priorities in the wake of the September 11 attacks has moved the Balkans to the periphery of congressional concerns, at least when compared to the situation in the 1990s.", "However, Congress has continued to have an impact on such issues as Kosovo's status, conditioning some U.S. aid to Serbia on cooperation with the International Criminal Tribunal for the Former Yugoslavia, and supporting NATO membership for the countries of the region.", "On May 12, 2009, the House passed H.R. 171, which calls on Bosnia to make constitutional reforms and on the Administration to appoint a special envoy to the Balkans. In late May 2009, Vice President Joe Biden will reportedly visit Kosovo, Bosnia, and Serbia to discuss the situation in the region." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, -1, -1, -1, 2, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Forms of International Agreements", "Treaties", "Executive Agreements", "Types of Executive Agreements", "Mixed Sources of Authority for Executive Agreements", "Choosing Between a Treaty and an Executive Agreement", "Nonlegal Agreements", "Effects of International Agreements on U.S. Law", "Self-Executing vs. Non-Self-Executing Agreements", "Congressional Implementation of International Agreements", "Conflict with Existing Laws", "Interpreting International Agreements", "Withdrawal from International Agreements", "Withdrawal from Executive Agreements and Political Commitments", "Withdrawal from Treaties", "Customary International Law", "Relationship Between Customary International Law and Domestic Law", "Statutory Incorporation of Customary International and the Alien Tort Statute", "Conclusion", "Appendix. Steps in the Making of a Treaty and in the Making of an Executive Agreement" ], "paragraphs": [ "", "International law consists of \"rules and principles of general application dealing with the conduct of states and of international organizations and with their relations inter se , as well as with some of their relations with persons, whether natural or juridical.\" While the United States has long understood international legal commitments to be binding upon it both internationally and domestically since its inception, the role of international law in the U.S. legal system often implicates complex legal principles.\nThe United States assumes international obligations most frequently when it makes agreements with other nations or international bodies that are intended to be legally binding upon the parties involved. Such legal agreements are made through treaty or executive agreement. The U.S. Constitution allocates primary responsibility for such agreements to the executive branch, but Congress also plays an essential role. First, in order for a treaty (but not an executive agreement) to become binding upon the United States, the Senate must provide its advice and consent to treaty ratification by a two-thirds majority. Secondly, Congress may authorize executive agreements. Thirdly, the provisions of many treaties and executive agreements may require implementing legislation in order to be judicial enforceable in U.S. courts.\nThe effects of customary international law upon the United States are more ambiguous and difficult to decipher. While there is some Supreme Court jurisprudence finding that customary international law is incorporated into domestic law, this incorporation is only to the extent that \"there is no treaty, and no controlling executive or legislative act or judicial decision\" in conflict. This report provides an introduction to the role that international law and agreements play in the United States.", "For purposes of U.S. law and practice, pacts between the United States and foreign nations may take the form of treaties, executive agreements, or nonlegal agreements, which involve the making of so-called \"political commitments.\" In this regard, it is important to distinguish \"treaty\" in the context of international law, in which \"treaty\" and \"international agreement\" are synonymous terms for all binding agreements, and \"treaty\" in the context of domestic American law, in which \"treaty\" may more narrowly refer to a particular subcategory of binding international agreements that receive the Senate's advice and consent.", "Under U.S. law, a treaty is an agreement negotiated and signed by a member of the executive branch that enters into force if it is approved by a two-thirds majority of the Senate and is subsequently ratified by the President. In modern practice, treaties generally require parties to exchange or deposit instruments of ratification in order for them to enter into force. A chart depicting the steps necessary for the United States to enter a treaty is in the Appendix .\nThe Treaty Clause—Article II, Section 2, Clause 2 of the Constitution—vests the power to make treaties in the President, acting with the \"advice and consent\" of the Senate. Many scholars have concluded that the Framers intended \"advice\" and \"consent\" to be separate aspects of the treaty-making process. According to this interpretation, the \"advice\" element required the President to consult with the Senate during treaty negotiations before seeking the Senate's final \"consent.\" President George Washington appears to have understood that the Senate had such a consultative role, but he and other early Presidents soon declined to seek the Senate's input during the negotiation process. In modern treaty-making practice, the executive branch generally assumes responsibility for negotiations, and the Supreme Court stated in dicta that the President's power to conduct treaty negotiations is exclusive.\nAlthough Presidents generally do not consult with the Senate during treaty negotiations, the Senate maintains an aspect of its \"advice\" function through its conditional consent authority. In considering a treaty, the Senate may condition its consent on reservations, declarations, understandings, and provisos concerning the treaty's application. Under established U.S. practice, the President cannot ratify a treaty unless the President accepts the Senate's conditions. If accepted by the President, these conditions may modify or define U.S. rights and obligations under the treaty. The Senate also may propose to amend the text of the treaty itself, and the other nations that are parties to the treaty must consent to the changes in order for them to take effect.\nSome international law scholars occasionally have criticized the Senate's use of certain reservations, understandings, and declarations (RUDs). For example, some critics have argued RUDs that conflict with the \"object and purpose\" of a treaty violate principles of international law . And scholars debate whether RUDs specifying that some or all provisions in a treaty are non-self-executing (meaning they require implementing legislation to be given judicially enforceable domestic legal effect) are constitutionally permissible.\nHowever much debate RUDs may have engendered among academics, they have produced little detailed discussion in courts. The Supreme Court has accepted the Senate's general authority to attach conditions to its advice and consent. And U.S. courts frequently interpret U.S. treaty obligations in light of any RUDs attached to the instrument of ratification. Where a treaty is ratified with a declaration that it is not self-executing, a court will not give its provisions judicially enforceable domestic legal effect.", "The great majority of international agreements that the United States enters into are not treaties, but executive agreements—agreements entered into by the executive branch that are not submitted to the Senate for its advice and consent. Federal law requires the executive branch to notify Congress upon entry of such an agreement. Executive agreements are not specifically discussed in the Constitution, but they nonetheless have been considered valid international compacts under Supreme Court jurisprudence and as a matter of historical practice. Although the United States has entered international compacts by way of executive agreement since the earliest days of the Republic, executive agreements have been employed much more frequently since the World War II era. Commentators estimate that more than 90% of international legal agreements concluded by the United States have taken the form of an executive agreement.", "Executive agreements can be organized into three categories based on the source of the President's authority to conclude the agreement. In the case of congressional-executive agreements , the domestic authority is derived from an existing or subsequently enacted statute. The President also enters into executive agreements made pursuant to a treaty based upon authority created in prior Senate-approved, ratified treaties. In other cases, the President enters into sole executive agreements based upon a claim of independent presidential power in the Constitution. A chart describing the steps in the making of an executive agreement is in the Appendix .\nThe constitutionality of congressional-executive agreements is well- settled. Unlike in the case of treaties, where only the Senate plays a role in approving the agreement, both houses of Congress are involved in the authorizing process for congressional-executive agreements. Congressional authorization takes the form of a statute which must pass both houses of Congress. Historically, congressional-executive agreements have been made for a wide variety of topics, ranging from postal conventions to bilateral trade to military assistance. The North American Free Trade Agreement and the General Agreement on Tariffs and Trade are notable examples of congressional-executive agreements.\nAgreements made pursuant to treaties are also well established as constitutional, though controversy occasionally arises as to whether a particular treaty actually authorizes the Executive to conclude an agreement in question. Because the Supremacy Clause includes treaties among the sources of the \"supreme Law of the Land,\" the power to enter into an agreement required or contemplated by the treaty lies within the President's executive function.\nSole executive agreements rely on neither treaty nor congressional authority to provide their legal basis. The Constitution may confer limited authority upon the President to promulgate such agreements on the basis of his foreign affairs power. For example, the Supreme Court has recognized the power of the President to conclude sole executive agreements in the context of settling claims with foreign nations. If the President enters into an executive agreement addressing an area where he has clear, exclusive constitutional authority—such as an agreement to recognize a particular foreign government for diplomatic purposes—the agreement may be legally permissible regardless of congressional disagreement.\nIf, however, the President enters into an agreement and his constitutional authority over the agreement's subject matter is unclear, a reviewing court may consider Congress's position in determining whether the agreement is legitimate. If Congress has given its implicit approval to the President entering the agreement, or is silent on the matter, it is more likely that the agreement will be deemed valid. When Congress opposes the agreement and the President's constitutional authority to enter the agreement is ambiguous, it is unclear if or when such an agreement would be given effect. Examples of sole executive agreements include the Litvinov Assignment, under which the Soviet Union purported to assign to the United States claims to American assets in Russia that had previously been nationalized by the Soviet Union, and the 1973 Vietnam Peace Agreement ending the United States' participation in the war in Vietnam.", "Recently, some foreign relations scholars have argued that the international agreement-making practice has evolved such that some modern executive agreements no longer fit in the three generally recognized categories of executive agreements. These scholars contend that certain recent executive agreements are not premised on a defined source of presidential authority, such as an individual statute or stand-alone claim of constitutional authority. Nevertheless, advocates for a new form of executive agreement contend that identification of a specific authorizing statute or constitutional power is not necessary if the President already possesses the domestic authority to implement the executive agreement; the agreement requires no changes to domestic law; and Congress has not expressly opposed it. Opponents of this proposed new paradigm of executive agreement argue that it is not consistent with separation of powers principles, which they contend require the President's conclusion of international agreements be authorized either by the Constitution, a ratified treaty, or an act of Congress. Whether executive agreements with mixed or uncertain sources of authority become prominent may depend on future executive practice and the congressional responses.", "There has been long-standing scholarly debate over whether certain types of international agreements may only be entered as treaties, subject to the advice and consent of the Senate, or whether a congressional-executive agreement may always serve as a constitutionally permissible alternative to a treaty. A central legal question in this debate concerns whether the U.S. federal government, acting pursuant to a treaty, may regulate matters that could not be reached by a statute enacted by Congress pursuant to its enumerated powers under Article I of the Constitution. Adjudication of the propriety of congressional-executive agreements has been rare, in significant part because plaintiffs often cannot demonstrate that they have suffered a redressable injury giving them standing, or fail to make a justiciable claim. As a matter of historical practice, some types of international agreements have traditionally been entered as treaties in all or many instances, including compacts concerning mutual defense, extradition and mutual legal assistance, human rights, arms control and reduction, taxation, and the final resolution of boundary disputes.\nState Department regulations prescribing the process for coordination and approval of international agreements (commonly known as the \"Circular 175 procedure\") include criteria for determining whether an international agreement should take the form of a treaty or an executive agreement. Congressional preference is one of several factors (identified in the text box below) considered when determining the form that an international agreement should take. In addition, the Circular 175 procedure provides that \"the utmost care\" should be exercised to \"avoid any invasion or compromise of the constitutional powers of the President, the Senate, and the Congress as a whole.\"\nIn 1978, the Senate passed a resolution expressing its sense that the President seek the advice of the Senate Committee on Foreign Relations in determining whether an international agreement should be submitted as a treaty. The State Department subsequently modified the Circular 175 procedure to provide for consultation with appropriate congressional leaders and committees concerning significant international agreements. Consultations are to be held \"as appropriate.\"", "Not every pledge, assurance, or arrangement made between the United States and a foreign party constitutes a legally binding international agreement. In some cases, the United States makes \"political commitments\" with foreign States, also called \"soft law\" pacts. Although these pacts do not modify existing legal authorities or obligations, which remain controlling under both U.S. domestic and international law, such commitments may nonetheless carry significant moral and political weight. In some instances, a nonlegal agreement between States may serve as a stopgap measure until such time as the parties may conclude a permanent legal settlement. In other instances, a nonlegal agreement may itself be intended to have a lasting impact upon the parties' relationship.\nThe executive branch has long claimed the authority to enter such pacts on behalf of the United States without congressional authorization, asserting that the entering of political commitments by the Executive is not subject to the same constitutional constraints as the entering of legally binding international agreements. An example of a nonlegal agreement is the 1975 Helsinki Accords, a Cold War agreement signed by 35 nations, which contains provisions concerning territorial integrity, human rights, scientific and economic cooperation, peaceful settlement of disputes, and the implementation of confidence-building measures.\nUnder State Department regulations, an international agreement is generally presumed to be legally binding in the absence of an express provision indicating its nonlegal nature. State Department regulations recognize that this presumption may be overcome when there is \"clear evidence, in the negotiating history of the agreement or otherwise, that the parties intended the arrangement to be governed by another legal system.\" Other factors that may be relevant in determining whether an agreement is nonlegal in nature include the form of the agreement and the specificity of its provisions.\nThe Executive's authority to enter such arrangements—particularly when those arrangements contemplate the possibility of U.S. military action—has been the subject of long-standing dispute between Congress and the Executive. In 1969, the Senate passed the National Commitments Resolution, stating the sense of the Senate that \"a national commitment by the United States results only from affirmative action taken by the executive and legislative branches of the United States government by means of a treaty [or legislative enactment] . . . specifically providing for such commitment.\" The Resolution defined a \"national commitment\" as including \"the use of the armed forces of the United States on foreign territory, or a promise to assist a foreign country . . . by the use of armed forces . . . either immediately or upon the happening of certain events.\"\nThe National Commitments Resolution took the form of a sense of the Senate resolution, and accordingly had no legal effect. Although Congress has occasionally considered legislation that would bar the adoption of significant military commitments without congressional action, no such measure has been enacted.\nUnlike in the case of legally binding international agreements, there is no statutory requirement that the executive branch notify Congress of every nonlegal agreement it enters on behalf of the United States. State Department regulations, including the Circular 175 procedure, also do not provide clear guidance for when or whether Congress will be consulted when determining whether to enter a nonlegal arrangement in lieu of a legally binding treaty or executive agreement. Congress normally exercises oversight over such non-binding arrangements through its appropriations power or via other statutory enactments, by which it may limit or condition actions the United States may take in furtherance of the arrangement.\nThe Iran Nuclear Agreement Review Act of 2015 is a notable exception where Congress opted to condition U.S. implementation of a political commitment upon congressional notification and an opportunity to review the compact. The act was passed during negotiations that culminated in the Joint Comprehensive Plan of Action (JCPOA) between Iran, and six nations (the United States, the United Kingdom, France, Russia, China, and Germany—collectively known as the P5+1). Under the terms of the plan of action, Iran pledged to refrain from taking certain activities related to the production of nuclear weapons, while the P5+1 agreed to ease or suspend sanctions that had been imposed in response to Iran's nuclear program. Because the JCPOA was not signed by any party and purported rely on a series of \"voluntary measures,\" the Obama Administration considered it a political commitment that did not alter domestic or international legal obligations. Despite the JCPOA's nonbinding status, the Iran Nuclear Agreement Review Act provided a mechanism for congressional consideration of the JCPOA prior to the Executive being able to exercise any existing authority to relax sanctions to implement the agreement's terms.", "The effects that international legal agreements entered into by the United States have upon U.S. domestic law are dependent upon the nature of the agreement; namely, whether the agreement (or a provision within an agreement) is self-executing or non-self-executing, and possibly whether the commitment was made pursuant to a treaty or an executive agreement.", "Some provisions of international treaties or executive agreements are considered \"self-executing,\" meaning that they have the force of domestic law without the need for subsequent congressional action. Provisions that are not considered self-executing are understood to require implementing legislation to provide U.S. agencies with legal authority to carry out the functions and obligations contemplated by the agreement or to make them enforceable in court. The Supreme Court has deemed a provision non-self-executing when the text manifests an intent that the provision not be directly enforceable in U.S. courts or when the Senate conditions its advice and consent on the understanding that the provision is non-self-executing.\nAlthough the Supreme Court has not addressed the issue directly, many courts and commentators agree that provisions in international agreements that would require the United States to exercise authority that the Constitution assigns to Congress exclusively must be deemed non-self-executing , and implementing legislation is required to give such provisions domestic legal effect. Lower courts have concluded that, because Congress controls the power of the purse, a treaty provision that requires expenditure of funds must be treated as non-self-executing. Other lower courts have suggested that treaty provisions that purport to create criminal liability or raise revenue must be deemed non-self-executing because those powers are the exclusive prerogative of Congress.\nUntil implementing legislation is enacted, existing domestic law concerning a matter covered by a non-self-executing provision remains unchanged and controlling law in the United States. While it is clear that non-self-executing provisions in international agreements do not displace existing state or federal law, there is significant scholarly debate regarding the distinction between self-executing and non-self-executing provisions, including the ability of U.S. courts to apply and enforce them. Some scholars argue that, although non-self-executing provisions lack a private right of action, litigants can still invoke non-self-executive provisions defensively in criminal proceedings or when another source for a cause of action is available. Other courts and commentators contend that non-self-executing provisions do not create any judicially enforceable rights, or that that they lack any status whatsoever in domestic law. At present, the precise status of non-self-executing treaties in domestic law remains unresolved.\nDespite the complexities of the self-execution doctrine in domestic, treaties and other international agreements operate in dual international and domestic law contexts. In the international context, international agreements traditionally constitute binding compacts between sovereign nations, and they create rights and obligations that nations owe to one another under international law. But international law generally allows each individual nation to decide how to implement its treaty commitments into its own domestic legal system. The self-execution doctrine concerns how a treaty provision is implemented in U.S. domestic law, but it does not affect the United States' obligation to comply with the provision under international law. When a treaty is ratified or an executive agreement concluded, the United States acquires obligations under international regardless of self-execution, and it may be in default of the obligations unless implementing legislation is enacted.", "When an international agreement requires implementing legislation or appropriation of funds to carry out the United States' obligations, the task of providing that legislation falls to Congress. In the early years of constitutional practice, debate arose over whether Congress was obligated—rather than simply empowered—to enact legislation implementing non-self-executing provisions into domestic law. But the issue has not been resolved in any definitive way as it has not been addressed in a judicial opinion and continues to be the subject of debate occasionally.\nBy contrast, the Supreme Court has addressed the scope of Congress's power to enact legislation implementing non-self-executing treaty provisions. In a 1920 case, Missouri v. Holland , the Supreme Court addressed a constitutional challenge to a federal statute that implemented a treaty prohibiting the killing, capturing, or selling of certain birds that traveled between the United States and Canada. In the preceding decade, two federal district courts had held that similar statutes enacted prior to the treaty violated the Tenth Amendment because they infringed on the reserved powers of the states to control natural resources within their borders. But the Holland Court concluded that, even if those district court decisions were correct, their reasoning no longer applied once the United States concluded a valid migratory bird treaty. In an opinion authored by Justice Holmes, the Holland Court concluded that the treaty power can be used to regulate matters that the Tenth Amendment otherwise might reserve to the states. And if the treaty itself is constitutional, the Holland Court held, Congress has the power under the Necessary and Proper Clause to enact legislation implementing the treaty into the domestic law of the United States without restraint by the Tenth Amendment.\nCommentators and jurists have called some aspects of the Justice Holmes's reasoning in Holland into question, and some scholars have argued that the opinion does not apply to executive agreements. But the Supreme Court has not overturned Holland 's holding related to Congress's power to implement treaties. Nevertheless, principles of federalism embodied in the Tenth Amendment continue to impact constitutional challenges to U.S. treaties and their implementing statutes, including in the 2014 Supreme Court decision, Bond v. United States .\nBond concerned a criminal prosecution arising from a case of \"romantic jealously\" when a jilted spouse spread toxic chemicals on the mailbox of a woman with whom her husband had an affair. Although the victim only suffered a \"minor thumb burn,\" the United States brought criminal charges under the Chemical Weapons Convention Act of 1998—a federal statute that implemented a multilateral treaty prohibiting the use of chemical weapons. The accused asserted that the Tenth Amendment reserved the power to prosecute her \"purely local\" crime to the states, and she asked the Court to overturn or limit Holland 's holding on the relationship between treaties and the Tenth Amendment.\nAlthough a majority in Bond declined to revisit Holland 's interpretation of the Tenth Amendment, the Bond Court ruled in the accused's favor based on principles of statutory interpretation. When construing a statute interpreting a treaty, Bond explained, \"it is appropriate to refer to basic principles of federalism embodied in the Constitution to resolve ambiguity . . . .\" Applying these principles through a presumption that Congress did not intend to intrude on areas of traditional state authority, the Bond Court concluded that the Chemical Weapons Convention Act did not apply to the jilted spouse's actions. In other words, the majority in Bond did not disturb Holland 's conclusion that the Tenth Amendment does not limit Congress's power to enact legislation implementing treaties, but Bond did hold that principles of federalism reflected in the Tenth Amendment may dictate how courts interpret such implementing statutes.", "Sometimes, a treaty or executive agreement will conflict with one of the three main tiers of domestic law—U.S. state law, federal law, or the Constitution. For domestic purposes, a ratified, self-executing treaty is the law of the land equal to federal law and superior to U.S. state law, but inferior to the Constitution. A self-executing executive agreement is likely superior to U.S. state law, but sole executive agreements may be inferior to conflicting federal law in certain circumstances (congressional-executive agreements or executive agreements pursuant to treaties are equivalent to federal law), and all executive agreements are inferior to the Constitution. In cases where ratified treaties or certain executive agreements are equivalent to federal law, the \"last-in-time\" rule establishes that a more recent federal statute will prevail over an earlier, inconsistent international agreement, while a more recent self-executing agreement will prevail over an earlier, inconsistent federal statute.\nTreaties and executive agreements that are not self-executing, on the other hand, have generally been understood not to displace existing state or federal law in the absence of implementing legislation. \"The responsibility for transforming an international obligation arising from a non-self-executing treaty into domestic law falls to Congress.\" Accordingly, it appears unlikely that a non-self-executing agreement could be converted into judicially enforceable domestic law absent legislative action through the bicameral process.", "When analyzing an international agreement for purposes of its domestic application, U.S. courts have final authority to interpret the agreement's meaning. As a general matter, the Supreme Court has stated that its goal in interpreting an agreement is to discern the intent of the nations that are parties to it. The interpretation process begins by examining \"the text of the [agreement] and the context in which the written words are used.\" When an agreement provides that it is to be concluded in multiple languages, the Supreme Court has analyzed foreign language versions to assist in understanding the agreement's terms. The Court also considers the broader \"object and purpose\" of an international agreement. In some cases, the Supreme Court has examined extratextual materials, such as drafting history, the views of other state parties, and the post-ratification practices of other nations. But the Court has cautioned that consulting sources outside the agreement's text may not be appropriate when the text is unambiguous.\nThe executive branch frequently is responsible for interpreting international agreements outside the context of domestic litigation. While the Supreme Court has final authority to interpret an agreement for purposes of applying it as domestic law in the United States, some questions of interpretation may involve exercise of presidential discretion or otherwise may be deemed \"political questions\" more appropriately resolved in the political branches. In Charlton v. Kelly , for example, the Supreme Court declined to decide whether Italy violated its extradition treaty with the United States, reasoning that, even if a violation occurred, the President \"elected to waive any right\" to respond to the breach by voiding the treaty. Moreover, the executive branch often is well-positioned to interpret an agreement's terms given its leading role in negotiating agreements and its understanding of other nations' post-ratification practices. Thus, even when a question of interpretation is to be resolved by the judicial branch, the Supreme Court has stated that the executive branch's views are entitled to \"great weight\" —although the Court has not adopted the executive branch's interpretation in every case.\nCongress also possesses power to interpret international agreements by virtue of its power to pass implementing or other related legislation. And because the Constitution expressly divides the treaty-making power between the Senate and the President, the Supreme Court has examined sources that reflect these entities' shared understanding of a treaty at the time of ratification. The Senate's ability to influence treaty interpretation directly, however, may be limited to its role in the advice and consent process. The Senate may, and frequently does, condition its consent on a requirement that the United States interpret a treaty in a particular fashion. But after the Senate provides its consent and the President ratifies a treaty, resolutions passed by the Senate that purport to interpret the treaty are \"without legal significance\" according to the Supreme Court.", "The Constitution sets forth a definite procedure whereby the President has the power to make treaties with the advice and consent of the Senate, but it is silent as to how to terminate them. Although the Supreme Court has recognized directly the President's power to conclude certain executive agreements, it has not addressed presidential power to terminate those agreements. The following section discusses historical practice and jurisprudence related to the withdrawal from and termination of international agreements.", "In the case of executive agreements, it appears generally accepted that, when the President has independent authority to enter into an executive agreement, the President may also independently terminate the agreement without congressional or senatorial approval. Thus, observers appear to agree that, when the Constitution affords the President authority to enter into sole executive agreements, the President also may unilaterally terminate those agreements. This same principle would apply to political commitments: to the extent the President has the authority to make nonbinding commitments without the assent of the Senate or Congress, the President also may withdraw unilaterally from those commitments.\nFor congressional-executive agreements and executive agreements made pursuant to treaties, the mode of termination may be dictated by the underlying treaty or statute on which the agreement is based. For example, in the case of executive agreements made pursuant to a treaty, the Senate may condition its consent to the underlying treaty on a requirement that the President not enter into or terminate executive agreements under the authority of the treaty without senatorial or congressional approval. And for congressional-executive agreements, Congress may dictate how termination occurs in the statute authorizing or implementing the agreement.\nCongress also has asserted the authority to direct the President to terminate congressional-executive agreements. For example, in the Comprehensive Anti-Apartheid Act of 1986, which was passed over President Reagan's veto, Congress instructed the Secretary of State to terminate an air services agreement with South Africa. And in the Trade Agreements Extension Act of 1951, Congress directed the President to \"take such action as is necessary to suspend, withdraw or prevent the application of\" trade concessions contained in prior trade agreements regulating imports from the Soviet Union and \"any nation or area dominated or controlled by the foreign government or foreign organization controlling the world Communist movement.\"\nPresidents also have asserted the authority to withdraw unilaterally from congressional-executive agreements, but there is an emerging scholarly debate over the extent to which the Constitution permits the President to act without the approval of the legislative branch in such circumstances. Some scholars assert that the President has the power to withdraw unilaterally from congressional-executive agreements, although he may not terminate the domestic effect of an agreements implementing legislation. But others argue that Congress must approve termination of executive agreements that implicate exclusive congressional powers, such as the power over international commerce, and that received congressional approval after they were concluded by the executive branch. Although this debate is still developing, unilateral termination of congressional-executive agreements by the President has not been the subject of a high volume of litigation, and prior studies have concluded that such termination has not generated large-scale opposition from the legislative branch.", "Unlike the process of terminating executive agreements, which historically has not generated extensive opposition from Congress, the constitutional requirements for the termination of Senate-approved, ratified treaties have been the subject of occasional debate between the legislative and executive branches. Some commentators have argued that the termination of treaties is analogous to the termination of federal statutes. Because domestic statutes may be terminated only through the same process in which they were enacted —i.e., through a majority vote in both houses and with the signature of the President or a veto override—these commentators contend that treaties likewise must be terminated through a procedure that resembles their making and that includes the legislative branch.\nOn the other hand, treaties do not share every feature of federal statutes. Whereas statutes can be enacted over the president's veto, treaties can never be concluded without the Senate's advice and consent. Moreover, whereas an enacted federal statute can only be rescinded by a subsequent act of Congress, some argue that, just as the President has some unilateral authority to remove executive officers who were appointed with senatorial consent, the President may unilaterally terminate treaties made with the Senate's advice and consent.\nThe United States terminated a treaty under the Constitution for the first time in 1798. On the eve of possible hostilities with France, Congress passed, and President Adams signed, legislation stating that four U.S. treaties with France \"shall not henceforth be regarded as legally obligatory on the government or citizens of the United States.\" Thomas Jefferson referred to the episode as support for the notion that only an \"act of the legislature\" can terminate a treaty. But commentators since have come to view the 1798 statute as a historical anomaly because it is the only instance in which Congress purported to terminate a treaty directly through legislation without relying on the President to provide a notice of termination to the foreign government. Moreover, because the 1798 statute was part of a series of congressional measures authorizing limited hostilities against the French Republic, some view the statute as an exercise of Congress's war powers rather than precedent for a permanent congressional power to terminate treaties.\nDuring the 19th century, government practice treated the power to terminate treaties as shared between the legislative and executive branches. Congress often authorized or instructed the President to provide notice of treaty termination to foreign governments during this time. On rare occasions, the Senate alone passed a resolution authorizing the President to terminate a treaty. Presidents regularly complied with the legislative branch's authorization or direction. On other occasions, Congress or the Senate approved the President's termination after-the-fact, when the executive branch had already provided notice of termination to the foreign government.\nAt the turn of the 20th century, government practice began to change, and a new form of treaty termination emerged: unilateral termination by the President without approval by the legislative branch. During the Franklin Roosevelt Administration and World War II, unilateral presidential termination increased markedly. Although Congress occasionally enacted legislation authorizing or instructing the President to terminate treaties during the 20th century, unilateral presidential termination became the norm.\nThe president's exercise of treaty termination authority did not generate opposition from the legislative branch in most cases, but there have been occasions in which Members of Congress sought to block unilateral presidential action. In 1978, a group of Members filed suit in Goldwater v. Carter seeking to prevent President Carter from terminating a mutual defense treaty with the government of Taiwan as part of the United States' recognition of the government of mainland China. A divided Supreme Court ultimately ruled that the litigation should be dismissed, but it did so without reaching the merits of the constitutional question and with no majority opinion. Citing a lack of clear guidance in the Constitution's text and a reluctance \"to settle a dispute between coequal branches of our Government each of which has resources available to protect and assert its interests[,]\" four Justices concluded that the case presented a nonjusticiable political question. This four-Justice opinion, written by Justice Rehnquist, has proven influential since Goldwater , and federal district courts have invoked the political question doctrine as a basis to dismiss challenges to unilateral treaty terminations by President Reagan and President George W. Bush.", "Customary international law is defined as resulting from \"a general and consistent practice of States followed by them from a sense of legal obligation.\" This means that all, or nearly all, nations consistently follow the practice in question and they must do so because they believe themselves legally bound, a concept often referred to as opinio juris sive necitatis ( opinio juris ). If nations generally follow a particular practice but do not feel bound by it, it does not constitute customary international law. Further, there are ways for nations to avoid being subject to customary international law. First, a nation that is a persistent objector to a particular requirement of customary international law is exempt from it. Second, under American law, the United States can exempt itself from customary international law requirements by passing a contradictory statute under the \"last-in-time\" rule. As a result, the impact of customary international law that conflicts with other domestic law appears limited.\nIn examining nations' behavior to determine whether opinio juris is present, courts might look to a variety of sources, including, inter alia, relevant treaties, unanimous or near-unanimous declarations by the United Nations General Assembly concerning international law, and whether noncompliance with an espoused universal rule is treated as a breach of that rule. Uncertainties and debate frequently arise concerning how customary international law is defined and how firmly established a particular norm must be in order to become binding.\nSome particularly prevalent rules of customary international law can acquire the status of jus cogens norms—peremptory rules which permit no derogation, such as the international prohibition against slavery or genocide. For a particular area of customary international law to constitute a jus cogens norm, State practice must be extensive and virtually uniform.", "For much of the history of the United States, courts and U.S. officials understood customary international law to be binding U.S. domestic law in the absence of a controlling executive or legislative act. By 1900, the Supreme Court stated in The Paquete Habana that international law is \"part of our law[.]\" Although this description seems straightforward, twentieth century developments complicate the relationship between customary international law and domestic law.\nIn a landmark 1938 decision, Erie Railroad Co. v. Tompkins , the Supreme Court rejected the then-longstanding notion that there was a \"transcendental body of law\" known as the general common law, which federal courts are permitted to identify and describe in the absence of a conflicting statute. Erie held that the \"law in the sense in which courts speak of it today does not exist without some definite authority behind it\" in the form of a state or federal statute or constitutional provision. Some jurists and commentators have argued that, because judicial application of customary international law requires courts to rely on the same processes used in discerning and applying the general common law, Erie should be interpreted to foreclose application of customary international law in U.S. courts. Many commentators, however, disagree with this view. Although the Supreme Court has not passed directly on the issue, in 1964, it discussed with approval a law review article in which then-professor and later judge of the International Court of Justice Philip C. Jessup argued that it would be \"unsound\" and \"unwise\" to interpret Erie to bar federal courts' application of customary international law. And in a 2004 case, the High Court rejected the view that federal courts have lost \"all capacity\" to recognize enforceable customary international norms as a result of Erie . Consequently, at present, the precise status of customary international law in the U.S. legal system remains the subject of debate.\nWhile there is some uncertainty concerning the customary international law's role in domestic law, the debate has largely focused on circumstances in which customary international law does not conflict with an existing federal statute. When a federal statute does conflict with customary international law, lower courts consistently have concluded that the statute prevails. And there do not appear to be any cases in which a court has struck down a federal statute on the ground that it violates customary international law. Further, the Supreme Court's pre- Erie jurisprudence could be read to support the view that federal statutes prevail over customary international law. In The Paquete Habana , the Court explained that customary international law may be incorporated into domestic law, but only to the extent that \"there is no treaty, and no controlling executive or legislative act or judicial decision\" in conflict.\nWhile it appears that federal statutes will generally prevail over conflicting custom-based international law, customary international law can potentially affect how courts construe domestic law. Under the canon of statutory construction known as the Charming Betsy canon, when two constructions of an ambiguous statute are possible, one of which is consistent with international legal obligations and one of which is not, courts will often construe the statute so as not to violate international law, presuming such a statutory reading is reasonable.", "Customary international law plays a direct role in the U.S. legal system when Congress incorporates it into federal law via legislation. Some statutes expressly reference customary international law, and thereby permit courts to interpret its requirements and contours. For example, federal law prohibits \"the crime of piracy as defined by the law of nations . . . .\" And the Foreign Sovereign Immunities Act removes the protections from lawsuits afforded to foreign sovereign nations in certain classes of cases in which property rights are \"taken in violation of international law . . . .\"\nPerhaps the clearest example of U.S. law incorporating customary international law is the Alien Tort Statute (ATS). The ATS originated as part of the Judiciary Act of 1789, and establishes federal court jurisdiction over tort claims brought by aliens for violations of either a treaty of the United States or \"the law of nations.\" Until 1980, this statute was rarely used, but in Filártiga v. Pena-Irala , the U.S. Court of Appeals for the Second Circuit relied upon it to award a civil judgment against a former Paraguayan police official who had allegedly tortured the plaintiffs while still in Paraguay. In doing so, the Filártiga Court concluded that torture constitutes a violation of the law of nations and gives rise to a cognizable claim under the ATS.\nFilártiga was a highly influential decision that caused the ATS to \"skyrocket\" into prominence as a vehicle for asserting civil claims in U.S. federal courts for human rights violations even when the events underlying the claims occurred outside the United States. But the expansion of the claims grounded in the ATS was not long-lived. Beginning with a 2004 decision, Sosa v. Alvarez-Machain , the Supreme Court began to place outer limits on the statute's application. Sosa held that not all violations of international norms are actionable under the ATS—only those that \"rest on a norm of international character accepted by the civilized world\" and are defined with sufficient clarity and particularity. And even when a claim meets these standards, Sosa explained that federal courts must exercise \"great caution\" before deeming a claim actionable.\nNine years later, in Kiobel v. Royal Dutch Petroleum Co ., the Supreme Court further limited the ATS's reach by holding that courts should apply the canon of construction known as the presumption against extraterritoriality to the statute. Under Kiobel, foreign plaintiffs cannot sue foreign defendants in ATS suits when the relevant conduct occurred overseas. And in Jesner v. Arab Bank, PLC , a 2018 decision, the High Court concluded that foreign corporations are not subject to the liability under the ATS. Although the ATS remains a clear example of a U.S. statute incorporating customary international law, the Supreme Court's narrowing of ATS jurisdiction in Sosa , Kiobel , and Jesner has caused some commentators to question its continued relevance.", "Although the United States has long understood international legal commitments to be binding both internationally and domestically, the relationship between international law and the U.S. legal system implicates complex legal dynamics. In some areas, courts have established settled rules. For example, courts clearly have recognized that the Constitution permits the United States to make binding international commitments through both treaties and executive agreements. And the Supreme Court has held that only self-executing international agreements have the status of judicially enforceable domestic law. But other issues concerning the status of international law in the U.S. legal system have never been fully resolved. The scope of presidential power to make executive agreements, the role of non-self-executing agreements and customary international law, and the division of power to withdraw from international agreements—like many international-law-related issues—have long been the subject of debate. Because the legislative branch possesses significant powers to shape and define the United States' international obligations, Congress is likely to continue to play a critical role in dictating the outcome of these debates in the future.", "" ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 2, 1, 2, 2, 2, 2, 1, 2, 2, 1, 2, 2, 1, 2 ], "alignment": [ "h0_title h1_title", "h1_full", "h0_title", "", "", "", "", "", "h0_full", "", "", "", "", "", "", "", "", "h1_title", "h1_full", "h1_full", "", "" ] }

{ "question": [ "What types of agreements can the executive branch make?", "What power do nonlegal agreements not have?", "What weight do these agreements carry?", "How do legal agreements and political agreements differ?", "How does customary international practice affect the United States?", "What is the ambiguity involved with customary international practice?", "Why might courts be able to interpret and apply customary international law in domestic legal system?", "What is the Alien Tort Statue?" ], "summary": [ "In addition to legally binding agreements, the executive branch also regularly makes nonlegal agreements (sometimes described as \"political agreements\") with foreign entities.", "The formality, specificity, and intended duration of such commitments may vary considerably, but they do not modify existing legal authorities or obligations, which remain controlling under both U.S. domestic and international law.", "Nonetheless, such commitments may carry significant moral and political weight for the United States and other parties.", "Unlike in the case of legal agreements, current federal law does not provide any general applicable requirements that the executive branch notify Congress when it enters a political agreement on behalf of the United States.", "The effects of the second source of international law, customary international practice, upon the United States are more ambiguous.", "While there is some Supreme Court jurisprudence finding that customary international law is \"part of\" U.S. law, domestic statutes that conflict with customary rules remain controlling, and scholars debate whether the Supreme Court's international law jurisprudence still applies in the modern era.", "Some domestic U.S. statutes directly incorporate customary international law, and therefore invite courts to interpret and apply customary international law in the domestic legal system.", "The Alien Tort Statute, for example, which establishes federal court jurisdiction over certain tort claims brought by aliens for violations of \"the law of nations.\"" ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "Background", "FHA Mortgage Insurance", "First-Time Homebuyer Credit", "Federal Policies on Tax Debtors Receiving Federal Loan Insurance", "FHA Insured over $1.44 Billion in Mortgages for Thousands of Recovery Act Beneficiaries with Federal Tax Debt", "$717.2 Million in FHA Mortgage Insurance Was Provided to Tax Debtors Who Claimed $27.4 Million in Recovery Act FTHBCs", "Shortcomings in the Capacity of FHA- Required Documentation to Identify Tax Debts and in Certain Policies Allow Tax Debtors to Obtain Mortgage Insurance", "Information That FHA Requires Lenders to Collect on Mortgage Applicants Does Not Reliably Indicate the Existence of Federal Tax Debt", "Shortcomings in FHA Policies May Have Led to Ineligible Tax Debtors Obtaining Mortgage Insurance", "Conclusion", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Data Reliability Assessment", "Appendix II: Excerpts of the Uniform Residential Loan Application", "Appendix III: Comments from the Federal Housing Administration", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The Recovery Act of 2009 was enacted in response to significant weakness in the economy to, among other things, help promote economic recovery and assist those most affected by the recession. The Congressional Budget Office (CBO) estimated the Recovery Act’s cost at $825 billion as of August 2011. The Recovery Act included provisions to help stimulate the housing market, including increasing loan limits for FHA-insured mortgages in 669 high-cost counties in calendar year The provision allowed FHA to insure mortgages at a higher 2009.amount than would have been authorized without the Recovery Act. Under this provision, FHA insured over $20 billion in mortgages for 87,000 homeowners who were approved for FHA mortgage insurance in 2009. The Recovery Act also adapted and extended the FTHBC through November 2009. Through July 3, 2010, IRS reported that about 1.7 million individuals claimed more than $12 billion in FTHBCs under the Recovery Act for homes purchased in 2009. Office of Management and Budget (OMB) Circular A-129 states that delinquent tax debtors are ineligible for federal loan insurance, such as FHA mortgage insurance, unless they repaid the debt or were in a valid repayment agreement with IRS, but the FTHBC was available to those who qualified regardless of their tax debt.", "FHA’s single-family programs insure private lenders against 100 percent of the value of the loan for foreclosures on mortgages that meet FHA criteria, including mortgages for initial home purchases, construction rehabilitation, and refinancing. As of September 2011, almost 3,700 lenders were approved to participate in these programs. The insurance covers the principal, interest, and associated foreclosure costs, among other things. Lenders usually require mortgage insurance when a home buyer makes a down payment of less than 20 percent of the value of the home. FHA mortgage insurance allows a home buyer to make a modest down payment—as low as 3.5 percent—and obtain a mortgage for the balance of the purchase price. As the recent housing and economic recession set in, FHA’s share of the market for home purchase mortgages grew sharply due to the contraction of other mortgage market segments—rising from about 5 percent in 2006 to nearly 30 percent in 2009. FHA insured almost 2 million single-family mortgages valued at more than $300 billion in mortgage insurance in 2009. FHA generally is thought to promote stability in the market by ensuring the availability of mortgage credit in areas that may be underserved by the private sector or that are experiencing economic downturns. It has played a particularly large role among minority, lower-income, and first-time home buyers; almost 80 percent of FHA-insured home purchase loans in 2010 went to first-time home buyers.\nThe FHA home mortgage insurance programs are funded by the FHA Mutual Mortgage Insurance Fund (MMIF), which is supported by insurance premiums charged to borrowers. The MMIF is used to cover claims on foreclosed mortgages, among other things. The Omnibus Budget Reconciliation Act of 1990 required the Secretary of HUD to take steps to ensure that the MMIF attained a capital ratio (i.e., economic value divided by the unamortized insurance-in-force) of at least 2 percent by November 2000 and maintain a 2 percent ratio at all times thereafter.The act also required an annual independent actuarial review of the economic net worth and soundness of the MMIF. The actuarial review estimates the economic value of the MMIF as well as the capital ratio to determine whether the MMIF has met the capital standards in the act. The capital ratio has dropped sharply in recent years due to declines in home prices and increases in seriously delinquent loans and foreclosures. The most recent actuarial study shows that the capital ratio is currently below the statutorily mandated level, at 0.24 percent, representing $2.6 billion in estimated capital resources against an active portfolio of $1.08 trillion. The MMIF has historically been sufficient to fund the FHA home mortgage insurance programs without additional funding from the federal government, but if the reserve were to be depleted, FHA would need to draw on permanent and indefinite budget authority to cover additional increases in estimated losses. A weakening in the performance of FHA-insured loans could increase the possibility that FHA will require additional federal funds. Our work has previously shown that the increased reliance on FHA mortgage insurance highlights the need for FHA to ensure that it has the proper controls in place to minimize financial risks to the federal government while meeting the housing needs of borrowers.\nLenders are responsible for underwriting the loans to determine an applicant’s eligibility for FHA mortgage insurance in accordance with FHA policies. Underwriting is a risk analysis that uses information collected during the loan origination process to decide whether to approve a loan for FHA insurance. Lenders employ automated underwriting— the process by which lenders enter information on potential borrowers into electronic systems that contain an evaluative formula, or algorithm, known as a scorecard. The scorecard attempts to quickly and objectively measure the borrower’s risk of default by examining data such as application information and credit score. Since 2004, FHA has used its own scorecard called Technology Open to Approved Lenders (TOTAL). FHA lenders now use TOTAL in conjunction with automated underwriting systems to determine the likelihood of default. Although TOTAL can assess the credit risk of a borrower, it does not reject a loan outright. Rather, TOTAL will assign a risk assessment of either “accept” or “refer” for each borrower. FHA requires lenders to manually underwrite loans that are assessed as “refer” by TOTAL to give a final determination if the loan should be accepted or rejected. According to FHA policy, a lender remains accountable for compliance with FHA eligibility requirements, regardless of the risk assessment provided by TOTAL.\nVirtually all of the lenders that participate in FHA’s mortgage insurance programs for single-family homes have direct endorsement authority. These lenders can underwrite and close mortgage loans without FHA’s prior review or approval. FHA insures lenders against nearly all losses resulting from foreclosed loans and covers 100 percent of the value of the loan. In general, foreclosure may be initiated when three monthly installments are due and unpaid, and it must be initiated when six monthly installments are due and unpaid, except when prohibited by law. To minimize the number of FHA loans entering foreclosure, servicers are responsible for pursuing various loss mitigation strategies, including suspended payments, loan modification, reduced mortgage payments, and sale of the property by the borrower. If, despite these loss mitigation strategies, the lender forecloses on the loan, the lender can file an insurance claim with FHA for the unpaid balance of the loan and other costs. However, FHA reviews a selection of insured loans, including early payment defaults (loans at least 60 days delinquent in the first six payments), in part to minimize potential FHA losses and ensure the underwriting for these mortgages met FHA guidelines. Reviews revealing serious deficiencies may result in FHA requiring the lenders to compensate the department for financial losses, known as indemnification, which requires the lender to repay FHA for any losses that it incurs after a loan has gone into default and the property has been sold.\nCongress, through legislation, sets limits on the size of loans that may be insured by FHA. These loan limits vary by county and can change from year to year. To mitigate the effects from the economic downturn and the sharp reduction of mortgage credit availability from private sources, Congress increased FHA loan limits. The Economic Stimulus Act (ESA) enacted in February 2008 stipulated that FHA loan limits be set temporarily at 125 percent of the median house price in each area, with a maximum loan limit of $729,750 for a one-unit home. Immediately prior to ESA’s enactment, the limits had been set at 95 percent of area median house prices. In July 2008, 5 months after passing ESA, Congress passed the Housing and Economic Recovery Act (HERA), which established new statutory limits of 115 percent of area median home prices. Then, in February 2009, Congress passed the Recovery Act, which stipulated that FHA loan limits for 2009 be set in each county at the higher dollar amount when comparing loan limits established under 2008 ESA requirements and limits for 2009 under HERA.", "Congress passed the FTHBC to assist the struggling real estate market and encourage individuals to purchase their first home. The credit was initially enacted by HERA and later revised by the Recovery Act. The 2008 HERA FTHBC provided taxpayers a credit of up to $7,500 to be paid back over 15 years, essentially serving as an interest-free loan. In 2009, the Recovery Act was enacted and increased the maximum credit for the 2009 FTHBC to $8,000, with no payback required unless the home is sold or ceases to be the taxpayer’s principal residence within 3 years of the purchase. The credit of up to $8,000 was a refundable tax credit paid out to the claimant if there was no tax liability or the credit exceeded the amount of any federal tax due. In July 2010, the Homebuyer Assistance and Improvement Act (HAIA) of 2010 extended the date to close on a home purchase to September 30, 2010.", "To protect federal government assets and minimize unintended costs to the government, OMB Circular A-129 states that individuals with delinquent federal debts are ineligible for loan insurance and prohibits federal agencies from issuing loans to such applicants; however, OMB’s policy allows individuals with delinquent federal taxes or other federal debt to attain eligibility by repaying their debt in full or entering into a valid repayment plan with the agency they owe. The policy states that agencies should determine if the applicant is eligible by including a question on loan applications asking applicants if they have such delinquencies. The policy also (1) requires agencies and lenders to use credit bureaus as screening tools, because tax liens resulting from delinquent tax debt typically appear on credit reports, and (2) encourages agencies to use HUD’s Credit Alert Interactive Voice Response System (CAIVRS), a database of delinquent federal debtors. CAIVRS contains delinquent debt information for six federal agencies; however, it does not According to OMB policy, if delinquent contain any tax debts from IRS.federal debts are discovered, processing of applications must be suspended until the applicant attains eligibility.\nFHA’s policies for lenders dictate that an FHA mortgage insurance applicant must be rejected if he or she is delinquent on any federal debt, including tax debt, or has a lien placed against his or her property for a debt owed to the federal government. Like OMB’s policy, FHA policy states that an applicant with federal debt may become eligible for mortgage insurance by repaying the debt in full or by entering into a valid repayment agreement with the federal agency owed, which must be verified in writing. Such repayment plans include IRS-accepted installment agreements and offers in compromise. To identify individuals with tax debt, FHA requires mortgage insurance applicants to declare whether they are delinquent or in default on any federal debt on their insurance application, the Uniform Residential Loan Application (URLA). As printed on the application, knowingly making any false statement on the URLA is a federal crime punishable by fine or imprisonment. FHA also requires that lenders review credit reports for all applicants to identify tax liens and other potential derogatory credit information.", "In 2009, FHA insured over $1.44 billion in mortgages for 6,327 borrowers who at the same time had delinquent tax debt and benefited from the Recovery Act. According to IRS records, these borrowers had an estimated $77.6 million in unpaid federal taxes as of June 30, 2010. As figure 1 illustrates, our analysis included tax debtors who either benefited from FHA’s increased loan limits or who claimed the FTHBC and received FHA mortgage insurance of any value. Although federal policies did not prohibit tax debtors from claiming the FTHBC, they were ineligible for FHA mortgage insurance unless their delinquent federal taxes and other federal debt had been fully repaid or otherwise addressed through a repayment agreement. We could not determine the proportion of borrowers who were ineligible because we could not systematically identify which of the 6,327 borrowers had valid repayment agreements at the time of the mortgage approval using IRS’s data; however, we found that five of our eight selected borrowers were not in valid repayment agreements at the time they obtained FHA mortgage insurance. In addition, FHA records indicate that borrowers with tax debt had serious delinquency (in default for 90 days or more) and foreclosure rates two to three times greater than borrowers without tax debt, which potentially represents an increased risk to FHA.\nIn 2009, FHA insured $759.3 million in mortgages for 2,646 individuals who owed $35.5 million in unpaid federal taxes as of June 30, 2010, under the Recovery Act’s provision for increased loan limits. These borrowers and coborrowers obtained 1,913 insured mortgages with a median value of $352,309 and had a median tax debt of $6,290 per person. Their mortgages accounted for 3.7 percent of the 52,006 mortgages FHA insured under Recovery Act provisions for increased limits in 2009, which in turn represented 2.5 percent of all mortgages insured by FHA in 2009. Our analysis likely understates the amount of unpaid federal taxes because IRS data do not cover individuals who fail to file tax returns or who understate their income. Of the 18 selected individuals who benefitted from increased loan limits for FHA mortgage insurance or received the FTHBC under the Recovery Act, we found that 11 had not filed all of their federal tax returns.\nUsing IRS data, we cannot systematically determine which of these individuals was in a valid repayment agreement at the time of the mortgage, and therefore cannot determine whether insuring each of these 1,913 mortgages was improper, but it is possible that borrowers with tax debt represent a greater financial risk to the federal government. As illustrated in figure 2, serious delinquency and foreclosure rates among Recovery Act borrowers with unpaid federal taxes were at least twice as high as the rates for other borrowers. As of September 2011, 32 percent of the 1,913 mortgages made to borrowers with tax debt were seriously delinquent on their payments, compared with 15.4 percent of other FHA- insured mortgages. About 6.3 percent of the mortgages for borrowers with tax debt went into foreclosure since the home was purchased in 2009, compared with 2.4 percent for others. The homes foreclosed after they were purchased by tax debtors were insured for $44.9 million, potentially leaving FHA responsible for paying claims for the remaining loan balance and certain interest and foreclosure costs. FHA recovers some of these costs when it sells the property.\nFinally, FHA’s increased exposure to risk from insuring tax debtors is unlikely to be limited to Recovery Act beneficiaries. Because FHA uses identical methods to insure non-Recovery Act mortgages, it is reasonable to assume that some portion of FHA borrowers for the remaining 97.5 percent of mortgages we did not analyze as part of this review are tax debtors.", "In 2009, $717.2 million in FHA mortgage insurance and $27.4 million in Recovery Act FTHBCs were provided to 3,815 individuals who owed an estimated $43.5 million in unpaid federal taxes. These borrowers obtained 3,812 insured mortgages with a median value of $167,887 and had a median unpaid tax amount of $5,044 per person. Their mortgages represented 0.5 percent of the 700,003 mortgages insured by FHA for borrowers who claimed the FTHBC. As discussed above, we were unable to determine the proportion of the mortgage insurance that was provided to borrowers who were, in fact, eligible as a result of entering into a valid repayment agreement with IRS. We found that three of our eight selected borrowers were in valid repayment agreements at the time they obtained FHA mortgage insurance.\nAs illustrated in figure 3, we found that serious delinquency and foreclosure rates for mortgages obtained by FHA borrowers with federal tax debts who received the FTHBC were two to three times higher than the rates for other borrowers. As of September 2011, 26.9 percent of the 3,812 mortgages made to borrowers with unpaid tax debts were seriously delinquent on their payments, compared with 11.9 percent of borrowers without tax debt who received the FTHBC and FHA mortgage insurance. About 4.7 percent of the mortgages of borrowers with tax debt were foreclosed, compared with 1.4 percent for other borrowers. The 181 foreclosed homes purchased by tax debtors had a total mortgage insurance value of $36.5 million, potentially resulting in a loss to the MMIF.\nThe FTHBC is a refundable credit, meaning taxpayers could receive payments in excess of their tax liability. Federal law typically requires that any federal tax refund be offset to pay down an individual’s unpaid taxes. Of the 3,815 borrowers we identified with tax debt, 233 received a federal tax refund after claiming the FTHBC. We selected 9 of these borrowers for a detailed review and found that all 9 were issued refunds in accordance with federal law. For example, three of these cases had filed bankruptcy prior to receiving the refund. Federal bankruptcy law prevents IRS from taking collections actions, such as offsetting postpetition refunds, against individuals undergoing bankruptcy proceedings.\nThe amounts of unpaid federal taxes, mortgage insurance, and FTHBCs we identified are likely understated for the following reasons:\nCertain individuals did not file tax returns or underreported their income, and therefore are not included in our analysis.\nData limitations in the FTHBC data prevented us from isolating all individuals who benefitted from the FTHBC under the Recovery Act.\nAny Recovery Act FTHBC recipient whose FTHBC was greater than their outstanding tax liability would not be included in our analysis because the refundable credit would have offset their outstanding tax liability. Federal law generally requires that IRS offset any refund against an individual’s tax liability.", "Some ineligible tax debtors received FHA mortgage insurance, in part, due to shortcomings in the capacity of FHA-required documentation to identify tax debts and shortcomings in other policies that lenders may misinterpret. Lenders are required by FHA policy to perform steps to identify an applicant’s federal debt status, but the information provided by these steps does not reliably indicate an applicant’s tax debt. Statutory restrictions limit the disclosure of taxpayer information without the taxpayer’s consent. Lenders are already required to obtain such consent through an IRS form they use to validate the income of some applicants. This same form could also be used to obtain permission from applicants to access reliable tax-debt information directly from IRS, but doing so is not addressed in FHA’s policies. Requiring lenders to collect more reliable information on tax debts could better prevent ineligible tax debtors from obtaining FHA mortgage insurance. Further, FHA’s policies requiring lenders to investigate whether tax liens indicate unresolved tax debt are unclear and may be misinterpreted. The lenders we spoke with believed they were in compliance with FHA policies when they provided FHA- insured loans to applicants with tax liens, but FHA officials indicated otherwise. As a result of these shortcomings, lenders may approve federally insured mortgages for ineligible applicants with delinquent tax debt in violation of federal policies.", "Consistent with OMB policies, FHA has lender policies intended to prevent ineligible tax debtors from obtaining FHA mortgage insurance; however, the information the agency requires lenders to collect does not reliably indicate the existence of federal tax debt. The three sources of information FHA requires lenders to obtain each have shortcomings in their capacity to identify borrowers’ tax debts:\nUniform Residential Loan Application (URLA). The URLA requires that applicants declare any federal debt that is delinquent or in default. The URLA also requires applicants to disclose any liabilities, including tax debt, so a lender can assess the applicant’s ability to repay the proposed mortgage. While knowingly making false statements on an URLA is a federal crime and may deter some from lying about their tax debt, much of our work has focused on the inadequacies of self- reported information without independent verification. In fact, our comparison of the URLAs in eight mortgage files with IRS tax data revealed that five borrowers wrongly declared they were not, by FHA’s definition, delinquent or in default on federal tax debt (e.g., not in a valid IRS repayment agreement). In addition, six of the borrowers did not properly disclose the tax debts on the liabilities section of the URLA. Because of the federal statute that prohibits the disclosure of taxpayer information, we are unable to refer these cases to FHA for further investigation. Excerpts of the URLA where applicants are required to disclose any debts that may affect their eligibility for FHA mortgage insurance or their ability to repay the proposed mortgage are illustrated in appendix II.\nCAIVRS. FHA requires that lenders check all applicants against CAIVRS, HUD’s database of delinquent federal debtors, to identify federal debts. While it contains delinquent debt information from six agencies, such as the Department of Education and the Small Business Administration, CAIVRS does not contain federal tax information from IRS because statutory restrictions generally prohibit IRS from disclosing taxpayer information without the taxpayer’s consent. Two of the three lenders we spoke with mistakenly believed CAIVRS could be used to identify federal tax debt.\nCredit reports. Lenders told us that credit reports, which contain public records such as federal tax liens, were a primary method of identifying liens to indicate certain tax debts. However, delinquent federal taxes do not always appear on credit reports because IRS does not file liens on all tax debtors with property. In addition, many FHA borrowers are first-time home buyers and may not have real property on which IRS can place a lien. IRS records indicated that only two of our eight selected borrowers had tax liens filed against them at the time they obtained FHA mortgage insurance.\nLenders using only these FHA-required methods for identifying tax debt are missing an opportunity to more accurately determine whether applicants are eligible for FHA-insured mortgages, in part, because they do not have access to certain information. Access to the federal tax information needed to obtain the tax payment status of applicants is restricted under section 6103 of the Internal Revenue Code, which prohibits disclosure of taxpayer data to lenders in most instances. However, lenders may request information on federal tax debts directly from IRS if the applicant provides consent. To verify the income of self- employed and commission-income applicants, FHA requires that lenders obtain an applicant-signed consent form allowing the lender to verify the applicant’s income directly with IRS.\nThe three lenders we spoke with indicated they use IRS form 4506-T Request for Transcript of Tax Return to satisfy this requirement. FHA could also compel lenders to use this form or otherwise obtain borrower consent to identify tax debts. Files for four of our eight selected borrowers had a copy of the IRS Form 4506-T in their FHA mortgage files. The lenders for these borrowers used the 4506-T only to validate income by requesting federal tax return transcripts and did not use the form to request account transcripts that would have disclosed tax debt information. None of the eight mortgage files contained IRS tax account transcripts. Officials from each of the lenders we interviewed said it is their policy to use the 4506-T only to validate the income of these applicants, as this is the requirement under FHA policies. Officials from In two of the lenders used the form to verify income for all borrowers.contrast, officials from the third lender stated that they executed this form for a random sample of additional applicants for income verification, but noted that doing so for every applicant would be too burdensome.\nAs shown in figure 4, checking box 6a on the form allows a lender to obtain tax return transcripts for applicants, which do not disclose tax debt information. Checking box 6b would allow a lender to request and receive account transcripts. Account transcripts contain information on the financial status of the account, including information on any existing tax These transcripts would allow a lender to identify federal taxes debts. owed by any applicant, including debts not found on credit reports because a federal tax lien does not exist. Checking box 6c would allow a lender to obtain both tax return transcripts and account transcripts, which the lender could use to verify the income of an applicant as well as identify whether the applicant has federal tax debt. The lender may request account transcripts only for the current year and up to 3 prior years and must state the requested years on the form; transcripts beyond this are generally unavailable. Despite this limitation, the IRS form 4506-T could serve as a method for lenders to identify loan applicants with unpaid debt. Without such a method, lenders may approve federally insured mortgages for ineligible applicants with delinquent tax debt in violation of OMB and FHA policies.\nIRS returns the information requested on IRS form 4506-T within 10 business days at no expense to the requester, or within 48 hours through the IRS Income Verification Express Service (IVES) at an expense of $2.00, according to IRS officials.", "All three lenders we spoke with unknowingly violated FHA policies on requirements to investigate tax liens. Federal tax liens remain on a property until the associated tax debt has been paid in full or otherwise satisfied. The presence of a lien does not prevent an applicant from receiving FHA mortgage insurance because, per OMB and FHA policies, applicants are eligible for mortgage insurance if they are in a valid repayment agreement. However, according to FHA officials, FHA requires lenders to investigate whether the tax debt that caused the lien has been resolved or brought current under a repayment plan. If it has not, insurance must be denied. Lenders understood these policies to have exemptions for some applicants. FHA officials told us that endorsing a mortgage without determining applicant eligibility by investigating the status of tax debts related to federal tax liens for any applicant is improper due diligence.\nSpecifically, officials from two of the three lenders said they would approve FHA insurance for applicants with a federal tax lien on their credit report if IRS agreed to subordinate the lien to FHA. The lenders believed this was in accordance with FHA policy that indicates that tax liens may remain unpaid if the lien holder subordinates the lien to FHA. One of the lenders told us that this policy could potentially allow ineligible applicants with delinquent federal tax debt to obtain FHA mortgage insurance. However, FHA officials told us that this policy is only applicable if the lender has previously determined the applicant is eligible by investigating the lien (i.e., requesting verification from IRS that they have repaid their debt or are in a repayment agreement). See figure 5 for FHA policy excerpts.\nOfficials from the third lender said they would approve any applicant rated as “accept” by TOTAL without additional review or manual underwriting, even if the applicant’s credit report showed a tax lien. The officials believed this was consistent with FHA policy because TOTAL would not have granted an “accept” unless the application met FHA requirements. However, FHA officials told us that while TOTAL considers an applicant’s credit score in its risk evaluation, it does not consider other factors such as tax liens. FHA guidance states that the lender remains accountable for compliance with FHA eligibility requirements, regardless of the risk assessment provided by TOTAL.\nDue to potential shortcomings in FHA policies, lenders may misinterpret them, which could result in lenders approving federally insured mortgages for ineligible applicants with delinquent tax debt in violation of OMB and FHA policies. Our review was limited to mortgages obtained under the Recovery Act provisions; however, these policies are the same for all FHA mortgages. Our review included only a small percentage of all mortgages insured by FHA in 2009, and it is likely that FHA’s unclear policies may negatively affect some of the other mortgages.", "FHA has helped millions of families purchase homes through its single- family mortgage insurance programs. As more and more Americans turn to FHA to finance their homes, it is critical for FHA to ensure that it has policies in place to minimize financial risks to the federal government while meeting the housing needs of borrowers. Tax debtors who were ineligible for FHA mortgage insurance were still able to obtain insurance, despite FHA policies intended to prohibit this. Our review focused exclusively on individuals who benefitted from the Recovery Act, which only accounted for a small percentage of FHA borrowers in 2009; nevertheless we were able to identify thousands of tax debtors who obtained insurance. These debtors became seriously delinquent in their payments and lost their homes to foreclosures at a higher rate than those without tax debt.\nCurrent shortcomings we found in the capacity of available information sources to identify applicants’ tax debts could be addressed by improved access to federal tax information. But because FHA’s underwriting policies apply equally to all mortgage insurance applicants, it is likely that loans we did not review also included tax debtors. To ensure compliance with the confidentiality requirements associated with the disclosure of taxpayer information, FHA would need to consult with IRS to take action to identify tax debtors who are ineligible for FHA mortgage insurance, as has been done to verify the income of certain applicants. This would include developing appropriate criteria and safeguards to ensure taxpayer privacy and minimize undue approval delays. In addition, strengthening FHA policies and their interpretation by lenders can help prevent ineligible tax debtors from continuing to receive the benefit of FHA insurance. To the extent that borrowers with tax debt represent additional risk, FHA could minimize the potential for this risk by taking steps to address the issues identified in this report.", "The Secretary of HUD should direct the Assistant Secretary for Housing (Federal Housing Commissioner) to implement the following two recommendations:\nConsult with IRS to develop written policies requiring lenders to collect and evaluate IRS documentation appropriate for identifying ineligible applicants with unpaid federal taxes, while fully complying with the statutory restriction on disclosure of taxpayer information. For example, FHA could require lenders to obtain consent from borrowers to allow FHA and its lenders to verify with IRS whether recipients of FHA insurance have unpaid federal taxes.\nProvide FHA lenders with revised policies or additional guidance on borrower ineligibility due to delinquent federal debts and tax liens to more clearly distinguish requirements for lenders to investigate any indication that an applicant has federal tax debt (such as a federal tax lien) to provide reasonable assurance that ineligible borrowers do not receive FHA mortgage insurance.", "We provided a draft of this report to IRS and HUD for review and comment. IRS did not have any comments in response to the draft report. The Acting Assistant Secretary for Housing (Federal Housing Commissioner) provided a written response which is reprinted in appendix III.\nIn HUD’s response, the agency agreed with our recommendations and acknowledged that current policies and procedures may fail to identify all potential borrowers with delinquent tax debt. To address our recommendations, FHA stated that it would contact IRS in an effort to establish executable policy that may identify delinquent tax debtors. Further, the agency affirmed that it would execute changes to current FHA requirements for lenders in order to address the concerns discovered through the audit. Included in its written response, HUD provided technical comments which were incorporated into this report. Specifically, HUD recommended that we change the terminology used to characterize federal tax debts. According to HUD, this suggested change would provide clarity and avoid the appearance that FHA knew of delinquent tax debts. We agreed to make the recommended change. However, for certain cases included in our review, evidence indicates that FHA-approved lenders were aware of tax debts.\nAs agreed with your offices, unless you publicly release its contents earlier we plan no further distribution of this report until 30 days from its issue date. At that time, we will send copies of this report to interested congressional committees, the Secretary of the Treasury, the Secretary of Housing and Urban Development, the Commissioner of Internal Revenue, the Acting Assistant Secretary for Housing (Federal Housing Commissioner), and other interested parties. The report is also available at no charge on the GAO Web site at http://www.gao.gov. If you have any questions concerning this report, please contact Gregory D. Kutz at (202) 512-6722 or kutzg@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Major contributors to this report are acknowledged in appendix IV.", "Our objectives were to determine: (1) the extent to which tax debtors benefited from the Recovery Act’s provisions for increased Federal Housing Administration (FHA) loan limits and the First-Time Homebuyer Credit (FTHBC); and (2) what challenges, if any, FHA faces in preventing ineligible tax debtors from receiving mortgage insurance.\nTo determine the extent to which individuals with unpaid tax debt benefited from the Recovery Act’s provision for increased loan limits on FHA mortgage insurance, we obtained and analyzed electronic data from FHA’s Single Family Data Warehouse (SFDW) as of September 2011. We also obtained and analyzed tax debt data from the Internal Revenue Service (IRS) as of June 30, 2010. Using the taxpayer identification numbers (TIN) present in these data, we electronically matched IRS’s tax debt data to the population we identified of Recovery Act borrower Social Security numbers (SSN) from the SFDW. The Recovery Act stipulated that revised FHA loan limits for 2009 be set in each county at the higher of the loan limits established under the Economic Stimulus Act of 2008 (ESA) or those established under the Housing and Economic Recovery Act of 2009 (HERA). Since loan limits would have reverted to HERA- established rates if the Recovery Act had not been promulgated, we considered an FHA borrower to be part of our Recovery Act population if he or she obtained mortgage insurance in 2009 at a value greater than would have been authorized under HERA. FHA officials agreed with this methodology.\nTo determine the extent to which individuals with unpaid taxes received the FTHBC under the Recovery Act, we obtained and analyzed FTHBC transaction data from IRS as of July 10, 2010, and then electronically matched IRS’s tax debt data to the population of individuals who claimed the FTHBC under the Recovery Act. Since IRS’s FTHBC data do not contain home purchase dates, we were unable to isolate all individuals who benefitted from the FTHBC under the Recovery Act. As a result, we used the SFDW to obtain home purchase dates to determine which FTHBCs were awarded under the Recovery Act. We electronically matched the FTHBC transaction data TINs with the SSNs in the SFDW and extracted mortgages with closing dates from January 1, 2009, through November 30, 2009, to identify a population of Recovery Act FTHBC recipients with FHA mortgage insurance. We identified 722,003 FTHBC claims associated with the Recovery Act for individuals who financed their home using FHA mortgage insurance, and in our prior work we found that there were 1,669,081 FTHBC claims filed under the Recovery Act.approximately 43 percent of all FTHBCs claimed under the Recovery Act.\nTherefore, our analysis includes two groups: 1. individuals who received FHA mortgage insurance under the higher limits authorized under the Recovery Act, and 2. individuals who received the FTHBC under the Recovery Act and obtained FHA mortgage insurance of any value.\nFurther, to determine the extent to which these Recovery Act FTHBC recipients with unpaid tax debt received federal tax refunds in the same year they claimed the FTHBC, we obtained and analyzed federal tax refund data from IRS from fiscal years 2009 and 2010.matched the refund data TINs with the TINs we identified to be FHA We electronically mortgage insurance borrowers who claimed the FTHBC under the Recovery Act while having unpaid federal tax debt.\nTo avoid overestimating the amount owed by borrowers who benefitted from the increased loan limits for FHA mortgage insurance under the Recovery Act and FTHBC recipients with unpaid federal tax debts, and to capture only significant tax debts, we excluded from our analysis tax debts meeting specific criteria to establish a minimum threshold in the amount of tax debt to be considered when determining whether a tax debt is significant. The criteria we used to exclude tax debts are as follows: tax debts IRS classified as compliance assessments or memo accounts for financial reporting, tax debts from calendar years 2009 and 2010 tax periods, tax debts that were assessed by IRS after the mortgage insurance was issued, and tax debts from individuals with total unpaid taxes of less than $100.\nThe criteria above were used to exclude tax debts that might be under dispute or generally duplicative or invalid, and tax debts that were recently incurred. Specifically, compliance assessments or memo accounts were excluded because these taxes have neither been agreed to by the taxpayers nor affirmed by the court, or these taxes could be invalid or duplicative of other taxes already reported. We also excluded tax debts from calendar years 2009 and 2010 tax periods to eliminate tax debt that may involve matters that are routinely resolved between the taxpayers and IRS, with the taxes paid or abated within a short time. We excluded any debts that were assessed by IRS after the mortgage insurance was received because those debts would not have been included in IRS records at the time the mortgage insurance was issued. We also excluded tax debts of less than $100 because we considered them insignificant for the purpose of determining the extent of taxes owed by Recovery Act recipients. Using these criteria, we identified at least 6,327 Recovery Act recipients with federal tax debt.\nTo provide examples of Recovery Act recipients who have unpaid federal taxes, we selected a non-probability sample of Recovery Act beneficiaries for a detailed review. We used the selection criteria below to provide examples that illustrate the sizeable amounts of taxes owed by some individuals who benefitted from the Recovery Act:\nWe selected nine individuals who benefitted from increased FHA mortgage limits who had (1) large amounts of unpaid federal tax debt (at least $100,000), (2) at least three delinquent tax periods, and (3) indications of IRS penalties or home foreclosures.\nWe also selected nine individuals who benefitted from the FTHBC and obtained FHA mortgage insurance of any value who had (1) large amounts of unpaid federal tax debt (at least $50,000), (2) at least five delinquent tax periods, (3) FHA mortgage insurance of $200,000 or more, and (4) indications of IRS penalties or home foreclosures.\nWe requested IRS notes, detailed account transcripts, and other records from IRS as well as mortgage files from FHA for these 18 individuals. Of the 18 total requested cases, FHA provided us information that only allowed us to fully analyze 8 of them. Although we did not receive complete information necessary to fully analyze the remaining cases, we were able to assess all 18 for limited purposes (e.g., nonfiling of tax returns). We also selected 9 additional cases of FTHBC recipients who received tax refunds to determine how they were able to receive federal tax refunds while having unpaid federal taxes. For these 9, we selected individuals who had (1) at least $5,000 in unpaid federal tax debt, (2) at least three delinquent tax periods, and (3) a federal tax refund value of at least $5,000. All of our cases were selected to illustrate the sizeable amounts of taxes owed by some individuals who benefitted from the Recovery Act. None of our case selections provide information that can be generalized beyond the specific cases presented.\nTo analyze the controls FHA has in place to prevent ineligible individuals with unpaid federal tax debt from receiving mortgage insurance, we reviewed FHA’s lender credit analysis and underwriting handbook, mortgagee letters, and reports from GAO and HUD’s Office of Inspector General. We also interviewed officials from FHA’s Office of Single Family Housing and Office of the Chief Information Officer.\nTo understand how private lenders interpret and implement FHA’s guidelines for preventing individuals with delinquent federal tax debt from receiving mortgage insurance, we interviewed senior-level officials from three large FHA-approved lenders. We selected four lenders based on the following criteria: (1) we selected the two largest lenders in terms of the number of FHA loans approved in 2009, and (2) we selected 2 of the top 10 largest FHA lenders that approved a comparable number of FHA loans in 2009 but varied in proportion of loans awarded to individuals with federal tax debt. However, the lender chosen for having a high proportion of loans awarded to individuals with federal tax debt declined to speak with GAO officials. In total, the three lenders we interviewed endorsed about 15 percent of all FHA mortgages for homes purchased in 2009.", "To assess the reliability of record-level IRS unpaid assessments and FTHBC data, we relied on the work we performed during our annual audit of IRS’s financial statements and interviewed knowledgeable IRS officials We also performed electronic testing of about any data reliability issues.required FTHBC elements. While our financial statement audits have identified some data reliability problems associated with tracing IRS’s tax records to source records and including errors and delays in recording taxpayer information and payments, we determined that the data were sufficiently reliable to address this report’s objectives.\nTo assess the reliability of record-level FHA mortgage insurance data, we reviewed documentation from FHA, interviewed FHA officials who administer these information systems and officials who routinely use these systems for mortgage insurance management, verified selected data across multiple sources, and performed electronic testing of required elements. We determined that the data were sufficiently reliable for our purposes.\nWe conducted this performance audit and related investigations from April 2011 through May 2012. We performed this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our audit findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Two of the three figures below represent sections of the Uniform Residential Loan Application (URLA) where applicant’s are required to disclose any debts that may affect their eligibility for FHA mortgage insurance or their ability to repay the proposed mortgage. The third excerpt lists the consequences of making a false statement on the URLA. Knowingly making any false statement on the URLA is a federal crime punishable by fine or imprisonment.", "", "", "", "In addition to the contact named above, Matthew Valenta, Assistant Director; Emily C.B. Wold, Analyst-in-Charge; Jamie L. Berryhill; Jeff McDermott; Maria McMullen; Wayne Turowski; Susan B. Wallace; and Timothy Walker made significant contributions to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 1, 2, 2, 1, 1, 1, 1, 2, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "", "", "", "h0_full h2_full", "h0_full h2_full", "h2_full h1_full", "", "", "", "", "", "h2_full", "", "", "", "", "", "" ] }

{ "question": [ "What tax debtors were insured by FHA in over $1.44 billion in mortgages?", "How can delinquent tax debtors be ineligible for FHA mortgage insurance?", "Why could GAO not determine proportion of borrowers who were ineligible for FHA insurance?", "What did GAO find out?", "How did some ineligible tax debtors receive FHA mortgage insurance?", "Why might lenders lend to ineligible people?", "How could lenders more accurately lend to the right people?", "What did the lenders GAO spoke with believe about their lending?", "What did the Recovery Act do?", "What was GAO asked to do?", "How did GAO get information to complete its tasks?", "Why was GAO only able to completely evaluate 8 of 18 individuals?" ], "summary": [ "This analysis includes tax debtors who (1) benefited from FHA’s increased loan limits, or (2) claimed the FTHBCs and received FHA mortgage insurance of any value.", "Federal policy makes delinquent tax debtors ineligible for FHA mortgage insurance unless they repay their debt or are in a valid repayment agreement with the Internal Revenue Service (IRS), but the FTHBC, like all tax credits, was available to those who qualified, regardless of their tax debt.", "GAO could not determine the proportion of borrowers who were ineligible for FHA insurance because GAO could not systematically identify which of the 6,327 borrowers were in valid repayment agreements using the data GAO received from IRS.", "However, GAO did find that 5 of the 8 borrowers completely evaluated were ineligible because they were not in valid repayment agreements at the time they obtained FHA mortgage insurance. In addition, GAO found that Recovery Act borrowers with unpaid taxes had foreclosure rates two to three times greater than borrowers without unpaid taxes, which potentially represents an increased risk to FHA.", "Some ineligible tax debtors received FHA mortgage insurance, in part, due to shortcomings in the capacity of FHA-required documentation to identify tax debts, and shortcomings in other policies that lenders may misinterpret.", "Lenders must perform steps to identify an applicant’s federal debt status, but sources commonly used, such as the loan application and credit report, do not reliably indicate an applicant’s tax debt.", "Lenders are already required to obtain such consent through an IRS form they use to validate the income of some applicants. This same form could also be used to obtain permission from applicants to obtain reliable tax-debt information directly from IRS, but doing so is not addressed in FHA policies. Requiring lenders to collect more reliable information on tax debts could better prevent ineligible tax debtors from obtaining FHA mortgage insurance.", "The lenders GAO spoke with believed they were in compliance with FHA’s policies when they provided FHA-insured loans to applicants with tax liens and no repayment agreements, but FHA officials indicated otherwise.", "Under a Recovery Act provision that increased mortgage insurance loan limits, FHA insured $20 billion in mortgages for 87,000 homeowners. The Recovery Act also provided for the awarding of an estimated $12 billion of FTHBCs to 1.7 million individuals.", "GAO was asked to determine the (1) extent to which tax debtors benefited from the Recovery Act’s provisions for increased FHA loan limits and the FTHBC, and (2) challenges, if any, FHA faces in preventing ineligible tax debtors from receiving mortgage insurance.", "Using IRS and FHA data, GAO identified Recovery Act recipients and compared them to federal tax debtors as of June 30, 2010. GAO reviewed relevant policies and interviewed agency officials and lenders. GAO also reviewed detailed IRS and FHA documents for a nonrepresentative selection of 18 individuals who received FHA mortgage insurance.", "Due to data availability and other factors, GAO was able to completely evaluate only 8 of 18 individuals on their eligibility for FHA mortgage insurance." ], "parent_pair_index": [ -1, -1, -1, 2, -1, -1, 1, -1, -1, -1, 1, 1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 0, 0, 0, 0 ] }

{ "title": [ "", "Introduction", "Brief History of AFDC and the Welfare Reform Debates", "The Early Years: 1930s to mid-1950s", "The mid-1950s to the 1960s: Self-Sufficiency and Work", "The Late 1960s and 1970s: Negative Income Tax and Guaranteed Incomes", "The 1980s: Devolution and Early Experiments", "1992 to 1996: \"Ending Welfare As We Know It\"", "President Clinton's Proposal", "The Contract with America", "A Block Grant for Temporary Assistance to Needy Families", "Welfare Reform Added to the 1995 Budget Bill—First Veto of Welfare Reform", "Final Agreement on H.R. 4 and Second Veto of Welfare Reform", "Legislation Action in 1996", "Major Differences Between AFDC and TANF", "Overview of Post-1996 TANF Legislation", "Balanced Budget Act of 1997", "Attempts at Reauthorization: 2002-2005", "The Deficit Reduction Act of 2005", "American Recovery and Reinvestment Act of 2009", "TANF Legislation from 2010 to 2019", "Detailed Legislative Chronology", "1996", "1997", "1998", "1999", "2000", "2002", "2003", "2004", "2005", "2006", "2008", "2009", "2010", "2011", "2012", "2013", "2014", "2015", "2016", "2017", "2018", "2019" ], "paragraphs": [ "", "The Temporary Assistance for Needy Families (TANF) block grant was created by the 1996 welfare reform law, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 ( P.L. 104-193 ). It replaced the program of cash assistance for needy families that dated back to the New Deal, Aid to Families with Dependent Children (AFDC), and some of its related programs. The enactment of the 1996 welfare reform law was the culmination of a debate about how to overhaul programs providing cash assistance to needy families with children—specifically, those headed by single mothers—that spanned four decades: from the 1960s to the 1990s.\nThe 1996 welfare law provided both program authority and funding (appropriations) for TANF through the end of FY2002. Most of the legislative activity on TANF since 2002 has been to extend the program funding and financing authority for TANF. Most of these extensions did not change TANF policy, though policy changes were included in extensions enacted in 2006, 2010, and 2012. The TANF Extension Act of 2019 ( P.L. 116-4 ) extended TANF funding through June 30, 2019.\nThis report will begin with a brief overview of the history of the AFDC program and the welfare reform debates of the 1960s to the 1990s. That overview will be followed by a summary of the 1996 welfare reform law and the changes made since 1996. The report concludes with a detailed chronology of TANF legislation.", "The modern form of cash assistance for needy families with children dates back to the Progressive Era of the early 1900s, and state- or locally funded mothers' pensions for \"fatherless\" families. The purpose of these programs was to permit these mothers to stay at home and care for their children.\nFederal funding for these programs was first provided in the Social Security Act of 1935 (P.L. 74-271) through the Aid to Dependent Children (ADC) program, later renamed the Aid to Families with Dependent Children program (AFDC). Many of the later changes, and the welfare reform debates of the 1960s to the 1990s, focused on issues of work and whether providing cash to nonworking single mothers served as disincentives for both work and marriage.\nHowever, the history of the ADC/AFDC program touched many other facets of the well-being of children and their families. ADC/AFDC provided federal funding for social services, medical assistance, child care, and foster care. These were later spun off into separate programs, with dedicated federal funding. While much of the focus of the welfare reform debates was on the single mother (custodial parent), ADC/AFDC policy also touched on noncustodial parents. The Child Support Enforcement (CSE) program was created, in great part, to reimburse states and the federal government for the costs of providing assistance to single mothers, and making noncustodial fathers responsible for these costs. CSE has evolved into a program that distributes child support payments collected from noncustodial parents to custodial parents, mostly to families that have never received or are no longer receiving cash assistance.", "The Social Security Act of 1935 (P.L. 74-271) created the social insurance programs of Old Age Benefits and unemployment compensation, where workers earned protection against lost wages because of old age and involuntary unemployment. It also created federal funding for state programs providing assistance for low-income aged persons, blind persons, and programs for needy families with children where one parent (usually the father) was unable to support the family.\nThe ADC program provided grants to the states to help finance programs to assist children who were \"deprived of parental support or care by reason of the death, continued absence from the home, or physical or mental incapacity of a parent\" and who lived with the other parent or a relative. States ran the program and determined eligibility for its benefits. The federal government provided funding for a portion of the expenditures made in state ADC programs.\nThe legislative history of the 1935 act explicitly stated that the purpose of ADC payments was to permit mothers to stay at home rather than work:\nThe very phrases \"mothers' aid\" and \"mothers' pensions\" place an emphasis equivalent to misconstruction of the intention of these laws. These are not primarily aids to mothers but defense measures for children. They are designed to release from the wage-earning role the person whose natural function is to give her children the physical and affectionate guardianship necessary not alone to keep them from falling into social misfortune, but more affirmatively to rear them into citizens capable of contributing to society.\nThe 1935 Social Security Act left administration and many decisions about eligibility to the states. States also determined ADC benefit amounts.\nIn the early years, families receiving ADC benefits were often headed by a widow or had a disabled father. However, over time the natures of both the program and the families it aided changed. The Social Security Amendments of 1939 (P.L. 76-379) added \"survivor\" benefits to the program of old age benefits, renaming it Old Age and Survivors Insurance. Survivor benefits, like old age benefits, were social insurance benefits earned through work in a covered job and paid to spouses and children upon the death of a worker or retiree. This provided an alternative, and more universal, means of aiding widows and their children. The Social Security Amendments of 1956 (P.L. 84-881) added Disability Insurance to Old Age and Survivor Insurance, with the combined program now commonly referred to as Social Security. The 1956 amendments also expanded the types of jobs covered by Social Security. These changes, too, provided more universal means of aiding the types of families that were originally assisted by ADC.\nThe families receiving ADC increasingly were families where the father was alive but absent. The caseload also became increasingly nonwhite.", "The issue of whether single mothers should work was also much debated. The intent of ADC to allow single mothers to stay home and raise their children was often met with resistance at the state and local levels. It was also contrary to the reality that low-income women, particularly women of color, were sometimes expected to, and often did, work. Further, the increase in women's labor force participation in the second half of the 20 th century—particularly among married white women—eroded support for payments that permitted single mothers to remain at home and out of the workforce.\nThe Social Security Amendments of 1956 (P.L. 84-881) added the goals of creating \"self-sufficiency\" and strengthening family life to ADC, along with funding for services that would seek to achieve these goals.\nP.L. 87-31, enacted in 1961, first made cash assistance benefits available to families headed by two able-bodied parents at state option. This authority was temporary at first (in response to an economic downturn), but was later made permanent. In 1962, the program was renamed Aid to Families with Dependent Children. The 1962 amendments, the Public Welfare Amendments of 1962 (P.L. 87-543), also established a community work and training program for adult AFDC recipients, largely intended for men in two-parent families.\nThe Social Security Amendments of 1967 (P.L. 90-248) enacted both financial incentives for adult recipients to work and, for the first time, requirements for AFDC mothers to work. These amendments required states to disregard from a family's countable income some earnings when determining its \"need\" and benefits. The amendments also created a new work program under AFDC—the Work Incentive Program (WIN)—that expanded the population served by an AFDC-related work program to women.", "The late 1960s marked the beginning of the welfare reform debates, with proposals put to Congress to completely replace AFDC with a different type of program. This occurred as AFDC's costs and the number of families receiving its benefits increased. In 1964, fewer than 1 million families received AFDC. By 1973, the AFDC rolls had increased to 3.1 million families.\nFor the decade beginning in 1969, these proposals were based on the \"negative income tax\" (NIT) concept. The NIT proposals would have provided a guaranteed income to families who had no earnings (the \"income guarantee\" that was part of these proposals). For families with earnings, the NIT would have provided for a gradual reduction in the benefit as earnings increased.\nPresident Nixon proposed to replace AFDC with an NIT-type program in 1969, the Family Assistance Plan (FAP). This proposal also would have nationalized the program, with the federal government paying the income guarantee and states able to supplement the federal guarantee with their own funds. This legislation was not enacted; it passed the House twice but never passed the Senate. In 1972, the Senate Finance Committee proposed to guarantee jobs—rather than income—for parents of school-age children. That proposal, too, did not ultimately pass.\nPresident Carter also proposed an NIT-based cash assistance program coupled with a public service job program in 1977. President Carter's proposals died in committee (they were never reported to either the full House or Senate). A less ambitious proposal from President Carter in 1979 passed the House but did not pass the Senate.", "The proposals to change AFDC made by President Reagan at the beginning of his Administration differed sharply from the earlier welfare reform proposals. They emphasized devolution to the states in decisionmaking, rather than nationalization. They also emphasized requirement to work, rather than work incentives. The Omnibus Budget Reconciliation Act of 1981 ( P.L. 97-35 ) limited the earnings disregard that was enacted in 1967, ending benefits for many who were on the rolls and working. It also gave states expanded authority to require recipients to engage in community service or work experience programs (unpaid work) in exchange for their AFDC benefit. In 1982, President Reagan proposed to completely devolve cash assistance for families with children. That proposal did not pass.\nIn the 1980s, there was increasing attention to \"welfare dependency.\" Research at that time showed that while many mothers were on cash assistance for a short period of time, a substantial minority of mothers remained on the rolls for long periods. Additionally, policymakers began to focus on the possibility that a single mother who left welfare for work might be financially worse off than if she did not work and continued to collect benefits. Such a single mother, who might command relatively low wages in the labor force, risked losing medical assistance from Medicaid for herself and her children and faced work-related costs such as child care.\nThe Family Support Act of 1988 ( P.L. 100-485 ) established in AFDC the notion of mutual responsibility between the cash assistance recipient and the state. It created the Job Opportunities and Basic Skills (JOBS) Training program, which provided employment services, education, and training for cash assistance recipients. The Family Support Act also mandated that states provide benefits for two-parent families, though it was on more restrictive terms than those for single-parent families.\nThe Family Support Act also established the Transitional Medical Assistance (TMA) program that continued Medicaid coverage for a period of time for those who otherwise would have lost eligibility for Medicaid when moving from welfare to work. Further, it guaranteed child care for AFDC recipients engaged in work activities and provided time-limited (transitional) child care for those who left AFDC for work. Subsequent legislation, enacted in 1990, further expanded child care by creating a new block grant for those without a connection to AFDC, new matching funds to subsidize child care for those \"at risk\" of receiving AFDC, and a major expansion of the Earned Income Tax Credit (EITC).\nAdditionally, an era of experimentation on \"welfare-to-work\" initiatives began in the 1980s. President Reagan proposed legislation in 1987 that would have authorized states to conduct demonstration projects that could have included AFDC and any other low-income assistance programs. These demonstrations would have been overseen at the federal level by an Interagency Low-Income Opportunity Board. Though the proposed legislation was not enacted, the Reagan Administration, and subsequently the Administrations of George H. W. Bush and Bill Clinton, issued waivers of AFDC requirements under another provision of law. The experimentation on \"welfare-to-work\" initiatives found that requiring participation in work or job preparation activities could effectively move single mothers off the benefit rolls and into jobs.", "The number of families receiving cash assistance had been fairly stable during the period from 1982 to 1988. However, beginning in the summer of 1989 the number of families receiving cash assistance began to increase once again.", "During the 1992 presidential campaign, then-candidate Bill Clinton promised to \"end welfare as we know it.\" He stressed time-limited aid and expanded financial supports for those who did go to work. The 1993 tax bill further expanded the EITC.\nPresident Clinton made his welfare reform proposal in June 1994. It would have phased in a two-year limit on AFDC receipt without work, followed by required participation in a wage-paying work program after two years. It would also have expanded funding for training within the first two years. It was estimated to increase child care costs for participants in the JOBS program or the wage-paying work program. The proposal would have barred AFDC to unwed minor mothers.\nPresident Clinton's proposal was never considered by either the House or the Senate. However, during the period before the enactment of the 1996 welfare reform law, the Administration granted waivers of AFDC law to 43 states allowing them to engage in \"welfare reform\" demonstration projects. Some of these waivers were for small-scale demonstrations, but some were for statewide demonstrations of state-designed cash assistance and work programs.", "Welfare reform was one of 10 legislative initiatives that was included in the \"Contract with America,\" developed by Republicans for the 1994 congressional campaign. The welfare proposal in the Contract with America would have required recipients to work after two years of AFDC (like the Clinton Administration proposal), but it also would have imposed a lifetime five-year limit on benefits. It would have barred AFDC to unwed minor mothers and would have imposed a \"family cap,\" not increasing benefits for new babies born into AFDC families. Funding for AFDC and child care would have been capped, with states given the option to receive AFDC as a block grant.", "H.R. 4 , as introduced at the start of the 104 th Congress, was the Contract with America proposal. However, immediately following the 1994 congressional election, House Republicans worked with several Republican governors to craft an alternative proposal that would block grant funding for AFDC and other social programs. The welfare reform legislation considered by House committees reflected the block grant proposals rather than the original H.R. 4 legislation. Legislation reported from the House committees was bundled into an omnibus welfare reform bill that included the end of AFDC and its replacement with TANF. That bill, the Personal Responsibility Act, substituting for the original text of H.R. 4 , passed the House on March 24, 1995.\nH.R. 4 , as passed by the House, formed the basis for all later welfare reform bills considered and passed by the 104 th Congress. It would have\nreplaced AFDC and related programs of Emergency Assistance, and the work and training program for AFDC recipients, with a block grant to the states for Temporary Assistance for Needy Families; allotted TANF basic block grant funds to states based on recent expenditures in AFDC and related programs; allowed states to spend their TANF grants on a broad range of benefits and services; gradually phased in a requirement that 50% of the caseload be either working or engaged in activities, but limited the ability of states to count education and training toward that target; the requirement could also be met, fully or partially, through caseload reduction (i.e., the caseload reduction credit); established a five-year lifetime limit on cash assistance; prohibited unwed minor parents from receiving cash assistance; prohibited states from increasing cash benefits when a new baby was born to a family already on the rolls (the family cap); and limited need-tested benefits for noncitizens in need-tested programs, including requiring that noncitizens be in the United States for five years before being eligible for TANF.\nThe House-passed bill also consolidated AFDC-related child care funding with the block grant created in 1990, and it increased funding for child care. However, it ended the guarantee that those transitioning from welfare-to-work be provided child care.\nThe Senate Finance Committee ordered H.R. 4 reported in May 1995. The Finance Committee bill adopted a similar structure to the House bill. Different from the House bill, however, the Senate Finance Committee bill\nwould have continued a separate employment and training program; did not include a family cap; and did not include the prohibition on benefits to unwed minor parents.\nDisputes about the committee-reported measure over items such as the distribution of funds held up consideration of the bill until August and September of 1995. Negotiations between party leaders in the Senate, Senator Robert Dole for the Republicans and Senator Thomas Daschle for the Democrats, produced an accord that also adopted the basic structure of the House bill but made some substantial modifications. The compromise bill included\na requirement that states continue to spend some of their own funds (a \"maintenance of effort,\" or MOE requirement) in order to receive their full block grant funds; supplemental grants to states with high rates of population growth and/or low historical welfare spending per poor child; a contingency fund for states experiencing economic need; a provision to allow aid to unwed minor parents who were living in an adult supervised setting; and \"charitable choice\" provisions to permit increased participation of faith-based organizations in the delivery of welfare services.\nThe Senate passed its version of H.R. 4 on September 19, 1995.", "Following passage of welfare reform legislation in the Senate, both the House and Senate began the process of crafting legislation to implement the budget adopted for FY1996. On October 17, 1995, the House Budget Committee reported its budget reconciliation bill ( H.R. 2491 ), which included the end of AFDC and its replacement with TANF. It passed the House on October 26, 1995. The Senate version of the budget reconciliation bill also generally included the Senate-passed version of the TANF proposal, and it passed on October 28, 1995. Conferees came to an agreement on the budget reconciliation bill—including the welfare reform provisions—on November 17, 1995. The House- and Senate-approved conference agreement was vetoed by President Clinton on December 6, 1995. President Clinton's veto message highlighted his opposition to cuts to Medicare, Medicaid, the EITC, and child nutrition programs. The President said:\nOn welfare reform, I strongly support real welfare reform that strengthens families and encourages work and responsibility. But the provisions in this bill, when added to the EITC cuts, would cut low-income programs too deeply.", "With the veto of the budget reconciliation bill, attention turned toward finalizing House-Senate agreements on the stand-alone welfare reform bill ( H.R. 4 ). A final conference report on H.R. 4 was filed on December 20, 1995. The final agreement included many of the modifications to TANF that were adopted in the Senate, including\na compromise maintenance of effort requirement; supplemental grants to states with high population growth and/or low historical spending per poor child, but with limited funding; and a state option to impose a family cap.\nPresident Clinton vetoed H.R. 4 on January 9, 1996. In vetoing the bill, the President remarked:\nThe final welfare reform legislation should provide sufficient child care to enable recipients to leave welfare to work; reward States for placing people in jobs; restore the guarantee of health coverage for poor families; require States to maintain their stake in moving people from welfare to work; and protect States and families in the event of economic downturn and population growth.\nThe President also objected to budget cuts not related to the TANF proposal, such as provisions that would have cut spending in food stamps (now the Supplemental Nutrition Assistance Program), benefits for disabled children, benefits for noncitizens, school lunches, and foster care and adoption assistance.", "With welfare reform twice vetoed, the National Governor's Association (NGA) in February 1996 adopted a policy position asking for additional child care funds, additional contingency funds for recessionary periods, and bonus payments for states that meet certain employment outcomes. In May 1996, House and Senate Republicans introduced bills that reflected the policies of the vetoed H.R. 4 and provided additional funding for child care, the TANF contingency fund, and performance bonuses.\nH.R. 3734 , the budget reconciliation bill for that year, included these welfare reform provisions together with a proposal to revise Medicaid. H.R. 3734 passed the House on July 18, 1996. The Senate made a key modification to the bill by dropping its Medicaid provisions. The welfare reform provisions remained in H.R. 3734 , and it passed the Senate on July 23, 1996. A conference agreement on the bill was filed July 30, 1996; it passed the House on July 31, 1996, and the Senate on August 1, 1996.\nPresident Clinton signed the legislation, known as the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA; P.L. 104-193 ), into law on August 22, 1996.", "The 1996 welfare reform law repealed AFDC and some of its related programs and replaced it with the TANF block grant. Funding for the AFDC-related child care programs was consolidated into a separate funding stream dedicated to child care. Some things did not change with the 1996 law. As was the case with AFDC, TANF programs are run by states (and sometimes localities), and they determine the maximum benefits under the programs and set the income eligibility thresholds.\nTable 1 summarizes some of the major differences between AFDC and TANF. It should be noted that at the time of enactment of the 1996 law many states were operating under waivers of the AFDC rules that related to cash assistance. These waivers imposed time limits, set different rules for counting earnings than did the AFDC federal rules, and set different rules for work or participation in job activities. TANF permitted states to continue programs operated under waivers, even if the provisions of the waiver were inconsistent with TANF rules. The last of these waivers expired in 2007.", "", "The Balanced Budget Act of 1997 (BBA97, P.L. 105-33 ), enacted one year after the 1996 welfare reform law, made a number of changes to TANF. It created a program providing additional funding dedicated to financing work activities. The Welfare-to-Work Grant program (WTW) provided $3 billion for two years, FY1998 and FY1999. Under the program, funding was divided, with 75% provided to states and local workforce areas through a formula and 25% dedicated to competitive grants. The program was originally targeted at the hardest to serve population on TANF and similarly disadvantaged noncustodial parents. The WTW grant program was administered by the Department of Labor (DOL), not the Department of Health and Human Services (HHS), which administers TANF. Subsequent legislation relaxed requirements for targeting services to the hardest to serve, and as funds were spent more slowly than anticipated, the deadline for expenditures was extended.\nThe BBA97 made several other permanent changes to TANF, including\npermitting a greater percentage of recipients to be counted as engaged in work through education and training, but retaining a limit on counting such participation; setting a statutory limit on transfers from TANF to the Social Services Block Grant at 10%; and making technical corrections to the 1996 welfare reform bill, including technical corrections to TANF.", "In February 2002, President George W. Bush made proposals for the reauthorization of the TANF block grant and related welfare reform proposals. The document, Working for Independence, outlined a five-year reauthorization that would have\nfunded the basic TANF block grant at the same level provided from FY1997 through FY2002 for an additional five years; provided mandatory child care funding through FY2007 at its FY2002 level (with no inflation or other adjustment over the period FY2003-FY2007); provided dedicated funding for grants to promote healthy marriage; raised the work participation standard to a minimum of 70% of families with a \"work-eligible individual\" that must be working or engaged in activities; required 40 hours per week of work or engagement in activities for full credit toward meeting the standard, but allowed for partial credit for hours less than 40 hours per week; allowed states to count rehabilitative activities for three months on the rolls, but narrowed the activities that counted after three months to work or community service or work experience; and ended the caseload reduction credit against the work standards, replacing it with a credit for recipients who left the rolls for work.\nThe Bush Administration proposals were incorporated (with some modifications) into bills that passed the House in 2002 and 2003: H.R. 4737 (107 th Congress) and H.R. 4 (108 th Congress). A major difference between the Bush Administration proposal and the House proposals of 2002 and 2003 was that the House proposals retained the caseload reduction credit and provided extra credit to states that had large historical caseload reductions. Following House action, the Senate Finance Committee reported substantially differing versions of each bill. The Senate Finance Committee bills did not narrow the activities that could be counted toward the work participation standard after three months, and they expanded the ability of states to count participation in rehabilitative activities toward the TANF work participation standard. The Senate Finance Committee bills would have replaced the caseload reduction credit with a credit based on employed leavers, families diverted from the rolls, and families receiving work supports. The full Senate never acted on either of the Senate Finance Committee-reported bills.\nIn the absence of reauthorization legislation, TANF program and funding authority was extended on a temporary basis 13 times from 2002 to 2006.", "The early part of 2005 again saw committee action on legislation to reauthorize TANF. On March 9, 2005, the Senate Finance Committee ordered reported legislation that became S. 667 (109 th Congress). The following week, the House Ways and Means Committee's Subcommittee on Human Resources considered H.R. 240 and sent it to the full committee. However, further action on TANF reauthorization did not occur until the fall of 2005, when the House and Senate began considering legislation under the budget reconciliation process.\nThe House passed as part of their reconciliation bill (the House amendment to S. 1932 ) the TANF reauthorization bills that essentially incorporated the proposals passed by the House in 2002 and 2003 and were contained in H.R. 240 . The Senate version of the reconciliation bill contained no TANF provisions.\nThe conference report on the budget reconciliation bill included TANF provisions different from those that passed the House. The Deficit Reduction Act of 2005 (DRA, P.L. 109-171 ) included (1) a long-term extension of TANF funding, through the end of FY2010; (2) the elimination of performance bonuses to states; (3) the establishment of a $150 million fund for research and competitive grants on healthy marriage and responsible fatherhood, with $100 million per year for healthy marriage initiatives and $50 million per year for responsible fatherhood initiatives; and (4) changes to TANF work rules, such as counting caseload reduction only from 2005 (rather than 1995) toward the work participation standards, requiring HHS to define specific work activities that may count for each listed statutory work activity, and requiring that states verify work activities of recipients. The DRA also included an increase in mandatory child care funding from $2.717 billion per year to $2.917 billion per year.\nThe conference report on the DRA passed the House on December 19, 2005. Congress finished reconciling differences between the two chambers in February 2006. President Bush signed the DRA into law as P.L. 109-171 on February 8, 2006.", "The economy entered into a recession after December 2007, with a major financial crisis and accelerating job loss occurring in late 2008. In response, the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) passed Congress and was signed by President Obama. ARRA included tax cuts; unemployment insurance provisions; and extra funding for programs, including provisions to provide fiscal relief to states.\nARRA also included $5 billion for a new TANF Emergency Contingency Fund (ECF) available to be spent in FY2009 and FY2010. The ECF supplemented funding for the regular TANF contingency fund, which itself was depleted in early FY2010. The ECF reimbursed states for 80% of the cost of increased expenditures for basic assistance, short-term emergency aid, and subsidized employment. ARRA also temporarily froze the TANF caseload reduction credit at prerecession levels, through its application to the FY2011 work participation standards.", "The long-term extension of TANF enacted in the DRA expired at the end of FY2010 (September 30, 2010). Since then, Congress continued TANF program authority and funding through a series of short-term extensions. TANF extensions have been incorporated into stop-gap continuing resolutions or omnibus appropriations bills to fund all or most of the government, added to tax bills, added to unrelated legislation, or passed as stand-alone legislation. (As used in this report, stand-alone legislation represents laws enacted that addressed only TANF and related programs.) There were two gaps in funding for TANF during this period. Funding lapsed during broader \"government shutdowns\" in October 2013 and beginning in December 2018. States were permitted to draw on unspent, previously appropriated TANF funds to finance their TANF activities during the shutdown.\nWhile many of the short-term extensions of TANF funding did not make changes to TANF policy, three extension laws did\nThe Claims Resolution Act of 2010 (CRA, P.L. 111-291 ), a bill to settle claims against the federal government for certain Indian tribes, included a TANF extension through the end of FY2011. It also altered funding for the healthy marriage and responsible fatherhood programs, splitting the combined $150 million appropriation for them at $75 million for healthy marriage and $75 million for responsible fatherhood (it had previously been $100 million for healthy marriage and $50 million for responsible fatherhood). Additionally, the CRA required special one-time reports from the states on how they spend funds and on individuals with no reported hours of work participation. The CRA also provided funding for TANF supplemental grants only through June 30, 2011 (rather than September 30, 2011, the end of the fiscal year). Supplemental grants were not funded for the last quarter of FY2011, nor any fiscal year thereafter. The Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ) extended TANF through the end of FY2012, and also permanently amended TANF law to require states to act to prevent cash assistance recipients from withdrawing their benefits at Automated Teller Machines (ATMs) at strip clubs, casinos, and liquor stores. The FY2017 Consolidated Appropriations Act ( P.L. 115-31 ) extended funding for the TANF block grant for the remainder of FY2017 and for FY2018. It also financed TANF-related research through a set-aside of 0.33% of the TANF basic block grant appropriation. This reduced the TANF basic block grant to each state by 0.33%.\nIn 2018, the House Ways and Means Committee reported legislation ( H.R. 5861 , 115 th Congress) that would have reauthorized and funded TANF for five years; revised TANF's work rules to measure employment outcomes rather than participation; required all assistance recipients to have an individualized plan; required that all TANF funds be spent on families with incomes at or below 200% of poverty; and required a minimum percentage of TANF funds to be spent on assistance, work activities, or short-term economic aid. The bill was not considered by the full House.", "", "P.L. 104-193 , enacted August 22, 1996, the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, established the block grant of Temporary Assistance for Needy Families. Funds for most TANF grants were appropriated through FY2002; supplemental grants and the TANF contingency fund were appropriated through FY2001. States were required to implement TANF, and accept their block grant funding, by July 1, 1997, though they could opt to implement earlier.\nP.L. 104-327 , enacted October 19, 1996, amended the transition rule from the pre-TANF programs to TANF that limited total FY1997 federal funding for TANF and pre-TANF programs. It changed the limit on funding to the states for FY1997 from an amount equal to their basic block grant to an amount equal to their basic block grant plus, if they qualified, what they would have received from the TANF contingency fund.", "P.L. 105-33 , enacted August 5, 1997, the Balanced Budget Act of 1997, raised the cap limiting the counting of education as work from 20% to 30% of those considered engaged in work, and temporarily removed from that cap teen parents engaged in education through FY1999; set the maximum allowable TANF transfer to Title XX social services at 10% of the block grant (rather than one-third of total transfers); and made technical corrections to P.L. 104-193 . P.L. 105-33 also established the Welfare-to-Work (WTW) grant program within TANF (funded at $3 billion over two years, FY1998 and FY1999), but administered by the Department of Labor at the federal level, with local administration by state workforce investment boards and competitive grantees.\nP.L. 105-89 , enacted November 19, 1997, the Adoption and Safe Families Act, reduced the contingency fund appropriation by $40 million.", "P.L. 105-178 , enacted June 9, 1998, the Transportation Act for the 21 st Century, permitted the use of federal TANF funds as matching funds for reverse commuter grants. It also set the statutory limit on TANF transfers to Title XX social services at 4.25% of the block grant. (Note that subsequent annual appropriation bills restored the 10% limit on TANF transfers to SSBG.)", "P.L. 106-113 , enacted November 29, 1999, an omnibus appropriations act, broadened eligibility for recipients to be served by the WTW grant program and added limited authority for vocational education or job training to be WTW activities.", "P.L. 106-554 , enacted December 21, 2000, an omnibus appropriation act, gave grantees two more years to spend WTW grant funds (for a total of five years from the date of the grant award).", "P.L. 107-147 , enacted March 9, 2002, the Job Creation and Worker Assistance Act, extended the TANF supplemental grants and contingency funds, both of which had expired on September 30, 2001, through FY2002. Supplemental grants were extended at FY2001 levels.\nP.L. 107-229 , enacted September 30, 2002, a short-term continuing resolution, extended TANF basic grants, supplemental grants, bonus funds, and contingency funds (and other related programs) through December 20, 2002.\nP.L. 107-294 , enacted November 22, 2002, a short-term continuing resolution, extended TANF and related funding through March 30, 2003.", "P.L. 108-7 , enacted February 20, 2003, an omnibus appropriations act, extended TANF and related funding through June 30, 2003.\nP.L. 108-40 , enacted June 30, 2003, a stand-alone bill, extended TANF and related funding through September 30, 2003.\nP.L. 108-89 , enacted October 1, 2003, a multipurpose bill, included an extension of TANF and related funding through March 31, 2004.", "P.L. 108-199 , enacted January 23, 2004, a consolidated appropriations bill, rescinded all remaining unspent WTW formula grant funds, effectively ending the WTW grant program.\nP.L. 108-210 , enacted March 31, 2004, a stand-alone bill, extended TANF and related funding through June 30, 2004.\nP.L. 108-262 , enacted June 30, 2004, a stand-alone bill, extended TANF and related funding through September 30, 2004.\nP.L. 108-308 , enacted September 30, 2004, a stand-alone bill, extended TANF and related funding through March 31, 2005.", "P.L. 109-4 , enacted March 25, 2005, a stand-alone bill, extended TANF and related funding through June 30, 2005.\nP.L. 109-19 , enacted July 1, 2005, a stand-alone bill, extended TANF and related funding through September 30, 2005.\nP.L. 109-68 , enacted September 21, 2005, allowed states to draw upon contingency funds to assist those displaced by Hurricane Katrina, allowing directly affected states to receive funds from the loan fund, with repayment of the loan forgiven, and suspending penalties for failure to meet certain requirements for states directly affected by the hurricane. It also temporarily extended TANF grants through December 30, 2005.\nP.L. 109-161 , enacted December 30, 2005, a stand-alone bill, extended TANF grants through March 30, 2006.", "P.L. 109-171 , enacted February 8, 2006, the Deficit Reduction Act of 2005, extended most TANF grants through FY2010 (supplemental grants were extended through the end of FY2008), eliminated TANF bonus funds, established competitive grants within TANF for healthy marriage and responsible fatherhood initiatives, revised the caseload reduction credit, and required HHS to issue regulations to define specific activities that count toward the TANF work participation standards as well as verify work and participation in activities.", "P.L. 110-275 , enacted July 15, 2008, the Medicare Improvements and Patients and Providers Act of 2008, included an extension of TANF supplemental grants through the end of FY2009.", "P.L. 111-5 , enacted February 17, 2009, the American Recovery and Reinvestment Act, established a $5 billion Emergency Contingency Fund (ECF) to reimburse states for increased costs associated with the Great Recession for FY2009 and FY2010. The fund reimbursed states, territories, and tribes for 80% of the increased costs of basic assistance, nonrecurrent short-term benefits, and subsidized employment. The law also permitted states to freeze caseload reduction credits at prerecession levels, allowed states to use TANF reserve funds for any benefit or service (it was previously restricted to assistance), and extended supplemental grants through the end of FY2010.", "P.L. 111-242 , enacted September 30, 2010, a short-term continuing resolution, extended TANF funding through December 3, 2010.\nP.L. 111-290 , enacted December 4, 2010, a short-term continuing resolution, extended TANF funding authority through December 18, 2010.\nP.L. 111-291 , enacted December 8, 2010, the Claims Resolution Act of 2010, extended basic TANF funding through the end of FY2011 (September 30, 2011) but provided supplemental grants only through June 30, 2011. It also altered funding for the healthy marriage and responsible fatherhood programs, splitting the combined $150 million appropriation for them at $75 million for healthy marriage and $75 million for responsible fatherhood. The act required some additional reporting on work activities and TANF expenditures.", "P.L. 112-35 , enacted September 30, 2011, the Short-Term TANF Extension Act, extended basic TANF funding for three months, through December 31, 2011. No funding was provided for TANF supplemental grants.\nP.L. 112-78 , enacted December 23, 2011, the Temporary Payroll Tax Cut Continuation Act of 2011, extended basic TANF funding for two months, through February 29, 2012.", "P.L. 112-96 , enacted February 22, 2012, the Middle Class Tax Relief and Job Creation Act of 2012, extended basic TANF funding for the remainder of FY2012 (to September 30, 2012). It also prevented electronic benefit transaction access to TANF cash at liquor stores, casinos, and strip clubs; states would be required to prohibit access to TANF cash at ATMs at such establishments. It also required states to report TANF data in a manner that facilitates the exchange of that data with other programs' data systems.\nP.L. 112-175 , enacted September 28, 2012, a continuing resolution providing funding for the first six months of FY2013, extended TANF funding through March, 2013.", "P.L. 112-275 , enacted January 14, 2013, the Protect Our Kids Act of 2012, appropriated $612 million to the TANF contingency fund for FY2013 and FY2014, and reserved $2 million from each of the two years' appropriations for the activities of a commission to examine child welfare fatalities.\nP.L. 113-6 , enacted March 26, 2013, an omnibus appropriations bill, extended TANF funding through the remainder of FY2013.\nP.L. 113-46 , enacted October 17, 2013, a short-term continuing resolution , extended TANF funding through January 15, 2014. (T h is resolution ended the government shutdown and a TANF funding gap from October 1, 2013, through October 16, 2013.)", "P.L. 113-73 , enacted January 15, 2014, a short-term continuing resolution, extended TANF funding through January 18, 2014.\nP.L. 113-76 , enacted January 17, 2014, a consolidated appropriations act, extended TANF funding for the remainder of FY2014 (through September 30, 2014).\nP.L. 113-164 , enacted September 19, 2014, a short-term continuing resolution, extended TANF funding through December 11, 2014.\nP.L. 113-202 , enacted December 12, 2014, a short-term continuing resolution, extended TANF funding through December 13, 2014.\nP.L. 113-203 , enacted December 13, 2014, a short-term continuing resolution, extended TANF funding through December 17, 2014.\nP.L. 113-235 , enacted December 16, 2014, an omnibus appropriations act, extended TANF funding through September 30, 2015.", "P.L. 114-53 , enacted September 30, 2015, a short-term continuing resolution, extended TANF funding through December 11, 2015.\nP.L. 114-96 , enacted December 11, 2015, a short-term continuing resolution, extended TANF funding through December 16, 2015.\nP.L. 114-100 , enacted December 16, 2015, a short-term continuing resolution, extended TANF funding through December 22, 2015.\nP.L. 114-113 , enacted December 18, 2015, a consolidated appropriations act, extended TANF funding for the remainder of FY2016 as part of an omnibus appropriations act.", "P.L. 114-223 , enacted September 29, 2016, a short-term continuing resolution, extended TANF funding through December 9, 2016.\nP.L. 114-254 , enacted December 10, 2016, extended TANF funding through April 28, 2017.", "P.L. 115-30 , enacted April 28, 2017, extended TANF funding through May 5, 2017.\nP.L. 115-31 , the Consolidated Appropriation Act, 2017, enacted May 5, 2017, extended TANF funding for the remainder of FY2017 and through the end of FY2018. It provided that 0.33% of the funding in the TANF basic block grant pay for TANF-related research activities. This reduced the basic TANF block grant for each state by that percentage (0.33%). The act also required the Department of Health and Human Services, in consultation with the Department of Labor, to develop a database named \"What Works Clearinghouse of Proven and Promising Projects to Move Welfare Recipients into Work,\" to consist of research projects that deliver services to move TANF recipients into work.", "P.L. 115-245 , enacted September 28, 2018, a short-term continuing resolution, extended TANF funding through December 7, 2018.\nP.L. 115-298 , enacted December 7, 2018, a short-term continuing resolution, extended TANF funding through December 21, 2018.", "P.L. 116-4 , the TANF Extension Act of 2019, enacted January 24, 2019, a stand-alone TANF bill, extended TANF funding through June 30, 2019. (This legislation ended a TANF funding gap that occurred after the expiration of P.L. 115-298 on December 21, 2018.)" ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 2, 1, 1, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h2_full", "h0_full h2_title h1_title", "", "", "", "h1_full", "h0_title h1_title", "h0_full h1_full", "h1_full", "h1_full", "", "h1_full", "h2_full", "h2_full", "h3_title", "", "", "h3_full", "", "h3_full", "h3_title", "", "", "", "", "", "h3_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h3_full" ] }

{ "question": [ "What is the Temporary Assistance for Needy Families?", "How was TANF created?", "What program did the welfare reform debates focus on?", "What aspects of the AFDC program were highlighted in the debates?", "What did candidate Bill Clinton promise in 1992?", "How did Bill Clinton attempt to commit to his promise?", "What action did Republicans take in 1994?", "How did President Clinton respond to these actions?", "What was passed by Congress in 1996?", "What was the purpose of the 1996 welfare reform bill?", "Based on the welfare bill, what is TANF policy focused on?", "How is TANF funded?", "How was TANF funded from FY2002-FY2006?", "What long term extension was included in this period?", "What changes did DRA make to TANF?" ], "summary": [ "The Temporary Assistance for Needy Families (TANF) block grant was created in the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (P.L. 104-193).", "It was born out of the welfare reform debates that spanned four decades, from the 1960s through the 1990s.", "These debates focused on the Aid to Families with Dependent Children (AFDC) program, which provided federal funding for state-run programs delivering assistance to needy families with children, with most families receiving assistance historically being headed by single mothers who were not working.", "The welfare reform debates focused on whether and how much single mothers should be expected to work, and whether the program itself contributed to dependency by providing disincentives to work and raise children in two-parent families.", "In 1992, then-candidate Bill Clinton promised to \"end welfare as we know it.\"", "President Clinton submitted his welfare reform proposal to Congress in June 1994, but Congress did not take any action on it.", "Immediately after the 1994 congressional campaign, with Republicans taking control of both the House and the Senate, the new House leadership and Republican governors crafted a proposal to end AFDC and replace it with the TANF block grant.", "This proposal passed Congress as part of two separate pieces of legislation in 1995, but President Clinton vetoed both.", "In 1996, a revised proposal was offered and passed Congress.", "On August 22, 1996, President Clinton signed the 1996 welfare reform bill that ended AFDC and replaced it with TANF, a broad-purpose block grant to the states that helps fund a wide range of benefits, services, and activities to address the effects of, and root causes of, child poverty and economic disadvantage.", "Reflecting its origins in the welfare reform debates, most TANF policy revolves around the state programs of cash assistance and work programs that the block grant helps fund.", "The original funding provided in that law for TANF expired at the end of FY2002 (September 30, 2002), and most of the legislative activity since then has been to continue funding on a short-term basis.", "From FY2002 to FY2006, TANF was funded by a series of short-term extensions.", "There was one long-term extension of TANF funding—The Deficit Reduction Act of 2005 (DRA, P.L. 109-171)—which extended it from FY2006 through the end of FY2010.", "The DRA also made some changes to TANF work rules and established a program of competitive grants mostly to community-based organizations for healthy marriage and responsible fatherhood initiatives." ], "parent_pair_index": [ -1, 0, -1, 2, -1, 0, -1, 2, -1, -1, 1, -1, 0, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Background", "Issues for Congress", "A Life-Cycle GHG Emissions Assessment of Coal and Natural Gas in the Power Sector", "GHG Emissions from the Combustion of Fossil Fuels", "GHG Emissions from the Combustion of Fuels at the Power Plant", "GHG Emissions from the Production and Transport of Fossil Fuels", "Natural Gas Production and Transport Emissions Estimates", "Coal Production and Transport Emissions Estimates", "Life-Cycle GHG Emissions Estimates for the Power Sector", "The Role of Methane's FER", "Life-Cycle GHG Emissions Estimates, with Selected FER", "The Role of Global Warming Potentials (GWP)", "Life-Cycle GHG Emissions Estimates, with Selected GWP", "Life-Cycle GHG Emissions Estimates, Full Timelines", "Concluding Remarks", "Summary of Results", "Policy Considerations" ], "paragraphs": [ "", "Recent expansion in natural gas production—primarily the result of new or improved technologies (e.g., hydraulic fracturing and directional drilling) used on unconventional resources (e.g., shale, tight sands, and coal-bed methane) —has made natural gas an increasingly significant component in the U.S. energy market. Many in both the public and the private sectors have advocated for the increased production and use of natural gas because the resource is domestically available, economically recoverable, and a potential \"cost-effective bridge\" to a less polluting and lower greenhouse-gas-intensive economy. Many Members of Congress as well as the Obama Administration have supported this assessment.\nWhen used as a fuel, natural gas has several advantages over other hydrocarbons (e.g., oil and coal). Natural gas is more versatile; it can heat homes, fuel stoves, run vehicles, fire power plants, and, when liquefied, be exported to support the energy needs of U.S. allies and trading partners. Natural gas is cleaner-burning; it emits less carbon dioxide (CO 2 ) than oil or coal when used to generate electricity in a typical power plant. Further, its combustion emits no mercury (a persistent, bioaccumulative neurotoxin), virtually no particulate matter or sulfur dioxide, and less nitrogen oxides, per unit of combustion, than either oil or coal. For these reasons, pollution control measures in natural gas systems have traditionally received less attention at the federal level relative to those in other hydrocarbon industries.\nHowever, the recent increase in unconventional natural gas production has raised a new set of questions regarding human health, safety, and environmental impacts. These concerns centered initially on water quality issues, including the potential contamination of groundwater and surface water from hydraulic fracturing and related production activities. They have since incorporated other issues, such as water management practices (both consumption and discharge), land use changes, and induced seismicity, as well as air pollution and greenhouse gas (GHG) emissions associated with natural gas production and transport activities.\nRecent reports in the scientific literature and popular press have created some confusion about the GHG emissions profile and the subsequent climate implications of natural gas. On the one hand, a shift to natural gas is promoted as climate change mitigation because it has a lower CO 2 emissions intensity than either oil or coal (i.e., it is commonly stated that natural gas has half the CO 2 emissions intensity of coal). On the other hand, methane—the primary constituent of natural gas—is itself a more potent GHG than CO 2 per unit of mass, and some contend that methane leakage from the production, transport, and use of natural gas has the potential to offset the GHG emissions benefits of switching.\nDebate continues as to whether the increased production and use of natural gas brings net benefits to the general economy, including jobs, investments, infrastructure, national security, human health, safety, and the environment. To answer these questions, more analysis is necessary along each of these lines of inquiry, as greater clarity would help inform domestic policy choices. A full assessment would demand an integrated analysis across all issues. Such an analysis is not within the scope of this report. Similarly, this report does not investigate the economic or national security impacts. Nor does it attempt to assess the full environmental impacts (e.g., inclusive of the net benefits to meeting National Ambient Air Quality Standards, reducing emissions of hazardous air pollutants, improving water management and land use practices, among others).\nThis report focuses on one facet of the debate: the claim that the production and use of natural gas is less GHG-intensive than other fossil fuels. Specifically, it presents a comparative analysis of the potential climate implications of switching from coal to natural gas in the domestic electric power generating sector. The findings are offered to help inform the larger conversation.", "Congressional interest in U.S. energy policy has focused in part on ways through which the United States could secure more economical and reliable fuel resources both domestically and internationally. For some, the issue of energy policy centers on economic growth and domestic job creation; for others, it focuses on national security; for still others, it calls attention to public health, safety, and environmental concerns. For many, the recent increase in domestic natural gas production has been a panacea, and they have advocated strongly for policies to accelerate this development.\nWhile natural gas production in the United States is driven primarily by market forces, a number of recent proposals by Congress and the Obama Administration have either explicitly or implicitly supported its development. They include, but are not limited to, the following:\nBills that would amend various provisions in the tax code to incentivize natural gas production and use (including H.R. 905 , S. 344 , and S. 948 ); Bills that would support increased natural gas production on federal lands (including H.R. 70 , H.R. 1330 , H.R. 1616 , H.R. 1647 , H.R. 1663 , H.R. 2295 , S. 15 , S. 411 , S. 1196 , and S. 1276 ); Bills that would streamline the approval, permitting, and/or construction of natural gas infrastructure (including H.R. 89 , H.R. 161 , H.R. 287 , H.R. 351 , H.R. 428 , H.R. 1487 , S. 33 , S. 280 , S. 1210 , S. 1228 , and S. 1581 ); Bills that would transfer federal natural gas regulation, guidance, or permitting to state authorities (including H.R. 866 , S. 490 , S. 828 , and S. 1230 ); and Several proposed or promulgated rules by the U.S. Environmental Protection Agency (EPA) (including GHG standards for new and existing power plants, mercury and air toxic standards for new and existing power plants, and GHG and criteria pollutant standards for new light-, medium-, and heavy-duty vehicles).\nMany of these proposals promote technology and infrastructure investments that could be significant and long lasting. For this reason, some stakeholders recommend a thorough analysis of the costs and benefits of these proposals as well as a full assessment of the economic and environmental impacts of increased natural gas development. Some see a comparative analysis of the GHG emissions from the production and use of natural gas and other fossil fuels to be a significant component in this assessment. They argue that if natural gas is to be considered a potential \"cost-effective bridge\" to a less polluting and lower GHG-intensive economy, it is worth investigating the length, breadth, and destination of this bridge.", "Life-cycle assessment (LCA) is an analytic method used for evaluating and comparing the environmental impacts of various products (e.g., the climate change implications of natural gas and coal resources). In this way, LCAs are used to identify, quantify, and track emissions of CO 2 and other GHGs arising from the development of these hydrocarbon resources and to express them in a single, universal metric (e.g., CO 2 equivalent [CO 2 e] of GHG emissions per unit of electricity generated). LCAs commonly strive to be comprehensive, and the GHG emissions profiles modeled by many are based on a set of boundaries referred to as \"cradle-to-grave.\" \"Cradle-to-grave\" assessments for fossil fuels in the power sector aim to encompass the emissions associated with the entire life-cycle of the fuel—from site preparation to the extraction, gathering, and processing of the resource; the transport of refined product to market; the combustion of the fuel in the power plant; and the transmission of the electricity to the consumer. The results of an LCA can be used to evaluate the GHG emissions intensity of various stages of the fuel's supply chain or to compare the emissions intensity of one type of fuel or method of production to another.\nWhile there are many uses for natural gas (both as a fuel and as a chemical feedstock), this report focuses on natural gas as a fuel for the electric power generating sector. (Other end-use sectors would require different LCAs, as supply chains and combustion infrastructure would vary. See Figure 1 .)\nThe methodology of this report is as follows:\n1. The report begins by assessing the GHG emissions associated with the burning of various fossil fuels on a per-unit-of-energy basis, focusing on natural gas and coal. 2. The report then proceeds with an analysis of the GHG emissions associated with the burning of these fuels in various types of electric power generating facilities. 3. The report then expands its analysis beyond the combustion of fuels at the power plant to incorporate an LCA of the fuels' entire supply chains (i.e., inclusive of the GHG emissions released during the fuels' extraction, processing, and transport, as well as the transmission of electricity). 4. Finally, the report looks into two aspects of the assessment that have shown the greatest levels of uncertainty: (1) the fugitive emissions of natural gas during production activities, and (2) the time period over which the impacts are estimated. 5. The report ends with a cumulative summary of the findings and a discussion of policy considerations.", "All fossil fuels produce GHG emissions when they are combusted. The most prevalent GHG emitted from fossil fuel combustion is CO 2 , which is released when the hydrocarbon molecules that make up fossil fuels are ignited in the presence of oxygen. How much CO 2 is released into the atmosphere depends upon several factors, including how much fuel is burned and the relative carbon and hydrogen content within the fuel. While there are many ways to measure and compare CO 2 emissions across different types of fuels (e.g., by the weight or by the volume of the fuel being burned), one of the most relevant methods for policy considerations is to compare the emissions produced in relation to the energy released (what is commonly referred to as the \"emissions intensity\" of a fuel)—for example, determining how much CO 2 is emitted by natural gas, oil, and coal in order for each to produce one British thermal unit (Btu) of energy. This method allows for a comparison based upon an equivalent amount of work that is being performed by each fuel.\nFigure 2 shows that natural gas combustion, on average, has a lower CO 2 emissions intensity than other fossil fuels. The primary chemical component of natural gas is methane. Methane—the simplest hydrocarbon—is made up of one carbon atom and four hydrogen atoms (CH 4 ). Its carbon content (and thus its CO 2 emissions potential) relative to the amount of energy it can release during oxidation is relatively low. Oil is composed of longer hydrocarbon molecules and thus has a higher carbon content. Coal's carbon content is higher still and varies across different types of coal. Due to these varying chemical compositions, the combustion of natural gas produces approximately 56% of the CO 2 emissions per unit of energy compared to the average type of coal used commercially in the U.S. power sector .", "Fossil fuels are combusted not simply to release energy but to use that energy to operate some type of facility or piece of equipment (e.g., a power plant, an automobile, a cook stove). Thus, the efficiency with which a piece of equipment uses a fuel's energy will play an important role in the amount of CO 2 emitted during its operation. While there are many end uses for the energy released from the combustion of fossil fuels, this report focuses on electricity generating units (EGUs), or power plants.\nThe combustion of fossil fuels for the purpose of electricity generation accounts for approximately 67% of total U.S. electricity generation (see Figure 3 ) as well as 31% of total U.S. GHG emissions. Further, the combustion of fossil fuels for the purpose of electricity generation takes place in a variety of differently designed and operated power plant facilities across the United States. To calculate CO 2 emissions rates at a power plant, one must assess a facility's \"heat rate\"—or what is commonly referred to as its \"thermal efficiency.\" In other words, some power plants are more efficient at converting chemical energy from a fuel into a megawatt-hour (MWh) of electrical energy. Heat rates vary depending upon the power plant's design, age, operation, and maintenance practices. All other things being equal, the higher the heat rate, the lower the thermal efficiency and, thus, the more energy consumed to produce electricity.\nHeat rates, thermal efficiencies, and CO 2 emissions intensities per MWh of electricity generated for various types of power plants in the United States are presented in Table 1 and Figure 4 . Data include (1) the average heat rates of the existing U.S. fleet of power plants, as reported by EIA, and (2) the heat rates from a selected number of case studies performed on advanced power plant configurations, as modeled by the Department of Energy's National Energy Technology Laboratory (DOE/NETL). For a more detailed discussion on the different types of power plant generators, both existing and advanced, see the DOE/NETL study.\nFigure 4 illustrates that the generation of one MWh of electricity from different types of U.S. natural-gas-fired power plants in 2013 produced approximately 42%-63% of the CO 2 emissions of an average coal-fired steam generator. The lower value represents emissions from a natural gas combined cycle power plant, while the higher values represent emissions from the less efficient single-cycle technologies. Further, the generation of one MWh of electricity in an advanced combined cycle natural-gas-fired power plant would produce, on average, approximately 46%-50% of the CO 2 emissions of an advanced combined cycle coal-fired generator.\nWhile most new natural-gas-fired and coal-fired power plant construction in the United States is expected to have combined cycle or other advanced technology, the existing U.S. fleet is made up of several different types of generators. The current generation mix of the existing natural-gas-fired fleet is represented in Table 2 . The current generation mix of the existing coal-fired fleet is almost exclusively from single-cycle steam generators.", "Figure 4 summarizes the CO 2 emissions intensities from the combustion of fossil fuels at a power plant. However, the combustion of fossil fuels at a power plant is not the only source of GHG emissions associated with the generation of electricity. GHG emissions associated with the extraction, processing, and transport of fossil fuels to the power plant, as well as those associated with the transmission of electricity away from the power plant, may also be of significance. These additional GHG emissions may include some quantities of CO 2 as well as methane (CH 4 ), nitrous oxide (N 2 O), and sulfur hexafluoride (SF 6 ).\nIn order to assess the full climate impacts of a fossil fuel employed in the power sector, many analyses aim to quantify the GHG emissions released across a fuel's entire supply and utilization chain. The following section summarizes the GHG emissions estimates for the production and transport of natural gas and coal as reported by DOE/NETL. The \"production and transport\" emissions estimates are then added to the \"power plant\" emissions estimates to gain a more comprehensive picture of the profiles of the fuels.", "The U.S. natural gas production and transport sector encompasses hundreds of thousands of wells and their associated equipment, hundreds of processing facilities, and over a million miles of gathering, transmission, and distribution pipelines. The sector contributes to GHG emissions in several ways, including (1) the leaking, venting, and combustion of natural gas during industry operations, and (2) the combustion of other fossil fuel resources to operate production and transport equipment. Emissions sources include pad, road, and pipeline construction; well drilling, completion, and flowback activities; and gas processing and transmission equipment such as valves, compressors, dehydrators, pipes, and storage vessels. For example, the DOE/NETL estimate of the GHG emissions from production and transport activities for the electric power generating sector is shown in Figure 5 . This estimate is for a selected natural gas source—the Marcellus Shale play in Pennsylvania. (Other sources—as well as other end-uses—would have slightly different profiles. See Table 3 for estimates from other sources.)\nGHG emissions from natural gas production and transport activities include, most prominently, CO 2 and methane. CO 2 is emitted as a byproduct of the burning of natural gas and other fossil fuels (e.g., diesel) during industry operations. It is released through either the flaring of natural gas for safety and health precautions or the combustion of fuels for process heat, power, and electricity in the system (e.g., for drills, compressors, and other machinery).\nMethane—the primary constituent of natural gas—is emitted when natural gas vapors are released to the atmosphere during industry operations. Every process in natural gas systems has the potential to emit methane. These emissions can be either intentional (i.e., vented) or unintentional (i.e., leaked). Intentional emissions are releases that are designed into the system: for example, emissions from vents or blow-downs used to guard against over-pressuring, or gas-driven equipment used to regulate pressure or store or transport the resource. Conversely, unintentional emissions are releases that result from uncontrolled leaks in the system: for example, emissions from routine wear, tear, and corrosion; improper installation or maintenance of equipment; or the overpressure of gases or liquids in the system.\nFurther, the activities and equipment used to extract, process, and transport natural gas can vary depending on the resource basin. Table 3 presents averaged GHG emissions estimates—as reported by DOE/NETL—for the production and transport activities of eight different sources of natural gas used in the domestic power sector, as well as an average U.S. gas profile.", "Though the objective of this report is to assess the GHG emissions impacts of natural gas production and use, the potential benefits of natural gas are based on perceived advantages relative to other options, particularly coal as the status quo. The CO 2 emissions intensity related to the combustion of coal at the power plant is summarized in Table 1 . Additional to this, an analysis of the GHG emissions associated with the extraction and transport of coal is necessary to allow for a more meaningful comparison. Table 4 outlines two major U.S. coal resources: Illinois No. 6 underground-mined bituminous and Powder River Basin surfaced-mined subbituminous. DOE/NETL reports emissions estimates for the production and transport of these two resources and uses these values to build an average U.S. coal profile.\nGHG emissions from the production and transport of coal are summarized in Table 4 . Emissions are associated with the following activities: (1) land use changes due to removal of overburden, (2) the operation of major equipment and mining components (e.g., drills, shovels, trucks, continuous miners and longwall mining systems, conveyor belts, stackers/reclaimers, crushers, coal cleaning equipment, silos, wastewater treatment, and shuttle car systems), and (3) the diesel-powered unit trains used to transport coal from the mining site to the power plant.\nAs with natural gas, coal extraction activities can release methane emissions. Different coal resource basins are characterized by different levels of specific methane content. Also, in some instances (e.g., Powder River Basin surface mining), extraction of coal-bed methane prior to mining of the coal seam results in a net reduction of the total amount of methane that is emitted to the atmosphere, since extracted methane is typically sold into the natural gas market. The DOE/NETL-2014 study reports the average range of methane emissions from coal production and transport activities to be anywhere from four to 504 standard cubic feet per ton of coal produced.", "Figure 6 presents life-cycle GHG emissions estimates for selected power plants in the United States . These estimates include emissions from the combustion of the fuel at the power plant (i.e., from Table 1 ), the emissions from the extraction, processing, and transport of the fuel resources (i.e., from Table 3 and Table 4 ), and the emissions from the transmission of the electricity generated. The figure shows that production and transport emissions account for approximately 5% of the total life-cycle emissions for coal-fired power generation and 15% of the total life-cycle emissions for natural-gas-fired power generation.\nFurther, Figure 6 illustrates that the generation of one MWh of electricity in an average U.S. natural-gas-fired combined cycle power plant in 2013 produced approximately 47% of the life-cycle GHG emissions of a coal-fired steam generator. However, the generation of one MWh of electricity in an average U.S. gas turbine power plant in 2013 produced approximately 70% of the life-cycle GHG emissions of a coal-fired steam generator. Further, when comparing examples of the most efficient, advanced power plant technologies (as modeled by DOE/NETL-2010), the generation of one MWh of electricity in an advanced combined cycle natural-gas-fired power plant would produce approximately 56% of the life-cycle GHG emissions of an advanced combined cycle coal-fired power plant.\nBased on these initial findings, a switch from coal to natural gas in the existing fleet of U.S. power plants can realize a 50% reduction in GHG emissions (i.e., the reduction commonly stated) if the switch is from existing coal-fired steam generators to existing natural-gas-fired combined cycle generators. However, these estimates are based on certain assumptions about the GHG emissions profiles of coal and natural gas production and transport activities. The remainder of this report focuses on a more detailed analysis of these input assumptions.", "One of the more significant variables in understanding the climate implications of fossil fuel use in the power sector is the role that methane emissions play in the overall assessment. Methane is commonly understood to be a more potent GHG than CO 2 : Current indices report methane emissions per unit mass to be approximately 25 times more potent than CO 2 emissions when averaged over the first 100 years after its release. Due to this potency, the amount of methane lost to the atmosphere during the production and transport of fossil fuels can greatly impact the life-cycle GHG emissions estimates for power generation.\nUnlike with CO 2 , where emissions are reported using well-tracked energy statistics, methane is emitted to the atmosphere primarily through fugitive releases of the gas (i.e., emissions that are leaked or vented from fossil fuel infrastructure). By definition, fugitive emissions are diffuse, transitory, and elusive. Thus, one of the greater difficulties in understanding the impacts of methane on the sector is acquiring comprehensive and consistent emissions data.\nFigure 7 illustrates an estimate done by DOE/NETL of the quantities of methane that are lost or consumed during natural gas production and transport activities for the power sector (i.e., Figure 7 is a representation of the methane emissions data included in Table 3 ). Using reporting from EIA and EPA, the DOE/NETL study calculates rates for (1) the fugitive release of methane from natural gas systems, and (2) the flaring and/or use of methane in natural gas systems, in relation to the quantity of natural gas produced. According to the study, the FER for natural gas systems in 2010 was 1.15%, and the flaring and/or use rate was 6.98%. These estimates are averages, and they are dependent on a variety of input data that are both sensitive to and impacted by the uncertainty of key parameters, including (1) the use and emission of natural gas along the pipeline transmission network; (2) the rate of natural gas emitted during unconventional gas extraction processes, such as well completion and workovers; and (3) the lifetime production rates of wells.\nThe DOE/NETL study bases its calculations in part on emissions data provided by EPA. EPA reports methane emissions for the source category \"natural gas systems\" annually as a part of the agency's Inventory of Greenhouse Gas Emissions and Sinks . EPA's Inventory is based on the use of measurement methodologies that employ commonly accepted emissions factors (i.e., formulas) and activity levels (i.e., equipment counts) to calculate aggregate emissions estimates for all source categories. That is, the Inventory is determined annually by calculations, not direct measurement.\nTable 5 shows annual emissions estimates from EPA's Inventory . The table presents data as they were estimated initially by the Inventory and not as they were revised in successive years. Thus, the table illustrates the evolution of EPA's measurement methodology as much as it presents changes in annual emissions from the industry. As shown in Table 5 , EPA estimates that methane releases by \"natural gas systems\" accounted for 1.28% of produced natural gas in 2013 (i.e., this estimate is an average for all end-use sectors, not just the electrical power generating sector).\nIn addition to the estimates from DOE/NETL and EPA, a number of academic studies have published emissions estimates for natural gas systems. Each study employs varied choices of data sources, system boundaries, modeling approaches, and inclusion or exclusion of specific activities; thus, all return slightly differing estimates. A harmonization of several of the more prominent studies was conducted by researchers at DOE's Joint Institute for Strategic Energy Analysis and National Renewable Energy Laboratory. The harmonized FER estimates are presented in Figure 8 . The studies estimate FER for both conventional and unconventional natural gas resources for use in the electrical power generating sector. The findings range from 0.53% to 6.20%, and while the sample size is small, the mean value returned by the studies is 2.78%. The range within one standard deviation (i.e., a FER of approximately 2.0%-4.0%) reflects estimates for natural gas systems as reported recently by other harmonized studies as well as several large-scale atmospheric measurement studies.\nThe reported values in Figure 6 reflect a FER of 1.15%. The range of FER discussed above (i.e., 1.15% from DOE/NETL and 2%-4% from the harmonized academic sources) is used as a representative estimate for the remainder of this report. (While additional academic, industry, and governmental studies exist for estimates of fugitive emissions rates, this report proceeds with the use of the DOE/NETL and DOE/JISEA harmonized estimates.)", "Figure 9 presents life-cycle GHG emissions estimates for existing coal-fired and natural-gas-fired power plants, highlighting the contributions that fugitive methane emissions make in both instances when averaged over the first 100 years after their release.\nFurther, Figure 9 illustrates the impacts that several different values for FER in the natural gas production and transport sector have on the overall life-cycle emissions estimates of natural-gas-fired power generation. Notably, if the FER is close to the 1.15%, as currently estimated by DOE/NETL, the generation of one MWh of electricity in an average U.S. natural-gas-fired combined cycle power plant in 2013 would produce approximately 47% of the life-cycle GHG emissions of a coal-fired steam generator. If the FER were in the range of 2%-4%, as estimated by several academic sources, natural gas could produce 50%- 58% of the life-cycle GHG emissions of coal. (These estimates represent the impacts that emissions have when averaged over the first 100 years after their release. The impacts can change depending upon the time frame assessed, as discussed further in the next section.)", "While methane is understood to be a more potent GHG than CO 2 , its characteristics as a radiative forcing agent differ from CO 2 in several ways. When methane is first released into the atmosphere, its capacity to trap heat is approximately 100 times that of CO 2 . However, methane has a shorter lifespan in the atmosphere, degrading in about 12 years compared to approximately 1,000 years for CO 2 . Because of these differences, methane's impacts are commonly measured against CO 2 through the use of an index referred to as \"Global Warming Potential\" (GWP). GWP is a measure of the total energy that an equivalent mass of gas absorbs compared to CO 2 over a particular period of time (generally reported as 20, 100, and 500 years). According to the current index used by EPA, the same amount of methane emissions by mass is approximately 25 times more potent than CO 2 emissions when these impacts are averaged over the first 100 years after their release. This value is relevant when looking at the long-term benefits of eliminating a temporary source of methane emissions versus a CO 2 source.\nHowever, when averaged over the first 20 years, the GWP for methane is estimated to be 72. This figure is arguably more relevant to the evaluation of methane emissions over the next two or three decades (which some contend to be most critical in discussing whether the world can reach the consensus objective of limiting the long-term increase in average surface temperatures to 2 degrees Celsius (°C)). Because the cost-benefit analysis of climate policy choices can vary greatly depending upon the assessed time frame, many studies—including this report—present emissions estimates for both the 100-year and 20-year scenarios.", "Considering a 20-year time frame, the life-cycle GHG emissions estimates for existing coal-fired and natural-gas-fired power plants are represented in Figure 10 .\nFigure 10 illustrates the impacts that several different values for FER in the natural gas production and transport sector have on the overall life-cycle emissions estimates of natural gas power generation when averaged over the first 20 years after their release. Notably, if the FER is close to the 1.15%, as currently estimated by DOE/NETL, the generation of one MWh of electricity in an average U.S. natural-gas-fired combined cycle power plant in 2013 would produce approximately 51% of the life-cycle GHG emissions of a coal-fired steam generator. If the FER were in the range of 2%-4%, as estimated by several academic sources, natural gas could produce 60%- 80% of the life-cycle GHG emissions of coal. The difference between the 20-year and 100-year estimates is not insignificant, and this range highlights the importance that time frames have on life-cycle GHG emissions assessments.\nFigure 9 and Figure 10 capture snapshots of the averaged impacts of methane at the 100-year and the 20-year marks, respectively. A full range of methane's GWP is charted in Figure 11 , which shows the averaged impacts of methane vis-à-vis CO 2 through the first 150 years after its release.\nIt should be noted that the scientific community periodically revises the reported values of GWP as a result of ongoing research. EPA currently employs GWP values for methane that were accepted by parties to the United Nations Framework Convention on Climate Change (UNFCCC) as they were presented in the Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report 2007 (AR4). The AR4 lists methane's GWP as 25 and 72 over a 100-year and a 20-year time horizon, respectively. The AR4 GWP values are reflected in the calculations for Figure 4 through Figure 9 of this report.\nHowever, in September 2013, the IPCC released its Fifth Assessment Report 2013 (AR5). AR5 lists methane's GWP as 34 and 86 over a 100-year and a 20-year time horizon, respectively. While these values have yet to be accepted officially by parties to the UNFCCC or by EPA, they are currently employed by much of the academic literature. The use of AR5 GWP values in LCAs serves to further the convergence between the life-cycle GHG emissions intensities of coal-fired and natural-gas-fired power generation when considering higher fugitive emissions rate scenarios for natural gas systems.\nFigure 12 presents the life-cycle GHG emissions estimates for existing coal-fired and natural-gas-fired power plants under the IPCC AR5 GWP values. The figure shows emissions from natural-gas-fired power plants based on several different estimates of FER. Notably, if the FER is close to the 1.15%, as currently estimated by DOE/NETL, the generation of one MWh of electricity in an average U.S. natural-gas-fired combined cycle power plant in 2013 would produce approximately 48% of the life-cycle GHG emissions of a coal-fired steam generator when averaged over a 100-year time frame. Conversely, if the FER were in the range of 2%-4%, as estimated by several academic sources, natural gas could produce 63%-87% of the life-cycle GHG emissions of coal when averaged over a 20-year time frame.", "The difference between the estimates—that natural-gas-fired power generation can have 48% of the emissions of coal-fired power generation and 87% of the emissions of coal-fired power generation—is sizeable. This range highlights the importance that assumptions regarding power plant efficiency, FERs, and GWPs have on the life-cycle GHG emissions comparisons among different types of fossil-fuel-fired power plants. To capture a fuller picture of this comparison, Figure 13 employs a range of variables over a continuous timeline to present life-cycle GHG emissions estimates between existing coal-fired and natural-gas-fired power plants. The figure illustrates that given a FER of around 1.00%, and given GWP values from IPCC AR4, the generation of one MWh of electricity in an average U.S. natural-gas-fired power plant in 2013 would produce approximately 50% of the life-cycle GHG emissions of a coal-fired steam generator across the entire time frame for which it would be measured. However, if the FER were in the range of 2%-4%, as estimated by some academic sources, the impacts of life-cycle emissions from natural-gas-fired power generation could be comparable to coal-fired power generation initially (within 5%-35%) and could remain within range of the coal plant's life-cycle emissions over the first 20 years after the emissions (within 20%-40%).\nThe analysis in Figure 13 would be applicable for policy discussions regarding fuel-switching strategies from coal to natural gas in the existing fleet of U.S. power generators (e.g., similar to potential actions under EPA's proposed GHG emissions standards for existing power plants (EPA's Clean Power Plan)).\nSome stakeholders contend that another relevant metric for comparing natural-gas-fired and coal-fired power generation would be to examine the life-cycle GHG emissions intensities of new, advanced power plant models. Figure 14 presents the life-cycle GHG emissions estimates between the most efficient, advanced coal-fired power plant model and the most efficient, advanced natural-gas-fired power plant model (from Table 1 ) using IPCC AR5 GWP values. The figure illustrates that given a FER of around 1.00%, life-cycle GHG emissions from the generation of one MWh of electricity in an advanced natural-gas-fired power plant model would begin approximately 35% lower than a coal-fired model in the short term and improve to approximately 45% lower in the long term. Further, if the FER were in the range of 2%-4%, as estimated by some academic sources, the impacts of life-cycle emissions from advanced natural-gas-fired power generation could be near or greater than advanced coal-fired power generation initially (from 20% less to 20% greater) and could remain within range of the advanced coal plant's life-cycle emissions over the first 60 years after the emissions (within 20%-35%).\nThe analysis in Figure 14 would be applicable for policy discussions regarding fuel use choices for new, or significantly modified, power plant construction.", "In debates about energy policy, many assert that natural gas has approximately half the CO 2 emissions of other fossil fuels. While this statement is accurate in some cases and under certain conditions, it is not complete. The net climate impact of replacing other fossil fuels with natural gas depends upon a number of analytic choices, including the following:\nThe fuel being replaced (e.g., coal, fuel oil, gasoline, diesel), The end-use sector (e.g., electricity generation, transportation, home heating), The equipment or facility within the sector (e.g., all existing power plants, only the least efficient existing power plants, new power plant configurations), The rate and extent to which a sector will be converted, The time period over which the impacts will be estimated, The fuel cycle (e.g., combustion cycle, production cycle, \"cradle-to-grave\") and specific production processes modeled (e.g., conventional vertical wells, hydraulically fractured horizontal wells), and The GHGs modeled (e.g., CO 2 , methane, nitrous oxide).", "Analyzing the fullest practicable range of these choices and using the best available data and scientific understanding, the following results are reported:\nComparisons of the life-cycle GHG emissions intensities for natural-gas-fired and coal-fired power generation are sensitive to each assessment's reported data as well as the choice of boundaries and input parameters. In some cases, the accuracy of data is as uncertain as it is significant. Natural gas combustion, on a per-unit-of-energy basis, produces approximately 56% of the CO 2 emissions of coal. Natural gas, when combusted at different types of existing U.S. power plants, produces anywhere from 42% to 63% of the CO 2 emissions of coal, depending upon the power plant technology. However, in order to more fully assess the climate impacts of a fuel employed in the power sector, analyses aim to aggregate emissions across the entire supply and utilization chain (i.e., from extraction to end use). Such analyses are referred to as life-cycle assessments (LCAs). Due to its potency as a GHG, methane lost to the atmosphere during the production and transport of fossil fuels can greatly impact the life-cycle GHG emissions estimates for power generation. DOE and EPA currently estimate a FER of around 1% in natural gas systems; a number of academic studies estimate FERs in the range of 2%-4%. Estimates for coal production are similarly uncertain. Further, due to its chemical composition, methane's climate impacts are significantly more pronounced in the short term as compared to the long term. Thus, when considering existing power plants, a natural-gas-fired combined cycle power plant produces approximately 50% of the life-cycle GHG emissions of a coal-fired steam generator, both in the short and the long terms, given a FER of around 1% in natural gas systems. However, when considering other existing natural-gas-fired technologies (e.g. single cycle), or advanced technologies, the comparative life-cycle emissions benefits of natural gas are reduced. Further, when considering the possibility of higher fugitive emissions rates for natural gas production and transport activities (e.g., 2%-4%), the life-cycle GHG emissions of existing natural-gas-fired technology could be comparable to coal-fired power generation initially (within 5%-35%) and could remain within range of the coal plant's life-cycle emissions over the first 20 after the emissions (within 20%-40%). Similarly, when comparing advanced power plants under the possibility of higher fugitive emissions rates (e.g., 2%-4%), the life-cycle GHG emissions of natural-gas-fired technology could be near or greater than coal-fired power generation initially (from 20% less to 20% greater) and could remain within range of the coal plant's life-cycle emissions over the first 60 years after the emissions (within 20%-35%).", "The results illustrate that the choices made in power generation regarding supply chains, production technologies, and consumption patterns can impact a fuel's life-cycle GHG emissions in ways both large and small. For this reason, LCA has become an important decision-support tool that has been used to identify the most effective improvement strategies and avoid \"burden shifting\" from one activity or sector to another. Given the results, several points of interest emerge for the consideration of future policy:\nNatural gas resources and technologies are not homogenous. Neither are coal's. The choice of fuel resources, fuel extraction processes, transport options, and power plant technologies for both coal and natural gas returns significant differences in life-cycle GHG emissions estimates. Effective policy considerations would require appropriate specificity and detail. Due to its potency as a GHG, the amount of methane lost to the atmosphere during the production and transport of fossil fuels can greatly impact the life-cycle GHG emissions estimates for power generation. In order to fully understand the climate implications of switching from coal to natural gas in the domestic power sector, improvements are required in the measurement and validation of emissions inventories (i.e., for both coal production and natural gas production). Effective policy considerations would require strategies to attain these inventory improvements. Further, in order to most fully realize the climate benefits of switching from coal to natural gas in the domestic power sector, a FER of approximately 1% is required from natural gas systems. Studies have shown that cost-effective technologies exist to mitigate fugitive emissions from some activities in the natural gas supply chain. Additionally, EPA has recently finalized performance standards for the oil and natural gas sector that may serve to reduce fugitive emissions. Effective policy considerations would require strategies to attain and/or maintain these targeted emissions rates. Given methane's unique characteristics as a GHG (e.g., its short-term potency compared to CO 2 ), effective policy considerations would require an analysis of both the short-term and the long-term climate implications of a fuel's life-cycle GHG emissions. The analysis would likely spur debate over the proper weight to place on both short- and long-term assessments of the costs and benefits of fuel-switching strategies. This report compares the life-cycle GHG emissions between coal and natural gas in the domestic power sector. It does not analyze other fuel-switching strategies that support natural gas (e.g., from coal-fired electricity to distributed natural gas in the home heating sector, from petroleum products to compressed natural gas in the domestic transportation sector, or from regional coal to imported liquefied natural gas in international markets ). These other scenarios would require different analytic inputs and wholly separate assessments. Effective policy considerations would require data and analysis with the appropriate LCAs. This report compares the life-cycle GHG emissions between coal and natural gas in the domestic power sector. It does not analyze other energy options. A full assessment of the climate implications of fuel-switching strategies in the domestic power sector would require a series of LCAs for the full range of energy options, including other fossil fuels and their derivatives, as well as biofuels, biomass, hydropower, nuclear, geothermal, solar, wind, and other renewables. This report compares the life-cycle GHG emissions between coal and natural gas in the domestic power sector. It does not analyze the net benefits of natural gas to the general economy (i.e., inclusive of jobs, investments, infrastructure, national security, human health, safety, and other environmental impacts). A full assessment of the costs and benefits of fuel-switching strategies would demand an integrated analysis across all issues." ], "depth": [ 0, 1, 1, 1, 2, 2, 2, 3, 3, 2, 3, 3, 3, 3, 3, 1, 2, 2 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "h0_full", "h1_title", "", "", "h1_full", "", "", "", "", "", "", "", "", "h1_title", "", "h1_full" ] }

{ "question": [ "Why is natural gas an important part of the US energy market?", "What policies could accelerate natural gas development?", "What do stakeholders recommend regarding these policies?", "Why do stakeholders recommend a thorough analysis of these policies?", "What impacts can switching from fossil fuels to natural gas have?", "How can these impacts be assessed?", "What would be a key part of this assessment?", "Why is there confusion about the climate implications of natural gas?" ], "summary": [ "Recent expansion in natural gas production has made the resource an increasingly significant component in the U.S. energy market.", "Examples of federal policies include U.S. Environmental Protection Agency air standards for power plants and vehicles, as well as bills introduced in the 114th Congress to promote increased natural gas production on federal lands, amend provisions in the tax code to incentivize natural gas production and use, and streamline the approval, permitting, and/or construction of natural gas infrastructure.", "For this reason, some stakeholders recommend a thorough analysis of the costs and benefits of these proposals as well as a full assessment of the economic and environmental impacts of increased natural gas development.", "Many of these proposals promote technology and infrastructure investments that could be significant and long lasting. For this reason, some stakeholders recommend a thorough analysis of the costs and benefits of these proposals as well as a full assessment of the economic and environmental impacts of increased natural gas development.", "Fuel-switching strategies from other fossil fuels to natural gas have the potential to impact many segments of the general economy, including jobs, investments, infrastructure, national security, human health, safety, and the environment.", "A full assessment of the costs and benefits of these strategies would demand an integrated analysis across all issues.", "Some contend that an important component of this assessment would be a comparative analysis of the various fuels' greenhouse gas (GHG) emissions.", "On the one hand, a shift to natural gas is promoted as climate change mitigation because natural gas combustion has a lower carbon dioxide (CO2) emissions intensity than either oil or coal. On the other hand, methane, the primary constituent of natural gas, is itself a more potent GHG than CO2, and some contend that methane leakage from the production, transport, and use of natural gas has the potential to offset the GHG emissions benefits of switching." ], "parent_pair_index": [ -1, -1, 1, 1, -1, 0, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "VA Disability Compensation Benefits", "History of the TDIU Benefit and the Eligibility Decision-Making Process", "VBA’s Steps to Measure Accuracy of Disability Compensation Claims Decisions", "The TDIU Beneficiary Population Is Growing, Especially among Older Veterans", "The Number of TDIU Beneficiaries and Benefit Costs Increased Over 5 Years", "The Number of Older TDIU Beneficiaries Has Increased", "VBA’s Guidance, Quality Assurance Approach, and Income Verification Procedures Do Not Ensure That TDIU Decisions Are Well Supported", "VBA Has Provided Incomplete Guidance on How to Determine a Veteran’s Unemployability", "Format and Delivery of TDIU Guidance Does Not Support Efficient Claims Decision-Making", "VBAs’ Quality Assurance Approach Does Not Provide a Comprehensive Assessment of TDIU Decisions", "VBA Does Not Verify Self- Reported Income Eligibility Information", "Options for Revising TDIU Eligibility Requirements", "We Identified Seven Options That Have Been Proposed by Others to Revise TDIU Eligibility Requirements and the Benefit Structure", "Advisory Committee Recommended Revisions to TDIU, but VA Has Not Taken Action", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Analysis of VA Data", "Selection of VA Regional Offices for Interviews and Review of TDIU Claims", "Interviews and Discussion Groups with Regional Office Officials", "Review of VA Files with TDIU Claims", "Review of Options to Revise TDIU Eligibility Requirements and Benefit Structure", "Appendix II: Veterans Benefits Administration’s Approaches to Assess Disability Compensation Claims Decisions", "Other VBA Approaches", "Appendix III: Number of All Total Disability Individual Unemployability (TDIU) Beneficiaries and New TDIU Beneficiaries by Age, Fiscal Years 2009-2013", "Appendix IV: Comments from the Department of Veterans Affairs", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "VA provides monthly disability compensation to veterans with disabling conditions caused or aggravated by their military service. Since 1925, VA has used the Veterans Affairs Schedule for Rating Disabilities (VASRD) to assign disability ratings to veterans based upon the existence and severity of service-connected disabilities. The severity of a disability is based on an average reduction in earning capacity across a group of veterans with similar physical or mental impairments brought on by their service. This degree of severity is expressed as a percentage and is often referred to as a “schedular rating.” For veterans with multiple service- connected disabilities, VA calculates the rating using a table that applies a formula for combining multiple ratings into a single rating. The rating dictates the amount of monthly compensation—set by law—a veteran receives, as shown in table 1. Veterans receiving a 100 percent rating are deemed to have a total disability.", "In 1934, VA revised its disability compensation program to establish TDIU compensation. VA has testified that the TDIU supplemental benefit was created to allow veterans to be deemed totally disabled even if they do not meet the criteria for a 100 percent rating. VA provided the rationale that while the rating schedule is intended to identify impaired earnings reduction for the average veteran, it does not always adequately compensate individual veterans based on their particular circumstances. The TDIU benefit was established during the Depression, when Social Security retirement benefits were passed into law. In 1945, VA established that age was not to be considered a factor in evaluating entitlement to TDIU.\nToday, TDIU benefits are generally a way VA can increase an eligible veteran’s schedular disability rating to 100 percent based on the veteran’s inability to earn income above the amount set by federal poverty guidelines because of their service-connected disabilities. To be eligible for TDIU compensation, a veteran must have a single service-connected disability rated at least 60 percent or multiple disabilities with a combined rating of at least 70 percent (with at least one disability rated at 40 percent or higher). In addition, the veteran must be unable to obtain or maintain “substantially gainful employment” as a result of these service- connected disabilities. VA generally considers “substantially gainful employment” to be employment above the federal poverty guidelines— $11,490 for an individual with no dependents in 2013. VA refers to the inability to maintain gainful employment as “unemployability.” Because a TDIU award yields a higher rating percentage, it leads to higher levels of compensation above the base schedular rating amount. For example, the rating for a veteran with no dependents could be increased from 60 percent ($1,026 per month) to 100 percent ($2,816 per month), an increase of $1,790 per month—or $21,480 a year.\nDisability compensation claims processing, including TDIU claims, is performed at 57 VBA regional offices. See figure 1 for a description of how TDIU-related claims processing is performed. Veterans are assigned a VASRD rating through VBA’s review of their service-connected disabilities. When a claim for TDIU benefits is raised, a rating specialist determines if the veteran meets the schedular rating requirements and is unemployable. The rating specialist considers additional evidence— beyond that related to the veterans’ military service and medical diagnosis required to decide a disability compensation claim—to decide whether the veteran’s service-connected disabilities make them unemployable. In determining unemployability, the rating specialist reviews the veteran’s employment history as well as the reason(s), if any, for termination of employment. Unlike other benefit programs, such as Social Security Disability Insurance (SSDI), VA does not consider reaching retirement age as a cause for ineligibility.\nOnce veterans begin receiving TDIU benefits, VBA reviews TDIU beneficiaries’ employment and income annually to determine whether they continue to meet the eligibility requirements. VA terminates the supplemental TDIU benefits for those who do not provide the required information or are determined no longer eligible. VA requires beneficiaries to annually self-certify their employment and income. Specifically, in an Employment Questionnaire required for the continuation of TDIU benefits, the beneficiaries report their employment status during the previous 12 months including the type of work, hours worked, time lost for illness, and highest gross earnings per month. A beneficiary’s income can exceed the income threshold for twelve consecutive months before VA discontinues the TDIU benefit.", "VBA measures the accuracy of disability compensation claim decisions mainly through its Systematic Technical Accuracy Review (STAR), including TDIU claims. Specifically, for each of the 57 regional offices, completed claims are randomly sampled each month and the data are used to produce estimates of the accuracy of all completed claims. VA reports national estimates of accuracy from STAR reviews to Congress and the public through its annual performance and accountability report and annual budget submission. VBA also produces regional office accuracy estimates, which it uses to manage the compensation benefits program. Beginning in October 2012, VBA began using data from STAR reviews to also produce issue-based estimates of accuracy that measure the accuracy of decisions on the individual medical conditions within each claim. VBA also performs local quality reviews conducted by regional office quality review teams (QRT) formed to assess and monitor quality of staff performance and decisions. Specifically, QRTs review completed claims to assess individual rating specialist’s performance. In addition, QRTs review in-process claims, which are claims that the specialists have not yet finalized, to identify common errors and help prevent inaccurate decisions. See appendix II for additional information on these and other VBA quality assurance measures.\nIn November 2014, we issued a report on VBA’s quality assurance efforts. We found, among other matters, that VBA had not always followed generally accepted statistical practices when calculating accuracy rates through STAR reviews, resulting in imprecise performance information. We also identified shortcomings in QRT practices and implementation that could reduce their effectiveness. We made a number of recommendations to VA to improve its measurement and reporting of accuracy, review the multiple sources of policy guidance available to claims processors, enhance local data systems, and evaluate the effectiveness of quality assurance activities. VA concurred with our recommendations. See appendix II for additional information on STAR and QRT reviews.", "", "In fiscal year 2013, 332,934 veterans received TDIU benefits, an increase of 22 percent since fiscal year 2009, as shown in table 2. In 2013, there were 31,159 veterans who began receiving TDIU for the first time; that is, new beneficiaries. Moreover, the number of new beneficiaries increased in each of the 4 years we compared to the subsequent year and represented about 9 to 10 percent of the overall TDIU population in each of the 5 years we examined. Similar to the number of new beneficiaries, the number of beneficiaries whose benefits were discontinued also increased in each of the 4 years we compared; these discontinued beneficiaries comprised from 4 to 6 percent of the TDIU population. Overall, of the 74,224 beneficiaries whose benefits were discontinued from fiscal year 2009 through fiscal year 2013, 69 percent were discontinued due to the death of the beneficiary. Benefits were discontinued for the remaining 31 percent because beneficiaries generally either (1) earned enough income to exceed the income threshold, (2) failed to submit the required annual Employment Questionnaire for the continuation of benefits, or (3) received a change to their schedular rating.\nOverall, TDIU beneficiaries make up a substantial portion of the group of veterans who receive benefit payments at the 100 percent disability compensation rate. In fiscal year 2013, there were 3.7 million veterans receiving disability benefits and those with service-connected disabilities who receive benefit payments at the 100 percent disability compensation rate accounted for 712,000 of the 3.7 million, as shown in figure 2. Within the population of veterans whose benefits were paid at the 100-percent rate, TDIU beneficiaries made up 45 percent.\nAccording to data provided by VA, TDIU beneficiaries received disability compensation payments totaling approximately $11 billion in fiscal year 2013, as shown in figure 3, which represented a 30 percent increase—or approximately $2.5 billion—since fiscal year 2009.\nIn fiscal year 2013, over two-thirds of TDIU beneficiaries had dependent family members, which increased their benefits payments, while 31 percent were single with no dependents. These TDIU beneficiaries received higher benefit payments depending on (1) whether the beneficiary had a spouse, dependent parent, and/or child and (2) the number of such dependents. For example, when comparing the payments beneficiaries received in fiscal year 2013, a TDIU beneficiary with no dependents received $2,816 per month, a beneficiary with a spouse and no other dependents received $2,973, while a beneficiary with a spouse and one child received $3,088.\nWe estimate that, in fiscal year 2013, the TDIU benefit was a $5.2 billion supplemental payment above what beneficiaries would have received at their regular scheduled rating in the absence of TDIU benefits. VA does not track the overall costs of TDIU benefits, so we used disability compensation payment rate information, data on the TDIU beneficiary population, and data on the population of all new beneficiaries to calculate this estimate. For more information on how we calculated this estimate, see appendix I.", "The number of older beneficiaries (age 65 and older) increased for each of the 5 years we examined and by fiscal year 2013, they represented the majority (54 percent) of the TDIU population, as shown in figure 4. By 2013, 180,043 beneficiaries fell within this age group, representing a 73 percent increase from fiscal year 2009. Of these older beneficiaries, 56,578 were 75 years of age and older in fiscal year 2013 while 10,567 were 90 years of age and older. The number of younger beneficiaries (under 40 years of age) increased by 56 percent from fiscal year 2009 through 2013, although they made up a small proportion (5 percent) of the overall TDIU population in fiscal year 2013. In contrast to the growth in the number of older and younger beneficiaries, the number of middle- aged beneficiaries (aged 40 to 64) dropped by 14 percent to about 136,000 beneficiaries in fiscal year 2013.\nThe increase in older beneficiaries, as described above, was largely attributable to older beneficiaries who began receiving TDIU benefits for the first time. Fifty-three percent of the increase in older beneficiaries, from fiscal year 2009 through fiscal year 2013, was attributed to the new older beneficiaries. The rest of the increase in older beneficiaries was attributed to aging of the existing TDIU population, with middle-aged workers (aged 40 to 64) aging into the age 65 and over population. A year-by-year breakdown is shown in figure 5. In comparing the new beneficiary population in fiscal years 2009 and 2013, the number of new older beneficiaries more than doubled to reach 13,259 beneficiaries. Of these new older beneficiaries, 2,801 were aged 75 and over while 408 were aged 90 and over. See appendix III for the breakdown of new older beneficiaries by age groups.", "", "VBA provides guidance to rating specialists to help them determine if veterans meet the eligibility requirements for TDIU benefits. This guidance tasks rating specialists, based upon the evidence at hand, to determine veterans’ unemployability; it also recognizes that the process is subjective and involves professional interpretation. The guidance briefly lists factors that rating specialists should consider when deciding if a veteran is unemployable. For example, rating specialists should, as appropriate, consider medical opinions, treatment records, notes from vocational rehabilitation efforts, and receipt of Social Security disability benefits. The guidance also briefly lists factors that rating specialists are to treat as “extraneous” and therefore exclude from their analysis, such as a veteran’s age, the availability of work in the community, and the effects of non-service-connected disabilities on the ability to work.\nHowever, the guidance provided by VBA on which factors to consider when determining if a veteran is “unemployable” is incomplete in three ways, creating potential variation in TDIU claim decisions. First, rating specialists in some (5 of 11) of the discussion groups we held at five regional offices disagreed on whether they are permitted to consider additional factors that are not specifically mentioned in VBA’s guidance. Rating specialists held varying opinions on whether factors such as enrollment in school, education level, or prior work history should be used to decide the benefit claim. Some examples of the variability in decisions this incomplete guidance results in are shown in the examples below:\nA rating specialist recently reviewed a claim for TDIU that was submitted by a veteran suffering from traumatic brain injury. The rating specialist found that the veteran was enrolled in school part time and earning A’s in engineering classes, which the specialist felt clearly demonstrated employability. However, another rating specialist within the group stated that the veteran’s enrollment in classes would not be part of her decision-making.\nA rating specialist granted benefits to a veteran with an 8th grade education because the specialist felt the veteran was unqualified for work other than the lumberjacking he had performed since leaving the military, despite the fact that the examiner found that the veteran could work in a job with fewer physical demands. A fellow rating specialist agreed that the veteran was qualified for few jobs, but would not have granted the benefit because the veteran’s physical restrictions did not disqualify the veteran from certain other jobs.\nAnother rating specialist denied benefits for a veteran who was a retired dentist. The veteran’s medical examiner submitted a written opinion that the veteran could not perform dental work due to his inability to stand; however, the rating specialist decided the veteran’s prior work in such a high-skilled career was an indication that he could engage in a different line of work. Yet, another rating specialist stated that he would have instead relied solely on the opinion of the medical examiner and consequently granted the TDIU benefit.\nSecond, rating specialists noted that for those factors that rating specialists can consider in their decision-making process, the guidance is silent on which factors, if any, should be given greater priority or weight. We confirmed that this information was not in the manual or guidance provided by VBA. As a result, during 5 of our 11 discussion groups with rating specialists, we heard differences in opinion about the primacy of factors rating specialists applied when making a decision on unemployability. The majority of rating specialists in the discussion groups (7 of 11) specifically noted that they could come to an opposite decision when reviewing the same evidence if the evidence were weighed differently. For example, during a few of these discussion groups, rating specialists told us they relied heavily on medical opinions while others considered Social Security Disability Insurance (SSDI) payments as the strongest marker of a veteran’s inability to work. In another instance, a rating specialist told us that a medical opinion was always weighted more heavily than all other evidence in the veteran’s file while another specialist expressed a hesitancy to rely too much on the examiner’s opinion.\nThird, the guidance does not provide instruction on how to separate extraneous factors from allowable ones. Some of the discussion groups (6 of 11) told us that not having this guidance was a significant challenge for them. Findings from our case file reviews also illustrate this issue: one file described a 77-year-old veteran claiming TDIU benefits for blindness that was caused by (1) a service-connected disability, (2) glaucoma, and (3) macular degeneration. However, because all three conditions related to the veteran’s quality of vision, the rating specialist noted in the file her difficulty separating the effect of the service-connected disability from the non-service-connected glaucoma and macular degeneration due to the man’s age. Rating specialists also told us that despite guidance to the contrary, they still consider age as a factor. At one end of the age spectrum, specialists in the majority (7 of 11) of the discussion groups told us that they have difficulty rationalizing granting benefits to veterans beyond 65 years of age. In each of these groups, at least one rating specialist provided an example of when they may consider age as a factor in the TDIU benefit decision. For example, one rating specialist shared a case of an older veteran who retired from police service more than 10 years before applying for TDIU benefits. He specifically had a concern with program rules which did not allow him to consider the veteran’s age and retirement status. At the other end of the age spectrum, rating specialists in four of the discussion groups described difficulties in granting TDIU benefits for younger veterans because they do not want these veterans, in the future, to be discouraged from attempting a return to work for fear of losing the benefit.", "Rating specialists in the majority (7 of 11) of our discussion groups at five regional offices reported that VBA’s guidance for reviewing TDIU claims is formatted and delivered in ways that make it difficult for them to complete their decision-making responsibilities in an efficient manner. Federal internal control standards highlight the need for collecting, consolidating, and distributing pertinent information in a form that allows employees to perform their duties efficiently. For several reasons, VBA’s guidance falls short of this standard. First, TDIU guidance is delivered using multiple formats, including manuals, policy and procedure letters, summaries of relevant legal decisions, frequently-asked-question responses, monthly bulletins, feedback from quality assurance reviews, e- mails, and internal webpages. However, the information provided in these various forms can also vary, making it challenging for rating specialists to have a definitive source for TDIU benefit decision guidance. Moreover, some of the guidance, for example the information provided to frequently- asked-questions, is sent only to the regional office which submitted the question, according to rating specialists in a couple of the 11 discussion groups. Second, VBA rating specialists in 8 of the 11 discussion groups told us they have difficulty finding the most current guidance. While VBA has a manual for TDIU benefit decisions, officials at all six regional offices told us that the manual is outdated. VBA officials acknowledged this condition and stated they issue interim guidance in many forms between manual updates because such updates are time-consuming and difficult to do on a regular basis. Third, rating specialists in a couple of the discussion groups told us that the guidance they receive typically lacks search features, which may allow them to readily find the most current TDIU guidance. For example, the rating specialists described having to read through numerous bulletins to find guidance on TDIU and then look for the specific guidance they need as opposed to being able to use a key word search to capture all related information.\nSome VBA central and regional office efforts address the disparate nature of the guidance. To locate guidance more readily, two of the six regional offices we visited had developed “cheat sheets,” which they said captured all of the guidance into a single searchable document. VBA officials also told us they are taking steps to develop an electronic manual that is intended to consolidate and replace many other forms of guidance, including manuals and memoranda of policy changes, for processing all claim types and will include a search feature. VBA is initially creating a web portal to house all existing guidance and subsequently will consolidate the guidance into one processing manual. VBA has completed two of the four stages for the web portal and is in the process of rewriting the manual. Officials told us they plan to complete the consolidation by the end of fiscal year 2015.", "VBA’s quality assurance approach—accomplished mainly through its Systematic Technical Accuracy Review (STAR)—may not be providing a comprehensive assessment of TDIU claim decisions. The agency’s current approach does not allow it to identify variations in these decisions or ascertain the root causes of variation which may exist. Federal internal control standards state that agencies should assess performance using control activities, such as quality assurance checks, and that performance information should provide agency officials with information on the extent to which claims decisions are complete, accurate, and consistent.\nHowever, VBA’s quality assurance standards indicate that a quality assurance officer reviewing TDIU decisions for errors cannot substitute his or her professional opinion with the opinion of the rating specialist who made the original decision. The officer cannot substitute, for example, his or her interpretation of the medical and vocational evidence, as well as an interpretation of the underlying regulations governing the benefit. For the quality assurance officer to decide that the rating specialist made an error, it must be clear and undebatable. Because of this high standard, a STAR review of a sample of claims finalized during the first three quarters of fiscal year 2014 determined that nearly 95 percent of TDIU claims (872 of 920) were error-free. Of the 48 claims found to contain an error, all the errors were found to be “procedural,” such as an incorrect date for the onset of unemployability. No “decisional” errors were found, which are errors in the decision to grant or deny the benefit. According to VBA officials, it is unlikely that they will find many decisional errors because there is so much individual judgment allowed in TDIU claim decisions, and VBA’s quality assurance standards do not allow for the reevaluation of the professional opinion of the original rating specialist.\nBeyond STAR, the regional offices also conduct quality review team (QRT) reviews for disability compensation claim decisions in general, but these reviews may not be providing much insight into the completeness, accuracy, and consistency of TDIU claim decisions. The regional offices use QRT reviews to identify trends in error and review individual rating specialist’s performance (for past claim decisions as well as claims still in review). However, VBA officials in almost all (5 of 6) of the regional offices told us that these reviews generally include very few TDIU claims. Moreover, QRT reviews apply a similar approach to calculating errors as STAR reviews. For example, QRT reviews give deference to professional opinion and officials we spoke with noted that questionable decisions made by rating specialists are typically coded as a “training comment” rather than as an “error.” In such instances, QRT officials discuss the claim with the rating specialist. Only one of the regional offices we visited was systematically tracking the type of TDIU errors in its QRT review process.\nQuality assurance approaches that VBA has used with non-TDIU disability compensation claims suggest that other options may be available to generate additional insight into a comprehensive assessment of the completeness, accuracy, and consistency, as well as possible enhancements, of TDIU claims decisions. For example, as we reported in 2014, VBA conducted a targeted review of military sexual trauma claims using a consistency questionnaire to test rating specialists’ understanding and interpretation of policies in response to concerns that post-traumatic stress disorder claims related to military sexual trauma were not being accurately decided. Performing a similar review to gauge the degree of consistency in TDIU claim decisions could help VBA identify differences— perhaps beyond reasonable limits—in how rating specialists interpret the guidance and apply their professional judgment. Further, measuring consistency of decisions for specialists working in different regional offices could provide additional insight. VBA has used other quality assurance approaches to assess non-TDIU disability compensation claim decision-making, which are discussed in greater detail in appendix II. While we recognize that TDIU benefit decisions have an inherently subjective component, the current approach that VBA uses cannot ensure that the decisions are comprehensively assessed for completeness, accuracy, and consistency.", "While VBA requires TDIU claimants and beneficiaries to provide information on their employment earnings, VBA places the benefits at risk of being awarded to ineligible veterans by not using third-party data sources to independently verify self-reported earnings. To begin receiving and remain eligible for TDIU benefits, veterans must meet the income eligibility requirements. VBA first determines a claimant’s income by requesting information on the last 5 years of employment on the claim form and subsequently requires beneficiaries to annually attest to any income changes. Rating specialists use the information provided by claimants to request additional information from employers and, when possible, verify the claimant’s reported income, especially for the year prior to applying for the benefit. In order to receive verification, VBA sends a form to the employers identified on the veteran’s benefit claim and asks them to provide the income earned by the veteran. However, VBA officials indicated that employers provide the requested information only about 50 percent of the time. This estimate was consistent with what we heard from our discussion groups of rating specialists and the number of completed forms found in the files we reviewed. Rating specialists in 5 of the 11 discussion groups told us the low response rate is often due to businesses having closed, lack of incentives to return the form, and staff at human resources offices being unfamiliar with the veteran. If VBA does not receive verification from a veteran’s employer after multiple attempts, it accepts the veteran’s claimed earnings. None of the rating specialists in the 11 discussion groups we held in five regional offices discussed other ways of verifying the self-attested income that beneficiaries’ report on the initial TDIU claim or the annual form that must be submitted to continue to receive benefits. However, one rating specialist explained that in the rare instances when beneficiaries indicate earning above the income threshold, the specialists review additional documents, such as tax documents, submitted by the veteran.\nVBA previously conducted audits of beneficiaries’ reported income by obtaining income verification matches from Internal Revenue Service (IRS) earnings data through an agreement with the Social Security Administration (SSA), but is no longer doing so. For example, VBA obtained reported income annually and compared lists of TDIU beneficiaries to their self-reported income. VBA officials told us that the agency is not performing income verification matches for TDIU claims despite having standing agreements with the IRS and SSA to do so. In 2012, VBA suspended income verification matches to allow for the development of a new system that would allow for more frequent, electronic information sharing. VBA officials told us that they plan to roll out a new electronic data system that would allow for compatibility with SSA data sources in fiscal year 2015. They noted that they plan to use this system to conduct more frequent and focused income verifications to ensure beneficiaries’ continued entitlement. VBA officials also anticipate being able to use the system to conduct income verifications for initial TDIU applicants beginning in fiscal year 2016. However, they did not provide us with a plan or timeline for implementing this verification system.\nIn addition, VA has not fully taken advantage of previous opportunities to use the National Directory of New Hires (NDNH) to verify self-reported income information for the TDIU program. The NDNH, which is maintained by the Department of Health and Human Services (HHS), was established in part to help states enforce child support orders against noncustodial parents and contains more timely state wage information. The NDNH also includes data from state directories of new hires, state records of unemployment insurance benefits paid, and federal agency payroll data, all of which can be used to help establish a picture of a claimant’s work history and earnings. NDNH data are updated at least quarterly, providing a more recent snapshot of earnings than the IRS wage information that SSA obtains. However, access to the NDNH is limited by statute. In our 2006 report on VA’s TDIU benefits, we recommended that VA use this directory to enforce earnings limits in their programs. VA was subsequently granted temporary statutory authority, twice, to access the NDNH for use in employment and income verification. Specifically, VA had such access from December 26, 2007, through November 18, 2011, and again for a period of 180 days beginning on September 30, 2013. VA, however, never reached an agreement with HHS to use the data during these time periods due to its limited financial and workforce resources at the time, according to officials. VA no longer has statutory authority to access the NDNH data. SSA, on the other hand, does have statutory access to NDNH data, and SSA’s Office of the Inspector General (OIG) recently reviewed the accuracy and effectiveness of NDNH data in identifying overpayments for SSA benefit programs including SSDI. The OIG concluded that NDNH’s quarterly data specifically aided SSA in identifying $141 million in improper payments in fiscal year 2009.", "", "Based on a review of literature, we identified a number of options proposed by others for revising the TDIU benefit: six focused on revising eligibility requirements and one that would change the benefit structure. More specifically, the six eligibility-related options involve changing existing requirements in various ways, for example, setting age limits, lowering the disability rating requirement, or increasing the income thresholds. The seventh option we identified would affect the benefit structure by lowering, but not immediately eliminating, the TDIU benefit payments as beneficiaries earned income beyond the eligibility limit.\nBased on interviews with selected experts and representatives of veterans service organizations (VSO), we identified a range of potential strengths and challenges associated with each option. When discussing the potential strengths and challenges of each option, the experts and VSO representatives commonly mentioned the equity of the proposed change, an increase or decrease of VA’s management and administration efforts and cost, and the effect on veterans. There was a range of opinions from the experts and VSO representatives across the options’ strengths and challenges. Moreover, some stakeholders expressed opposite views, which could be attributable to differences in the interpretation of the material as well as differing policy stances. We did not independently assess the individual merits or accuracy of the views expressed by these experts and VSO representatives; however, we recognize that weighing and possibly implementing any of these revisions would be a complex process. For example, a couple of the options present possible opportunities for VA to better target TDIU benefits to veterans who are unemployable, but implementation of these options could pose challenges in ensuring that all veterans are treated equitably. Each of the seven options and the potential strengths and challenges identified by stakeholders that we interviewed are summarized below.\nDiscontinue beyond retirement age: Discontinue the TDIU payment when the veteran reaches Social Security’s full retirement age (65 to 67, depending on birth year). This option was proposed by the Congressional Budget Office (CBO) in 2013. CBO based this option on the rationale that most veterans who are older than Social Security’s full retirement age would not be in the labor force because of their age, and that a lack of earnings among them would probably not be attributable to service- connected disabilities. CBO also noted that veterans over age 65 who currently receive TDIU benefits—most of whom began receiving them in their 50s—would likely have income from other sources, including the regular VA disability compensation benefit and Social Security retirement benefits. CBO also provided an argument for retaining the current policy, noting that the benefit should be based solely on an ability to work and that using age as a factor would be unfair. CBO stated that some disabled veterans would not be able to replace the TDIU supplement and that their Social Security retirement benefit and personal savings are low. If the option to discontinue TDIU payments when the veteran reaches Social Security’s full retirement age were implemented, the veteran would continue to receive disability compensation payments at a dollar amount appropriate to the underlying VA disability rating. Veterans beyond Social Security’s full retirement age at the time of their initial application would be ineligible for TDIU. CBO did not address how the discontinuance of TDIU benefits could possibly interact with Social Security retirement benefits.\nThe age restriction proposed in this option has been implemented in the federal Social Security Disability Insurance (SSDI) program. In SSDI, once program beneficiaries reach full retirement age, their benefit converts to a Social Security retirement benefit, although the amount of their benefit payment remains the same.\nPotential Strengths Identified by Stakeholders\nCould better target the intended population—older veterans might not be likely to work past retirement age.\nBenefit costs might be reduced due to the reduction in payments to older veterans.\nPotential Challenges Identified by Stakeholders\nSome veterans might not have income replacement available— especially those who had been on TDIU in advance of reaching retirement age.\nCould be unfair to veterans—older individuals might have the option of working past the retirement age, but older veterans whose service-connected disabilities stop them from working cannot.\nConsider vocational assessment: Consider the results of a mandatory vocational assessment before granting TDIU benefits. The Institute of Medicine of the National Academies (IOM) has reported that there are vocational counselors with the appropriate education and training to assess employability, but not all veterans who claim TDIU receive such an evaluation. The vocational assessment would address whether the veteran could be rehabilitated in order to maintain employment. In addition, rating specialists working on TDIU claims would receive training in how to interpret the findings from the vocational assessment. Rating specialists would then be able to use this assessment, along with the results of medical reports and other information, to help determine the veterans’ ability to engage in work activities.\nPotential Strengths Identified by Stakeholders\nCould help provide a more complete appraisal of the veteran’s ability to work.\nPotential Challenges Identified by Stakeholders\nCould require VA to expand its vocational rehabilitation program to address the increase in required assessments.\nCould cause delays in benefit decisions.\nRating specialists and vocational rehabilitation counselors might need to receive additional training on how to assess the vocational rehabilitation findings.\nCould increase the burden on veterans as they would likely need to submit to an additional assessment.\nBy adding a new factor to consider, could possibly increase the subjectivity of claim decision-making, thereby possibly creating more variation in decisions.\nGradually reduce payment: Implement a gradual reduction in the TDIU payment as the veteran, in returning to work, exceeds the maximum income that determines eligibility for TDIU, which was $11,888 per year for an individual in fiscal year 2013. The existing TDIU regulations call for a discontinuation of a TDIU benefit once a veteran has income above the maximum after having worked for more than a year. IOM found that, as a consequence, the beneficiary’s total monthly disability payment could be reduced by anywhere from 40 percent to 64 percent. This reduction represented the drop in disability pay from the 100 percent disability rating, which the veteran received with TDIU, to the pay at their regular scheduled disability rating. They noted that this drop in disability payments might deter some veterans from trying to return to work.\nThe option to implement a gradual reduction in the TDIU payment is similar to the design of a program SSA is testing for SSDI beneficiaries, which reduces payments by $1 for every $2 of income earned beyond the maximum allowed to maintain eligibility. Participants in the program have also received benefits counseling with the goal of helping them to return to work.\nPotential Strengths Identified by Stakeholders\nBeneficiaries could have an incentive to return to work since the beneficiary would continue to earn benefits even as they earned income beyond the maximum allowed instead of losing the benefits entirely.\nCould reduce the total amount of benefits paid out by VA since some beneficiaries would receive reduced benefit payments as they earn income beyond the maximum income.\nCould provide positive mental health improvements as the beneficiaries return to work.\nPotential Challenges Identified by Stakeholders\nBeneficiaries could have a disincentive to work if the resulting earned income above a certain threshold begins to reduce the benefit payment amount.\nIncrease earnings limit: Increase the maximum earnings limit for TDIU eligibility to match that used in the SSDI, which was $12,480 per year (for a non-blind individual) in fiscal year 2013. Economic Systems, Inc. (Econosys) noted in its study on VA compensation payments that very poor veterans with disabilities would also be eligible for SSDI and, therefore, the maximum earnings limits for TDIU and SSDI should be aligned.\nPotential Strengths Identified by Stakeholders\nCould reduce any confusion for veterans and VA regarding the maximum income allowed to qualify for SSDI and TDIU.\nBeneficiaries could have more earnings and still qualify for TDIU.\nCould be easy to implement the increase.\nPotential Challenges Identified by Stakeholders\nLikely increases VA benefit costs and workload as more veterans qualify for TDIU under the higher earnings limit.\nLower disability rating criteria: Lower the TDIU eligibility criteria for veterans with multiple disabilities to a combined scheduled disability rating of 60 percent. The existing TDIU regulation states that a veteran with multiple disabilities is eligible for TDIU if the combined rating is at least 70 percent so long as one of the multiple disabilities is rated at least 40 percent. The change in the multiple disability ratings threshold would also eliminate the requirement that one of the disabilities have a minimum rating of 40 percent.\nPotential Strengths Identified by Stakeholders\nLowering the criteria could make it easier for veterans to qualify for TDIU if they did not have any disabilities above 40 percent, but were still considered unemployable.\nCould provide consistency in the eligibility criteria since, instead of requiring a 70 percent rating for veterans with multiple disabilities and a 60 percent rating for veterans with a single disability in order for the veteran to be eligible for TDIU, the minimum required rating of a 60 percent disability would be the same for veterans regardless if they had a single or multiple disabilities.\nPotential Challenges Identified by Stakeholders\nCould increase the benefit costs and the workload for VA as more veterans would qualify.\nMay overemphasize the effects of a disability rating comprised of multiple disabilities, which may not be as severe as the effects of a single disability with the same rating.\nAdd new unemployability criteria: Amend the criteria for assessing “unemployability” to include the veteran’s education, work history, and the medical effects of an individual’s age on his or her potential employability. For example, an older veteran with a college education could have the appropriate education and training needed to make it easier to transition to a new type of employment. As noted by IOM, shifts in the labor market have reduced the physical demands for labor, potentially making inclusion of these additional criteria for TDIU decisions appropriate. However, an older veteran with less education and whose experience is limited to a more physically demanding trade might not be able to find alternative employment.\nThe option to amend criteria for assessing “unemployability” is similar to the criteria used to assess certain SSDI applicants, which considers an individual’s education and work history, along with age, to assess the capacity of the applicant to work in other jobs.\nPotential Strengths Identified by Stakeholders\nThe new criteria would add factors that could be relevant for VA to consider when determining whether a veteran is employable.\nPotential Challenges Identified by Stakeholders\nCould be unfair to veterans—veterans who are otherwise similar might not be treated equally when deciding eligibility.\nBy adding multiple new factors to consider, could possibly increase the subjectivity of claim decision-making, thereby possibly creating more variation in decisions.\nRating specialists might need additional training and guidance to ensure consistency in their TDIU benefit decisions.\nVA could incur additional administrative costs as claims could require additional documentation before a decision is made.\nUse patient-centered work disability measure: Adopt a “patient- centered work disability measure” to evaluate TDIU eligibility. In addition to assessing the veteran’s work history, as currently performed, VA would consider other factors, including motivation and interests. To be sensitive to the veteran’s unique circumstances and areas of concern, VA staff would measure multiple factors—impairments, functional limitations, and disability—relevant to health-related work disability. Particular care would be taken to include measures of physical, psychological, and cognitive function.\nPotential Strengths Identified by Stakeholders\nCould provide a more complete appraisal of the veteran’s employability.\nBy applying the assessment consistently to all veterans using the prescribed measures, the results could be standardized— potentially improving the consistency of the decisions.\nPotential Challenges Identified by Stakeholders\nVA could incur additional administrative cost as the measure would require collecting additional information.\nCould delay the benefit decisions while rating specialists collect the additional information required for the measure.\nRating specialists could need additional training and guidance regarding how to apply the measure.\nThis could require VA to make changes to how the agency measures disability, such as through the inclusion of their motivations and interests.", "In 2012, the Advisory Committee on Disability Compensation made recommendations to VA regarding potential revisions to the TDIU benefit, and while VA concurred with those recommendations, it has yet to take actions in response to them. The advisory committee is composed of experts with experience in the provision of VA disability compensation or who are leading medical or scientific experts in relevant fields. The committee, when consulted by the Secretary of Veterans Affairs, is required to provide, among other things, an ongoing assessment of the effectiveness of the schedule for rating disabilities and advice on the most appropriate means of responding to the needs of veterans with respect to disability compensation. Taking the committee’s advice into consideration could better position the agency to meet federal internal control standards. For example, in its 2012 report, the committee noted the increase in the number of veterans receiving TDIU benefits as well as concerns regarding potential internal inconsistencies in TDIU decisions. As a consequence, the committee recommended that the agency (1) study whether age should be considered when deciding if a veteran is unemployable and (2) require a vocational assessment for all TDIU applicants. VA concurred with the recommendation to study whether age should be considered. The agency also concurred with the recommendation that called for it to require a vocational assessment, though VA noted that before it could proceed, it needed to complete a study on whether it was possible to disallow TDIU benefits for veterans whose vocational assessment indicated they would be employable after rehabilitation. To date, VA officials have told us, without explanation, that no such studies or analyses, in either area, have been planned or initiated.", "The benefits veterans are entitled to, as well as VA’s decisions on what constitutes a work disability, are in need of constant refinement to keep pace with changes in medicine, technology, and the modern work environment. Within this broad context, VA can position itself to better manage the TDIU benefit and look for opportunities to strengthen the assessments of its eligibility decisions. Unfortunately, the integrity of the decision-making process for the TDIU benefit is at risk due to incomplete guidance that leaves much open to interpretation. As a consequence, rating specialists may be using and interpreting evidence differently to determine unemployability—this could mean that benefits could be granted for one veteran and possibly denied for another veteran with similar circumstances and impairments. Within this environment, VA’s quality assurance approach may not be fully identifying the extent to which errors made by rating specialists are occurring or providing adequate assurance on the overall soundness of the TDIU benefit decision-making process. Specifically, little if anything is known about the consistency of TDIU decision-making across individuals in the same regional office as well as across regional offices. We heard about the subjectivity and challenges in the claims decision-making process throughout our visits to VBA regional offices, which elevate the need to use a thorough process to ensure that rating specialists are bringing reasonably consistent judgments to benefit decisions—which for some individual veterans, could result in 50 or more years of benefits. In addition, VA does not use available third-party earnings data to verify veterans’ self-attested employment history and income information. Without such verification, VA cannot adequately ensure that the eligibility standards are being met, which places these benefits at risk of being awarded to ineligible veterans. These deficiencies also have the potential of increasing the cost of TDIU benefits because some ineligible veterans may be receiving benefits and other deserving veterans could be denied benefits. Having a strong framework for program integrity is important for any federal program, and in light of the multi-billion dollar—and growing— TDIU benefit, taking steps to ensure payments are properly awarded to veterans is essential.\nVA is at a junction where it is revising its complex and multifaceted disability compensation benefits program. As VA works on adjusting the eligibility criteria and management of the compensation benefits program, the agency must balance such things as improvements in the assistance available to those with disabilities, the increasing number of veterans, and fiscal constraints. Concurrent with this effort, VA has the opportunity to benefit from the amount of attention the TDIU benefit has received by various experts. Notably, VA’s own advisory committee has pointed out the need for VA to study, for example, age as a possible decision-making factor. The committee members’ expertise and familiarity with VA compensation benefits and veteran needs are meant to aid VA in identifying what additional information they need to effectively and efficiently review the TDIU benefit. By concurring with the committee’s recommendations, but not taking action, VA has delayed the timely analysis of the benefit. The options and the potential strengths and challenges identified by experts and VSO representatives may warrant consideration in any broader benefit refinement discussions and efforts to improve the TDIU benefit design and eligibility criteria going forward.", "To help ensure that TDIU decisions are well supported and TDIU benefits are provided only to veterans whose service-connected disabilities prevent them from obtaining or retaining substantially gainful employment, we recommend the Secretary of Veterans Affairs direct the Under Secretary for Benefits to: 1. Update the TDIU guidance to clarify how rating specialists should determine unemployability when making TDIU benefit decisions. This updated guidance could clarify whether factors such as enrollment in school, education level, and prior work history should be used and if so, how to consider them; and whether or not to assign more weight to certain factors than others. Updating the guidance would also give VBA the opportunity to re-examine the applicability, if at all, of other factors it has identified as extraneous. 2. Identify other quality assurance approaches that will allow the agency to conduct a comprehensive assessment of TDIU benefit claim decisions. The approach should allow VBA to assess if decisions are complete, accurate, and consistent, and ascertain the root causes of any significant variation so that VBA can take corrective actions as appropriate. This effort could be informed by the approaches VBA uses to assess non-TDIU claims. 3. Verify the self-reported income provided by veterans (a) applying for TDIU benefits and (b) undergoing the annual eligibility review process by comparing such information against IRS earnings data, which VBA currently has access to for this purpose. VA could also explore options to obtain more timely earnings data from other sources to ensure that claimants are working within allowable eligibility limits. 4. In light of VA’s agreement with the recommendations made by the Advisory Committee on Disability Compensation, develop a plan to study the complex TDIU policy questions on (1) whether age should be considered when deciding if veterans are unemployable and (2) whether it is possible to disallow TDIU benefits for veterans whose vocational assessment indicated they would be employable after rehabilitation.", "We provided a draft of this report to VA for review and comment. In its written comments, reproduced in appendix IV, VA generally agreed with our conclusions and concurs with all of our recommendations. The agency outlined how it plans to address our recommendations as follows:\nRegarding our recommendation to update the TDIU guidance to clarify how rating specialists should determine unemployability when making TDIU benefit decisions, VA stated that VBA will review current TDIU policies and procedures to identify necessary improvements including developing new policies and procedures that provide clear guidance on deciding these claims. The updated guidance will address the extent to which age, education, work history, and enrollment in training programs are factors that claims processors must address. VA anticipates that Compensation Service will complete this review and provide options to VBA for a decision by the end of January 2016.\nRegarding our recommendation to identify other quality assurance approaches that will allow the agency to conduct a comprehensive assessment of TDIU benefit claim decisions, VA stated that the Compensation Service Quality Assurance Staff will add TDIU- specific questions to the In-Process Review checklist at the regional offices between July and September 2015. Based on the results of the reviews, VBA will determine the most effective approach for assessing the accuracy and consistency of TDIU decisions by October 31, 2015.\nRegarding our recommendation to verify the self-reported income provided by veterans (a) applying for TDIU benefits and (b) undergoing the annual eligibility review process by comparing such information against IRS earnings data, VA stated that VBA is developing an upfront verification process. This involves expanding the data sharing agreement with SSA, which enables VBA to receive federal tax information via an encrypted electronic transmission through a secure portal. VBA expects to implement this upfront verification process for TDIU claimants by January 31, 2016.\nRegarding our recommendation to develop a plan to study (1) whether age should be considered when deciding if veterans are unemployable and (2) whether it is possible to disallow TDIU benefits for veterans whose vocational assessment indicated they would be employable after rehabilitation, VA stated that Compensation Service initiated a review of TDIU policies and procedures in April 2015. Compensation Service is considering both the use of age and vocational assessments in TDIU benefit claim decisions and will develop a plan to initiate any studies, legislative proposals, or proposed regulations deemed necessary. VBA expects to complete an action plan by July 31, 2015.\nVA also provided technical comments, which we incorporated as appropriate.\nAs agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to the appropriate congressional committees, the Secretary of Veterans Affairs, and the Under Secretary for Benefits. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions regarding this report, please contact me at (202) 512-7215 or bertonid@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix V.", "This report: (1) examines age-related trends in the population of Total Disability Individual Unemployability (TDIU) beneficiaries and benefit payments, (2)assesses how the Department of Veteran Affairs’ (VA) procedures position the agency to ensure that TDIU benefit decisions are supported, and (3) describes suggested options for redesigning TDIU benefits and eligibility requirements.\nTo examine these objectives, we reviewed prior GAO, disability commission, and expert reports; relevant federal laws, regulations, and procedures for reviewing new and continuing claims; and program documentation, including procedure manuals, training materials, and supporting documents. We also conducted interviews with VA and its Veterans Benefits Administration (VBA) officials in their central and regional offices; disability experts; and representatives of veterans groups. We collected and analyzed data from VA on TDIU benefit claims and beneficiaries covering fiscal years 2009 through 2013. The data included information such as the beneficiaries’ age and disability ratings as well as total amounts paid in disability benefits. To obtain information and views from VBA regional office officials involved in claim reviews, we also visited six regional offices where we held discussion groups with rating specialists and interviewed quality review team (QRT) coaches, QRT members, and regional office management. In addition, we conducted a non-generalizable file review from each of the selected regional offices. We identified options proposed for revising the TDIU benefit and obtained experts’ views on the opportunities and challenges the options posed.", "To examine the age-related trends in the population of TDIU beneficiaries and benefit payments, we analyzed data provided by VA for the fiscal years 2009 through 2013. VA provided data from its Veterans Service Network, which is the agency’s data entry platform for benefits tracking as well as its Beneficiary Identification Records Locator Subsystem, a system used to verify that an applicant is a veteran. Prior to 2009, VA also used an older system, Compensation and Pension Master Record, for tracking benefits. Agency officials told us that, while this system collected similar information to the newer databases, there was some variation. As a consequence, we limited the years we examined to those covered by the newer databases in order to ensure the consistency of the data. The data included information such as the beneficiaries’ age, schedular disability ratings, benefit discontinuations, and total amounts paid in disability benefits. To assess the reliability of the data, we conducted multiple interviews with knowledgeable agency officials. During these interviews we obtained detailed information on the methods used to generate the data requested, including limitations and assumptions made by VBA officials. In addition, we performed electronic logic testing of the program used to extract the data provided by VA. Based on these efforts, we found the data to be sufficiently reliable for our purpose.\nAs part of our data analysis, we estimated the cost of the TDIU benefit payments in fiscal year 2013. We defined the cost of the TDIU benefit payments as the difference between the disability payments VA made at the 100 percent disability rate—which beneficiaries would have received due to the TDIU designation—in comparison to the amount beneficiaries would have been paid based on their regular disability rating. We estimated the TDIU benefit cost because we did not have complete information on the disability compensation payments made to individual beneficiaries. For example, the data provided by VA did not include information such as when a new beneficiary began receiving TDIU benefits or data on how much each beneficiary received in monthly disability payments for the full fiscal year—both of which would affect how much VA paid in benefits for the fiscal year. Due to these limitations, we made a number of assumptions for the estimate. We assumed that the population of new beneficiaries had only been receiving payments at the 100 percent disability rate or at their regular disability rate for 6 months and that the rest of the beneficiary population had been receiving payments at the 100 percent rate or at their regular disability rate for the full fiscal year. We also assumed that the beneficiaries’ dependent status and, when applicable, their regular schedular disability rate remained constant and that beneficiaries had no more than three children and that all children were under age 18.\nAs part of the TDIU cost estimate, we removed the estimated benefit payments that would have been made to beneficiaries whose benefits were discontinued. We assumed that the benefit payments had been discontinued for this population for 6 months, on average. In addition, we calculated a range for the benefits paid to the discontinued beneficiaries at their regular disability rating. One estimate in the range assumed the discontinued beneficiaries were all rated as 60 percent disabled, the lowest disability rating at which a veteran would be eligible for TDIU. The second estimate in the range assumed the discontinued beneficiaries were all 90 percent disabled, which was the highest rating a veteran could receive before experiencing an increase in payments due to TDIU. We also assigned dependent categories to the discontinued beneficiaries where we assumed that the distribution of this population was proportional to the population of (1) TDIU beneficiaries as a whole, (2) beneficiaries who were rated as 60 percent disabled, or (3) beneficiaries who were rated as 90 percent disabled.", "We selected six regional offices we would visit to gather additional information on the TDIU claims review and quality assurance processes, including the challenges associated with such reviews. These six selected regional offices were located in Boston, Massachusetts; Denver, Colorado; Manchester, New Hampshire; New Orleans, Louisiana; Portland, Oregon; and Seattle, Washington. We selected these regional offices based on the following criteria:\nTDIU caseload size: We used data provided by VA on the caseloads of the 57 different regional offices. Such data included total caseloads, completed and pending, by regional office for fiscal year 2013. We selected regional offices to represent varying caseloads by selecting from regional offices we categorized as having high, medium, and low caseloads.\nPercentage of TDIU claims resulting in granted benefits: We used data provided by VA on the percentage of TDIU benefits granted and denied at each regional office in fiscal year 2013. We selected regional offices to represent variation of percentages of claims resulting in granted benefits. We sorted the data by the percentage of claims resulting in granted benefits and then divided the sorted list into two main groups representing approval rates of 21 to 40 percent and 41 to 60 percent. The majority of regional offices fell evenly within these two groups. A third group contained three outlying offices that granted benefits in over 60 percent of TDIU claims reviewed. We selected regional offices from each of these three groups. Through our review of the data and interviews with VA, we found these data to be sufficiently reliable for comparing approval rates the different regional offices.\nAccuracy of eligibility reviews: We reviewed quality assurance data, provided by VA officials, on the accuracy levels of TDIU eligibility decisions made at each regional office. We used quality assurance data for claims reviewed from October 1, 2013, through January 31, 2014. Most accuracy ratings fell between 95 and 100 percent. As a result, we selected regional offices with as much relative variation in accuracy ratings as possible, given the other selection criteria, by selecting a regional office with ratings outside the 95 to 100 percent range. We interviewed VBA and found these data to be sufficiently reliable for comparing accuracy rates at the different regional offices.\nGeography: We selected regional offices in as many different VA regions as possible, given other selection criteria, to capture a variation in geographical location. We included regional offices in three of the four VA regional areas (Western, Central, Eastern, and Southern) in our review. Our selection did not include a regional office in the Southern region.\nSee table 3 for details about the characteristics for each of the regional offices we visited.", "To better understand how TDIU claims decisions are made and reviewed for accuracy, as well as the challenges associated with these duties, we interviewed officials in the office of Compensation Service including quality assurance officials, regional office managers, quality review team (QRT) coaches, and QRT members. In addition, we conducted a total of 11 in-person discussion groups with 2 to 3 rating specialists each across five of the regional offices after conducting initial interviews in the Denver regional office. The 31 rating specialists that participated were selected by VBA and were intended to represent different experience levels with TDIU claim decisions and lengths of tenure at VA.\nDuring each discussion group we followed an interview protocol to collect information on TDIU claim decisions. Specifically, we used the following steps to ask rating specialists about the top challenges in making TDIU claim decisions, the impact of the challenges, and possible solutions to these challenges. (1) We asked the rating specialists to brainstorm about challenges they had experienced while making TDIU claim decisions. We documented all challenges mentioned and discussed any contradictory points. (2) We asked the rating specialists to independently identify, in any order, the five challenges from the brainstormed list they felt were the most significant. (3) As the rating specialists shared their independent lists, we tallied their responses and developed a list of the top five challenges, ensuring agreement of all the members of the discussion group. (4) Using this list of top challenges, we asked the rating specialists to brainstorm and share what they felt were the impacts of these challenges on their ability to make TDIU claim decisions and (5) to brainstorm possible solutions that would address the challenges. (6) We asked rating specialists to describe one or two claims decisions that they felt illustrated the challenges discussed.", "Across the six regional offices we visited, we reviewed a total of 34 case files that contained TDIU claim determinations resulting in both granted and denied benefits made between April 2012 and April 2014. We reviewed at least five files from each regional office. We reviewed the claims files using a standardized checklist we developed using the procedural guidance and forms for TDIU claims. We used the checklist to determine if the required documents were included in the file and if the rating specialist followed the guidance. We also collected information about the veteran and the procedures for reviewing TDIU claims. For example, we reviewed initial application forms and information; supporting documentation including medical opinions, work histories from employers, disability ratings, and vocational rehabilitation services or Social Security Disability Insurance benefits received; rationale for claim determination; and continuation of benefit forms and reviews when applicable. While we reviewed files in the Denver regional office on site, we reviewed the files from the other regional offices from a single location (VBA’s regional office in Providence, Rhode Island) using VA’s Veterans Benefit Management System database.\nTo ensure an unbiased selection, we selected files with TDIU claims from a randomly selected sample of files and followed a methodology so that files from the different field offices were selected in the same way. For the files with claims determined at five of the regional offices, we selected files from a list, provided by VBA, of 200 randomly selected files composed of 40 TDIU claims from each regional office, 20 of which were granted and 20 denied. All 200 claims had been decided within the last 2 years. For our review of files in Denver, we selected files from a separate list of 100 files with claims from only the Denver regional office. We selected files by sorting the list by field office and then approved and denied claims. We choose every other approved claim and every other denied claim for each regional office. In the event that there was a problem with the file, we noted the problem and moved down the list following the above procedure for the duration of the review. In total, we selected and reviewed 34 files, 17 with granted TDIU claims and 17 with denied claims, across the regional offices using this process.\nThe results of the file reviews are not generalizable to all 57 regional offices or all TDIU claims.", "In order to describe options that had been presented to revise the TDIU benefit and eligibility requirements, we conducted a literature search which included identifying relevant reports by disability compensation committees and research organizations. Our search covered reports from 2004 through 2014 using databases such as ProQuest, CQ.com, and the Defense Technical Information Center. We identified any options in the reports that either revised the TDIU benefit or the benefit’s eligibility requirements. We selected and summarized the options for revising TDIU eligibility requirements or benefit structure from the six reports along with options presented in a Federal Register notice from 2001. Where similar options were found in more than one report, we summarized the common themes across the reports while also including details describing the proposed option that might be specific to one report’s presentation of the option. The six reports and Federal Register notice, where the options were presented, are as follows:\nCenter for Naval Analyses, Final Report for the Veterans’ Disability Benefits Commission: Compensation, Survey Results, and Selected Topics (August 2007).\nCongressional Budget Office, Options for Reducing the Deficit: 2014 to 2023 (November 2013).\nDepartment of Veterans Affairs Advisory Committee on Disability Compensation, 2012 Report to the Secretary of Veterans Affairs (October 31, 2012).\nDepartment of Veterans Affairs, Total Disability Ratings Based on Inability of the Individual to Engage in Substantially Gainful Employment. 66 Fed. Reg. 49,886 (Oct. 1, 2001), subsequently withdrawn by 70 Fed. Reg. 76,221 (Dec. 23, 2005).\nEconomic Systems, Inc. (Econsys), A Study of Compensation Payments for Service Connected Disabilities (September 2008).\nInstitute of Medicine of the National Academies, A 21st Century System for Evaluating Veterans for Disability Benefits (2007).\nVeterans’ Disability Benefits Commission, Honoring the Call to Duty: Veterans’ Disability Benefits in the 21st Century (October 2007).\nTo identify the potential strengths and challenges related to implementing each option, we conducted semi-structured interviews with experts and representatives from veterans service organizations (VSO). The experts and VSO representatives were provided with a written description of each option as well as the definition for potential strengths and challenges in advance of the interviews. An option was considered to have potential strengths if it provided fair and equitable benefits for veterans or, for VA, if it allowed for administrative improvement or clarity in eligibility criteria. Additionally, an option was considered to have potential challenges if implementation faced concerns (for example, among the veteran community) or impediments (for example, to VA). During the interviews, we obtained experts’ and VSO representatives’ views on the potential strengths and challenges of each option. We then categorized the responses according to their similarity. In order to provide an independent assessment, we did not obtain VA officials’ views on challenges in implementing the proposed options.\nWe identified the experts through the individual’s contributions to the reports containing the alternative options or someone associated with the issuing organization. In addition, we identified the VSOs through our prior knowledge of their work with related topics and the organizations’ participation in Congressional testimonies related to TDIU. Table 4 identifies the five experts and two VSO representatives, including their respective titles and professional affiliation.", "Additional information is provided below on the two approaches Veterans Benefits Administration (VBA) uses to review Total Disability Individual Unemployability (TDIU) claims—the Systematic Technical Accuracy Review (STAR) and quality review team (QRT) reviews. In addition, information is provided on other approaches VBA has used to assess non-TDIU claims.\nSince fiscal year 1999, VBA has used its STAR review to measure the accuracy of disability compensation claims decisions. Through the STAR process, VBA reviews a stratified random sample of completed claims, and certified reviewers use a checklist to assess specific aspects of each claim. Specifically, for each of the 57 regional offices, completed claims are randomly sampled each month and the data are used to produce estimates of the accuracy of all completed claims. VA reports national estimates of accuracy from its STAR reviews to Congress and the public through its annual performance and accountability report and annual budget submission. VBA also produces regional office accuracy estimates, which it uses to manage the program. Regional office and national accuracy rates are reported in a publicly available performance database, the Aspire dashboard.\nPrior to October 2012, VBA’s estimates of accuracy were claim-based; that is, claims free of errors that affect veterans’ benefits were considered accurate and, conversely, claims with one or more errors that affect benefits were considered inaccurate. Beginning in October 2012, VBA also began using STAR data to produce issue-based estimates of accuracy that measure the accuracy of decisions on the individual medical conditions within each claim. For example, a veteran could submit one claim seeking disability compensation for five disabling medical conditions. If VBA made an incorrect decision on one of those conditions, the claim would be counted as 80 percent accurate under the new issue-based measure. By comparison, under the existing claim- based measure, the claim would be counted as 0 percent accurate unless the error did not affect benefits when considered in the context of the whole claim. VBA uses these STAR review results to guide other quality assurance efforts. According to VBA officials, the agency has used STAR data to identify error trends associated with specific medical issues, which in turn were used to target efforts to assess consistency of decision- making related to those issues.\nIn March 2012, VBA established QRTs with one at each regional office. Although regional offices were previously responsible for assessing individual performance, QRTs represent a departure from the past because QRT personnel are dedicated primarily to performing these and other local quality reviews. The QRT reviews individual rating specialist performance across the parts of claims that an individual processed (individual quality reviews). Also, QRTs review claims the regional office is still processing (in-process reviews) to help prevent inaccurate decisions. In-process reviews specifically aim to help prevent inaccurate decisions by identifying specific types of common errors and serve as learning experiences for staff members and are not used to assess individual performance. Quality reviewers are also responsible for providing feedback to claims processors on the results of their quality reviews, typically as reviews are completed, including formal feedback from the results of individual quality reviews and more informal feedback from the results of in-process reviews. In addition, according to VBA, the focus of in-process reviews performed by QRTs has been guided by STAR review error trend data. Originally, VBA established these reviews to help the QRTs identify and prevent claim development errors related to medical examinations and opinions, which it described as the most common error type. More recently, VBA has added two more common error types—incorrect rating percentages and incorrect effective benefit dates—to its in-process review efforts. VBA officials stated that they may add other common error types based on future STAR error analyses.", "VBA has used other approaches to assess the consistency and accuracy of other types of non-TDIU compensation benefit claims. These approaches include:\nSpecial accuracy reviews: VBA periodically conducts special reviews of claims decisions to assess the accuracy in processing specific types of claims. For example, in our 2014 report on military sexual trauma, we reported on a special accuracy review VBA conducted in response to concerns that adjudicators were not making accurate decisions for post-traumatic stress disorder claims related to military sexual trauma. The VBA review found errors in 98 of 385 randomly selected claims that had been denied (about 25 percent). In particular, the review identified 61 cases where the adjudicators should have identified markers and ordered medical exams rather than denying the benefit. The VBA reviewers made several recommendations for improving the adjudication process such as to: (1) clarify VA policies on markers, (2) build expertise in adjudicating such claims, and (3) develop training.\nInter-rater reliability (IRR) studies: Since fiscal year 2008, VBA has used IRRs to assess the extent to which a cross-section of rating specialists across all regional offices agree on an eligibility determination when reviewing the entire body of evidence from the same claim. These studies are, however, time intensive and only review one claim. The process was administered by proctors in the regional offices and the results were hand-graded by national VBA staff. Given the resources involved, IRR studies have been typically limited to 300 to 500 (about 25 to 30 percent) claims processors, randomly selected from the regional offices.\nConsistency questionnaires: As of 2013, VBA has used questionnaires as its primary means for assessing consistency of decision-making across individual rating specialists. A questionnaire includes a brief scenario on a specific medical condition for which a rating specialist must correctly answer several multiple-choice questions. The questionnaires are intended to test for understanding and interpretation of policy and test takers receive feedback. The questionnaires are administered electronically through the VA Talent Management System, removing the need to proctor or hand-grade the tests, which has allowed VBA to significantly increase employee participation. For example, a recent consistency questionnaire was taken by about 3,000 claims processing employees—representing all employees responsible for rating claims. Further, VBA now administers these studies more frequently, from about 3 to 24 per year. According to VBA officials, they plan to further expand the use of consistency studies from two questionnaires per month to six to eight per month, pending the availability of additional funding. Regional offices receive national results; regional office-specific results; and, since February 2014, individual staff results.", "", "", "", "", "In addition to the contact named above, Brett Fallavollita (Assistant Director), Melissa Jaynes (Analyst-in-Charge), and David Reed made contributions to this report. Sheranda Campbell, David Chrisinger, A. Nicole Clowers, Beryl Davis, Alexander Galuten, Kirsten Lauber, Sheila McCoy, Philip McIntyre, Lorin Obler, and Greg Whitney also contributed to this report." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2, 2, 2, 2, 1, 2, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "h0_title", "h0_full", "", "h0_full", "h0_full", "h1_title", "h1_full", "", "", "", "h0_full h1_full", "h0_full h1_title", "", "", "h0_full", "", "h1_full", "", "", "", "", "", "", "" ] }

{ "question": [ "How do VA's procedures not ensure that Individual Unemployability benefit decisions are well-supported?", "What did VA rating specialists disagree on?", "What problems could these disagreements create?", "What other issues does VA have that could lead to not well supported benefit decisions?", "Why is it risky for VA to postpone verification of self-reported earnings?", "How did GAO identify options for revising eligibility requirements and Individual Unemployability benefit?", "What options did GAO come up with?", "How were these options analyzed?", "What did VA's advisory committee recommend in 2012?" ], "summary": [ "VA's procedures do not ensure that Individual Unemployability benefit decisions are well-supported. For example, contrary to federal internal control standards, the guidance on determining unemployability is incomplete for ensuring consistency.", "In discussion groups with GAO, VA's rating specialists said they disagreed on the factors they need to consider when determining unemployability, weighed the same factors differently, and had difficulty separating allowable from non-allowable factors.", "Some specialists said these challenges create the risk that two raters could examine the same evidence and reach an opposite decision to approve or deny a claim.", "Also, VA's quality assurance approach primarily checks the procedural accuracy of decisions and does not ensure a comprehensive assessment of whether decisions are complete, accurate, and consistent. In addition, VA does not independently verify self-reported earnings information supplied by applicants and beneficiaries, although the agency has access to Internal Revenue Service data for this purpose.", "VA officials said they are waiting for a data system, expected in 2016, to conduct verifications. However, by postponing verification of self-reported earnings, the benefit is at risk of being awarded to ineligible veterans.", "Based on a review of literature, GAO identified various options for revising eligibility requirements and the structure of the Individual Unemployability benefit.", "Six options focus on eligibility requirements, such as considering additional criteria when determining unemployability and applying an age cap of 65. The seventh option would change the benefit structure by reducing payments as beneficiaries earn income in excess of the poverty threshold.", "Experts and representatives of veterans service organizations (VSO) that GAO interviewed identified the potential strengths of each option (such as improved decision accuracy) and potential challenges (such as increased need for fiscal and administrative resources).", "In addition, VA's advisory committee recommended in 2012 that the agency study age and require vocational assessments when weighing veterans' unemployability; VA agreed to study both, but has not yet taken action." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "", "Introduction", "Eligibility Criteria and Operations", "National Science Foundation", "Department of Energy", "National Aeronautics and Space Administration", "U.S. Department of Agriculture", "National Institutes of Health", "Funding", "Interagency Coordination", "Program Assessments", "Selected Issues", "Expanding Duration and Focus", "Reevaluating Eligibility Criteria", "Determining Success", "Recent Congressional Activity", "Concluding Observations", "Appendix. NSF EPSCoR Eligibility Table" ], "paragraphs": [ "", "The Established Program to Stimulate Competitive Research (EPSCoR)—originally named the E xperimental Program to Stimulate Competitive Research (EPSCoR) —is a set-aside funding program that began as an effort to avoid an \"undue concentration\" of federal research funds by providing competitive grant opportunities to states that historically received little federal research and development (R&D) funding. The National Science Foundation's (NSF's) governing board first established the program in 1978 by resolution, and EPSCoR was formally established in statute in 1988. The program was created to increase research and infrastructure capacity, thereby improving the ability of institutions in EPSCoR states to compete for non-set-aside federal R&D funding. EPSCoR is distinct from other NSF programs in this geographically targeted approach.\nSince the first program began at NSF, EPSCoR and EPSCoR-like programs have been established at other federal agencies, with active programs at the Department of Energy (DOE), National Aeronautics and Space Administration (NASA), U.S. Department of Agriculture (USDA), and National Institutes of Health (NIH). In 1992, the EPSCoR Interagency Coordinating Committee (EICC) was established through a Memorandum of Understanding to improve coordination among the programs. NSF serves as the Chair and Executive Secretary of the EICC, which was formally authorized in statute by the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ).\nEPSCoR has long been a program of interest for Congress. Stakeholders and researchers have noted that EPSCoR—as established within NSF—was initially intended to be a limited-duration catalyst to support the development of research capacity and has evolved into a long-term program that also supports education, diversity, and economic development goals. Some Members have expressed interest in supporting EPSCoR as a long-term program, while others have expressed interest in discontinuing its funding.\nThis report provides an overview of the active EPSCoR programs, including eligibility criteria, operations and funding information, findings and recommendations from program assessments, programmatic and policy issues, and recent congressional activity. This report focuses on the EPSCoR program at NSF, but also provides information about, and comparisons to and among, the EPSCoR programs at other federal agencies.", "EPSCoR eligibility criteria and determinations vary by agency. EPSCoR programs at DOE and NASA follow the NSF's eligibility determinations, while USDA and NIH have established their own criteria. Table 1 lists FY2016 eligible jurisdictions (including eligible states, territories, and the District of Columbia) for agencies with active programs. The following sections describe agency-specific operations and eligibility criteria in further detail.", "NSF's EPSCoR program was established in 1978 by a resolution of the National Science Board (NSB). Congress directed initial appropriations for the program in FY1979. NSF's EPSCoR was formally established in statute in 1988 to assist states that \"historically have received relatively little Federal [R&D] funding\" and have \"demonstrated a commitment to develop their research bases and improve science and engineering research and education.\" The America COMPETES Reauthorization Act of 2010 directed NSF to continue the program \"with the objective of helping eligible States to develop the research infrastructure that will make them more competitive for Foundation and other Federal research funding.\" According to NSF, the overall program mission is\nto advance excellence in science and engineering research and education in order to achieve sustainable increases in research, education, and training capacity and competitiveness that will enable EPSCoR jurisdictions to have increased engagement in areas supported by the NSF.\nNSF states that EPSCoR's goals are\nto provide strategic programs and opportunities for EPSCoR participants that stimulate sustainable improvements in their R&D capacity and competitiveness; [and] to advance science and engineering capabilities in EPSCoR jurisdictions for discovery, innovation and overall knowledge-based prosperity.\nEPSCoR program objectives further include broadening participation of diverse groups in EPSCoR projects and establishing science, technology, engineering, and math (STEM) education, training, and professional development opportunities that advance research and workforce development needs identified by each jurisdiction.\nNSF's EPSCoR program is broadly set up as federal-jurisdiction partnerships. To participate in the EPSCoR program, an eligible jurisdiction is required to form its own EPSCoR steering committee and to develop a science and technology (S&T) plan specific to the jurisdiction's needs and goals. Each steering committee is expected to undertake \"a recent comprehensive analysis of the strengths, barriers, and opportunities for further development of its institutions in support of overall objectives in research, education, and innovation.\" Through these activities, steering committees work closely with partners in academia, government, and the private sector to build statewide networks.\nThe funding awards structure for the NSF EPSCoR program has changed over time. In 1980, NSF awarded the first EPSCoR planning grants to seven states to support establishment of state steering committees, identify barriers to research competitiveness, and suggest possible remedies. Building from that work, five states subsequently developed successful research grant proposals and received five years of initial funding, primarily to support individual investigators. In the 1990s, award levels increased, and the grant focus changed to support for research clusters and statewide proposals for infrastructure development. In the 2000s, NSF's EPSCoR program was moved to the Office of Integrative Activities (OIA) and developed to include the three current investment components: Research Infrastructure Improvement (RII) awards, co-funding, and outreach/workshops.\nResearch Infrastructure Improvement . In FY2016, the RII component included three tracks:\nRII Track-1 awards provide up to $20 million total over a five-year period to support physical, human, and cyberinfrastructure improvements critical to a jurisdiction's science and technology (S&T) plan (e.g., acquisition of research equipment, establishment of university-private sector partnerships). RII Track-2 (Focused EPSCoR Collaborations [FEC]) awards provide up to $1.5 million per year for up to four years to support the establishment of interjurisdictional teams of investigators from at least two RII-eligible jurisdictions working collaboratively on NSF priority research topics. FY2016 awards supported EPSCoR proposals on two topics: (1) Understanding the Brain, and (2) Sustainable, Food, Energy, and Water Systems. RII Track-3 (Building Diverse Communities) awards provide up to $750,000 per award for an award period of up to five years, with projects serving as a \"testbed\" for building approaches to broaden participation of underrepresented groups in STEM. Track-3 proposals were first called for in FY2013 as a pilot program. Initial funding supported five proposals including projects to develop and implement chemistry coursework in tribal colleges and test cyber-learning methods for STEM education in rural middle schools.\nFor FY2017, NSF announced an RII Track-4 (EPSCoR Research Fellows) component. These awards provide up to $300,000 over a two-year period for non-tenured investigators to \"further develop their individual research potential through extended collaborative visits to the nation's premier private, governmental, or academic research centers.\" According to the program solicitation, through activities such as accessing unique equipment and developing research collaborations, fellows are expected to improve their individual research competitiveness, and, in turn, to enhance the research capacity of their institutions and jurisdictions.\nSpecific criteria and proposal requirements vary by track. For example, for RII Track-1 awards, cost-sharing is required and an eligible jurisdiction may only submit one proposal. For RII Track-2 and -3 awards, no cost-sharing requirement is listed in the program solicitation and limits on proposal submissions are less restrictive. EPSCoR proposal evaluations follow the merit-based, peer-review process used for the vast majority of NSF's competitive awards.\nA jurisdiction becomes eligible to participate in the EPSCoR program \"if their most recent 3-year funding level of NSF research support is equal to or less than 0.75% of the total NSF Research and Related Activities (RRA) budget.\" This criterion is commonly used when referring to a jurisdiction as EPSCoR-eligible. Figure 1 shows EPSCoR-eligible jurisdictions for FY2016, as well as year of entry into the program. Table A-1 shows NSF RRA funding received by each jurisdiction for FY2013-FY2015, the three-year total by jurisdiction, and the percentage each three-year total accounts for of NSF's total RRA funding for that period.\nCo-funding . The co-funding component is not a grant program, but rather an internal, joint funding mechanism, in which project funding is provided by both EPSCoR and another NSF directorate or office. Co-funding awards provide combined support for proposals submitted to NSF's non-EPSCoR awards competitions by investigators in EPSCoR jurisdictions. Proposals deemed meritorious and recommended for funding—but not able to be funded otherwise due to budget limitations—may be evaluated for EPSCoR co-funding consideration. States that have lost eligibility for the RII component remain eligible for three years for the co-funding component.\nOutreach/Workshops . The outreach/workshop component provides funding for workshops, conferences, and other community-based activities designed to explore new scientific areas, share best practices, and build capacity. Program administrators expect workshops to be multijurisdictional and of interest to the broad EPSCoR community. This funding component also supports travel costs associated with connecting NSF staff across directorates and offices with research and education communities in EPSCoR jurisdictions. States that have lost eligibility for the RII component remain eligible for three years for the outreach/workshop component.", "The Energy Policy Act of 1992 directed DOE to operate an EPSCoR program and established objectives for the program. Located within its Office of Science (OS), DOE's EPSCoR is a merit-based program that works to support basic and applied energy-related research and development across many interdisciplinary program areas. Program priorities include increasing the number of professionals in energy-related fields and building relationships between professionals in EPSCoR jurisdictions and scientists from DOE facilities.\nThe DOE EPSCoR program follows NSF's EPSCoR eligibility determinations; states that are eligible for the NSF EPSCoR RII component are eligible for DOE's program. In other words, eligib ility for the DOE EPSCoR is based on recent funding received by each state from NSF, rather than from DOE.\nThe program offers three types of funding opportunities: EPSCoR Implementation Grants, EPSCoR-State/National Laboratory Partnership Grants, and DOE OS Early Career Awards. DOE award components are similar in structure and function to those at NSF, with some differences. For example, DOE Implementation Grants—which support research infrastructure improvement similar to NSF RII awards—do not require matching funds, nor is there a limit on the number of active grants per jurisdiction.", "In 1992, the Experimental Program to Stimulate Competitive Research on Space and Aeronautics Act established the NASA EPSCoR program, directing NASA to conduct a merit-based grant competition among states eligible for NSF's EPSCoR program. The program goals focus on enabling jurisdictions to develop long-term, self-sustaining, nationally competitive aerospace and related research capabilities to, in turn, contribute to local economic viability and the expansion of the nation's aerospace R&D base.\nNASA's EPSCoR program includes three award components, each based on a performance period of up to three years: EPSCoR Research Infrastructure Development (RID) awards of up to $125,000 per year to help jurisdictions build relationships with NASA researchers; EPSCoR Research awards of up to $750,000 for topic-specific projects on high-priority NASA research and technology development needs; and EPSCoR International Space Station (ISS) Flight Opportunity awards of up to $100,000.", "At USDA, the National Institute of Food and Agriculture's (NIFA's) Agriculture and Food Research Initiative (AFRI) operates the Food and Agricultural Science Enhancement (FASE) grants program. Broadly, FASE grants are designed to help institutions develop competitive projects and attract new scientists and educators to work in national high-priority research areas. The FASE program includes three types of grants: New Investigator Grants, Pre- and Post-doctoral Fellowships, and Strengthening Grants. The Strengthening Grants component includes USDA's EPSCoR-like program funding.\nStrengthening Grants are awarded with the goal of enhancing institutional capacity, leading to future funding within the supported project area, and strengthening the competitiveness of research, education, and/or extension activities. This subset of the FASE grants can be awarded to\n(1) small and mid-sized or minority-serving degree-granting institutions that previously had limited institutional success for receiving Federal funds, or (2) State Agricultural Experiment Stations or degree-granting institutions eligible for USDA Experimental Program to Stimulate Competitive Research (EPSCoR) funding .\nWhile Strengthening Grants comprise 11.25% of AFRI FASE funding overall, there is no specific set-aside amount for grants to EPSCoR-eligible states. Furthermore, all AFRI grant applicants are first considered together regardless of EPSCoR status; those applicants that do not receive funding due to budget constraints but were ranked highly and identified as EPSCoR-eligible may then be considered for a Strengthening Grant award. Awards are provided directly to individual investigators. Eligibility for Strengthening Grants is determined by NIFA each year and includes states that have a \"funding level no higher than the 38 th percentile of all states based on a three-year rolling average of AFRI funding levels, excluding FASE Strengthening Grant funds granted to EPSCoR states and small, mid-sized, and minority-serving degree-granting institutions.\"", "The NIH Institutional Development Award (IDeA) program is also an EPSCoR-like program. IDeA is administered by the National Institute of General Medical Sciences (NIGMS). The National Institutes of Health Revitalization Act of 1993 directed NIH to establish a program to provide research institute funding in states with historically low success rates. The program has two main components: Centers of Biomedical Research Excellence (COBRE) and IDeA Networks of Biomedical Research Excellence (INBRE).\nThe COBRE program supports thematic, multidisciplinary centers with related projects run by junior faculty and overseen by senior mentors. COBRE focuses on developing both infrastructure and scientific investigator capacity by providing up to 15 years of funding in three five-year phases. Centers must apply for each five-year phase, with funding in the second and third phases contingent upon previous success. An additional COBRE activity is the IDeA Program Infrastructure for Clinical and Translational Research (IDeA-CTR) initiative. IDEA-CTR funding supports the development of regional infrastructure and capacity to address the \"tremendous challenges and opportunities [that] remain for pursuing activities aligned with NIH's growing interest and focus on clinical and translational research.\"\nThe INBRE program supports the establishment of statewide systems of biomedical institutions and efforts to improve student access to biomedical training and resources. Similar to NSF's EPSCoR program, the IDeA program also has a co-funding component for meritorious awards from other NIH institutes and centers in IDeA-eligible states.\nIn NSF EPSCoR states, IDeA program staff work informally with the EPSCoR committees and have made efforts to ensure that the committees include members with knowledge of biomedical research and medicine. An eligible jurisdiction may only have one active INBRE grant at a time —similar to the NSF RII restriction—but may have up to three active COBRE grants per institution. Cost-sharing is not required, though applicants are encouraged to provide matching funds. Strong support from the institution and a commitment to building and sustaining the research program are important considerations in the proposal review process.\nBy statute, IDeA eligibility is to be based on historic proposal success rates of institutions in each state. The most recent NIH eligibility requirement was set at a proposal success rate of less than 20% or a three-year average of total NIH awards of under $120 million per year. In 2008, a reassessment of these criteria and a nationwide decline in NIH proposal success rates led NIH to freeze program eligibility; the list of eligible states has not changed since that time. If eligibility had not been frozen, 47 states and territories would currently be IDeA-eligible. In a report to the Senate and House Appropriations committees, IDeA administrators have proposed a revision in the program's statutory language that would change the basis for eligibility to \"aggregate NIH funding received by entities in the state at or below the median of all states.\"", "Total EPSCoR funding across agencies began to grow significantly starting around FY1999, largely due to increased funding for EPSCoR programs at NIH and NSF. In FY2015, total EPSCoR program funding across agencies was $500.8 million, with NIH and NSF programs together accounting for close to 88% of the funding: nearly 55% at NIH ($273.3 million) and 33% at NSF ($165.5 million). Table 2 shows the funding amounts for prior and current EPSCoR programs across agencies from FY1997 through the FY2017 budget requests. Figure 2 illustrates funding trends for EPSCoR programs by agency from FY1997 through the FY2017 budget requests.\nIn FY2015, NSF EPSCoR funding comprised about 2.3% of the agency's $7.3 billion overall budget. NSF's EPSCoR program is currently administered by the Research and Related Activities (RRA) account. The RII component has historically accounted for the largest proportion of the program funding. In FY2016, estimated funding for the RII component is $128 million, which is 80% of the total NSF EPSCoR funding; the co-funding component accounts for 19% ($30 million), and the outreach/workshop component accounts for about 1% ($2 million).", "In 1992, with direction from the Senate Committee on Appropriations, federal agencies with EPSCoR or EPSCoR-like programs formed the EPSCoR Interagency Coordinating Committee (EICC) \"to integrate all EPSCoR programs into a single unified effort to maximize taxpayer investment.\" Member agencies initially worked together under the guidance of a Memorandum of Understanding (MOU). Statutory authority was subsequently provided to the EICC by the America COMPETES Reauthorization Act of 2010, which directed NSF to continue to carry out its EPSCoR program, to coordinate federal EPSCoR and EPSCoR-like programs through the EICC, and to report to Congress annually on activities, among other provisions. Current EICC membership includes NSF—serving as Chair and Executive Secretary—DOE, NASA, USDA, and NIH.\nThe EICC meets regularly to improve federal agency coordination and implementation of active EPSCoR and EPSCoR-like programs. The committee's goals include the following:\nTo coordinate federal EPSCoR and EPSCoR-like programs to maximize the impact of federal support while eliminating duplication in states receiving EPSCoR support from more than one agency; To coordinate agency objectives with state and institutional goals, to obtain continued nonfederal support of science and technology (S&T) research and training; To coordinate the development of metrics to assess gains in academic research quality and competitiveness and in S&T human resource development; and To exchange information on pending legislation, as appropriate, agency policies, and relevant programs related to S&T research and training, and to provide responses on issues of common concern.\nAs an example of its work, the EICC's FY2015 report to Congress highlighted discussions from its two meetings. Topics included EICC and NSF responses to the National Academy of Sciences EPSCoR assessment report (discussed in the \" Program Assessments \" section); NSF eligibility criteria and the \"graduation\" of Iowa, Tennessee, and Utah from the NSF, NASA, and DOE EPSCoR programs; and the role of, and need for, jurisdictional EPSCoR steering committees.", "As the EPSCoR program has grown and developed, Congress and others have expressed interest in determining how successfully it has achieved its mission of helping states with less developed R&D capacity to improve their ability to compete for federal R&D funding. To this end, a number of institutions have conducted assessments of EPSCOR. Many assessments have focused largely or solely on the NSF and NIH programs, while some recent assessments have examined the programs across agencies.\nIn 1999, NSF released the results of an external evaluation of the EPSCoR program's initial years, from 1980 to 1994. The evaluation was intended to assess the program's influence on the geographical concentration of federal R&D funds and to identify successful strategies. According to the report, the EPSCoR states' share of federal R&D increased modestly from 0.25% to 0.4% ($10.1 million to $50.5 million) per state on average during that period, though the EPSCoR program's impact on this change was not able to be quantified. Evaluators stated that a \"plausible argument\" could be made that EPSCoR contributed to increased R&D competitiveness—citing program features that reportedly helped build research infrastructure, investigator capabilities, and intra- and inter-university collaborations—though the program's impacts on university-wide actions and policies were limited. The report recommended periodic reassessments of eligibility criteria and continued support of research clusters to promote long-term, sustainable research efforts.\nIn 2008, NIH sponsored an external process evaluation of its COBRE program, which was initiated in FY2000. The study included 19 centers and 107 junior investigators. While there was considerable variation in baseline characteristics and program activity emphasis among centers, the report concluded that the program was effective in strengthening institutional research infrastructure and training investigators. The report further stated that, as a group, the centers were successful in achieving program goals. Recommendations from evaluators included conducting rigorous assessments of research progress, placing a strong emphasis on mentorship of junior investigators, and increasing involvement from external assessment committees.\nThrough the America COMPETES Reauthorization Act of 2010, Congress directed the NSF to contract with the National Academies of Sciences (NAS) to conduct a study of \"all Federal agencies that administer an [EPSCoR program] or a program similar to [EPSCOR].\" The resulting study was released in 2013. Therein, the NAS committee reported that it could not adequately assess EPSCoR effectiveness as charged, citing program goals that have broadened over time and vary by agency, and a \"scarcity of rigorous data and scholarly assessment literature.\" Focusing rather on understanding overall program structure and policies and evaluating core concerns, the committee findings and recommendations included the following:\nChallenges . Per the report, EPSCoR programs across agencies have competing objectives and policy directives, as well as inconsistent and incomplete evaluation metrics, making assessment difficult. Participating states reportedly have uneven commitments to improving research capacity, and the aggregate share of federal R&D funding to eligible states has not changed significantly over the course of the EPSCoR program. Successes . Evaluators found that EPSCoR programs have enhanced infrastructure, training, and human capital in participating states. The study notes that nearly all states reported positive changes in cultural attitudes, programs, and policies regarding science, engineering, and research. Recommendations . Broadly, the committee recommended that the federal government continue promoting the development of research capacity in all states, asserting that \"students in all parts of the country must have the chance to participate in high-quality research, and it is in the national interest that federal funding be provided to universities in every state to ensure that these research opportunities are available.\" To improve the focus and impact of the EPSCoR program, recommendations included an enhancement of research and STEM training capacity; more rigorous proposal and project evaluation processes, including effective third-party evaluation; a matching funds requirement for all research awards; and, working through the EICC, development of a new framework for eligibility and graduation.\nIn 2014, the Institute for Defense Analyses (IDA) Science and Technology Policy Institute (STPI) released a report commissioned by NSF in 2011 to conduct a life-of-program assessment of NSF-specific EPSCoR activities, outputs, and outcomes. The analyses focused on program goals and funding levels, competitiveness for research funding, S&T research base enhancements, eligibility indicators, and the concentration of NSF research funding.\nThe IDA/STPI report found that NSF's EPSCoR program has meaningfully contributed to increased competitiveness for NSF funding overall; however, competitiveness increased for state cohorts entering the program prior to 2000, but not for those entering after. Furthermore, evaluators stated that the geographic concentration of NSF R&D funding was shown to have decreased slightly since 1980, though the decrease could not be attributed to EPSCoR. Evaluators also noted that jurisdictions have developed their research bases, improved university policies promoting research, and sustained their EPSCoR activities over the long term. While the EPSCoR statute states that the purpose of the program is to assist states that \"historically have received relatively little Federal research and development funding,\" it does not define \"relatively little\" with respect to determining program eligibility nor does it define the units to be considered (e.g., dollars, share of total federal research funding). The report notes that the choice of such criteria can have important implications for determining eligibility.\nTo help ensure that EPSCoR funding has the greatest impact, the IDA/STPI report concluded that NSF should define \"undue concentration\"; encourage jurisdictions to use experimental strategies to enhance their research capacity; and improve eligibility calculations, program-level evaluations, and research competitiveness data analysis.\nIn 2015, NSF provided an official response to the NAS and STPI reports. In the two-page response, the agency proposed strengthening program-level evaluations; encouraging jurisdictions to experiment with flexible and competitive mechanisms to support research, faculty, and STEM education; and working with other agencies in the EICC to explore the use of specific indicators of \"undue concentration\" and to reexamine eligibility criteria.\nIn addition to the assessments, NSF has previously held two workshops with a variety of stakeholders from state and federal government, business, and EPSCoR administrators and faculty to recommend long-term program goals and strategies—the EPSCoR 2020 workshop in 2006 and the EPSCoR 2030 workshop in 2012. Broadly, the EPSCoR 2030 workshop recommended effectively coordinating across federal agencies, maintaining a focus on increasing research capacity, using EPSCoR institutions as test beds for new agency initiatives, and developing robust cyberinfrastructure at institutions to help them stay competitive.\nFurther, as part of NSF's ongoing internal review processes, the NSF Committee of Visitors (COV) completed a detailed EPSCoR program review in FY2015. The review included program processes and a sample of 74 proposals spanning the three EPSCoR award components. Reviewers provided recommendations for improving proposal review and post-award data collection, expanding certain award components, and establishing a standing advisory committee for the program. NSF's response document included plans to convene an advisory panel in FY2017, building on the EPSCoR 2020 and EPSCoR 2030 workshops.\nIn summary, assessment activities over the years have included repeated recommendations in certain areas: reevaluating eligibility and graduation criteria, improving data collection and program evaluation processes, and focusing on flexible and sustainable program strategies.", "An overarching challenge for the EPSCoR program since its inception has been crafting a balance between supporting sustainable research capacity development equitably across states while also supporting high-quality science through the merit review process. As EPSCoR has grown among agencies, with variations in policy and program structures, a number of issues have emerged.", "EPSCoR's lengthening duration and evolving program focus have been considered by program supporters and critics, and addressed in program reviews and academic analyses. As the program's time frame has continued beyond the initial limit of five years, the goals and objectives have both evolved and expanded.\nIn planning the creation of EPSCoR, then-Director of NSF Richard Atkinson stated that:\nIt would be clearly understood from the beginning that no support would be provided beyond five years through [EPSCoR], as scientists in the funded states should then be able to compete more successfully for support from NSF and other agencies.\nSome critics contend that the existence of an experimental program 30 years after its establishment demonstrates that the program is ineffective and instead is a \"redistribution of wealth.\" One academic analyst who conducts research on federal decisionmaking regarding integration of science with policy and technology transfer asserted that EPSCoR \"was not intended as an entitlement, but rather as a catalyst.\"\nOn the other hand, EPSCoR supporters have argued for the necessity of the program's long tenure. One NSF staff member during EPSCoR's initial years has asserted that he and others realized that it was not feasible to achieve the program's objectives in such a short time. A recent study asserted that building research capacity and competitiveness through investments in physical infrastructure and human capital \"is not an easily achievable target because capacity building generally takes a long time.\" Just how long remains uncertain for EPSCoR programs and states and is a topic of debate among stakeholders.\nAs EPSCoR's duration has increased, program focus has evolved and expanded. Initially, EPSCoR was termed \"experimental\" in its approach to building research capacity in certain states. More recently, the program has been referred to as \"established,\" with \"experimental\" referring to support for innovative methods to achieve program goals. In 2009, Arden Bement, then Director of NSF, called it a \"program of experimentation\" as opposed to an experimental program. Some have compared EPSCoR state projects to the work of small businesses—in regards to purportedly being more nimble than large entities—and have asserted that EPSCoR states are able to develop \"unique S&T related abilities and expertise to contribute to the national agenda.\"\nFurthermore, some researchers have noted that EPSCoR has become an important component in developing states' economies. One analyst contends that EPSCoR somewhat inadvertently \"evolved into a program that fosters science-based economic development, an extension of the best science paradigm on which NSF and EPSCoR were founded,\" during which time there was also \"a general national trend toward partnering academic research with economic development.\" A former state EPSCoR administrator asserted that EPSCoR has \"put [S&T] on the forefront in discussions of the role and importance of universities in states. Not only from the perspective of education and research, but particularly from the perspective of technology transfer and economic development.\"\nIn its RII Track-1 program solicitation, NSF has emphasized the importance of linking an EPSCoR jurisdiction's S&T plan with its economic development plan:\n[A jurisdiction's] S&T plan should be informed by the jurisdiction's Economic Development Plan (if applicable) and should describe innovation pathways for bringing outputs and outcomes of the proposed RII Track-1 research to the marketplace.\nIn addition, the 2015-2016 NSF EPSCoR Workshop Series on Innovation, Entrepreneurship, and Translational Research led to a guide to help EPSCoR jurisdictions build such connections.\nNIH's program has a focus on innovation and economic development, as well. In its FY2017 budget request, NIH stated its intention to initiate small business and technology transfer activities in IDeA states. NIH also expressed its intention to use funds from the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs to set up biotechnology incubators in each of the four IDeA regions. The Senate Committee on Appropriations has expressed support for such plans: \"The Committee supports the initiative to direct small business research funding to IDeA States to foster the development of products to advance public health.\"\nThis focus on innovation is part of a growth of the EPSCoR objectives, which include supporting research projects, developing statewide and regional networks, building infrastructure and human capacity, broadening diversity in STEM, and connecting research to technology transfer, state economic development, and national priorities.", "The threshold for NSF EPSCoR eligibility has changed multiple times over the program's duration. Recently, the 2014 IDA/STPI assessment of NSF's EPSCoR program noted—based on a literature review—that \"a range of indicators ... could be used to identify jurisdictions with 'relatively little' Federal funding,\" but found \"no consensus that one or more of those indicators is the preferred way to select EPSCoR-eligible jurisdictions.\" In addition to the IDA/STPI report, the 2013 NAS assessment also suggested a number of EPSCoR eligibility factors for consideration, including per capita federal research funding; state commitment; proposal success rates of research university faculty; total research funding; progress to date; future opportunities for progress; and financial need.\nResponding to the reports, NSF noted that it would \"consider models for eligibility and graduation, including the option of using median funding level\" and \"explore the use of specific indicators of 'undue concentration' in collaboration with other federal agencies ... and ensure that EPSCoR's program design, funding levels, and eligibility criteria reflect the indicators.\" The NSF's FY2017 budget request stated that this issue was being explored by the EICC: \"In FY2016, the [EICC] was tasked with examining the eligibility criteria across the five agencies with active programs ... and determining if there should be a common federal EPSCoR eligibility criterion.\" The EICC subsequently provided recommendations to NSF's Office of Integrative Activities (OIA); as of October 2016, the recommendations remained under review by NSF leadership. Developing a common federal eligibility criterion (or criteria) might help address concerns voiced by some Members of Congress that eligibility for EPSCoR funding at DOE is based on NSF research award expenditures rather than on DOE Office of Science award expenditures (as discussed in the \" Recent Congressional Activity \" section).\nNIH also reports that, since freezing eligibility in 2008, the agency has developed a new proposed criterion under which eligible states would include those for which the aggregate NIH funding received by entities in the state is at or below the median of all states. Such a criterion raises the question of whether or not state \"graduation\" from EPSCoR remains a goal. It is uncertain yet if EPSCoR agencies will develop common eligibility and graduation criteria.", "Program assessments, peer-reviewed literature, and Members of Congress have all raised broad questions about how to determine EPSCoR's success. Among the types of questions raised: What metrics should be used to determine success (e.g., increases in agency-specific R&D funding, all federal R&D funding, grant proposal success rates, research collaborations)? At which level should these metrics be evaluated—institution, state, region? How can federal agencies with active EPSCoR programs best coordinate data collection and evaluation of comprehensive program success in light of the differences in agency-specific missions?\nSeveral academic studies have been conducted to assess EPSCoR's impact on university research, competitiveness in R&D awards funding, and economic development. A primary measure of program effectiveness has been increased shares of federal funding in EPSCoR states. Some research has shown that states become more competitive for federal science and engineering (S&E) funding the longer they stay in the EPSCoR program. This finding was based on faster growth of federal S&E obligations in EPSCoR states compared to non-EPSCoR states; however, the effect was small, suggesting a long and slow process of addressing changes in concentrations of research funding. A 2009 study concluded that, for some states, greater success in securing federal R&D funding may have led to reduced state contributions to academic institutions. Another evaluation found that the percentage of university-performed R&D funded by industry—used in the study as a rough indicator of the intensity of university-industry research partnerships—was comparable in EPSCoR and non-EPSCoR states between 1985 and 2000.\nIn addition to funding, researchers have suggested that including a more nuanced evaluation of capacity building—looking at both the \"hard infrastructure and the human-based infrastructure and resources\"—is needed to fully understand capacity and competitiveness improvements in EPSCoR states. For example, one study showed that EPSCoR had a significant positive impact on publication quality at universities in participating states. A 2009 study noted that \"a social capital approach to the assessment of EPSCoR would address capacity building at the micro level, and be targeted to state characteristics\"; the study found that—within EPSCoR states—scientists who participated in program projects performed better in capacity-related characteristics (e.g., larger collaborative networks) than their colleagues who did not. Notably, this and other studies highlight a common challenge—demonstrating that EPSCoR is not only associated with measures of success, but directly contributes to them. Nevertheless, some may caution against focusing too heavily on directly quantifiable outcomes, which might not adequately assess impacts from EPSCoR support. For example, research investments, particularly investments in basic research, may have impacts on future competitiveness that are difficult to measure or anticipate, such as advancing fundamental knowledge and spurring new and innovative research directions.\nBroadly, researchers and program assessors have recommended more thorough data collection procedures with standardization across programs to allow for improved comparisons in future EPSCoR evaluations. NSF EPSCoR has stated that it \"strongly agrees that detailed data, captured in a uniform fashion over time, is essential to assessing the outputs and outcomes of EPSCoR investments, and effective program management overall,\" highlighting recent efforts to standardize data reporting for RII awards.", "On several occasions, the 114 th Congress addressed aspects of the EPSCoR program.\nThe American Innovation and Competitiveness Act (AICA, P.L. 114-329 ), enacted on January 6, 2017, revises program requirements and renames EPSCoR as the Established Program to Stimulate Competitive Research, among other provisions. The act directs agencies with EPSCoR programs to consider modifications to award structures and evaluations, including an emphasis on harmonization of EPSCoR metrics across agencies, long-term investments, and support for innovative and experimental research and funding models. Further, the AICA requires the EICC to brief the appropriate committees of Congress on any such modifications one year after enactment.\nIn 2015, H.Amdt. 317 would have amended H.R. 2578 , the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2016, to prohibit the use of funds for any EPSCoR program funded by the bill; this would have included EPSCoR programs at NSF and NASA. The amendment failed on a floor vote of 195-232. During floor debate, some Members expressed concerns with the program, asserting that many EPSCoR states have small populations and receive more in federal spending than they pay in taxes; program monies are determined on a per state basis, rather than a per capita basis; and what was originally intended as temporary assistance funding to develop research infrastructure has grown into a permanent program. Opposition to the amendment asserted that EPSCoR has supported areas of strategic importance and helped to stabilize an imbalance in funding—cited as 28 EPSCoR jurisdictions accounting for about 10% of NSF funding but 20% of the U.S. population—and should continue to do so.\nIn 2016, H.Amdt. 1122 , a similarly focused amendment to H.Amdt. 317 , would have amended H.R. 5055 , the Energy and Water Development and Related Agencies Appropriations Act, 2017, to prohibit the use of funds for DOE's EPSCoR program. The amendment failed on a floor vote of 206-213. During House floor debate, many of the same objections to the program were raised as for H.Amdt. 317 with additional concerns that the program at DOE is based on NSF's EPSCoR program eligibility and research grant expenditures, rather than DOE research expenditures. Supporters of the amendment asserted that \"a rational program would ... collect all research funding in all areas and base the set-asides on that [and] would do it on a per capita basis.\" Opponents of the amendment stated a willingness to debate program details—such as potential modifications to program formulas—and emphasized that eliminating the program would be a mistake.\nThe introduced version of the 2015 Senate Labor, Health and Human Services, and Education, and Related Agencies Appropriations bill ( S. 1695 ) would have revised eligibility criteria for the IDeA program, including allowing NSF EPSCoR-eligible entities to apply for inclusion in NIH INBRE awards. That program revision was not included in the FY2016 omnibus, but the accompanying explanatory statement included recognition of the IDeA program's success and requests to update and incorporate EPSCoR eligible states into IDeA program eligibility criteria.", "The EPSCoR program funding and objectives have expanded and evolved since its establishment more than three decades ago. Assessments and workshops involving a wide range of stakeholders have helped to inform these changes, as has some academic research. As the program has grown, some stakeholders have also raised program-specific concerns due to EPSCoR's geographically targeted structure and variations among agency approaches. Further, some of the questions raised about the program are similar to questions raised about the broader role of the NSF, such as: What is the federal government's role in scientific research? How do Congress and agencies balance supporting innovative, independent scientific research while remaining accountable for the use of public funds?\nGoing forward, Congress may consider whether or not to provide additional direction and oversight regarding EPSCoR's longevity and focus, and the development of new eligibility and graduation criteria. Should graduation remain a desired goal for EPSCoR programs, Congress may further explore how new eligibility criteria—such as setting eligibility at a median funding level—would affect the potential for jurisdictions to \"graduate\" from a program. Congress may also consider whether or not to require additional data collection and comparative program evaluations across agencies to inform future program direction and congressional action.", "" ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 1, 1, 1, 1, 2, 2, 2, 1, 1, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_title h2_title", "h0_full h2_full", "", "", "", "", "", "", "h0_full h2_full h1_full", "h2_title h1_full", "h1_full", "h2_full", "h1_full", "h2_full", "h2_full", "" ] }

{ "question": [ "What was the purpose of EPSCoR?", "What does EPSCoR help institutions do?", "What determines EPSCoR eligibility for funding?", "Why is there debate about EPSCoR among stakeholders?", "What do stakeholders discuss about EPSCoR?", "Why have assessments been conducted to evaluate EPSCoR?", "What issues have these assessments raised?", "What role does EPSCoR have for Congress?", "Why is EPSCoR not supported by some members of Congress?", "Why do some members of Congress support EPSCoR?", "What is the American Innovation and Competitiveness Act?" ], "summary": [ "The Established Program to Stimulate Competitive Research (EPSCoR)—originally named the Experimental Program to Stimulate Competitive Research (EPSCoR)—was established at the National Science Foundation (NSF) in 1978 to address congressional concerns about an \"undue concentration\" of federal research and development (R&D) funding in certain states.", "The program is designed to help institutions in eligible states build infrastructure, research capabilities, and training and human resource capacities to enable them to compete more successfully for open federal R&D funding awards.", "Eligibility for NSF EPSCoR funding is limited to states (including some territories and the District of Columbia) that received 0.75% or less of total NSF research and related activities (RRA) funds over the most recent three-year period. EPSCoR awards are made through merit-based proposal reviews.", "While EPSCoR was originally proposed as a short-term effort for certain states, it has grown in size and scope, generating debate among stakeholders about program goals and policies.", "Common topics of discussion among stakeholders include the expansion and focus of EPSCoR goals, program coordination among federal agencies, criteria for state eligibility and graduation from the program, and metrics for assessing EPSCoR's success.", "As the programs have evolved, a number of assessments have been conducted to evaluate EPSCoR's challenges and success, and to inform future directions.", "For instance, an overarching concern is finding an appropriate balance between supporting research development equitably across states while also supporting high-quality science through the merit review process.", "Congress has a long-standing interest in the EPSCoR program.", "Some Members of Congress have questioned the fairness of the program, which is unique at NSF in its state-targeted approach. Additionally, some have expressed concern that the EPSCoR approach does not fit within the broader merit-based grant-making process at NSF.", "Others Members of Congress have supported the program, stating that it has been successful in contributing to research of national interest, helping to balance federal R&D funding among states, and providing broader research education opportunities to create a skilled workforce.", "The American Innovation and Competitiveness Act (AICA, P.L. 114-329), enacted on January 6, 2017, renamed EPSCoR as an established—rather than experimental—program, revised various program components, and included language in support of continuing EPSCoR." ], "parent_pair_index": [ -1, 0, -1, -1, 0, -1, 2, -1, 0, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "The Importance of Exchange Rates in the Global Economy", "What is an Exchange Rate?", "Impact on International Trade and Investment", "International Trade", "International Investment", "Types of Exchange Rate Policies", "Exchange Rate Misalignments", "General Debates over \"Currency Wars\"", "Specific Debates over Exchange Rates", "Currency Interventions", "China22", "Other Countries", "Debates", "Expansionary Monetary Policies", "Quantitative Easing in the United States, UK, and Eurozone41", "Japan and \"Abenomics\"", "Debates", "U.S. Laws Addressing Currency Manipulation", "1988 Trade Act", "Trade Promotion Authority Legislation", "Trade Facilitation and Trade Enforcement Act of 2015", "International Agreements on Exchange Rates", "International Monetary Fund", "Multilateral Coordination in the G-7 and G-20", "World Trade Organization", "Free Trade Agreements", "Continuing Debate and Policy Options for Congress", "Maintaining the Status Quo", "Applying Countervailing Duties on Imports from Countries that Manipulate their Currency", "Applying Countervailing Interventions in Foreign Exchange Markets", "Urging the Administration to Include Enforceable Provisions on Currency in Trade Agreements", "Urging the Administration to Address Currency Disputes at the IMF or WTO", "Conclusion" ], "paragraphs": [ "", "Some Members of Congress and policy experts allege that U.S. producers and U.S. jobs have been adversely affected by the exchange rate policies adopted by China, Japan, and a number of other countries. They maintain that some countries are purposefully using various policies to weaken the value of their currency to boost exports and create jobs, but that these policies come at the expense of other countries, including the United States. During the global financial crisis, some political leaders and policy experts argued that there was a \"currency war\" in the global economy, as countries competed against each other to weaken the value of their currencies and boost exports. Even as the global financial crisis has faded, some policymakers continue to express concerns that other countries are using exchange rate policies to gain an unfair trade advantage against the United States.\nSome economists are skeptical about \"currency manipulation\" and whether it is a significant problem. They raise questions about whether government policies have long-term effects on exchange rates; whether it is possible to differentiate between \"manipulation\" and legitimate central bank activities; and the net effect of alleged currency manipulation on the U.S. economy.\nSome Members of Congress have proposed taking additional measures to address concerns about the exchange rate policies of other countries, while other Members have cautioned against aggressive measures that could trigger retaliation, among other concerns. During the 114 th Congress, two major pieces of legislation were enacted that contain provisions on currency. TPA legislation signed into law in June 2015 ( P.L. 114-26 ) includes principal negotiating objectives addressing currency manipulation. Provisions to combat currency manipulation were also included in the Trade Facilitation and Trade Enforcement Act ( P.L. 114-125 ), signed into law in February 2016. In the 115 th Congress, debates about currency manipulation have surfaced in the context of renegotiations of the North American Free Trade Agreement (NAFTA) and modifications to the U.S.-South Korea Free Trade Agreement (KORUS FTA).\nThis report provides information on current debates over exchange rates in the global economy. It offers an overview of how exchange rates work; analyzes specific disagreements and debates; and examines existing frameworks for potentially addressing currency disputes. It also lays out some policy options available to Congress, should Members want to take action on exchange rate issues.", "", "An exchange rate is the price of a country's currency relative to other currencies. In other words, it is the rate at which one currency can be converted into another currency. For example, at the beginning of January 2018, one U.S. dollar could be exchanged for 0.83 euros (€), 112 Japanese yen (¥), or 0.74 British pounds (£). Exchange rates are expressed in terms of dollars per foreign currency, or expressed in terms of foreign currency per dollar. The exchange rate between dollars and euros in early January 2016 can be quoted as 1.21 dollars per euro ($/€) or, equivalently, 0.83 euros per dollar (€/$).\nConsumers use exchange rates to calculate the cost of goods produced in other countries. For example, U.S. consumers use exchange rates to calculate how much a bottle of French or Australian wine costs in U.S. dollars. Likewise, French and Australian consumers use exchange rates to calculate how much a bottle of U.S. wine costs in euros or Australian dollars.\nHow much a currency is worth in relation to another currency is determined by the supply and demand for currencies in the foreign exchange market (the market in which foreign currencies are traded). The foreign exchange market is substantial, and has expanded in recent years. Trading in foreign exchange markets averaged $5.1 trillion per day in April 2016 (latest data available), up from $3.3 trillion in April 2007.\nThe relative demand for currencies reflects the underlying demand for goods and assets denominated in that currency, and large international capital flows can have a strong influence on the demand for various currencies. The government, typically the central bank, can use policies to shape the supply of its currency in international capital markets.", "", "Exchange rates affect the price of every export leaving a country and every import entering a country. As a result, changes in the exchange rate can impact trade flows. When the value of a country's currency falls, or depreciates, relative to another currency, its exports become less expensive to foreigners and imports from overseas become more expensive to domestic consumers. These changes in relative prices can cause the level of exports to rise and the level of imports to fall. For example, if the dollar depreciates against the British pound, U.S. exports become cheaper to UK consumers, and imports from the UK become more expensive to U.S. consumers. As a result, U.S. exports to the UK may rise, and U.S. imports from the UK may fall.\nLikewise, when the value of a currency rises, or appreciates, the country's exports become more expensive to foreigners and imports become less expensive to domestic consumers. This can cause exports to fall and imports to rise. For example, if the dollar appreciates against the Australian dollar, U.S. exports become more expensive to Australian consumers, and imports from Australia become less expensive to U.S. consumers. Changes in prices may cause U.S. exports to Australia to fall and U.S. imports from Australia to rise.", "Exchange rates impact international investment in two ways. First, exchange rates determine the value of existing overseas investments. When a currency depreciates, the value of investments denominated in that currency falls for overseas investors. Likewise, when a currency appreciates, the value of investments denominated in that currency rises for overseas investors. For example, if a U.S. investor holds a German government bond denominated in euros, and the euro depreciates, the value of the bond in U.S. dollars falls, making the investment worth less to the U.S. investor. In contrast, if the euro appreciates, the value of the German bond in U.S. dollars rises, and the investment is worth more to the U.S. investor.\nSecond, exchange rates impact the flow of investment across borders. Changes in the value of a currency today can shape investors' future expectations about the value of the currency, which can have substantial impacts on capital flows. If investors expect a currency to depreciate, overseas investors may be reluctant to invest in assets denominated in that currency and may want to sell assets denominated in the currency, in fear that their investments will become less valuable over time. Likewise, if a currency is expected to rise over time, assets denominated in that currency become more attractive to overseas investors. For example, a depreciating euro may deter U.S. investment in the Eurozone, while an appreciating euro may increase U.S. investment in the Eurozone.", "There are two major types of exchange rate policies. First, some governments \"float\" their currencies. This means they allow the price of their currency to fluctuate depending on supply and demand for currencies in foreign exchange markets. Governments with floating exchange rates do not take policy actions to influence the value of their currencies.\nSecond, some countries \"fix\" or \"peg\" their exchange rate. This means they fix the value of their currency to another currency (such as the U.S. dollar or euro), a group (or \"basket\") of currencies, or a commodity, such as gold. The government (typically the central bank) then uses various policies to control the supply and demand for the currency in foreign exchange markets to maintain the set price for the currency. Often, central banks maintain exchange rate pegs by buying and selling currency in foreign exchange markets, or \"intervening\" in foreign exchange markets.\nThere are pros and cons to having a floating or fixed exchange rate. Fixed exchange rates provide more certainty in international transactions, but they can make it more difficult for the economy to adjust to economic shocks and can make the currency more susceptible to speculative attacks. Floating exchange rates introduce more unpredictability in international transactions and may deter international trade and investment, but make it easier for the economy to adjust to changes in economic conditions.\nIn order to take advantage of the benefits of both fixed and floating exchange rates, many countries do not adopt a purely fixed or floating exchange rate, but choose a hybrid policy: they let the currency's value fluctuate but take action to keep the exchange rate from deviating too far from a target value or zone. The degree to which they float or peg varies. The optimal choice for any given country will depend on its characteristics, including its size and interconnectedness to the country to which it would peg its currency.\nBetween the end of World War II and the early 1970s, most countries, including the United States, had fixed exchange rates. In the early 1970s, when international capital flows increased, the United States abandoned its peg to gold and floated the dollar. Other countries' currencies were pegged to the dollar, and after the dollar floated, some other countries decided to float their currencies as well.\nIn 2016 (latest data available), 36% of countries had floating currencies . This includes several major currencies, such as the U.S. dollar, the euro, the Japanese yen, and the British pound, whose economies together account for half of global GDP. Many countries use policies to manage the value of their currencies, although some manage it more than others. This includes many small countries, such as Panama and Hong Kong, as well as a few larger economies, such as China and Saudi Arabia. In 2014, 42% of countries used a \"soft\" peg, which let the exchange rate fluctuate within a desired range, and 13% of countries used a \"hard\" peg, which anchors the currency's value more strictly, including the formal adoption of a foreign currency to use as a domestic currency (for example, Ecuador has adopted the U.S. dollar as its national currency). No large country uses a hard peg. Figure 1 depicts the exchange rate policies adopted by different countries.", "Many economists believe that exchange rate levels can differ from the underlying \"fundamental\" or \"equilibrium\" value of the exchange rate. When an actual exchange rate differs from its fundamental or equilibrium value, the currency is said to be misaligned. More specifically, when the actual exchange rate is too high, the currency is said to be overvalued; when the actual rate is too low, the currency is said to be undervalued.\nConsiderable debate exists about what the fundamental or equilibrium value of a currency is and how to define or calculate currency misalignment. For example, some economists believe that a currency is misaligned when the exchange rate set by the government, or the official rate, differs from what would be set by the market if the currency were allowed to float. By this reasoning, governments that take policy actions to sustain an exchange rate peg, such as intervening in currency markets, most likely have misaligned currencies. Additionally, this view suggests that floating currencies, by definition, cannot be misaligned, since their values are determined by market forces.\nFor other economists, a currency can be misaligned even if it is a floating rate. This is the case if the exchange rate differs from its long-term equilibrium value, which is based on economic fundamentals and eliminates short-term factors that can cause the exchange rate to fluctuate. Defining or estimating an equilibrium exchange rate is not a straightforward process and is complex. Economists disagree on the factors that determine an equilibrium exchange rate, and whether the concept is a valid one, particularly when applied to countries with floating exchange rates. Economists have developed a number of models for calculating differences between actual exchange rates and equilibrium exchange rates. Estimates of whether a currency is misaligned, and if so, by how much, can vary widely depending on the model used.", "Amid heightened concerns about slow growth and high unemployment in many countries, disagreements over exchange rate policies broadened following the global financial crisis. In 2010, Brazil's finance minister, Guido Mantega, declared that a \"currency war\" had broken out in the global economy. Even as the global economy has recovered, many concerns about exchange rates persist.\nAt the heart of disagreements is whether or not countries are using policies to intentionally push down the value of their currency in order to gain a trade advantage at the expense of other countries. A weak currency makes exports cheaper to foreigners and imports more expensive to domestic consumers. This can lead to higher production of exports and import-competing goods, which could help spur export-led growth and job creation in the export sector.\nHowever, if one country weakens its currency, there can be negative implications for certain sectors in other countries. In general, a weaker currency in one country can hurt exporters in other countries, since their exports become relatively more expensive and may fall as a result. Additionally, domestic firms producing import-competing goods may find it harder to compete with imports from countries with weak currencies, since weak currencies lower the cost of imports. Under certain circumstances, policies used to drive down the value of a currency in one country can cause other countries to run persistent trade deficits (imports exceed exports) that can be difficult to adjust and can be associated with the build-up of debt.\nFor these reasons, some economists view efforts to boost exports through a weaker exchange rate as \"unfair\" to other countries and a type of \"beggar-thy-neighbor\" policy—the benefit the country gets from the policy comes at the expense of other countries. These views are particularly rooted in the experience in the 1930s, during which, some economists argue, countries devalued their currencies to boost exports, in response to widespread high unemployment and negative economic conditions. The devaluations in the 1930s are referred to as \"competitive devaluations,\" since a devaluation in one country was often offset by a devaluation in another country, making it difficult for any country to gain a lasting advantage. Some economists view the competitive devaluations of the 1930s as detrimental to international trade, and, in addition to protectionist trade policies, as exacerbating the Great Depression.\nSome economists disagree that \"currency wars\" and competitive devaluations characterized the period following the global financial crisis of 2008-2009, and if they did, whether they are necessarily bad for the global economy. Because currency devaluations can often involve printing domestic currency, or implementing expansionary monetary policies, they can stimulate short-term economic growth. If enough countries engage in currency interventions, then there may be no net change in relative exchange rate levels and the simultaneous currency interventions may help reflate the global economy and boost global economic growth. Economists of this viewpoint argue that competitive devaluations of the 1930s did not cause the Great Depression and, in fact, actually helped end it.\nAdditionally, a weak currency in one country does not have an unambiguous negative effect on other countries. Instead, consumers and certain sectors may benefit when other countries have weak currencies. In particular, consumers that purchase imports from abroad benefit when other countries have weak currencies, because imports become cheaper. Businesses that rely on inputs from overseas also benefit when other countries have weak currencies, by lowering the costs of inputs and thus the overall cost of production.", "In current debates about exchange rates and whether countries are engaged in unfair currency policies to weaken their currencies, two major types of concerns have been raised: first, concerns about countries engaged in interventions in foreign currency markets, and second, concerns about the effects of expansionary monetary policies in some developed countries on exchange rate levels.", "Governments have various mechanisms they can use to weaken, or devalue, their currency, or sustain a lower exchange rate than would exist in the absence of government intervention. One way is intervening in foreign exchange markets or, more specifically, selling domestic currency in exchange for foreign currency. These interventions increase the supply of domestic currency relative to other currencies in foreign exchange markets, pushing the price of the currency down. The foreign currency is typically then invested in foreign assets, most commonly government bonds.\nConcerns about currency interventions are not new. For nearly a decade, various policymakers and analysts have raised concerns about China's interventions in foreign exchange markets to maintain, in their view, an undervalued currency relative to the U.S. dollar. Since the global financial crisis, however, concerns about currency interventions have become more widespread, as more countries, including Switzerland and others, intervened in foreign exchange markets, in the view of some analysts, to lower the value of their currency.", "Over the past decade, the Chinese government has tightly managed the value of its currency, the renminbi (RMB) or yuan, against the U.S. dollar. Some policymakers and analysts have argued that China's currency policies keep the RMB undervalued relative to the U.S. dollar, giving Chinese exports an \"unfair\" trade advantage against U.S. exports and contributing to the U.S. trade deficit with China. However, recent developments in exchange rate markets have led some economists to argue that China's currency is no longer undervalued against the U.S. dollar.\nIn 1994, China began to peg its currency to the U.S. dollar and kept it pegged to the U.S. dollar at a constant rate through 2005. In July 2005, it moved to a managed peg system, in which the government allowed the currency to fluctuate within a range, and the currency began to appreciate. In 2008, China halted appreciation of the RMB, due to concerns about the effects of the global financial crisis on Chinese exports. In 2012, China again allowed more flexibility in the value of the RMB against the U.S. dollar, and widened the trading band for the currency in 2014. Between 2005 and the end of 2015, the RMB appreciated by more than 20% against the dollar ( Figure 2 ).\nThe Chinese government used various policies to manage this appreciation of the RMB against the U.S. dollar. It printed yuan and sold it for U.S. currency and assets denominated in U.S. dollars, usually U.S. government bonds. It also manages the value of its exchange rate through capital controls that limit buying and selling of RMB. As China has engaged in currency interventions, its holdings of foreign exchange reserves increased, from $659 billion in the first quarter of 2005 to a peak of $3.9 trillion in the first quarter of 2014 ( Figure 2 ). Some economists view the sustained, substantial increase in foreign exchange reserves as evidence that the Chinese government kept the value of the RMB below what it would be if the RMB were allowed to float freely.\nWith the gradual appreciation of the RMB against the dollar in recent years, some policymakers and analysts have questioned whether the yuan is still undervalued against the U.S. dollar when adjusting for differences in price levels (the real exchange rate), and if so, by how much, particularly as inflation has increased in China. In May 2015, the IMF stated that the currency is \"no longer undervalued.\"\nIn August 2015, the Chinese central bank announced that the daily RMB parity values would become more \"market-orientated.\" China has also been selling foreign exchange reserves to prevent further depreciation of the currency, amid concerns about slower growth rates in China. China's currency depreciated in 2015 and 2016, although it resumed some appreciation in 2017. Although China does not disclose interventions in its foreign exchange market, the Treasury Department estimates that Chinese authorities significantly curtailed interventions in the second half of 2017 that they had been undertaking to support the value of the RMB.", "Other examples of interventions to weaken currencies in recent years include, among others, the following:\nJapan , which sold yen in foreign exchange markets in 2010 and 2011. Japan's interventions in March 2011 were unusual in that they were supported with corresponding interventions by the other G-7 countries to weaken the yen. A crisis in Japan (earthquake, tsunami, and threat of nuclear crisis) in March 2011 had sparked a sharp appreciation of the yen, which some feared would throw the world's third-largest economy back into recession, prompting the coordinated interventions; New Zealand , whose central bank revealed in May 2013 that it had intervened in currency markets to stem appreciation of its currency, the New Zealand dollar (nicknamed the kiwi); South Korea , which is believed to have intervened in currency markets to hold down the value of the won at various points in recent years, including estimated net purchases of $9 billion in 2017; Switzerland , which intervened to limit appreciation of the Swiss franc between September 2011 and January 2015, as a result of increased demand for the currency as a \"safe haven\" during the Eurozone crisis. In January 2015, the central bank of Switzerland (the Swiss National Bank) resumed its previous policy of allowing the Swiss franc to float freely; and Taiwan , which Treasury believes intervenes on both sides of the market but, on net, intervenes more frequently to resist appreciation of its currency, the new Taiwan dollar.\nMore generally, according to a June 2017 study by economists at the Peterson Institute of International Economics (PIIE), 20 countries intervened aggressively in at least one of the 11 years from 2003 to 2013 to keep their currencies undervalued, including Algeria, China, Hong Kong, Israel, Japan, Kuwait, Libya, Macao, Malaysia, Norway, Oman, Russia, Singapore, South Korea, Sweden, Switzerland, Taiwan, Thailand, Trinidad and Tobago, and the United Arab Emirates.", "A number of countries are actively intervening, or have recently intervened, in foreign exchange markets to lower the value of their currencies, and there are different views among economists about the consequences of these interventions for other countries. Some economists argue that currency interventions have helped countries give their exports a boost at the expense of other countries. A December 2012 study by economists at the PIIE estimates that currency interventions have caused the U.S. trade deficit to increase by $200 billion to $500 billion per year and the U.S. economy to lose between 1 million and 5 million jobs. Their updated study in 2017 found that that manipulation cost the United States 1 million jobs between 2009 and 2014, exacerbating the recovery from the global financial crisis.\nOther economists are skeptical that one country's interventions in foreign exchange markets have had adverse consequences for other countries. For example, some economists argue that interventions in foreign exchange markets by other countries change the composition of output in the United States (particularly the size of the export- and domestic-oriented sectors), but do not reduce the overall employment or output levels in the U.S. economy. Some economists also question whether currency interventions have long-lasting effects on exchange rate levels, particularly for countries with floating currencies. They argue that the large size of international capital flows overwhelms, in the long term, government purchases and sales of foreign currencies, and that other economic fundamentals, such as interest rates, inflation rates, and overall economic performance, have much greater effects on exchange rate levels.\nStill other economists argue that it is hard to make generalizations about the effects of currency interventions, and that, depending on the specific circumstances, currency interventions may or may not be \"fair\" policies. For example, they argue that relevant factors can include the following:\nDoes the government i ntervene in currency markets to sometimes strengthen and sometimes weaken its currency, or does it always intervene to weaken its currency? \"Two-way\" interventions (sometimes strengthening the currency, sometimes weakening the currency) may be evidence that the country is using currency interventions to sustain a pegged exchange rate that is close to its long-term fundamental or equilibrium value. Some economists argue that \"one-way\" interventions (always selling domestic currency) may be evidence that the government is using interventions to sustain a currency that is below the currency's fundamental or equilibrium value. Does the government intervene periodically, or on a continual basis? Periodic interventions may smooth potentially disruptive short-term fluctuations in the exchange rate and help the country build foreign exchange reserves, which can help it guard against economic crises. Sustained, or long-term, interventions may create negative distortions in the global economy. Does the government allow the intervention to increase its domestic money supply, or does the government \"sterilize\" the intervention to prevent an increase in its domestic money supply? When some governments intervene in currency markets by selling domestic currency, they allow the domestic money supply to increase. This is called an unsterilized intervention. When other countries (such as China) intervene, they do not allow their money supply to increase. Instead, when they sell domestic currency in exchange for foreign currency, they then sell a corresponding quantity of domestic government bonds to remove the extra domestic currency from circulation. This is called a sterilized intervention. It may matter to other countries whether the intervening country sterilizes the intervention or not. For example, increasing the money supply may help increase domestic demand, which in certain circumstances can cause consumers to buy more, not fewer, imports from other countries. Additionally, an increase in the money supply may cause prices to rise in the medium term. This may mean that the exchange rate adjusted for inflation (the real exchange rate) may not change in the medium term (after prices adjust), even if the nominal exchange rate (the exchange rate not adjusted for inflation) falls.", "In addition to intervening directly in foreign exchange markets, governments can weaken the value of their currency through expansionary monetary policies. Monetary policy is the process by which a government (usually the central bank) controls the supply of money in an economy, such as by changing the interest rates through buying and selling government bonds. Changes in the money supply can impact the value of the currency. For example, increasing the supply of British pounds can cause the price of the pound to fall.\nSome emerging markets, particularly Brazil, were critical of the expansionary monetary policies adopted by the United States, the United Kingdom, and the Eurozone in response to the global financial crisis of 2008-2009. Some U.S. policymakers also raised concerns about Japan's monetary policies, following a major policy shift in late 2012 and early 2013.", "The United States, the United Kingdom, and, to a lesser extent, the Eurozone adopted expansionary monetary policies to respond to the economic recession following the global financial crisis of 2008-2009. In addition to cutting interest rates, the Federal Reserve, the Bank of England, and the European Central Bank (ECB) used quantitative easing to provide further monetary stimulus. Quantitative easing is an unconventional form of monetary policy that expands the money supply through government purchases of assets, usually government bonds. Quantitative easing is typically used when more conventional monetary policy tools are no longer feasible, for example, when short-term interest rates cannot be cut because they are already near zero.\nSome emerging markets have argued that because the U.S. dollar, the British pound, and the euro are floating currencies, expansionary policies in these countries have caused these currencies to depreciate against the currencies of emerging markets. For example, Brazil has argued that quantitative easing in developed countries was a key factor in causing its currency (the real) to appreciate by more than 25% against the dollar between the start of 2009 and the end of the third quarter of 2010 ( Figure 3 ), when Brazil's finance minister, Guido Mantega, declared that a currency \"war\" had broken out in the global economy. Brazil imposed some short-term controls on inflows of capital into Brazil (capital controls) to stem appreciation of the real.\nIn response to the concerns of emerging markets, many policymakers and analysts have argued that the Federal Reserve, the Bank of England, and the ECB adopted expansionary monetary policies for domestic purposes (combatting the recession), and that any effect on their currencies was a side effect or by-product of the policy. For example, during a Senate Banking Committee hearing in February 2013, the Chairman of the Federal Reserve, Ben Bernanke, stressed that the Federal Reserve is not engaged in a currency war or targeting the value of the U.S. dollar. Instead, he emphasized that monetary policy is being used to achieve domestic economic objectives (high employment and price stability). He also stressed that monetary policies to strengthen aggregate demand in the United States are not \"zero-sum,\" because they raise the demand for the exports of other countries.\nThe concerns of emerging markets about the effects of quantitative easing have subsided. As developed countries have started rolling back expansionary monetary policies, the real has weakened substantially against the U.S. dollar ( Figure 3 ). Brazil's government, in fact, has started expressing concerns about the real becoming too weak, and in August 2013, intervened in foreign currency markets to strengthen its currency. The concerns of emerging-market economies about the potential rollback of quantitative easing policies in developed countries, including the United States, were a major topic of discussion at the September 2013 G-20 summit in St. Petersburg, Russia.", "Concerns have also been recently raised about major changes in Japan's monetary policy and their effects on the value of the yen. Elected in December 2012, Prime Minister Shinzo Abe has made it a priority of his administration to grow Japan's economy and eliminate deflation (falling prices), which has plagued Japan for many years. His economic plan, nicknamed \"Abenomics,\" relies on three major economic policies: expansionary monetary policies, fiscal stimulus, and structural reforms. To promote expansionary monetary policy, Japan's central bank (the Bank of Japan) unveiled a host of new measures in the first half of 2013, including goals to double the monetary base (commercial bank reserves plus currency circulating in the public) and to double its holdings of Japanese government bonds. By buying government bonds in exchange for yen, the Bank of Japan can increase Japan's money supply. Japan's central bank has had relatively loose monetary policy since 2013, although some believe it could tighten in early 2019.\nExpansionary monetary policies in Japan may have also contributed to a relatively sharp depreciation of the yen, which fell by almost 50% against the U.S. dollar between mid-2012 and the end of 2015 ( Figure 4 ) to its 2007 level, even as Japan has not directly intervened in currency markets since 2011. Several countries expressed their concerns about a weakening of the yen. In 2013, an official from the Russian central bank reportedly warned that \"Japan is weakening the yen and other countries may follow,\" and that \"the world is on the brink of a fresh currency war.\" Additionally, the president of China's sovereign wealth fund reportedly warned Japan against using its neighbors as a \"garbage bin\" by deliberately devaluing the yen, and South Korea's finance minister argued that Japan's weakening yen hurts his country's economy more than threats from North Korea. Movements in Japan's currency have also created concerns for some Members of Congress, with concerns being raised about the currency policies in the context of the proposed TPP, where Japan is one of the negotiating parties.\nOthers argue that a weakening yen partially offset the slow, but continued, appreciation of the yen in the preceding several years ( Figure 4 ). For example, in January 2012, the IMF estimated that the Japanese yen was \"moderately overvalued from a medium-term perspective.\" Some also argue that, rather than targeting the value of the currency, Japan's monetary policies are targeting domestic objectives, namely, beating deflation that has plagued the economy for many years. Japan's finance minister, Taro Aso, reportedly stated that \"monetary easing is aimed at pulling Japan out of deflation quickly. It is not accurate at all to criticize (us) for manipulating currencies.\" In 2016 and 2017, controversy surrounding Japan's exchange rate policies dissipated, as the yen started to strengthen and the government has not directly intervened in foreign exchange markets in over six years.", "There is debate over whether the expansionary monetary policies, including quantitative easing, implemented by some developed economies have been \"beggar-thy-neighbor\" policies. Some argue that expansionary monetary policies have unfairly caused the currencies of developed countries to depreciate against other countries, giving the exports of developed countries an \"unfair\" export boost. However, most economists agree that the expansionary policies in the United States, the UK, the Eurozone, and Japan have been designed to stimulate their domestic economies and will, in the medium term, cause prices to rise. As a result, they argue that there will be little effect on the real exchange rate (the exchange rate adjusted for differences in prices across countries) in the medium term (as prices increase), even if the nominal exchange rate (the exchange rate not adjusted for differences in prices across countries) falls in the short term. However, it should be noted that inflation in all these countries remains very low, to date.\nAdditionally, some argue that the expansionary policies stimulate domestic consumption and investment, which ordinarily leads to higher, not lower, imports from other countries, all else being equal. They argue that the net effect of quantitative easing and similar policies on trading partners is not necessarily negative and could be positive in some instances. For example, the IMF estimated that the first round of quantitative easing in the United States resulted in substantial output gains for the rest of the world, and that the second round generated modest output gains for the rest of the world.\nFor some economists, then, a key question to evaluate whether expansionary monetary policies are \"fair\" or \"unfair\" in the context of claims about \"currency wars\" is as follows:\nIs it appropriate for countries to adopt expansionary monetary policies to combat a domestic economic recession, even if some sectors in other countries may be adversely affected in the short run ?: Some economists argue that countries should use expansionary monetary policies to respond to economic recessions. Moreover, most central banks, including the Fed, are pursuing statutory mandates that do not include foreign exchange rate requirements and responsibilities. Other economists argue that countries have a number of policy tools to respond to economic recessions, not just monetary policy, and that in today's globalized economy, a country should consider the potential negative spillover effects on other countries in its decisionmaking process.", "Some Members' concerns about currency manipulation and its impact on U.S. producers and workers have led to legislation over the past several decades. Key legislation seeking to address currency manipulation that has been signed into law is described below.", "In 1988, Congress enacted the \"Exchange Rates and International Economic Policy Coordination Act of 1988\" as part of the Omnibus Trade and Competitiveness Act of 1988 (the 1988 Trade Act), when many policymakers were concerned about the appreciation of the U.S. dollar and large U.S. trade deficits. A key component of this act requires the department to analyze on an annual basis the exchange rate policies of foreign countries, in consultation with the International Monetary Fund (IMF), and \"consider whether countries manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.\" If \"manipulation\" is occurring with respect to countries that have (1) global currency account surpluses and (2) significant bilateral trade surpluses with the United States, the Secretary of the Treasury is to initiate negotiations, through the IMF or bilaterally, to ensure adjustment in the exchange rate and eliminate the \"unfair\" trade advantage. The Secretary of the Treasury is not required to start negotiations in cases where they would have a serious detrimental impact on vital U.S. economic and security interests.\nAdditionally, the act requires the Treasury Secretary to submit a report annually to the Senate and House Banking Committees, on or before October 15, with written six-month updates, and the Secretary is expected to testify on the reports as requested. The reports are to address a host of issues related to exchange rate policies of major U.S. trade competitors, such as currency market developments; currency interventions undertaken to adjust the exchange rate of the dollar; the impact of the exchange rate on U.S. competitiveness; and the outcomes of Treasury negotiations on currency issues, among others.\nSince the 1988 Trade Act was enacted, the Department of the Treasury has identified three countries as manipulating their currencies under the Trade Act's terms: China, Taiwan, and South Korea. These designations occurred in the late 1980s and early 1990s; Treasury has not determined that currency manipulation has occurred under the terms of the 1988 Trade Act since it last cited China in 1994.", "Given the impact that exchange rates can have on trade flows, Congress has sought to address currency manipulation in trade promotion authority (TPA) legislation. TPA is the authority Congress grants to the President to enter into certain reciprocal trade agreements and to have their implementing bills considered under expedited legislative procedures when certain conditions have been met. For example:\nThe Omnibus Trade and Competitiveness Act of 1988 ( P.L. 100-418 ), which granted \"fast track\" authority (a precursor to TPA) to the President, required the Administration, among other things, to submit a report to Congress with supporting information after entering a trade agreement. One part of this report was \"describing the efforts made by the President to obtain international exchange rate equilibrium.\" The Trade Act of 2002 ( P.L. 107-210 ), which renewed TPA in 2002, included exchange rate issues as a priority that the Administration should promote. The legislation stipulated that the Administration should \"seek to establish consultative mechanisms among parties to trade agreements to examine the trade consequences of significant and unanticipated currency movements and to scrutinize whether a foreign government engaged in a pattern of manipulating its currency to promote a competitive advantage in international trade.\" While a number of free trade agreements (FTAs) were negotiated under the 2002 version of TPA, with Congress approving implementing legislation for FTAs with Chile, Singapore, Australia, Morocco, the Dominican Republic and the Central American countries (CAFTA-DR), Bahrain, Oman, Peru, Colombia, Panama, and South Korea, it is not clear to what extent currency issues were salient issues in the negotiations or in the final agreements. The Bipartisan Congressional Trade Priorities and Accountability Act of 2015 ( P.L. 114-26 ), the most recent TPA legislation signed into law in June 2015, includes for the first time principal negotiating objectives addressing currency manipulation. The first states that it is a principal negotiating objective of the United States that parties to trade agreements should avoid manipulating their exchange rates over other parties to the agreement, with multiple possible remedies \"as appropriate,\" such as cooperative mechanisms, enforceable rules, reporting, monitoring, transparency, or other means. The second states that it is a principal negotiating objective of the United States to establish accountability against unfair currency practices through multiple possible means, and particularly to address protracted, large-sale intervention in one direction in foreign exchange markets. The principal negotiating objectives on currency likely led to a side agreement on exchange rates among the parties negotiating the Trans-Pacific Partnership (TPP), discussed in greater detail below.", "Currency manipulation is addressed in the Trade Facilitation and Trade Enforcement Act ( P.L. 114-125 ), which was signed by the President in February 2016. Two sections of the law address currency manipulation. The first section outlines provisions to enhance engagement on exchange rate and economic policies with certain major trading partners of the United States. In particular, the law stipulates new reporting requirements for Treasury on the macroeconomic and currency exchange rate policies for major trading partners of the United States. If a country has a significant bilateral trade surplus with the United States, has a current account surplus, and has engaged in persistent one-sided intervention in foreign exchange markets, the Treasury Secretary is under certain circumstances to start bilateral engagement with the country on the issue, including urging implementation of policy reforms, among other measures. If a country has failed to adopt appropriate policies to correct the currency undervaluation and surplus after a year of enhanced bilateral engagement, the President is to take one or more of the following actions:\nProhibit the Overseas Private Investment Corporation (OPIC) from approving any new financing for a project in that country; Prohibit the federal government from procuring goods or services from that country, as long as it can be done in a manner that is consistent with U.S. obligations under international agreements and would not impose an unreasonable cost on U.S. taxpayers; Instruct the U.S. Executive Director of the IMF to call for additional rigorous surveillance of the macroeconomic and exchange rate policies of that country and, as appropriate, formal consultations on findings of currency manipulation; and/or Instruct the U.S. Trade Representative to take into account the extent to which the country has failed to adopt appropriate policies to correct undervaluation and surpluses in assessing whether to enter into bilateral or regional trade agreement with that country or participate in negotiations with respect to a bilateral or regional trade agreement with that country.\nThe requirement for the President to take remedial action is waived if it would have an adverse impact on the U.S. economy greater than the benefits of taking remedial action or would cause serious harm to U.S. national security. To date, Treasury has not found a country that meets all three criteria. However, it has developed a new \"Monitoring List,\" which includes major trading partners that meet two of the three criteria currently or in the past year. The Monitoring List for April 2018 includes China, Japan, Germany, South Korea, Switzerland, and India.\nThe second section on currency establishes a new Advisory Committee on International Exchange Rate Policy, responsible for advising the Treasury Secretary on the impact of international exchange rates and financial policies on the U.S. economy. The committee is to be composed of nine members all appointed by the President, none of which are federal government employees. Three are to be appointed upon the recommendation of the Senate Banking Committee, and three are appointed upon the recommendation of the House Ways and Means Committee. The committee is to terminate after two years, unless renewed by the President.", "In addition to provisions in U.S. law that address currency manipulation, the United States is party to a number of international agreements and discussions that address exchange rate policies and currency manipulation.", "With a nearly universal membership of 188 countries, the IMF is focused on promoting international monetary stability. The IMF has engaged on the exchange rate policies of its member countries as part of its mandate, arguably motivated by the experience of competitive devaluations in the 1930s. Its role on exchange rates has evolved over time. Currently, members of the IMF, including the United States, have made commitments to refrain from manipulating their exchange rates to gain an unfair trade advantage. Specifically, IMF member countries have agreed to several obligations on exchange rates in the IMF's Articles of Agreement, the document that lays out the rules governing the IMF and establishes a \"code of conduct\" for IMF member countries. The Articles state that countries can use whatever exchange rate system they wish—fixed or floating—so long as they follow certain guidelines; that countries should seek, in their foreign exchange and monetary policies, to promote orderly economic growth and financial stability; and that the IMF should engage in \"firm\" surveillance over the exchange rate policies of its members.\nThe Articles also state that IMF member countries are to \"avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair advantage over other members.\" An IMF Decision, issued in 1977 and updated in 2007 and 2012, provides further guidance that, among other things, \"a member will only be considered to be manipulating exchange rates in order to gain an unfair competitive advantage over other members if the Fund determines both that: (a) the member is engaged in these policies for the purposes of securing fundamental exchange rate misalignment in the form of an undervalued exchange rate; and (b) the purpose of securing such misalignment is to increase net exports.\"\nIf a member country were to be found to be in violation of its obligations to the IMF, under the rules laid out in the Articles, it could be punished through restrictions on its access to IMF funding, suspension of its voting rights at the IMF, or, ultimately, expulsion from the IMF. To date, the IMF has never publicly cited a member country for currency manipulation.", "The United States has also participated in more informal forums to coordinate economic policies, including exchange rate policies. For example, in 1985, France, West Germany, Japan, the United States, and the United Kingdom (the Group of 5, or G-5) signed the Plaza Accord, in which countries agreed to intervene in currency markets to depreciate the U.S. dollar in relation to the Japanese yen and the German deutsche mark to address the U.S. trade deficit. In 1987, six countries (the G-5, plus Canada) signed the Louvre Accord, in which they agreed to halt the depreciation of the U.S. dollar through a host of different policy measures, including taxes, public spending, and interest rates.\nAdditionally, small groups of countries have executed coordinated interventions in foreign exchange markets to shape the relative value of currencies. For example, the G-7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States) have coordinated interventions a number of times: in 1995, to halt the dollar's fall against the yen; in 2000, to support the value of the euro after its introduction; and in 2011, to stem appreciation of the yen following a major crisis in Japan. This coordination has occurred on an ad hoc, voluntary basis. It is not based on any specific set of rules or commitments on exchange rates, and has been limited to a small group of advanced economies.\nMore recently, exchange rate policies have also been discussed at G-7 and G-20 meetings. During meetings in February 2013, for example, the G-7 nations reaffirmed their \"long-standing commitment to market-determined exchange rates\" and to \"not target exchange rates.\" The G-20 countries pledged to \"refrain from competitive devaluation\" in February 2013, which was again reiterated in subsequent G-20 meetings. G-7 and G-20 commitments are nonbinding, although other enforcement mechanisms, including peer pressure, have been used to ensure compliance in the past.", "Given the relationship between exchange rates and trade, some analysts and lawyers have examined whether World Trade Organization (WTO) provisions allow for recourse against countries that are unfairly undervaluing their currency. With 159 member countries, the WTO is the principal international organization governing world trade. It was established in 1995 as a successor institution to the General Agreement on Tariffs and Trade (GATT), a post-World War II institution intended to liberalize and promote nondiscrimination in trade among countries. Unique among the major international trade and finance organizations, the WTO has a mechanism for enforcing its rules through a dispute settlement process. However, there is a lot of debate about the extent to which WTO agreements address currency manipulation.\nOne aspect of the debate is whether the WTO agreement on export subsidies applies to countries with undervalued currencies. The WTO Agreement on Subsidies and Countervailing Measures specifies that countries may not provide subsidies to help promote their national exports, and countries are entitled to levy countervailing duties on imported products that receive subsidies from their national government if such imports cause or threaten to cause material injury to U.S. producers. Some economists maintain that an undervalued currency is an indirect subsidy that lowers a firm's cost of production relative to world prices and therefore helps encourage exports. Some argue, then, that an undervalued currency should count as an export subsidy in countervailing measures. It is not clear, however, whether intentional undervaluation of a country's currency is an export subsidy under the WTO's specific definition of the term, and thus is eligible for recourse through countervailing duties under WTO agreements, because currencies and exchange rates are not mentioned in the WTO agreement on subsidies. Additionally, the subsidy must be, among other things, specific to an industry and not provided generally to all producers. Intentional undervaluation of a currency may not be industry specific because it applies to all producers.\nAnother aspect of the debate relates to a provision in the General Agreement on Tariffs and Trade (GATT, the WTO agreement on international trade in goods), which states that member countries \"shall not, by exchange action, frustrate intent of the provisions\" of the agreement. Some analysts argue that policies to undervalue a currency are protectionist policies, and thus should count as an exchange rate action that frustrates the intent of the GATT. Others argue that the language is too vague to apply to undervalued currencies. Specifically, they argue that the language was written to apply to an international system of exchange rates that no longer exists (the system of fixed exchange rates, combined with capital controls, that prevailed from the end of World War II to the early 1970s).\nNo dispute over exchange rates has been brought before the WTO, and whether currency disputes fall under the WTO's jurisdiction remains a contested issue.", "In some cases, the United States has started exploring addressing concerns about currency manipulation in free trade agreement (FTA) negotiations. Provisions relating to currency were first formally explored in the Trans Pacific Partnership (TPP), a proposed FTA among the United States and 11 other Asia-Pacific countries. Largely in response to the TPA legislation passed by Congress in 2015, the monetary authorities from the 12 TPP countries initiated negotiations and in November 2015 released a joint declaration to address unfair currency practices. While the declaration was released concurrently with the text of the TPP, it was a separate agreement from the TPP. The declaration focused on commitments to avoid manipulation, transparency and reporting about interventions in foreign exchange markets, and multilateral dialogue on exchange rates. It did not include enforceable rules against currency manipulation. The joint declaration was to take effect when TPP entered into force and was to apply to countries that accede to the TPP in the future, subject to additional transparency or other conditions determined by the existing TPP countries. President Trump withdrew the United States from the TPP in January 2017. The other 11 TPP countries forged ahead with a trade agreement (the Comprehensive and Progressive Agreement on Trans-Pacific Partnership, CPTPP) in March 2018, without the side agreement on currencies.\nIn the renegotiation of the North American Free Trade Agreement (NAFTA), the Trump Administration has identified combatting currency manipulation as a negotiating objective. Although negotiations continue, news reports suggest that the countries are working on a nonbinding side agreement that pledges to avoid currency devaluation for competitive purposes. Concerns raised by U.S. policymakers about currency manipulation do not focus on Mexico and Canada, both of which have floating exchange rates, but the side agreement could send a signal globally and set precedent for provisions on currencies in future trade agreements with other countries.\nIn March 2018, the Administration announced that, through negotiating modifications to the U.S.-South Korea Free Trade Agreement (KORUS FTA), the Treasury Department was finalizing a side agreement on currency with South Korea. South Korea has periodically intervened in foreign exchange markets to weaken its currency. Likely in response to these negotiations, the South Korean government has indicated it will disclose more information about its interventions in foreign exchange markets.", "Concerns about the exchange rate policies of other countries persist. During the 2016 presidential campaign, combatting currency manipulation, particularly by China, was a key issue for Donald Trump. Since assuming office, President Trump has continued to express concerns about the exchange rate policies of other countries, although the Treasury Department has not formally labeled a country as a currency manipulator. Some Members of Congress have also proposed taking more assertive action on currency. There are a number of options for doing so, some of which Members have pursued through legislation. Policy options could include the following, among others:", "Even though there may be concerns about supporting U.S. producers and jobs from \"unfair\" exchange rate policies adopted by other countries, some Members and policy experts have laid out a number of reasons to refrain from taking action on exchange rate dispute, such as the following:\nThere is debate among economists on how to calculate a currency's \"equilibrium\" or \"fundamental\" long-term value, making the classification of currencies as undervalued or overvalued complex and subject to much discussion, with different models at times yielding very different results. Although an undervalued currency could harm certain U.S. import-sensitive firms and exporters, it benefits other parts of the economy. U.S. imports from trading partners with weak currencies are less expensive than they would be otherwise. Lower-cost imports may benefit U.S. businesses that purchase inputs from abroad and U.S. consumers. Plus, some countries that may \"manipulate\" buy U.S. public debt, which may make U.S. borrowing costs cheaper than they might otherwise be. Unilaterally labeling a country as a currency manipulator (\"naming and shaming\") or leading a multilateral charge against currency manipulation could trigger retaliation by other countries. This could lead to a trade war or higher borrowing costs for the U.S. government. Some analysts have argued that stricter international rules on currency manipulation could place constraints on U.S. monetary policy, because monetary policy can indirectly impact the value of the U.S. dollar against other currencies. Others argue that the constraints could be minimized, depending on the precise definition of currency manipulation.", "Some argue that the United States should treat currency manipulation as an actionable subsidy under U.S. law. This means that the United States could apply countervailing duties on imports from countries that are found to be manipulating their exchange rates. In the 115 th Congress, legislation has been introduced (the Currency Reform for Fair Trade Act, H.R. 2039 ) that would apply U.S. countervailing laws to imports from countries whose currencies are determined to be \"fundamentally undervalued.\" In the 114 th Congress, a similar bill ( S. 433 ) was amended to the Senate version of the Trade Facilitation and Trade Enforcement Act of 2015 ( S. 1269 ) during the Senate Finance Committee markup of the bill. However, it was not included in the final version of the legislation ( P.L. 114-125 ). Similar legislation has been introduced and considered in previous Congresses.\nApplying countervailing duties on imports from countries that manipulate their currencies may be attractive because it would be a unilateral action that the United States could take that could apply to all countries. Others argue that it could be difficult to reach consensus on whether, and if so, by how much, a currency is undervalued or misaligned and thus how to measure the subsidy conferred through currency manipulation. There are also questions about whether such legislation if implemented would violate WTO rules and make the United States subject to recourse under the WTO's dispute resolution.", "Most analysts agree that the primary way countries \"manipulate\" the value of their currency is by intervening in foreign exchange markets, by selling domestic currency in exchange for foreign currency. These interventions increase the supply of domestic currency relative to other currencies in foreign exchange markets, pushing the price of the currency down. Congress could direct the Department of the Treasury and/or the Federal Reserve to conduct \"countervailing currency interventions,\" that would effectively undo interventions by other countries in foreign currency markets.\nFor example, if a country sells its domestic currency in exchange for 1 billion dollars in foreign exchange markets, this could have the effect of keeping its currency relatively weak and the dollar relatively strong. To offset the impact on the exchange rate, the United States could buy 1 billion dollars' worth of the other country's domestic currency in exchange for 1 billion U.S. dollars. So-called \"countervailing interventions\" or \"remedial interventions\" have been previously proposed in legislation, for example S. 1619 in the 112 th Congress, which passed the Senate. Some experts also argue they could be implemented under existing law.\nCountervailing currency interventions may be an attractive policy option, because they seek to address concerns about exchange rate policies directly through exchange rate channels. These interventions in foreign exchange markets are unlikely to raise questions about WTO-compatibility that other policy options (particularly countervailing duties) might raise, and proponents argue there would be no budgetary costs to countervailing interventions. However, countervailing interventions would be less feasible for countries like China that restrict access to assets denominated in their domestic currency. If the United States were unable to purchase enough assets denominated in the other country's currency, it may not fully offset the other country's interventions in foreign exchange markets. Also, some countries do not publish data on their currency interventions, which could make countervailing interventions difficult.", "In 2015, Congress actively debated whether to require enforceable provisions on currency in trade agreements in the context of the TPA. While the final 2015 TPA legislation lists enforceable provisions as one of the possible remedies U.S. negotiators should seek against currency manipulation in trade agreements, the legislation does not require it. However, Members of Congress could continue to urge the Administration to negotiate and include enforceable provisions in its trade negotiations with other countries, including NAFTA and KORUS negotiations. Including enforceable provisions in trade agreements could be complicated, however, as there may be disagreement over how exchange rate disputes would be adjudicated and they would only apply to negotiating parties to the agreement, not to countries in the global economy more broadly.", "The IMF and the WTO are typically identified as the international institutions best suited for dealing with exchange rate disputes, because the IMF has the clearest set of commitments relating to currency manipulation, and the WTO is unique among international institutions in that it has a clear enforcement mechanism. Congress could ask the Administration to push for action on currency issues at the IMF and WTO, as well as seek changes to IMF and/or WTO rules to allow currency disputes to be addressed more clearly under these organizations. For example in the 110 th Congress, H.R. 2942 would have required, among other measures, the Administration to raise the issue at the IMF and the WTO.\nAddressing currency disputes in formal international institutions may provide broad, multilateral support for decisions that are reached and would apply to their broad memberships. However, addressing disputes over exchange rates at the IMF and WTO may run into obstacles. For example, the IMF Executive Board may find it too politically sensitive to publicly cite a country for currency manipulation. Changes to IMF and/or WTO policies could be a complicated process that would require multilateral consensus.", "Exchange rates are important prices in the global economy, and changes in exchange rates have potentially substantial implications for international trade and investment flows across countries. Following the global financial crisis of 2008-2009, tensions among countries over exchange rate policies arguably broadened. Some policymakers and analysts have expressed concerns that some governments are pursuing exchange rate policies to gain a trade advantage. Concerns have focused on both government interventions in currency markets in a number of other countries, including China, and expansionary monetary policies in some developed economies. However, some economists argue that the effects of exchange rate policies are nuanced, creating winners and losers, and that it is hard to make generalized claims about the negative effects of \"currency wars.\"\nTo date, the most formal response to current tensions over exchange rates has been through discussions at G-7 and G-20 meetings. Although frameworks have been set up for addressing currency \"manipulation\" at the IMF and through U.S. law, neither the IMF nor the U.S. Department of the Treasury has taken formal action on current disputes over exchange rates. There are debates about why formal action has not been taken at these institutions. One general complicating factor in addressing currency disputes is that estimating a currency's \"fundamental\" or \"true\" value is extremely complex and subject to debate among economists.\nThe 114 th Congress addressed currency manipulation through TPA and customs legislation. Members that continue to have concerns about currency manipulation may want to weigh the pros and cons of taking action on exchange rate disputes. If policymakers do want to take action, there are a number of policy options to consider, including countervailing duties, countervailing interventions in foreign exchange markets, provisions in trade agreements, and urging the Administration to press the issue more forcefully at international institutions." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 2, 2, 1, 1, 2, 3, 3, 3, 2, 3, 3, 3, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h0_title", "", "h0_title", "h0_full", "", "", "", "h1_full", "h0_title h2_title h1_title", "h0_full h2_title h1_title", "", "", "h2_full h1_full", "", "", "", "", "h2_title h3_title", "h2_full", "h3_full", "h3_full", "h2_full", "", "", "", "", "h1_title", "", "h1_full", "", "", "", "h0_full h2_full" ] }

{ "question": [ "Why are exchange rates important?", "Why are some members of Congress concerned about exchange rates?", "What have Congressional concerns about exchange rates been focused on?", "What is the main reason for disagreement about exchange rates?", "How does a weak currency affect exports?", "How can US consumers and businesses benefit from weak currencies?", "How may foreign interventions in exchange markets affect U.S. borrowing?", "What is the IMF?", "Why have there not been many citations of countries for currency manipulation?", "How is currency manipulation addressed?", "How did 114th Congress respond to concerns about currency manipulation?", "What did TPA legislation include?", "How else has currency manipulation been addressed?", "How was currency manipulation addressed in this way?" ], "summary": [ "Exchange rates are among the most important prices in the global economy. They affect the price of every country's imports and exports, as well as the value of every overseas investment.", "Over the past decade, some Members of Congress have been concerned that foreign countries are using exchange rate policies to gain an unfair trade advantage against other countries, or \"manipulating\" their currencies.", "Congressional concerns have focused on China's foreign exchange interventions over the past decade to weaken its currency against the U.S. dollar, although concerns have also been raised about a number of other countries pursuing similar policies.", "At the heart of disagreements is whether or not countries are using policies to undermine free markets and intentionally push down the value of their currency.", "A weak currency makes exports cheaper to foreigners, which can lead to higher exports and job creation in the export sector.", "However, U.S. consumers and U.S. businesses that rely on inputs from abroad may benefit when other countries have weak currencies, because imports may become less expensive.", "When foreign countries intervene in foreign exchange markets, it may also help lower U.S. borrowing costs.", "Through the International Monetary Fund (IMF), countries have committed to avoiding currency manipulation.", "The IMF has never cited a country for currency manipulation, and the U.S. Department of the Treasury has not done so since it last cited China in 1994. There are differing views on why. Some argue that countries have not engaged in policies that violate international commitments on exchange rates or triggered provisions in U.S. law relating to currency manipulation. Others argue that currency manipulation has occurred, but the provisions do not effectively respond to exchange rate disputes.", "Through the International Monetary Fund (IMF), countries have committed to avoiding currency manipulation. There are also provisions in U.S. law to address currency manipulation by other countries.", "The 114th Congress responded to concerns about currency manipulation through Trade Promotion Authority (TPA) and customs legislation.", "TPA legislation signed into law in June 2015 (P.L. 114-26) included, for the first time, principal negotiating objectives addressing currency manipulation in trade agreements.", "Currency manipulation was also addressed in the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125).", "It enhanced Treasury reporting and bilateral engagement on exchange rate issues, and led to the creation of a new Treasury \"monitoring list\" on currency manipulation." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, -1, 0, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Methods Used to Estimate the Potential Economic Effects of Climate Change in the United States Are Based on Developing Research, Are Complex, Produce Imprecise Results, and Can Convey Useful Insight", "Methods Are Based on Developing Research", "Methods Are Complex Because They Link Complicated Scientific and Economic Models", "Methods, and the National-Scale Studies That Use Them, Produce Imprecise Results Because of Information and Modeling Limitations", "Climate Modeling Uncertainty", "Limited Information on Which to Base Sector-Specific Models", "Incomplete Coverage of Sectors, Interactions, and Impacts", "Challenges of Modeling over Long Time Frames", "Methods Can Convey Useful Insight into Broad Themes about Potential Climate Damages in the United States", "National-Scale Studies and Experts Suggested That Potential Economic Effects of Climate Change in the United States Could Be Significant and Unevenly Distributed", "National-Scale Studies and Experts Suggested That Potential Economic Effects of Climate Change in the United States Could Be Significant", "National-Scale Studies and Experts Interviewed Suggested That the Potential Economic Effects of Climate Change Could Be Unevenly Distributed across Sectors and Regions", "According to Leading Practices and Experts, Information on the Potential Economic Effects of Climate Change Could Help Decision Makers Better Manage Climate Risks", "Existing Information on Potential Economic Effects Could Help Identify Significant Climate Risks to the Federal Government", "Additional Information on Potential Economic Effects Could Help Decision Makers’ Efforts to Manage Climate Risks", "Conclusions", "Recommendation for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: GAO Contacts and Staff Acknowledgments", "GAO Contacts", "Staff Acknowledgments" ], "paragraphs": [ "Agencies across the federal government, such as the National Oceanic and Atmospheric Administration and the National Aeronautics and Space Administration, collect and manage many types of climate information, including observational records from satellites and weather monitoring stations on temperature and precipitation; projections from complex climate models; and other tools to make this information more meaningful to decision makers. Such information includes the following: Information and analysis about observed climate conditions. This includes information on, for example, temperature, precipitation, drought, storms, and sea level rise and how they may be changing in the local area. This type of information can be most easily conveyed by graphs and maps with some statistics on trends, variability, and data reliability.\nInformation about observed climate impacts and vulnerabilities. This includes site-specific and relevant baselines of environmental, social, and economic impacts and vulnerabilities, resulting from observed changes in the climate against which past and current decisions can be monitored, evaluated, and modified over time.\nProjections of what climate change may mean for the local area.\nThis includes, for example, projections based on easily understandable best- and worst-case scenarios with confidence intervals and probability estimates and examples of potential climate impacts. The projections may need to be downscaled from complex global-scale climate models to provide climate information at a geographic scale relevant to decision makers. Then, the information would need to be translated into impacts at the local level, such as how increased streamflow for a particular river may increase flooding.\nInformation on the economic and health impacts of climate change. Observed and projected local impacts must be translated into costs and benefits, as this information is needed for many decision-making processes.\nEntities within the Executive Office of the President, such as the Council on Environmental Quality and the Office of Science and Technology Policy, have led specific government-wide climate information efforts, such as USGCRP’s May 2014 Third National Climate Assessment, which summarizes the impacts of climate change on the United States, now and in the future.", "Methods used to estimate the potential economic effects of climate change in the United States are based on developing research from a small but growing number of researchers. These methods are complex because they link different types of complicated climate and economic models to assess how projected changes in the climate could affect different sectors and regions. They produce imprecise results because of information and modeling limitations associated with (1) climate modeling uncertainty; (2) limited information on which to base models for specific economic sectors; (3) incomplete coverage of sectors, interactions among sectors, and climate change impacts; and (4) challenges of modeling over long time frames. Nonetheless, according to several experts we interviewed, the methods can convey useful insight into broad themes about potential climate damages across sectors in the United States.", "Methods used to estimate the potential economic effects of climate change in the United States are based on developing research being undertaken by a small but growing number of researchers, according to the literature we reviewed and several experts we interviewed. Researchers began developing methods to understand the economics of climate change starting in the early 1990s. These original methods— primarily designed to analyze the economic benefits and costs of reducing greenhouse gas emissions—typically assess the economic effects of climate change at a global or multinational scale, with little detailed information about specific regions or sectors within a country. As a result, some experts said that these original methods produce limited information about the economic effects of climate change within different sectors in the United States.\nSince the early 2000s, researchers have developed new methods that provide more detailed information about the economic effects of climate change in the United States. Advances in knowledge about the historical relationships between changes in temperature, precipitation, and other climatic variables and the economy; access to data and information about the physical impacts of climate change; and a growth in computing power, among other things, have enabled the development of methods to assess economic effects in specific sectors and regions of the United States, according to literature we reviewed. To date, the new methods have been used primarily to quantify the economic effects of climate change on certain economic sectors, such as agriculture, health, and energy, but the research has been expanding to include additional sectors, such as infrastructure and water resources.\nOnly recently have studies analyzed the economic effects of climate change using frameworks that can compare effects across different sectors and regions within the United States on a national scale. According to many experts we interviewed, the following are the only two such national-scale research studies:\nAmerican Climate Prospectus: This study was published in October 2014 by the Rhodium Group and assessed the economic effects of potential changes in temperature, precipitation, sea level, and extreme weather events on six sectors of the U.S. economy—coastal property, health, agriculture, energy, labor productivity, and crime— within different regions of the country. According to the study, its intent was to provide information on the probability, timing, and scope of a set of economically important climate change impacts comparable across sectors, rather than a conclusive answer about how much climate change will cost the United States. The study’s authors noted that they designed a research framework that could expand and improve as the climate science and economics fields continue to develop.\nClimate Change Impacts and Risks Analysis: This is an ongoing research project coordinated by the Environmental Protection Agency (EPA), which published a summary study in 2015. The goal of the study was to assess the extent to which reducing global greenhouse gas emissions may help avoid or reduce climate change impacts and adverse economic effects on six U.S. sectors—health, infrastructure, electricity, water resources, agriculture and forestry, and ecosystems—and enabled the comparison of climate risks across these sectors. According to the authors of the Climate Change Impacts and Risk Analysis study, the study estimated the benefits to the United States of global action on climate change. As such, the analysis presented in the report did not inform on alternative actions and did not constitute a benefit-cost assessment of actions to address climate change. In addition, EPA officials stated that the report was meant to convey broad themes about climate damages across sectors of the United States based on peer-reviewed data and methods. Like the authors of the American Climate Prospectus study, the authors of the Climate Change Impacts and Risk Analysis study noted in the report that the breadth and depth of the project, including the number of sectors covered, will expand in future work as the fields of climate science and economics continue to develop. According to EPA officials, this expanded research will contribute physical and economic information to USGCRP’s next National Climate Assessment.", "Methods used to estimate the potential economic effects of climate change in the United States are complex because, according to literature we reviewed and many experts we interviewed, they use different types of complicated climate and economic models that are linked together in a sequential framework that uses the results of one model as input to another. The different types of climate and economic models include the following:\nClimate models: Climate models are mathematical representations of physical, chemical, and biological processes in Earth’s climate system, including the atmosphere, land surface, ocean, and sea ice. These models use scenarios of future greenhouse gas emissions as input, such as a scenario in which current trends in greenhouse gas emissions continue or a scenario in which future emissions are reduced. Based on these scenarios, the models simulate future changes in climate variables, such as changes in temperature and the amount of precipitation. In the United States, global-scale climate models are developed at federally funded institutions, such as the National Center for Atmospheric Research. The American Climate Prospectus and Climate Change Impacts and Risk Analysis studies both used climate models from the National Center for Atmospheric Research, including the Model for the Assessment of Greenhouse- gas Induced Climate Change and the Community Atmosphere Model.\nEconomic models for individual sectors: These models estimate the direct economic effects in certain sectors from changes in climate variables, such as temperature, and related climate impacts, such as sea level rise. Some economic models for individual sectors are based on relatively new econometric research that uses historically observed relationships between climate variables and economic effects to assess the potential economic effects of climate change on certain segments of the economy. For example, the American Climate Prospectus study used analyses of the historical relationships among temperature and changes in mortality, labor productivity, and violent crime, among other things, to project the economic effects of climate change. Other types of sector-specific models use known or theoretical relationships among climate variables and economic effects to make projections. These types of process-based models include, for example, the Forest and Agricultural Sector Optimization Model, used in the Climate Change Impacts and Risks Analysis study, which estimates changes in market outcomes associated with projected impacts of climate change on U.S. crop and forest yields. The 2015 Climate Change Impacts and Risks Analysis report included 18 process-based models and 2 econometric models, according to EPA officials. Also, a version of the U.S. Energy Information Administration’s National Energy Modeling System, maintained by the Rhodium Group and used in the American Climate Prospectus study, models the impact of changes in temperature on energy demand, power generation, and electricity costs.\nEconomy-wide models: These models—called Computable General Equilibrium (CGE) models—can help assess how the entire economy, including individual sectors or regions, might react to the impacts of climate change and how their reactions can have implications for other sectors and regions. For example, as a result of changes in climate (e.g., higher temperatures), increases in energy demand and costs can increase the price of a wide range of goods, and decreases in crop yields in Iowa can affect food prices nationwide. As they encompass multiple sectors in a model of the U.S. economy, CGE models can more fully account for interactions between sectors than individual sector models can, potentially affecting findings on the effects of climate change. The American Climate Prospectus used a CGE model to examine how these types of interactions among sectors affect the magnitude and regional variation of effects on the sectors analyzed in the study. According to EPA officials, although the Climate Change Impacts and Risk Analysis study did not use a CGE model to analyze interactions among sectors, some interaction between sectors was analyzed. For example, water supply and availability projections from the water balance model were used to inform irrigation supply in the agricultural sector.\nFigure 1 provides an example of how climate models, economic models for specific sectors, and economy-wide models can be linked together sequentially in a framework to estimate the economic effects of climate change.\nWhile the two national-scale studies of the economic effects of climate change across sectors in the United States use sequential modeling frameworks similar to the one shown in figure 1, other methods—referred to by several experts we interviewed as complex integrated assessment models—also incorporate feedback between the different climate and economic modeling components. Such models include the Integrated Global System Model, developed at the Massachusetts Institute of Technology, and the Global Change Assessment Model, developed at the Pacific Northwest National Laboratory. Some experts we interviewed noted that these complex integrated assessment models have traditionally been used to analyze the effects of different policies on the energy sector. The models currently have limited capability to quantify economic effects on individual sectors, according to some experts we interviewed. For example, some experts we interviewed said that the Integrated Global System Model can roughly quantify the economic effects of climate change in the health and agriculture sectors.", "According to the literature we reviewed and many experts we interviewed, methods used to estimate the potential economic effects of climate change in the United States, and the national-scale methods that use the methods, produce imprecise estimates of economic effects because of data and modeling limitations associated with (1) climate modeling uncertainty; (2) limited information on which to base models for specific economic sectors; (3) incomplete coverage of sectors, interactions among sectors, and climate change impacts; and (4) challenges of modeling over long time frames.", "According to a 2012 National Academies report, climate models have advanced over the decades to provide much information that can be used for decision making today, but there are and will continue to be large uncertainties associated with climate modeling. According to literature we reviewed, future greenhouse gas emissions are one key source of uncertainty because they will depend on factors that are extremely challenging to predict decades into the future, such as rates of economic and population growth, technological developments, and policy decisions. Climate models use as input different scenarios that represent a range of potential future greenhouse gas emissions. These scenarios are based on various actions that could be taken to reduce future emissions, such as particular policies initiated by the international community. For example, the Climate Change Impacts and Risk Analysis study used a scenario based on significant global action being taken to reduce future emissions. The study does not specify what significant global action would cost the United States, or what it would entail, and such action may or may not occur. concentration. In its 2013 Fifth Assessment Report, the IPCC estimated that the likely range for climate sensitivity is from 1.5 to 4.5 degrees Celsius. The report also indicated that a “best” estimate could not be determined.\nProspectus study incorporated a range of values for climate sensitivity in its analysis, and the Climate Change Impacts and Risk Analysis study generally used a single value to represent the sensitivity of the climate to rising greenhouse gas concentrations.", "The methods rely on limited information that can be used to model the relationships between climate and society, requiring assumptions about how society will respond to future changes in the climate. For example, some sector-specific models assume that historical observed relationships between weather events and economic output variables— such as between temperature and crop production—will represent the effects of long-term climate change. However, over the long time periods under which climate change is expected to occur, individuals, businesses, and government institutions may develop new approaches or technologies to adapt to climate change, lessening its economic effect. For example, one expert said that farmers may respond by making different crop choices. On the other hand, future climate change may have effects that are not revealed in historical events. According to one study, the likelihood that the climate will produce unprecedented effects— for example, heat so extreme that it can induce heat stroke in healthy individuals—will increase as temperatures rise outside the realm of past human experience.\nSimilarly, data showing how populations will adapt to climate change are limited, so the methods use different assumptions about the extent to which society will adapt to climate change in different sectors. For instance, the Climate Change Impacts and Risk Analysis study assumed that for some sectors, such as agriculture, cost-effective adaptation actions will be taken, such as adjusting the type of crops grown in a region. For the coastal sector, the study considered four adaptation strategies: beach nourishment (adding sand), property elevation, shoreline armoring (using physical structures to protect from erosion), and property abandonment. However, for other sectors, such as the labor sector, the study did not take into account potential adaptation measures—such as using potential technological advances to reduce exposure—that could reduce future economic effects. The American Climate Prospectus study generally assumed that no adaptation would occur in response to climate change. Also, the methods might not incorporate potential market inefficiencies. For example, in the Climate Change Impacts and Risk Analysis, the coastal sector analysis does not consider how subsidized insurance might affect adaptation actions. If insurance prices do not reflect actual risks—such as in the presence of insurance subsidies—insurance availability might disincentivize adaptation actions.", "The methods have not included all sectors because the U.S. economy is complex and the information available for different sectors and climate impacts varies. Typically, studies using the methods include sectors for which the most information about climate impacts and economic effects is available. For example, both the American Climate Prospectus and Climate Change Impacts and Risk Analysis studies selected sectors based on whether sufficient information and modeling methods were available for the sector and the potential for impacts in the sector to affect the country as a whole, among other things. In addition, the methods do not fully cover some of the sectors that are included. For example, the American Climate Prospectus study’s analysis of the agricultural sector included the impacts of temperature and precipitation changes on the largest commodity crops—maize, wheat, soy, and cotton—but not on fruits, vegetables, nuts, or livestock, which dominate the agricultural sectors in some states.\nFurthermore, the methods do not always capture interactions between sectors that may influence economic effects. Such interactions include the ability of capital and labor to move between sectors in the economy, potentially lessening the economic effects of climate change; the impact of changes in water supply on the cost of electric power generation; or the effects of an extreme event cascading throughout a region over time by redistributing the workforce or raising the cost of capital.\nFinally, the methods do not include potential impacts that fall outside of the market economy—such as the loss of species from ecosystem disruptions and threats to endangered historical or cultural monuments from rising sea levels or more intense storms—because many of these impacts are difficult to quantify in monetary terms.", "Modeling the effects of climate change is challenging because, among other things, it often involves projections over long periods into the future, and these projections become more uncertain over time. For example, the American Climate Prospectus and Climate Change Impacts and Risk Analysis studies both included projections of economic effects though the end of this century, but how the economy will evolve and how society may respond to climate changes over such time frames is inherently uncertain. As a result of this high degree of uncertainty, the methods require that modelers make assumptions about these factors. For example, the American Climate Prospectus study assumed that the structure of the U.S. economy would remain as it is today—an assumption the study notes is almost guaranteed to be wrong—and therefore provided a projection of the effect of potential climate changes through the end of this century on today’s economy, as opposed to projecting these effects on the economy of the future. The Climate Change Impacts and Risk Analysis study made assumptions about future economic growth and labor productivity growth but did not report the sensitivity results associated with this and other key economic assumptions.\nChallenges also arise with discounting future benefits and costs, particularly when modeling over long time frames. According to OMB, benefits or costs that occur sooner are generally more valuable than those that occur later. However, according to the literature reviewed and some experts interviewed, the appropriate discount rate to apply when considering benefits and costs across generations, such as those associated with climate change, is subject to much debate. According to one of its authors, this debate was one reason why the American Climate Prospectus study did not present its estimates in discounted terms. For several sectors, the Climate Change Impacts and Risk Analysis study presented some estimates in discounted present value terms consistent with OMB and EPA guidance but presented undiscounted estimates of economic effects for all sectors for 2050 and 2100. Nevertheless, climate change could have both positive and negative potential economic effects at different points in time in the future. Discounting is a way to account for differences in the timing of these effects.\nAs a result of the challenges of modeling over long time frames, economic analyses may assess the uncertainty in assumptions and data used in making long-term projections. For example, according to one author, the American Climate Prospectus study provided ranges of estimated economic effects for each sector to help account for uncertainty associated with the underlying climate and economic models, such as uncertainty in climate sensitivity. The Climate Change Impacts and Risk Analysis study primarily reported results as point estimates, not providing a range of estimated effects, and reported on only a limited assessment of uncertainty. The authors of the study further acknowledged that exploration of the uncertainties and limitations throughout the study, including the development of ranges for all impact projections, would strengthen the Climate Change Impacts and Risk Analysis study’s results.", "Several experts we interviewed noted that even though the methods produce imprecise results, they can convey useful insight into broad themes about potential climate damages across sectors in the United States. For example, according to several experts we interviewed, these methods can provide valuable research information about the potential magnitude of economic effects and potential areas of greatest concern, including where assets may be at greatest risk. Some other experts told us that using the methods can help identify areas where additional research would be most useful. Finally, another expert said that exploring differences among the results from various models and scenarios can help researchers explore and better understand some of the factors that drive the potential economic effects of climate change.\nRecent and emerging research could produce additional insight and begin to address some of the limitations of the methods, including those related to incomplete coverage of sectors and climate impacts, according to some experts we interviewed. For example, a new study published in June 2017 by almost all of the same authors of the American Climate Prospectus study and others expands on the research of the American Climate Prospectus study and provides additional insight into the potential economic effects of climate change in particular sectors and regions of the United States by examining county-level effects. In addition, since the 2015 Climate Change Impacts and Risk Analysis summary study was published, EPA has expanded the research project to enhance the analysis of sectors covered in the 2015 report; expand analyses of adaptation for some of these sectors; and include additional sectors such as winter recreation, Alaskan infrastructure, and rail. According to EPA officials involved in the study, they plan to publish a study summarizing these new modeling analyses, estimating impacts across 24 sectors in conjunction with the Fourth National Climate Assessment.", "The two national-scale studies—the American Climate Prospectus and the Climate Change Impacts and Risk Analysis—and many of the experts we interviewed suggested that although the methods are developing and produce imprecise results, the potential economic effects of climate change could be significant in many sectors across the U.S. economy and unevenly distributed across U.S. sectors and regions.", "The national-scale studies and many experts we interviewed suggested that climate change could result in significant economic effects in the United States, and the studies indicated that these effects will likely increase over time for most of the sectors analyzed. As shown in table 1, the American Climate Prospectus study estimated net costs in the near term for most of the five sectors analyzed and net costs by the end of the century for almost all of the six sectors analyzed. For example, the study projected potential economic costs from climate change impacts such as damage to coastal property from storms, decreases in labor supply from higher temperatures, and increases in energy expenditures for air conditioning. The study estimated that the likely combined direct economic effects of the six sectors could reach 0.7 to 2.4 percent of the U.S. gross domestic product per year by the end of this century.\nIn all sectors analyzed, estimated net economic costs increased over time, becoming greater by late in the century. Specifically, for all sectors that have net economic costs at the lower and upper bounds of the likely ranges of economic effects, the study indicated a projected increase from about two to four times from mid-century to late century. For example, the study estimated that coastal property losses from sea level rise and increases in the frequency and intensity of storms could range from $4 billion to $6 billion per year in the near term (i.e., 2020 through 2039), increasing to a range of $51 billion to $74 billion per year by late century. According to several experts we interviewed, the estimates presented in the study are not precise and may be underestimated because the study did not quantify all known climate impacts.\nWhile the results of the Climate Change Impacts and Risk Analysis study cannot be directly compared with those of the American Climate Prospectus study, the Climate Change Impacts and Risks Analysis study also suggested that climate change could have significant economic effects on several of the economic sectors analyzed, and that those effects would increase by the end of the century. The results of this study, shown in table 2, were primarily presented in terms of the benefits associated with significant global action to reduce greenhouse gas emissions.\nAccording to EPA officials involved in the study, the results highlighted sectors with potentially higher economic effects of climate change. For some sectors, the study estimated the costs of climate changes without any emissions reductions. For example, the study reported $5.0 trillion in economic costs to coastal property from climate change through 2100 (discounted at 3 percent). However, the study did not explain how these estimated costs were obtained, and these estimated costs did not match those reported in the underlying journal papers. EPA officials told us that the scenario that led to this estimate was added as a result of reviewer comments.", "According to the two national-scale studies and several experts we interviewed, potential economic effects could be unevenly distributed across sectors and regions. First, the studies and some experts suggested that climate change will affect certain sectors more than others. The results of the American Climate Prospectus study suggested that nationwide economic effects on sectors, including human health, labor, coastal infrastructure, and energy, could exceed the economic effects on the agriculture and crime sectors. The factors driving the economic effects on the health, labor, coastal infrastructure, and energy sectors included costs associated with, respectively, (1) an increase in premature mortality from higher temperatures, (2) reduced number of hours worked because of high temperatures, (3) infrastructure damage from increased flooding and storm surge, and (4) increased energy demand. In the near term, the annual sector-specific economic effects reported in this study for 2020 through 2039 varied from a range of $8.5 billion in benefits to $9.2 billion in costs for the agriculture sector up to a range of $0.1 billion to $22 billion in costs from changes in labor productivity. In the long term, for 2080 through 2099, the annual sector- specific economic effects reported in this study varied from a range of $12 billion in benefits to $53 billion in costs for the agriculture sector up to a range of $90 billion to $506 billion in mortality costs for the health sector.\nThe Climate Change Impacts and Risk Analysis study suggested that the benefits from emissions reductions would affect some sectors more than others. For example, among the sectors analyzed, the study reported that emissions reductions would generate relatively larger effects in 2050 for sectors relating to human health, water resources, and electric power. The factors driving the estimated economic effects in this study included lost labor hours and premature mortality from poor air quality and extreme heat in the health sector, costs to water users—such as domestic and industrial water users—when sufficient water is not available, and costs to expand power system capacity in the energy sector.\nAnother difference in the economic effects across different sectors identified in the studies is that adaptation actions can reduce the negative economic effects of climate change in particular sectors, according to the national-scale studies and several experts we interviewed. For example, the Climate Change Impacts and Risk Analysis study reported that protective adaptation measures—such as beach nourishment, property elevation, shoreline armoring, and property abandonment—can reduce projected coastal property damage in the contiguous United States. In addition, some experts we interviewed said that adaptation actions in coastal areas can be cost effective. However, according to the studies and some experts, information on the cost-effectiveness of adaptation actions in many other sectors remains limited.\nWith regard to variation across regions, the studies suggested that the economic effects of climate change could be more significant in some geographic areas than others. For example, the American Climate Prospectus study reported that depending on the specific climate impacts evaluated, the combined direct net economic effects for each state could range from annual benefits of 0.8 to 4.5 percent of economic output in Vermont to annual costs of 10.1 to 24 percent of current economic output in Florida by the end of the century. In the Tampa Bay, Florida, area alone, the Climate Change Impacts and Risk Analysis study estimated that damage to coastal property from sea level rise and storm surge could reach $2.8 billion per year by 2100. Figure 2 shows examples of potential economic effects in different U.S. geographic areas.\nAccording to the American Climate Prospectus study, the Southeast, Midwest, and Great Plains regions will likely experience greater combined economic effects than other regions, largely because of coastal property damage in the Southeast and changes in crop yields in the Midwest and Great Plains. The Climate Change Impacts and Risk Analysis study also reported economic effects in particular regions. For instance, according to the study, ocean acidification in the Pacific Northwest is already affecting shellfish harvests, which the study projected could decline by 32 to 48 percent by the end of the century in a scenario without emissions reductions. In addition, under the same scenario, the study estimated that wildfires could burn an additional 1.9 million acres annually in the Rocky Mountains by the end of the century, compared to today, which would significantly increase wildfire response costs. Some experts noted the importance of considering the economic effects of climate change in specific sectors and regions because nationwide estimates can average out some important differences. For example, in the agricultural sector, climate change could cause economic benefits in northern regions of the country from moderate warming, which could offset some agricultural economic losses from more extreme heat in southern regions.", "Information on the potential economic effects of climate change could help federal decision makers better manage climate risks, according to leading practices for climate risk management and economic analysis we reviewed and the views of several experts we interviewed. Several experts we interviewed said that existing information on the potential economic effects of climate change could help federal decision makers identify significant climate risks to the federal government. Further, additional economic information could help federal, state, local, and private sector decision makers manage climate risks that drive federal fiscal exposure.", "Even though existing information on the potential economic effects of climate change, such as that from the two national-scale studies, is imprecise, it is a first step toward effective climate risk management at the federal level. Several experts we interviewed said federal decision makers could use the insight this information provides about economic damages in various sectors or regions for different scenarios. Along with other available information about current and future climate risks, collectively this information could start informing federal decision makers about climate risks in different sectors and identifying areas of high fiscal exposure. For example, several experts we interviewed said that existing research indicates that infrastructure in coastal areas faces high financial risks relative to the risks posed to many other sectors or geographic regions. In addition, according to some experts we interviewed, projections about adverse economic effects in coastal areas, when considered with other information—for example, disaster costs already incurred such as the approximately $50 billion appropriated for recovery from Hurricane Sandy—could help decision makers better understand the potential magnitude of risks to coastal areas and identify vulnerable coastal infrastructure as a source of potentially high fiscal exposure.\nSuch a first step in risk assessment is consistent with leading practices for climate risk management and federal standards for internal control. The National Academies’ 2010 leading practices state that managing risk in the context of climate change involves using the best information, including economic information, to assess risks and determine priorities for managing them. Further, in its 2010 report, the National Academies concluded that an iterative process—in which decisions are based on an evolving understanding of the underlying natural and social science—can improve decisions related to climate change risk management because of the opportunities it offers for considering uncertainty. This is consistent with what we reported in December 2016—that the first steps in developing enterprise risk management involve identifying and assessing risks to understand the likelihood of impacts and their associated consequences. As we found in that report, federal managers often handle complex and risky missions, such as preparing for and responding to natural disasters and building and managing safe transportation systems. While it is not possible to eliminate all uncertainties associated with these missions, risk management strategies exist to help federal managers anticipate and manage risks. In addition, under federal standards for internal control, management—in this case, the federal government—should identify, analyze, and respond to risks related to achieving the defined objectives. For example, management estimates the significance of a risk by considering the magnitude of impact, likelihood of occurrence, and nature of the risk—which provides a basis for responding to the risks—and management may need to conduct periodic risk assessments.\nOur past work and the work of others have reported that climate change impacts and their economic effects have already cost the federal government money and pose future risks that could lead to increased federal fiscal exposure. As we concluded in our October 2009 report, given the potential magnitude of climate change and the lead time needed to adapt, preparing for these impacts now may reduce the need for far more costly steps in the decades to come. For example, we reported in our February 2013 High-Risk update that federal disaster aid functions as the insurance of last resort in certain circumstances, increasing the federal government’s fiscal exposure to a changing climate. We also reported in December 2014 that from fiscal years 2004 through 2013, the Federal Emergency Management Agency obligated about $95 billion in federal disaster assistance for 650 major disasters declared during this time frame. Then, in July 2015, we reported that the federal government does not adequately plan for disaster resilience and that most federal funding for hazard mitigation is available after a disaster.\nEven with the magnitude of these disaster recovery costs, the federal government does not have government-wide strategic planning efforts in place to help set clear priorities for managing significant climate risks before they become federal fiscal exposures. The federal government has not undertaken strategic, government-wide planning to manage climate risks, using the best available information, including information on the potential economic effects of climate change, to identify and assess significant risks. In May 2011, we found that a government-wide strategic planning process could enhance how priorities for an overall federal response to climate change are set and recommended that the Executive Office of the President establish federal strategic climate change priorities. The Executive Office of the President has not implemented this recommendation. Later, in July 2015, we found that the federal government had no comprehensive, strategic approach to identifying, prioritizing and implementing investments for disaster resilience. This report concluded that a strategy to guide federal investments in disaster resilience could result in more effective returns on these investments. Building disaster resilience can include taking actions to adapt to the effects of climate change, as we found in May 2016.\nIn addition, in our February 2015 High-Risk update, we reported that federal officials do not have a shared understanding of strategic government-wide priorities related to climate change, which along with other issues, limits the federal government’s ability to manage climate risks. In February 2017, we found that federal agencies had undertaken various strategic planning efforts, but it was unclear how they related to each other or whether they amounted to a government-wide approach for reducing federal fiscal exposures. Subsequently, a March 2017 Executive Order rescinded some of these planning efforts and created uncertainty about whether other planning efforts would continue or take their place.\nThe National Academies’ 2010 leading practices state that climate change risk management efforts need to be focused where immediate attention is needed and that, by prioritizing federal climate risk management activities well, the federal government can help to minimize negative impacts and maximize opportunities associated with climate change. In addition, most experts we interviewed told us that federal decision makers should prioritize risk management efforts on significant climate risks that create the greatest fiscal exposure. By using information on the potential economic effects of climate change to assess and identify significant climate risks and craft appropriate federal responses, the federal government could take an initial step in establishing government- wide priorities to manage significant climate risks, which we recommended in May 2011 to reduce federal fiscal exposure and continue to believe is important. This initial step could include establishing a strategy to identify, prioritize, and guide federal investments to enhance resilience against future disasters, as we recommended in July 2015.\nTo achieve the ultimate objective of establishing government-wide priorities, decision makers need information on policy alternatives that are representative of all available alternatives and their economic effects, such as benefits and costs. The authors of the American Climate Prospectus study highlighted, for instance, that national decision makers must weigh the potential economic and social impacts of climate change against the costs of policies to reduce emissions or make our economy more resilient. Further, EPA officials stated that using information from national-scale economics reports to make policy choices would involve a number of intermediate analytical steps, including (1) estimating the federal risk exposure from the national or regional estimates, (2) identifying policy options, and (3) analyzing the costs and benefits of those options. The relevant point for decision makers, according to these EPA officials, is that multisector, national estimates of climate damages can be made available for use, though additional analysis may be needed for specific policy actions.", "A strategy to identify, prioritize, and guide federal investments to enhance resilience against future disasters could include additional information on the economic effects of climate change. Such economic information could help inform future efforts by federal, state, local, and private sector decision makers to manage climate risks, according to a 2010 National Academies report, our prior work, literature we reviewed, and several experts we interviewed. The 2010 National Academies report, literature we reviewed, and several experts we interviewed noted that to make informed adaptation choices, decision makers need more comprehensive information on economic effects to better understand the potential costs of climate change to society and begin to develop an understanding of the benefits and costs of different adaptation options. In addition, economic guidance generally states that investment decisions—which would include decisions about adaptation investments—should be informed by a consideration of both benefits and costs of relevant alternatives. For example, OMB has issued guidance on using benefit-cost analyses to help federal agencies efficiently allocate resources through well-informed decision making. This guidance includes OMB Circular A-94, which directs agencies to follow certain economic guidelines for benefit-cost and cost-effectiveness analyses of federal programs or policies to promote efficient resource allocation through well-informed decision making in certain circumstances.\nThe American Climate Prospectus study also recognized the importance of balancing benefits and costs, stating that national policy makers must weigh the potential economic and social impacts of climate change against the cost of the policies to manage climate risks. When it comes to managing climate risks through adaptation, the literature we reviewed and several experts we interviewed noted that a full understanding of the adaptation alternatives would require information on the economic effects of climate change impacts, how adaptation may lessen some of these effects, and the costs of adaptation.\nIn our 2013 High-Risk update, we reported that the federal government has a role to play in providing information to decision makers so they can make better choices about adapting to climate change since their decisions can drive federal fiscal exposure. Moreover, we found in our 2015 High-Risk update that state, local, and private sector decision makers drive federal climate-related fiscal exposures because they are responsible for planning, constructing, and maintaining certain types of vulnerable infrastructure paid for with federal funds, insured by federal programs, or eligible for federal disaster assistance. Therefore, federal efforts to provide information to these decision makers could help them make more informed choices about how to manage climate risks, ultimately helping to reduce federal fiscal exposure. In our November 2016 report, we reported that these decision makers need climate information—including economic information—that represents the best available information and is updated over time.\nSome experts we interviewed noted that emerging research—which includes updates to the national-scale studies of the economic effects of climate change—will help fill information gaps. Recognizing that decision makers need more comprehensive economic information to manage climate risks, the National Academies recommended in 2016 that USGCRP integrate social, behavioral, and economic science into the National Climate Assessment to support decision-making processes. EPA officials told us that, as a step toward this integration, the agency’s updates to the Climate Change Impacts and Risk Analysis project advance the understanding of economic effects of climate change. The officials said that this information is documented in new analyses serving as input to the next National Climate Assessment. While several experts we interviewed noted that information on the economic effects of climate change is currently relatively sparse, they also said that new information is still emerging.", "Climate change impacts are already costing the federal government money, and these costs will likely increase over time as the climate continues to change. Even though existing information on the potential economic effects of climate change, such as that from the two national- scale studies, is imprecise, it could help identify significant potential damages for federal decision makers—an initial step in the process for managing climate risks. Under the National Academies’ 2010 leading practices, climate change risk management efforts need to be focused on where immediate attention is needed, and by prioritizing federal climate risk management activities well, the federal government can help to minimize negative impacts and maximize opportunities associated with climate change. The 2010 National Academies report, literature we reviewed, and several experts we interviewed noted that to make informed adaptation choices, decision makers need more comprehensive information on economic effects to better understand the potential costs of climate change to society and begin to develop an understanding of the benefits and costs of different adaptation options. By using information on the potential economic effects of climate change to help identify significant climate risks and craft appropriate federal responses—such as establishing a strategy to guide federal investment to enhance resilience against future disasters—the federal government could take an initial step in establishing government-wide priorities to manage significant climate risks. To help prioritize and guide federal investments, such a strategy could include developing more comprehensive information on the potential benefits and costs of different adaptation options.", "We are making the following recommendation to the Executive Office of the President: The appropriate entities within the Executive Office of the President, including the Council on Environmental Quality, Office and Management and Budget, and Office of Science and Technology Policy, should use information on the potential economic effects of climate change to help identify significant climate risks facing the federal government and craft appropriate federal responses. Such responses could include establishing a strategy to identify, prioritize, and guide federal investments to enhance resilience against future disasters. (Recommendation 1)", "We provided a draft of this report for review and comment to the Council on Environmental Quality, the Office of Science and Technology Policy, and EPA. The Council on Environmental Quality and the Office of Science and Technology Policy did not provide comments. EPA did not provide written comments on our findings and recommendation but instead provided technical comments, which we incorporated as appropriate.\nAs agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies to the Director of the Office of Science and Technology Policy, the Director of the Council on Environmental Quality, and the Administrator of the Environmental Protection Agency. In addition, the report will be available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact J. Alfredo Gómez at (202) 512-3841 or gomezj@gao.gov or Oliver Richard at (202) 512-2700 or richardo@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix II.", "In this report, we examine (1) what is known about methods used to estimate the potential economic effects of climate change in the United States; (2) what is known about the potential economic effects of climate change in the United States; and (3) to what extent have leading practices and experts found that information about the potential economic effects of climate change could inform efforts to manage climate risks across the federal government.\nTo address our audit objectives, we conducted a literature search for studies that (1) described the methods used to develop estimates of the economic effects of climate change in the United States and (2) produced estimates of such effects at a national scale, across different sectors and regions. We targeted the literature search to studies that were published in 2005 or later to encompass the 10 years of research preceding the start of our work. We identified relevant studies though three efforts: (1) searching literature databases, including Scopus, Web of Science, EBSCO, ProQuest, PolicyFile, and OCLC databases; (2) referrals from experts we interviewed during semistructured interviews (a discussion of these interviews is included below); and (3) reviewing citations in literature we reviewed. In total, we identified 30 studies that were relevant to our objectives and scope. We reviewed these studies to identify common themes related to the types of methods used to estimate the economic effects of climate change in the United States, the limitations of these methods, and what is known about the economic effects of climate change in the United States.\nOf the 30 studies identified that described methods to estimate economic effects, 2 included estimates of the potential economic effects of climate change in the United States on a national-scale, across different sectors and regions—the American Climate Prospectus study by the Rhodium Group and the Climate Change Impacts and Risk Analysis study by the Environmental Protection Agency. Many experts we interviewed confirmed that these two studies represented the best available estimates to date. To review the two national-scale studies, we used standard economic principles, similar to those embodied in federal and agency guidance, including a review of the statement of objective and scope, methodology, analysis of effects, sensitivity analysis, and documentation.\nThrough this assessment, we identified several limitations that affect the precision of the studies’ results and are common to the methods used to estimate the economic effects of climate change that were identified in literature we reviewed and by experts we interviewed. We discuss these limitations in the report. Finally, we interviewed the authors of these studies to discuss the studies’ methodologies and limitations.\nIn addition, to address our audit objectives we conducted 26 semistructured interviews with economists and other experts we identified through snowball sampling based on expert referrals. Specifically, we interviewed experts who (1) were recommended by at least one other expert, (2) authored at least one study identified through our literature review, (3) were available and agreed to meet with us, and (4) had a range of views and expertise needed to address our objectives. For example, we interviewed experts who were knowledgeable enough about methods to estimate the economic effects of climate change impacts that they could discuss strengths and limitations of these methods. Repeated recommendations of the same experts indicated that we reached saturation of the field and were identifying the appropriate experts. We reviewed experts’ curricula vitae—to the extent they were available—to ensure that their areas of expertise and research were relevant to the engagement’s objectives and that we were gathering the range of expertise that we needed, including expertise on the strengths and limitations of the methods discussed in this report. During these interviews, we asked experts about (1) methods used to develop estimates of the economic effects of climate change impacts in the United States; (2) strengths and limitations these methods may have; (3) what is known about the economic effects of climate change in the United States; (4) potential federal fiscal exposures that could result from these effects; and (5) how, if at all, information about potential economic effects of climate change could inform climate risk management across the federal government. We interviewed 23 out of the 26 experts in person in select geographic areas: Berkeley, California; Stanford, California; Boulder, Colorado; Boston, Massachusetts; Cambridge, Massachusetts; and Washington, D.C. Because this is a nonprobability sample, our findings cannot be generalized to other experts we did not interview. Rather, these interviews provided us with illustrative examples of methods used to estimate economic effects of climate change, what is known about economic effects of climate change in the United States, and ways information about the potential economic effects of climate change could inform efforts to manage climate risks across the federal government. In addition, the specific areas of expertise varied among the experts we interviewed, so not all of the experts commented on all of the interview questions we asked.\nFinally, to address our third audit objective, we reviewed leading practices and principles of risk management to identify key elements. We reviewed these practices and principles to identify how, if at all, economic information could be considered in risk management frameworks. National Academies’ leading practices on climate risk management characterize climate change adaptation as a risk management strategy, so we then identified how information about the economic costs and benefits of climate change could be considered to manage climate risks. We also reviewed our reports related to risk management and climate change to determine what federal actions could reduce fiscal exposure because of climate risks. We then determined how, if at all, what is known about economic effects of climate change could help implement or enhance these actions.\nWe conducted this performance audit from December 2015 to September 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "In addition to the individual contacts named above, Joseph Dean Thompson (Assistant Director), Colleen Candrl, Lilia Chaidez, Ellen Fried, Cindy Gilbert, Tim Guinane, Anne Hobson, Jeanette Soares, Sara Sullivan, Kiki Theodoropoulos, and Michelle R. Wong made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 2, 3, 3, 3, 3, 2, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "", "", "", "h0_full h2_title h1_full", "h0_full h2_full", "h0_full", "h3_full h2_title h1_full", "h2_full h1_full", "", "h1_full", "", "", "h3_full", "", "", "" ] }

{ "question": [ "What do the two available national-scale studies examining climate change suggest?", "What specifically did one of the studies estimate?", "Why might the Southeast face greater effects of climate change?", "What could inform decision makers about damages in different US sectors?", "How could this information be helpful?", "What has the federal government not yet done regarding climate change?", "What has cost the federal government $350 billion?", "How will this cost change in the future?", "What did GAO put on its High-Risk List?", "What was GAO asked to review?", "What does GAO's report examine?", "How did GAO get information for its review?" ], "summary": [ "The two available national-scale studies that examine the economic effects of climate change across U.S. sectors suggested that potential economic effects could be significant and unevenly distributed across sectors and regions.", "For example, for 2020 through 2039, one study estimated between $4 billion and $6 billion in annual coastal property damages from sea level rise and more frequent and intense storms.", "Also, under this study, the Southeast likely faces greater effects than other regions because of coastal property damages (see figure).", "Information about the potential economic effects of climate change could inform decision makers about significant potential damages in different U.S. sectors or regions.", "According to several experts and prior GAO work, this information could help federal decision makers identify significant climate risks as an initial step toward managing such risks.", "The federal government has not undertaken strategic government-wide planning to manage climate risks by using information on the potential economic effects of climate change to identify significant risks and craft appropriate federal responses.", "Over the last decade, extreme weather and fire events have cost the federal government over $350 billion, according to the Office of Management and Budget.", "These costs will likely rise as the climate changes, according to the U.S. Global Change Research Program.", "In February 2013, GAO included Limiting the Federal Government's Fiscal Exposure by Better Managing Climate Change Risks on its High-Risk List.", "GAO was asked to review the potential economic effects of climate change and risks to the federal government.", "This report examines (1) methods used to estimate the potential economic effects of climate change in the United States, (2) what is known about these effects, and (3) the extent to which information about these effects could inform efforts to manage climate risks across the federal government.", "GAO reviewed 2 national-scale studies available and 28 other studies; interviewed 26 experts knowledgeable about the strengths and limitations of the studies; compared federal efforts to manage climate risks with leading practices for risk management and economic analysis; and obtained expert views." ], "parent_pair_index": [ -1, 0, -1, -1, 0, -1, -1, 0, -1, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Background", "Recent Political Developments", "2006 Elections3", "The Ortega Presidency", "Issues in U.S.-Nicaraguan Relations", "Level and Focus of U.S. Assistance", "Development and Poverty Reduction", "Consolidation of Democratic Processes", "Human Rights12", "Trade", "Immigration14", "Property Claims", "Security, Missiles, and Military Assistance", "Counternarcotics Efforts15" ], "paragraphs": [ "", "Daniel Ortega was a leader of the Sandinista National Liberation Front (FSLN) when it overthrew the corrupt and repressive Somoza family dictatorship in 1979. When the pro-Soviet Sandinistas gained control of the government and pursued increasingly radical social policies, including redistribution of land and wealth, the United States backed opposition \"contras\" who launched an eight-year war (1982-1990) against the government. About 30,000 Nicaraguans died in the war. As President from 1985-1990, Ortega's administration was marked by improved education and healthcare on the one hand, and charges of corruption and authoritarian tendencies on the other. As part of the Central American Peace Plan, Ortega's Sandinista government agreed to internationally monitored democratic elections in February 1990, which he lost and peacefully ceded to Violeta Chamorro. Ortega also ran for President and lost in 1996 and 2001. Because he came in second place, however, Nicaraguan law gave him a seat in the National Assembly, where he has served as an opposition leader. He ran for President again in 2006 and won.\nSince 1990 Nicaragua has developed democratic institutions and a framework for economic development. Progress has been made in social and economic reforms. Nonetheless, significant challenges remain: Nicaragua is still very poor, the second poorest nation in the western hemisphere. Its institutions are weak and often corrupt.\nIn 2003, former President Arnoldo Alemán (1997-2002) was prosecuted by the Administration of President Enrique Bolaños (2002-2007) for embezzling about $100 million in public funds while in office. The effort was particularly notable because Bolaños and Alemán not only belonged to the same political party, the conservative Liberal Constitutional party (PLC), but Bolaños also served as Alemán's Vice-President until he stepped down to run for President. Alemán was sentenced to 20 years in prison for fraud and money-laundering. In December 2006 U.S. federal officials seized $700,000 in certificates of deposit they said were bought for Alemán with Nicaraguan government funds. Nonetheless, Alemán continues to control the Liberal party. His supporters have tried continually to secure his release and an amnesty. He has served his term under increasingly lax terms, and was released under very broad terms in March 2007 after Ortega took office.\nThe 2006 elections followed more than a year of political tensions among then-President Bolaños, the leftist Sandinista party, and allies of rightist former President Alemán. Alemán and Ortega, once longtime political foes, negotiated a power-sharing pact (\"El Pacto\") in 1998 that has since defined national politics. Their parties passed laws making it difficult for other parties to participate in elections, and otherwise facilitated an alternating of terms between their two parties. Their ongoing influence made governing increasingly difficult for President Bolaños, who had limited legislative support. In 2004, renegotiation of the pact included a demand for Alemán's release. In October 2004 the Organization of American States (OAS) sent a special mission to Nicaragua to encourage all parties to preserve and follow democratic order there. In January 2005, the two parties adopted a series of constitutional amendments that transferred presidential powers to the legislature, and further divided up government institutions as political patronage, moves the Central American Court of Justice ruled illegal.\nDuring the height of tensions, President Bolaños invoked the OAS Inter-American Democratic Charter, and the OAS sent several high-level delegations to help negotiate a solution. Negotiations in October 2005 considerably reduced tensions and provided for President Bolaños, who had been isolated by his anti-corruption efforts against Alemán, to serve the remainder of his term, which expired in January 2007. Ortega announced he was breaking the power-sharing pact between his party and the PLC that had hampered Bolaños' ability to govern. After Ortega's announcement, the legislature passed reforms such as the passage of the 2006 budget, the first-ever tax code, local government transfers, and financial administration reforms. Ortega and Bolaños then agreed to postpone the implementation of the constitutional amendments at the root of the tensions.\nPolitics remained volatile in 2006, but for a different reason, as attention shifted to national elections held on November 5, 2006. The FSLN and PLC still control many state institutions, however, including the electoral authority, and opposition parties and others expressed concern that the two parties would use those posts to manipulate the electoral outcome. Concerns remain that the two parties will use their dominance of state institutions to manipulate state power in their favor.", "", "Three elements were key to Ortega's victory: a change in Nicaraguan electoral law, an effective political machine, and a divided opposition. The Sandinistas negotiated a change in the electoral law with then-President Alemán's party eliminating the requirement that a candidate gain 45% of the vote to avoid a run-off election. The new law requires that a presidential candidate win either 40% of valid votes, or 35% of the vote plus at least 5% more votes than the second-place candidate in order to win in a first round. Failing that, a run-off vote between the top two candidates is held. Many observers saw this lowering of the threshold as part of the Pact alternating power between the PLC and FSLN. The lower percentage required to win in the first round facilitated the election of Ortega, whose support in the previous three presidential elections had hovered around 40%. Analysts believed Ortega felt it was critical he win in a first round, because the opposition would unite against him in a second round. Ortega won only 37.9% of the vote, but was able to avoid a run-off vote because he was 9.6% ahead of the next closest candidate, Eduardo Montealegre of the Nicaraguan Liberal Alliance (ALN).\nOrtega also had the advantage of an extremely well-disciplined party. Critics say he forced out members seeking reform, and made the party into a platform for his personal ambitions. In addition, Ortega ensured through his position as opposition leader in the legislature and through the Pact that FSLN loyalists were firmly entrenched throughout various government agencies.\nAccording to polls prior to the vote, about 60% of voters said they would not vote for Ortega. This held true in the final vote, but the opposition was divided in 2006 among four candidates. In the 2001 presidential elections, Ortega received 40% of the vote, but faced a united opposition and lost.\nMontealegre, who gained 28.3% of the vote, is a Harvard-educated banker and former finance minister. He says he offered to run as the vice presidential candidate for the conservative Constitutional Liberal party (PLC) party to prevent further splintering of the opposition. When Alemán refused to remove himself from the political scene, however, Montealegre split from the PLC, formed the ALN, and advocated continued political reform. He was regarded by many as the U.S.-favored candidate. Montealegre's second place position garnered him a seat in the legislature. The PLC then came in third place with 26.2% for candidate José Rizo, an ally of Alemán and critic of President Bolaños.\nEdmundo Jarquín registered a distant fourth place at 6.4%. Jarquín, an economist who worked at the Inter-American Development Bank, became the presidential candidate of the center-left Sandinista Renewal Movement (MRS) when nominee Herty Lewites died suddenly in July 2006. The son-in-law of former President Violeta Chamorro (1990-1997), Jarquín chose popular singer and composer Carlos Mejia Godoy as his running mate. The two candidates are prominent former Sandinistas who left the FSLN in opposition to Ortega and in favor of political reform, joining other like-minded former Sandinistas in the splinter party, the MRS. Edén Pastora, another disaffected one-time Sandinista leader, won less than half a percent of the vote as head of the Alternative for Change (AC) party.\nThe 90-member National Assembly was also elected. No party won an outright majority. The FSLN has 38 seats, the PLC 25, the ALN 22, and the MRS 5. Pastora's AC won no seats. Voters also chose 20 members of the Central American parliament in the November 5 elections.\nThe United States provided $15.3 million to support the 2006 elections in Nicaragua. Critics accused both U.S. officials and Venezuelan President Hugo Chávez of trying to influence the election's outcome. The U.S. embassy was criticized for making critical remarks, such as alluding to Ortega and Rizo as \"two corrupt bosses.\" After U.S. officials voiced their opposition to Ortega, support for him increased. U.S. Ambassador Paul Trivelli, asserting a right to express his opinion, rejected calls to stop commenting on the elections.\nA prominent figure in the Iran-Contra scandal was also accused of interfering in the elections. Oliver North, a former Reagan Administration aide who manipulated the funding of the Nicaraguan contras by selling arms to Iran, appeared in Nicaragua to support Rizo's candidacy. Ambassador Trivelli, who has criticized Rizo's PLC as undemocratic and corrupt, publicly distanced himself from North, saying North spoke only as a private citizen, not for the U.S. government. Other analysts were baffled by North's position: while condemning Ortega as the worst thing that could happen to Nicaragua, he backed the candidate whose party was essentially governing with Ortega through a political pact.\nCritics say Chávez was indirectly supporting Ortega's campaign by providing fertilizer and oil to certain municipalities under favorable terms through Sandinista-dominated organizations. The Venezuelan state oil company signed the agreement to supply oil at preferential rates and with a deferred payment schedule, for example, with the Nicaraguan Association of Municipalities, a predominantly Sandinista association of mayors, rather than with the Nicaraguan government.\nRegional elections were held on the Atlantic Coast earlier in the year, on March 5, 2006. According to the State Department, problems there included voter identification card distribution, errors in the voter registry, lack of voter education, inadequate voting materials, and poorly trained electoral officials. Domestic and international observation groups were seen as essential to ensuring the transparency and credibility of the regional elections, and later, for the national elections as well.\nMost of the problems experienced at the regional level were evident at the national level. A non-governmental group providing electoral support expressed concern that more than a third of Nicaraguans could have been disenfranchised in the November elections, a number that could have affected the outcome of the elections. An audit by a Nicaraguan election observation group, Ethics and Transparency, revealed a high rate of errors on voter registry lists, and only about 28% of voters participated in a drive to verify and correct the lists.\nConcern over the elections was due in large part to the fact that the FSLN and PLC controlled many state institutions, including the electoral authority. As a result of the 2000 power-sharing pact, the electoral council in charge of running the elections consisted of three PLC members, three FSLN members, and a consensus president chosen by the two parties. International and domestic observation groups pressed the government to address problems during the pre-election process such as a high rate of errors on voter registry lists, and difficulty getting voter identification cards needed to vote. The OAS found that 200,000 citizens still did not have the cards less than a month before the elections, and told the government to issue them.\nSome 18,000 observers monitored the elections. International observer missions, such as those from the OAS and the European Union, concluded that the irregularities that occurred did not affect the outcome. The observer missions generally agreed with the conclusion reached by the OAS electoral observer mission, that the election was \"peaceful and orderly, had a massive turnout and took place in accordance with the law.\"", "FSLN leader Daniel Ortega was inaugurated President on January 10, 2007 for a five-year term Over the years, Ortega has changed his image from Marxist revolutionary and protagonist in a proxy Cold War battle with the United States to a practicing Catholic preaching peace and reconciliation. The other candidates presented themselves as a vote against Ortega, and some warned of a return to forced conscription and food shortages if he were re-elected. Although the opposition together garnered over 60% of the vote, it was divided among four candidates, and Ortega was able to win with less than 40% of ballots cast.\nWhat Ortega's government positions on many issues will be is unclear, as he still has not provided coordinated policy plans for major areas such as the economy, energy, or poverty reduction. Conversations between Ortega and U.S. officials, including President Bush, indicate both sides are seeking a cooperative relationship. Nonetheless, since taking office, Ortega has continued to vacillate between populist, anti-U.S. rhetoric, and pragmatic reassurances that his second administration will respect private property and pursue free-trade policies. His cabinet appointments include both Sandinista loyalists and supporters of a free market economy. He has close ties with Venezuelan President Hugo Chávez, who advocates a leftist, populist alliance in the Americas to counter U.S. influence in the region. Venezuela is reportedly providing Nicaragua with energy assistance—including research into constructing an oil refinery in Nicaragua—and promising sizeable development assistance. But Ortega's Vice President Jaime Morales, spokesman for the anti-Sandinista contras during the 1980s, has resumed talks with the International Monetary Fund, of which Chávez is highly critical, regarding a new Poverty Reduction and Growth Facility plan. The Ortega Administration says it seeks a plan which will place greater emphasis on social priorities than previous plans.\nThe amendments passed and then postponed by the previous legislature, in which Ortega was opposition leader of the FSLN, would have transferred significant executive powers, including controlling Cabinet appointments, to the legislature in February 2007. The new legislature voted in January 2007 to postpone them again, however, for another year, until January 2008. Montealegre, now serving as head of the opposition, said he advocated postponing them in part because implementing them as they are now would give control of new institutions and more patronage jobs to the FSLN and the PLC. The legislature established a commission for constitutional reforms that will look at the reforms currently on hold, plus others being proposed. The ALN is advocating a provision barring presidential reelection. The FSLN says it supports unlimited presidential re-election.\nThe Ortega Administration also proposed in January a bill that would create \"people's councils\" and give direct control of the police to the President. The National Assembly approved the bill, but weakened Ortega's proposals. Critics feared the people's councils resembled defense committees that operated during the 1980s Sandinista government and reportedly acted as spies and enforcers of FSLN doctrine. The new councils will have less power and more of a consulting role under the new law. The bill that passed gave Ortega greater control over the police, but not as much as he had proposed.\nIn March 2007 the Ortega government released former President Alemán from the conditions of his parole, allowing him to travel freely throughout the country. Many critics see this as evidence that he still operates under the power-sharing pact with Ortega, and believe that his release was a reward for contributing to the split in his party and facilitating Ortega's election. Alemán said he would like to be president again.", "", "Some Members of Congress have criticized the Administration's reduced levels of some funding to Latin America, including to Nicaragua. The Administration proposes to reduce aid to Nicaragua by 40%, from $47.583 million in FY2006 to $29.375 million in 2008, a decrease of $18.2 million. The Administration notes, however, that it has supported forgiveness of Nicaraguan debts, and is providing significant amounts of aid through the Millennium Challenge Account (MCA) (see \" Development and Poverty Reduction ,\" below). The Administration's five-year MCA agreement of $175 million represents $35 million per year. Some analysts argue that the Administration had said MCA funds would be in addition to traditional aid provided mostly through the U.S. Agency for International Development (USAID), not instead of it.\nIn its Congressional Budget Justification for FY2008, the Administration describes 2008 as a \"critical year for Nicaragua,\" as Ortega—who the Administration says still controls the \"anti-democratic 'pact'\" with former President Alemán—completes his first year in office and the implementation of CAFTA-DR \"hopefully hits its stride.\" Programs seeking to promote good governance and maximize the benefits of the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) would be significantly reduced under this proposal. Programs to promote \"Governing Justly and Democratically\" would be cut by more than 50%, from $10 million to $4 million. Programs promoting \"Economic Growth\" would be reduced by about a third, from $17.3 million to $11.3 million. \"Investing in People\" programs, focusing on education, and environmental protection and social safety nets related to CAFTA-DR, would be cut by a third, from $18.6 million to $11.7 million.\nAid under two smaller groups of programs would increase. Peace and security programs would increase from $1.3 million to $2.2 million. These programs would include reducing the threat posed by excess weapons and improving civilian control over the military. Humanitarian assistance to improve disaster preparedness and mitigation would increase from $0.0 to $200,000.\nBetween 1990 and August 2006, the United States forgave $389.7 million in Nicaraguan debt. As of December 31, 2005, Nicaragua owed the U.S. $20.5 million. In March 2007, the Inter-American Development Bank approved 100% debt relief for several countries, including $984 million in debt relief for Nicaragua. The Bush Administration supported the decision.", "Nicaragua is the second poorest nation in the hemisphere, rating only above Haiti. Nicaragua's poverty is widespread and acute. Some social indicators have shown little or no improvement since 1993. According to a recent World Bank report, overall poverty declined in Nicaragua between 1993 and 2001, but more than two-thirds of the rural population continue to live in poverty. The official unemployment rate is about 12%, with another 35% underemployed, though estimates vary. In 2005, the Bush Administration signed a five-year, $175 million agreement with Nicaragua under the Millennium Challenge Account to promote rural development. The programs are focusing on the regions of León and Chinandega. According to the Bush Administration, the MCA projects will reduce poverty and spur economic growth by reducing transportation costs and improving access to markets for rural communities; increasing wages and profits from farming and related enterprises in the region; and increasing investment by strengthening property rights.\nOrtega has not yet stated the policies his government proposes to achieve his stated goal of ending poverty. He did, however, say that the United States should pay at least $300 million to support former \"contras\" whom the Reagan Administration funded to fight Ortega's first government in the 1980s. The rebels seek housing, land, and credits.", "The top U.S. priority in Nicaragua, according to the Administration's FY2008 budget request, is \"strengthening and consolidating democracy.\" U.S. programs in the requested \"Governing Justly and Democratically\" component of U.S. aid would support the structural reform of government institutions to make them more transparent, accountable and professional; combat corruption; and promote the rule of law. They also aim to increase citizen advocacy and the role of the media in order to \"blunt\" Nicaragua's caudillo-style political practices.\nIn January 2007, the legislature passed a bill proposed by President Ortega concentrating political power in the executive branch and another delaying implementation of constitutional changes which would have given more power to the legislature until January 2008. A commission for constitutional reforms will reexamine the passed package and look at new reform proposals from all the parties. The FSLN has suggested it will propose a reform to allow unlimited presidential re-elections. Current law allows re-election, but only in non-consecutive terms.", "U.S. officials have also expressed concern regarding improving respect for human rights. According to the State Department's 2006 Human Rights report, released in March 2007, civilian authorities generally maintained effective control of security forces, but there were some reports of human rights abuses involving the police. The most significant human rights abuses included harsh prison conditions; widespread corruption in and politicization of government entities, including the Office of Human Rights Ombudsman, the judiciary, and the Supreme Electoral Council. According to Amnesty International, the inadequate response by authorities to high levels of violence against women was a major concern. Violence against children was also a concern expressed by human rights reports. Journalists were harassed and abused. Human rights problems related to labor issues include widespread child labor and violation of worker rights in free trade zones.\nHuman rights and other groups expressed concern over the National Assembly's passage of a law in October 2006 that made abortion illegal and punishable by imprisonment even when done to save a pregnant woman's life, or the pregnancy is a result of rape or incest, conditions under which abortion had been legal since 1893. International organizations, including the UN, criticized the legislature for passing the bill during the highly politicized period just before the presidential elections. The Sandinistas, who had previously supported a woman's right to abortion, supported the penalization of abortion. Many observers saw the move as an effort by the party to garner Catholic votes for Ortega. In January human rights activists asked the Supreme Court to declare the law unconstitutional on grounds that it violates fundamental rights and principles.", "The National Assembly approved the U.S.-Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) in October 2005 and passed related intellectual property and other reforms in March 2006. It went into effect on April 1, 2006. CAFTA-DR supporters say the agreement will promote economic growth, create jobs, and increase exports to the United States. In 2005, Nicaraguan exports to the United States were $275 million; they increased almost 40 percent in the second quarter of 2006 following the introduction of CAFTA-DR-related tariff reductions. U.S. imports to Nicaragua totaled $522 million, and also are expected to increase under the pact. President Ortega has said he will honor the CAFTA-DR agreement.", "Immigration is a contentious area in U.S.-Nicaraguan relations. In December 2005, the U.S. House of Representatives passed a bill ( H.R. 4437 ) that would make unlawful presence in the United States a criminal, rather than a civil offense. In January 2006, Nicaragua joined the Mexican and other Central American governments in criticizing such efforts to toughen immigration laws and in demanding guest-worker programs and other immigration reforms. The 2000 U.S. census reported about 220,000 Nicaraguans living in the United States. Of those, 21,000 were estimated to be \"unauthorized.\" In late February 2006, the Department of Homeland Security extended Temporary Protected Status (TPS) for about 4,000 eligible Nicaraguans living in the United States until July 5, 2007. During his March 2007 trip to Latin America, President Bush said he would support new legislation to give legal status to millions of undocumented immigrants through temporary worker programs, and said he would seek its passage through Congress by August 2007.", "Resolution of property claims by U.S. citizens has been a contentious area in U.S.-Nicaraguan relations for decades, since the Sandinista regime expropriated property in the 1980s. The Nicaraguan government has gradually settled many claims through compensation since 1995, including the claims of 4,400 U.S. citizens. About 760 claims registered with the U.S. embassy remain unresolved. Nicaragua passed a law creating a new Property Institute that could lead to the dismissal of property claim lawsuits arising from Sandinista-era expropriations. The law is part of the constitutional reform package now on hold until January 2008.", "The Bush Administration suspended military assistance to Nicaragua in March 2005. It resumed providing assistance in October 2005 after an agreement was reached to destroy an arsenal of anti-aircraft missiles the Administration says constitutes a possible terrorist threat. The National Assembly also promised to schedule debate on a law authorizing the missiles' destruction. After being held up for many months, the bill was suddenly brought up for a vote on July 13, 2006. Sandinista legislators walked out in protest. PLC and ALN legislators passed a bill lowering the threshold needed to approve the destruction of weaponry to a simple majority. They did not, according to the U.S. embassy, vote on the destruction of the missiles, which the current government will not consider unless it is linked to a reduction of military strength throughout Central America.\nNicaragua and the United States are participating in regional security efforts. Nicaragua hosted a meeting of hemispheric defense chiefs in October 2006; then-U.S. Secretary of Defense Donald Rumsfeld participated. Defense officials at the Eighth Central American Security Conference held in April 2007 discussed regional initiatives regarding security issues such as organized crime and transnational trafficking in small arms, drugs, and humans. Congress has also expressed concern over improving civilian control over defense policy. USAID peace and security programs include efforts to reduce the threat posed by excess weapons and improve civilian control over the military.", "Nicaragua is a significant sea and land transshipment point for cocaine and heroin being shipped from South America primarily to the United States and Canada, according to the State Department's 2007 Narcotics Control Report. Trafficking has been mostly through the Atlantic coast, which is geographically and culturally isolated from the rest of the country. In response to increased law enforcement efforts there, however, traffickers shifted their operations in 2006 to the Pacific coast, where the State Department estimates that three-fourths of drug trafficking now occurs. Its report said the Nicaraguan government \"is making a determined effort to fight both domestic drug abuse and the international narcotics trade, despite an ineffectual, corrupt, and politicized judicial system.\" The Ortega Administration has promised to participate in counternarcotics efforts, and called on the United States to do more to combat trafficking." ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h1_title", "", "h0_title", "h0_full", "h0_full", "h1_title", "h1_full", "h1_full", "h1_full", "h1_full", "h1_full", "", "h1_full", "h1_full", "" ] }

{ "question": [ "What played a role in Ortega's 2006 presidential election?", "How was Ortega able to avoid a run-off vote?", "How did Montealegre fare in the Nicaraguan election?", "What were US officials and President Hugo Chavez accused of?", "What is the Administration's top priority in Nicaragua?", "What other priorities does the Administration have in Nicaragua?", "What trade issue is the Administration is focused on in Nicaragua?", "What issues are involved in US-Nicaraguan relations?" ], "summary": [ "Three elements were key to Ortega's victory in the November 2006 presidential election: a change in Nicaraguan electoral law, an effective political machine, and a divided opposition.", "Ortega won only 37.9% of the vote, but was able to avoid a run-off vote because he was ahead of the next closest candidate, Eduardo Montealegre of the Nicaraguan Liberal Alliance (ALN), by more than the 5% required by law.", "Montealegre, who gained 28.3% of the vote, was regarded by many as the U.S.-favored candidate. His second place position garnered him a seat in the legislature.", "Critics accused both U.S. officials and Venezuelan President Hugo Chávez of trying to influence the election's outcome.", "The Administration says its top priority in Nicaragua is consolidating democratic processes, including reforming the judicial system, implementing good governance, and combating corruption.", "Another issue is promoting development and poverty reduction; the Millennium Challenge Account compact between the two countries focuses on reducing rural poverty through road-building, increased wages, and strengthening property rights.", "Supporting the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) is the dominant trade issue; President Ortega has said he will honor the agreement.", "Resolution of property claims by U.S. citizens and immigration are contentious areas in U.S.-Nicaraguan relations. Other issues in U.S.-Nicaraguan relations include improving respect for human rights, improving civilian control over defense policy, the state of Nicaraguan missiles, and increasing Nicaragua's capacity to combat transnational crimes such as narcotics trafficking." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 3, 3, 3, 3 ] }

{ "title": [ "", "Who Can File Under Chapter 9?", "What Are the Benefits of Chapter 9 for the Municipal Debtor?", "The Automatic Stay", "Postpetition Financing", "Retention of Control", "No Trustee", "No Bankruptcy \"Estate\"", "Limited Involvement or Oversight by the Bankruptcy Court", "Assumption and Rejection of Executory Contracts", "Avoidance Powers", "Adjustment of Debts", "Notable Chapter 9 Cases", "Orange County, California", "Vallejo, California", "Recent Developments", "Boise County, Idaho", "Harrisburg, Pennsylvania", "Jefferson County, Alabama", "Appendix. Legislative History of Municipal Bankruptcy" ], "paragraphs": [ "Chapter 9 of the U.S. Bankruptcy Code provides a legal mechanism through which municipalities may be protected from their creditors as they attempt to develop and negotiate a plan to adjust their debts. Although chapter 9 was enacted as part of the Bankruptcy Code pursuant to Congress's power under Article I, § 8, clause 4, municipal bankruptcies are different from the bankruptcies of individuals and businesses. There is no provision for liquidation of a municipality's assets to satisfy creditors, there is no \"bankruptcy estate,\" and the bankruptcy court has limited authority over the conduct of the municipality during the pendency of the case. Furthermore, creditors do not have the ability to file a petition for the municipality—an \"involuntary case.\" Many of these limitations are in the code to preserve the states' autonomy under the Tenth Amendment to the U.S. Constitution.\nThe recent recession has caused fiscal distress for states and municipalities as well as for individuals and businesses. In 2009, there were more filings by municipalities under chapter 9 of the Bankruptcy Code than in 2007 and 2008 combined. Despite this seemingly dramatic increase in chapter 9 filings, chapter 9 is, and has been, a relatively seldom used provision of the Bankruptcy Code, generally averaging fewer than 10 filings per year. Many of those filings have been by small government agencies such as municipal utilities, school districts, or single-purpose entities (e.g., a hospital or convention center).\nReports of significantly decreased revenues and increased expenses in both cities and states as well as predictions of a significant number of municipal bond defaults in the coming years have sparked interest in municipal bankruptcy, as well as calls for allowing states to use the Bankruptcy Code as a means of adjusting their own debts. Under the current Bankruptcy Code, there is no provision that would allow states to file for bankruptcy protection; however, less than 100 years ago, municipalities were not eligible to file for bankruptcy protection. A brief legislative history is provided in the Appendix .", "Only municipalities may file under chapter 9 of the Bankruptcy Code, and it is the only chapter under which a municipality may file even if that municipality is incorporated. Not all municipalities can file. A municipality must be specifically authorized by its state to file under chapter 9. The municipality must be insolvent and must be willing to negotiate a plan to adjust its debts. It generally must also show that it has negotiated in good faith with its creditors.\nChallenges to an entity's eligibility to file under chapter 9 are a prime area for litigation by creditors following a chapter 9 filing. The municipality carries the burden of proving that it is eligible to file under chapter 9. If it is not, then the case will be dismissed. Litigation of challenges to chapter 9 eligibility can be a time-consuming process.\nMost people, hearing the term \"municipality,\" probably think of cities and towns. However, under the Bankruptcy Code, the term encompasses a broader variety of entities. Section 101(40) of the Bankruptcy Code states that the term \"means political subdivision or public agency or instrumentality of a State.\" Thus, although states are not included in the definition, counties are, since counties, like cities, towns, villages, etc., are political subdivisions of a state. Public agencies or instrumentalities of a state include such entities as school districts, water districts, and highway authorities.\nSince 1994, municipalities have only been eligible to file under chapter 9 if they were specifically authorized to do so by their states. Not all states authorize their municipalities to file under chapter 9. Georgia law explicitly prohibits the state's municipalities from filing. Iowa restricts chapter 9 authorization to those municipalities that become insolvent as a result of an involuntarily incurred debt. In 14 states, municipalities must get approval from a state authority before filing a chapter 9 petition. Twenty-three states have no law addressing authorization to file under chapter 9; therefore, unless a specific law were passed by the state explicitly authorizing their filing, municipalities in those states would be unable seek protection under chapter 9.\nSimply being a municipality that is authorized by its state to file under chapter 9 is not sufficient for being an eligible chapter 9 debtor. The municipality must also be insolvent. Insolvency in a municipal bankruptcy is determined on a cash flow basis rather than being defined as the condition where liabilities exceed assets; Section 101(32)(C) defines \"insolvent\" as the financial condition of either generally not paying undisputed debts as they become due or the inability to pay debts as they become due. However, fiscal distress is not sufficient if the municipality has the means of either increasing revenue or reducing costs.\nTo be eligible for chapter 9 protection, an insolvent municipality must be filing for such protection in good faith. Although a municipality is no longer required to submit a plan of adjustment with its bankruptcy petition, it must evidence a desire to implement a plan of adjustment rather than filing under chapter 9 in an attempt to either evade or delay payments to its creditors. Unless it has reason to believe that a creditor may attempt to get an avoidable transfer, the municipality generally must show that it has negotiated with its creditors in good faith or that it is impractical to do so prior to filing the petition.", "", "The automatic stay goes into effect when the chapter 9 petition is filed. The stay generally prevents both the initiation and continuation of collection actions by creditors against the municipality. A creditor may, however, ask the bankruptcy court to provide relief from the stay, which the court shall grant in certain circumstances.\nChapter 9 provides that the stay does not apply to application of pledged special revenues to the debt secured by those special revenues. Additionally, the stay will not prevent creditors from challenging the municipality's eligibility to file for chapter 9 protection.", "Filing for chapter 9 does not automatically eliminate the financial stress a municipality is experiencing. The municipality may need additional funds to provide services or to pay for expenses incurred in the administration of the chapter 9 case. By its incorporation of Section 364(c), chapter 9 provides the municipality with the ability to acquire debt that either has priority over administrative expenses or is secured by a lien on the municipality's property. However, some states will not allow their municipalities to borrow to cover operating expenses. Furthermore, unless the lender were to agree otherwise, the entire debt would need to be repaid by the effective date of the plan of adjustment, otherwise the plan could not be confirmed.", "There are several ways in which the municipal debtor retains control in a chapter 9 case.", "Generally, there is no trustee in a chapter 9 case. In this way it is similar to a chapter 11. However, in a chapter 9 case, if a creditor so requests, the court may appoint a trustee for the limited purpose of pursuing a cause of action using certain avoidance powers, such as fraudulent or preferential transfers, when a debtor has refused to do so. In a chapter 11, if a trustee is appointed, the trustee takes the place of the debtor in possession, with the same powers and duties. Generally, a trustee is appointed in a chapter 11 case only \"for cause\" such as fraud, dishonesty, incompetence, or gross mismanagement.", "Municipal property, including income other than special revenues, remains under the control of the municipality to use as it chooses. It does not become part of an estate that cannot be disposed of without the consent of the bankruptcy court.", "In a municipal bankruptcy, the municipality retains autonomy in most things. The bankruptcy court cannot interfere with the municipality's political or governmental powers, its property or revenues, or its use or enjoyment of its income-producing property.\nThe municipality in chapter 9 remains subject to control by the state. The bankruptcy court's involvement is generally limited to a few areas. It may determine whether the municipality is eligible to file under chapter 9 and may dismiss cases when appropriate. Approval of assumptions or rejections of executory contracts and confirmation of the municipality's plan of adjustment are also within the purview of the bankruptcy court.", "Chapter 9 includes § 365 among the sections of the Bankruptcy Code that are applicable in a municipal case. As a result, the municipality, with the approval of the court, may assume executory contracts that are beneficial to the municipality and reject those that are too burdensome. Generally, the standard bankruptcy courts use in approving a debtor's assumption or rejection of an executory contract is the business judgment rule, a standard that generally defers to the debtor's judgment as to what is best for its operations. However, in evaluating assumption or rejection of a collective bargaining agreement (CBA), the courts use a higher standard.\nIn a chapter 11 bankruptcy, rejection of a CBA is subject to the requirements of § 1113 of the Bankruptcy Code. This section requires that three conditions be met before a court can grant a motion to reject a CBA: (1) the debtor must meet the requirements of 11 U.S.C. § 1113(b)(1) by (a) presenting a proposal that both treats all parties equitably and proposes changes necessary for reorganization, and (b) providing the bargaining unit's representative with information needed to evaluate the proposal; (2) the representative must have refused to accept the debtor's proposal without good cause; and (3) \"the balance of equities [must] clearly favor[] rejection.\" Section 1113, which is not among the Bankruptcy Code sections named in § 901(a) as applicable in chapter 9, was added to the Bankruptcy Code following the U.S. Supreme Court's 1984 holding in National Labor Relations Board v. Bildisco and Bildisco . Bildisco held that rejection of a CBA required a higher standard than the business judgment rule, but its requirements were not as stringent as those of § 1113.\nUnder the Bildisco standard, a CBA may be rejected only if the court finds that the agreement is burdensome to the debtor and that, after balancing the equities, rejection is favored. This is the standard generally used for rejecting a CBA in chapter 9.\nIn 1995, the bankruptcy court overseeing the Orange County, CA, chapter 9 case found that the standards established by the Bildisco decision were applicable when a municipality wanted to reject a CBA, but that those standards had not been met nor had the county established the necessity for unilateral abrogation of its employee CBAs. Recently the city of Vallejo, CA, was successful in rejecting CBAs in its chapter 9 case, with both the bankruptcy court and the district court finding that the Bildisco standard was applicable in the case. The district court, ruling in an appeal by the International Brotherhood of Electrical Workers, Local 2376, found that the Bildisco standard had been met.", "Sections 547 and 548 of the Bankruptcy Code are applicable in chapter 9 cases; therefore, the municipality can avoid (or \"clawback\") fraudulent transfers and preferential transfers. One exception to the latter is transfers to bondholders.", "In a chapter 9 case, only the debtor has the right to file a plan of adjustment. This is in contrast to chapter 11 reorganizations, in which the debtor initially has the exclusive right to file a plan of reorganization, but with the passage of time, may lose that exclusivity. In a chapter 9 case, if the plan is not filed with the petition, the court may determine a date by which the plan must be filed.\nTo be confirmed, a plan generally must be accepted by each class of impaired creditors. However, chapter 9 incorporates the \"cramdown\" provision in chapter 11, thereby allowing confirmation if at least one class of impaired creditors accepts the plan and the plan \"does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that is impaired under, and has not accepted the plan.\"\nSpecial revenue bonds are generally protected from adjustment in chapter 9. General obligation bonds do not enjoy such protection under bankruptcy law; however, a municipality's ability to adjust those debts may be limited by state law. To be confirmed, a plan cannot require the municipality to take an action that is prohibited by law. This provision may also limit a municipality's ability to adjust its existing pension obligations through chapter 9. Many states have either constitutional or statutory constraints regarding both general obligation debts and pensions.\nSection 943 directs the court to confirm a plan if it complies with the requirements of the Bankruptcy Code; the expenses incurred in connection with the case and the plan of adjustment are disclosed and are reasonable; the debtor is not legally prohibited from taking actions necessary to carry out the plan; holders of administrative claims receive cash equaling their claims, unless they agree otherwise; the debtor has, or will, obtain any regulatory or electoral approval required under nonbankruptcy law for carrying out the plan; and the plan is both feasible and in the best interest of creditors.", "As stated before, municipalities rarely file for bankruptcy protection. Although New York City experienced significant financial difficulty in 1975, it did not file for bankruptcy. Instead, the state created a financial watchdog: the New York City Emergency Financial Control Board, which held veto power over the city's budget until 1986. In 1991, the city of Bridgeport, CT, filed under chapter 9, but its case was dismissed after its eligibility to file was challenged by creditors. The court found that state law authorized the city to file, but found that it was not insolvent.\nIn recent years, there have been two notable chapter 9 filings: Orange County, CA; and the city of Vallejo, CA.", "On December 6, 1994, Orange County, CA, filed under chapter 9. Its debt adjustment represents the largest municipal bankruptcy filing to date. The county was overseer of the Orange County Investment Pool (OCIP), comprising its funds and those belonging to a wide variety of additional municipal entities, such as school and irrigation districts. The county treasurer engaged in a high-risk investment strategy involving reverse repurchase agreements or \"repos.\" The OCIP's $7.5 billion in investment equity was leveraged into $20 billion. The success of the investment strategy depended upon declining interest rates. When interest rates began to rise and creditors demanded increased collateral, the county's financial liquidity plummeted. It filed under chapter 9 and instituted many lawsuits against its investment bankers and others. A plan of adjustment became effective in June 1996. In February 2000, the presiding bankruptcy judge closed the case by approving the distribution of $816 million in litigation proceeds.", "Prior to filing under chapter 9 on May 23, 2008, the city of Vallejo attempted to resolve its financial issues by \"reducing the number of its employees, cutting funding and services not controlled by contract, and severely reducing or completely cutting off funding for various community services … as well as infrastructure.\" It also \"retained a consultant to identify potential sources of new and additional revenue, and implemented these recommendations where possible.\" However, its ability to generate new revenues was limited by California law.\nThrough negotiations, the city was able to temporarily reduce employee costs, arriving at interim agreements to modify the collective bargaining agreements (CBAs) with its police and firefighters. The city was not successful in its attempts to negotiate long-term modifications to its CBAs with any of the four unions representing its employees. Prior to the expiration of the interim agreements, the city filed under chapter 9 and froze all employee compensation at its pre-petition level. This enabled the city to benefit from the interim agreements beyond their stated expiration dates as well as avoid upcoming salary increases provided for in the CBAs. It also filed a motion to reject its CBAs. Ultimately, the city was able to renegotiate all but one of its CBAs. The court allowed the city to reject the remaining CBA, using the Bildisco standard.\nThe city's plan of adjustment was filed January 18, 2011, along with its disclosure statement. In the plan the city proposes paying its unsecured creditors less than the full amount of their claims. Estimates are that the claims would be paid between 5% and 20%. The disclosure statement prepared by the city must be approved by the court before the creditors have the opportunity to vote on the city's plan of adjustment.", "", "On March 1, 2011, Boise County, ID, filed a chapter 9 petition. Reportedly the impetus for the filing was a judgment against the county for $4 million. The annual budget for the county, which does not include the city of Boise, is less than $9.5 million. The judgment came as the result of a suit by Alamar Ranch, LLC, which asserted that its efforts to obtain a conditional use permit had been improperly blocked. Taxpayers in the county had opposed the proposed development—a residential treatment facility for 72 boys. Ultimately, the county was found to have violated the Fair Housing Act. After the judgment, the county attempted to negotiate a lower amount that it could afford, but was unsuccessful.", "Harrisburg considered filing under chapter 9, but ultimately its mayor, who opposed bankruptcy, chose to pursue a state-offered program for distressed cities. December 15, 2010, Harrisburg, PA, was accepted into the state's \"distressed cities\" program, also known as Act 47. The program was started in 1987. Harrisburg is the 20 th municipality in the program. Many have remained in the program for more than a decade.\nThe city qualified for the program after missing $10.5 million in payments for bonds related to an incinerator project. It also had a junk-bond credit rating and lawsuits to force it to postpone paying operating expenses (including payroll) in favor of meeting debt obligations as well as a more than $19 million projected deficit in 2015. Some believe that chapter 9 would be a better alternative for the city than the state program and are considering appealing the state's decision to admit the city into its program.", "Jefferson County, AL, is the most populous county in Alabama. Most of the city of Birmingham is within its boundaries. It has been experiencing financial difficulties for several years. While there has been speculation about its filing for bankruptcy, it has not done so. If it does, it is believed that it would be the largest municipal bankruptcy in history.\nJefferson County's financial troubles are due in part to the recession, but also due to a $3.2 billion debt load attributable to sewer bonds with a floating interest rate and a downgrading of those bonds to junk status in 2008 by both Moody's Investors Service and Standard and Poor's due to the projected inability of the county to meet interest payments on the debt. Most recently, the county has lost a source of revenue after the Alabama Supreme Court found the county's occupational tax unconstitutional for lack of sufficient notice.", "In 1934, legislation was enacted as \"emergency temporary aid\" for insolvent municipalities whose revenues had dropped during the Great Depression. The provisions were modified slightly by legislation enacted in April 1936 and were extended to January 1, 1940. Two years and one day after the original legislation was enacted, the U.S. Supreme Court, in a 5 to 4 opinion, found it to be unconstitutional.\nThe next year, 1937, new legislation was enacted that established a new chapter of the Bankruptcy Code. The legislation expanded the definition of \"municipality,\" but continued to require the entity to have the power to tax. The constitutionality of the new law was challenged, but the U.S. Supreme Court found the provisions to be constitutional, noting that a federal provision for municipal bankruptcy was needed because adequate relief could not be provided by the states due to the constitutional prohibition on enacting any law that would impair contracts. This legislation was also enacted as a temporary provision and was due to expire on June 30, 1940. It was extended for two years in 1940 and for four more years in 1942. In 1946, the provisions were amended and made permanent.\nAmong the changes made in 1946 was the removal of \"taxing\" as an adjective in the lengthy definition of \"municipality.\" This change allowed the definition of \"municipality\" to include public agencies that were authorized to either construct or acquire revenue-producing utilities and that issued bonds to finance those public improvements—revenue bonds, whose source of repayment was revenue from the utility that had been constructed or acquired.\nIn the wake of New York City's 1975 financial crisis, the provisions for municipal bankruptcy were again revised. The existing provisions were believed to contain procedural obstacles that made them inadequate for the reorganization of a major municipality. In 1976, chapter IX of the Bankruptcy Act of 1898 (as amended) was amended to revise sections 81 through 83 and add sections 84 through 98. The revisions eliminated the need to have a plan of adjustment approved by the majority of creditors before the petition could be filed. Filing of the petition then triggered the automatic stay, providing protection from litigation of creditors' claims against the debtor. The revisions also extended to municipal debtors some provisions available to other debtors and allowed them to reject executory contracts with the approval of the court.\nTwo years later, when Congress enacted the Bankruptcy Reform Act of 1978, establishing the current Bankruptcy Code, the 1976 revisions were incorporated into chapter 9. Since 1978, Congress has amended chapter 9 several times. In 1988, Congress passed amendments generally concerned with the definition of municipal \"insolvency\"; the rights of creditors as general obligation bondholders and special revenue bondholders; and the status of municipal financing leases. Section 109(c)(2) of the Bankruptcy Code was amended in 1994 to require that municipalities be \"specifically authorized\" by state law to be a debtor under chapter 9. Previously, the authorization under state law needed only to be general.\nThe primary way in which the Bankruptcy Prevention and Consumer Protection Act of 2005 changed chapter 9 directly was by amending § 901 to make applicable in chapter 9 several additional sections from chapter 5 of the Bankruptcy Code, most of which involved exceptions to the automatic stay. An additional subsection from chapter 11 was also added to the sections of chapter 11 that are applicable in chapter 9." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 3, 2, 2, 2, 1, 2, 2, 1, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_title h2_title h1_title", "", "h0_full h2_full h1_full", "h0_full", "", "", "h0_full", "h1_full", "", "h0_full h2_full", "", "", "", "h1_title", "", "", "h1_title", "h1_full" ] }

{ "question": [ "What does chapter 9 of the Bankruptcy Code address?", "How does the Bankruptcy Code restrict municipalities?", "What is provided instead of these provisions?", "How does this code deals with municipalities similarly to other existing forms?", "What is the difference from between chapter 9 and 11?", "How does the bankruptcy court involve itself?", "What is made available to chapter 9?", "What is one of these sections?", "What are collective bargaining agreements?", "What expenses do CBAs bring with them?", "How does chapter 9 and 11 handle CBAs?", "How has chapter 9 previously handles CBAs?", "What are the limitations of chapter 9?", "What makes chapter 9 potentially difficult financially?", "How does chapter 9 affect debt?" ], "summary": [ "Chapter 9 is titled \"Adjustment of Debts of a Municipality.\"", "The Bankruptcy Code does not provide for the liquidation of a municipality's assets and distribution thereof to the creditors.", "Instead, it provides a legal mechanism through which municipalities may be protected from the claims of their creditors as they attempt to develop and negotiate a plan to adjust their debts.", "In this way, chapter 9 has similarities to chapter 11 reorganizations.", "However, a municipality retains more control in a chapter 9 case than does the debtor in a chapter 11.", "The oversight and involvement of the bankruptcy court is quite limited. The court cannot interfere with the municipality's political or governmental powers, its property or revenues, or its use or enjoyment of its income-producing property.", "There are only a few sections of the Bankruptcy Code that were specifically written in chapter 9; however, many other sections of the Code are explicitly made applicable to a chapter 9 case.", "Among these is § 365, which allows executory contracts to be assumed or rejected in a bankruptcy proceeding.", "Collective bargaining agreements (CBAs) are executory contracts.", "The expense incurred in meeting the obligations of CBAs may be a substantial budget consideration for many municipalities.", "While chapter 11 includes a section that specifically addresses the standards that must be met before a court can allow rejection of a CBA, no such section exists in chapter 9.", "Instead, based on two chapter 9 cases (In re County of Orange, California and In re City of Vallejo, California) it appears that municipalities may reject CBAs if they meet the less stringent standards established in National Labor Relations Board v. Bildisco and Bildisco.", "Although chapter 9 has provided significant relief in the two major cases named above, it is not a panacea for a municipality's financial problems.", "It can be a lengthy and expensive procedure.", "Additionally, the debtor's ability to adjust debts, particularly pension or general obligation debt, may be limited by the state's constitutional or statutory restrictions since a plan of adjustment cannot require the municipality to take an action that is not lawful." ], "parent_pair_index": [ -1, -1, 1, -1, 3, -1, -1, 0, -1, 2, 2, 4, -1, 0, -1 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 5, 5, 5 ] }

{ "title": [ "Background", "The Biodefense Enterprise", "Biosurveillance Threats and Responsibilities", "Independent Reports on Issues Facing the Biodefense Enterprise", "The Biodefense Enterprise Is Fragmented and Does Not Have Strategic Oversight to Promote Efficiency and Accountability", "The Biodefense Enterprise Does Not Have Enterprise-Wide Institutionalized Leadership to Provide Strategic Oversight and Coordination", "The Enterprise Does Not Have an Integrated National Strategy to Guide Priorities and Investments", "Biosurveillance Faces Similar Challenges", "Enterprise-wide Leadership and Strategy Challenges", "Challenges for Biosurveillance Capabilities", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "", "Biological threats that could result in catastrophic consequences exist in many forms and arise from multiple sources. For example, several known biological agents could be made into aerosolized weapons and intentionally released in a transportation hub or other populated urban setting, introduced into the agricultural infrastructure and food supply, or used to contaminate the water supply. Concerned with the threat of bioterrorism, in 2004, the White House released HSPD-10, which outlines the structure of the biodefense enterprise and discusses various federal efforts and responsibilities that help to support it. The biodefense enterprise is the whole combination of systems at every level of government and the private sector that can contribute to protecting the nation and its citizens from potentially catastrophic effects of a biological event. It is composed of a complex collection of federal, state, local, tribal, territorial, and private resources, programs, and initiatives, designed for different purposes and dedicated to mitigating various risks, both natural and intentional.\nBiodefense is organized into four pillars—threat awareness, prevention and protection, surveillance and detection, and response and recovery— and multiple federal agencies have biodefense responsibilities within the pillars. Each of these pillars comprise numerous activities—such as controlling access to dangerous biological agents used in research—that generally require coordination across federal departments as well as with state, local, and international governments, and the private sector. Protecting humans, animals, plants, air, soil, water, and critical infrastructure from potentially catastrophic effects of intentional or natural biological events entails numerous activities carried out within and among multiple federal agencies and their nonfederal partners (see fig. 1).", "Emerging infectious diseases represent an ongoing threat to the health and livelihoods of people and animals worldwide. Many advances in medical research and treatments have been made during the last century, but infectious diseases are nevertheless a leading cause of death worldwide. In addition to causing nearly one in five human deaths worldwide, infectious diseases impose a heavy societal and economic burden on individuals, families, communities, and countries. Infectious diseases are a continuous threat for reasons that include: (1) emergence—at times rapid—of new infectious diseases; (2) re- emergence of previously-known infectious diseases; and (3) persistence of intractable infectious diseases.\nIn an era of rapid transit and global trade, the public health and agricultural industries, as well as natural ecosystems including native plants and wildlife, face increased threats of naturally occurring outbreaks of infectious disease and accidental exposure to biological threats. According to the World Health Organization, infectious diseases are not only spreading faster, they also appear to be emerging more quickly than ever before. The ongoing outbreak of Zika virus in the Americas has heightened travel-related concerns regarding the spread of the virus. As of March 23, 2016, 273 cases of continental U.S. travel-associated Zika virus disease have been reported, according to Centers for Disease Control and Prevention (CDC). Figure 2 shows passenger arrivals from five regions of the world and the top five airports receiving passengers whose travel originated from each of these regions in 2014.\nAccording to the World Health Organization, about 75 percent of the new diseases that have affected humans in recent years are zoonotic and have been caused by pathogens originating from an animal. These emerging and reemerging diseases transmit between animals—including domestic animals and wildlife—and humans. Many of these diseases have the potential to spread through various means over long distances and to become global problems. In some cases, disease transmission is direct, in others the animals act as intermediate or accidental hosts, while in others transmission occurs, for example, via mosquitoes or ticks. Examples of emerging and zoonotic diseases include: Zika, chikungunya, and dengue viruses, West Nile virus, H1N1 (swine) influenza, severe acute respiratory syndrome (SARS), avian influenza, and rabies. Habitat loss and human encroachment on rural and wildlife environments are bringing populations of humans and animals, both farmed and wild, into closer and more-frequent contact. Increasingly, wildlife are involved in the transmission of diseases to people, pets, and livestock, and managing wildlife transmitters is an integral part of efforts to control the spread of zoonotic diseases. Diseases among wildlife can also provide early warnings of environmental damage, bioterrorism, and other risks to human health. Finally, potential bioterrorism threats also include the use of zoonotic diseases as weapons of mass destruction, such as anthrax, plague, tularemia, and brucellosis.\nTransmission and detection of Zika, chikungunya, and dengue viruses Zika, chikungunya, and dengue viruses are all spread by the Aedes aegypti mosquito, pictured below. These mosquitoes typically lay eggs in and near standing water in containers like buckets, bowls, animal dishes, flower pots, and vases. They prefer to bite people, and live both indoors and outdoors. Mosquitoes that spread dengue, chikungunya, and Zika are aggressive daytime biters, but also bite at night. Mosquitoes can become infected when they feed on a person already infected with the virus. Diagnosing Zika virus infection is complicated because it is difficult to differentiate it from other similar diseases, such as dengue or yellow fever, and some tests for Zika virus antibodies suffer from cross-reactivity with antibodies to similar viruses. For example, a person previously infected with another flavivirus such as dengue could be falsely identified as also having been exposed to the Zika virus (and vice-versa).\nNumerous federal, state, local, and private sector entities have roles and responsibilities for monitoring for pathogens in human, animal, plant, food, and the environment. Federal departments, such as the HHS, USDA, DHS, and the Department of Interior, play leading biosurveillance roles for certain domains such as human and animal health, food, and air, but they also rely on support from state and local authorities or partner with other federal agencies. In other cases federal departments or agencies play supporting roles. Officials at all levels of government, as well as Homeland Security Presidential Directive-21’s (HSPD-21) vision of a national biosurveillance capability, acknowledge that state and local capabilities are at the heart of the biosurveillance enterprise. According to federal, state, and local officials, early detection of potentially serious disease indications nearly always occurs first at the local level, making the personnel, training, systems, and equipment that support detection at the state and local level a cornerstone of our nation’s biodefense posture. While there is variation in organization and structure among public-health, animal-health, and wildlife functions at the state, tribal, local, and insular levels they all share in the nation’s biosurveillance responsibility. Some of the nonfederal partners with key responsibilities in the biosurveillance enterprise are presented in table 1.", "Bipartisan and independent commissions have identified a range of issues facing the biodefense enterprise, many of which mirror our findings. In October 2011, the WMD Center reported its assessment of various capabilities within the U.S. biodefense enterprise in which a team of leading biodefense experts assigned letter grades to each of the capabilities for different types of outbreak. The report assigned low marks to nearly all the capabilities for address large-scale and global disease outbreaks. For example, the team assigned the grade of D (meets few expectations) to the capability for detecting large-scale infectious outbreaks and the grade of F (fails to meet expectations) to the capability for detecting global contagious outbreaks.\nIn 2014, a Blue Ribbon Study Panel on Biodefense (Study Panel) was established to assess gaps and provide recommendations to improve U.S. biodefense. The panel’s October 2015 final report identified 33 recommendations to execute over the short, medium, and long term. The Study Panel report echoed many of the same challenges highlighted in the WMD Center’s report, and highlighted a sense of urgency to address the ongoing and persistent biological threats—both naturally occurring, like Ebola and Zika, and from enemies, like The Islamic State of Iraq and the Levant (also known as ISIL and Da’esh) who have advocated for the use of biological weapons. The panel’s report identified several themes we have also highlighted in our biosurveillance work, including the lack of a centralized leader, no comprehensive national strategic plan, and no all- inclusive dedicated budget for biodefense.", "", "In 2011, we reported that reducing fragmentation in the biodefense enterprise could enhance assurance that the nation is prepared to prevent, detect, and respond to biological attacks with potentially devastating consequences in terms of loss of life, economic damage, and decreased national security. We reported that there are more than two dozen presidentially appointed individuals with some responsibility for biodefense. In addition, numerous federal agencies, encompassing much of the federal government, have some mission responsibilities for supporting biodefense activities. However, there is no individual or entity with responsibility, authority, and accountability for overseeing the entire biodefense enterprise. Because none of the federal departments has authority over the entire biodefense enterprise, in 2011 we reported that the Homeland Security Council (HSC) should consider establishing a focal point to coordinate federal biodefense activities. In December 2014 officials from National Security Council (NSC) staff, which supports the HSC told us that two of its directorates work together as the focal point for federal biodefense efforts. According to NSC staff, these focal points provide strategic leadership on all federal biodefense efforts, with responsibilities to coordinate across domestic and global priorities to prevent, detect, and rapidly respond to biological threats. The focal points are to host ongoing meetings with the federal biodefense enterprise to ensure a comprehensive and coordinated approach to biodefense.\nWe recognize the policy work of the directorates as an important step in promoting a comprehensive and coordinated approach to biodefense, but strategic leadership issues persist. In October 2015, the Study Panel reported on ongoing leadership challenges for the enterprise. The report called for a focal point to provide strategic leadership by elevating authority above what any single agency has to help overcome the challenges faced by the biodefense enterprise. The Study Panel report noted mixed opinions on the effectiveness of the current NSC staff model for coordinating biodefense. Some have asserted that efforts remain fragmented under this system, but others pointed to the benefit of having a wider variety of staff involved across the spectrum of biodefense activities. However, the Study Panel found that White House councils and offices generally only become involved when a specific biodefense issue affects a prominent ongoing responsibility—a method which is not consistent with our call for a strategic approach.", "In 2011, we reported that while some high-level biodefense strategies have been developed, there is no broad, integrated national strategy that encompasses all stakeholders with biodefense responsibilities that can be used to guide the systematic identification of risk; assess resources needed to address those risks; and prioritize and allocate investment across the entire biodefense enterprise. We have also previously reported that choices must be made about protection priorities given the risk and how to best allocate available resources. Further, neither the Office of Management and Budget nor the federal agencies account for biodefense spending across the entire federal government. As a result, the federal government does not know how much is being spent on this critical national security priority. We reported that the overarching biodefense enterprise would benefit from strategic oversight mechanisms, including a national strategy, to ensure efficient, effective, and accountable results, and suggested the HSC take action.\nAs of February 2016, NSC staff had not developed such a strategy. Rather, they assert that the National Strategy for Countering Biological Threats, the National Biosurveillance Strategy, and Presidential Policy Directive-8 work in concert to provide comprehensive strategic guidance to stakeholders with biodefense responsibilities. Although these documents demonstrate clear commitment to coordinating interagency biodefense efforts, they do not provide the strategic approach that we suggested in March 2011. For example, the National Biosurveillance Strategy, released by the White House in July 2012, does not provide a specific framework for prioritizing and trading off among approaches to build biosurveillance capabilities with limited resources. Moreover, as previously discussed, there are four pillars of the biodefense enterprise, each complex and in need of coordination: (1) threat awareness, (2) prevention and protection, (3) surveillance and detection, and (4) response and recovery. The National Strategy for Biosurveillance does not—alone or in combination with the National Strategy for Countering Biological Threats and Presidential Policy Directive-8—address all four pillars, and more specifically, it does not address the key fragmentation issues across the biodefense enterprise, such as ensuring strong linkage and identifying gaps in investments across the four pillars.\nSimilarly, the Study Panel’s 2015 report identified the lack of a comprehensive national strategy and dedicated budget as challenges. The Study Panel noted that leadership issues were exacerbated by the lack of a comprehensive biodefense strategy and a unified approach to budgeting, which they called vital to any strategic interagency effort for the nation’s biodefense capabilities. They called for a unified approach to budgeting and prioritizing biodefense efforts. The Study Panel noted that the nation lacks a comprehensive, cohesive, and regularly updated strategy resulting in disorganization and loss of institutional knowledge associated with changes in administrations.", "Much like biodefense, biosurveillance faces key challenges that transcend what any one agency can address on its own. We have identified challenges related to the nation’s ability to detect and respond to biological events. Our findings have identified challenges at all levels of government, and our more recent and ongoing work continues to highlight these challenges.", "In June 2010, we found that there was no integrated approach to help ensure an effective national biosurveillance capability and to provide a framework to help identify and prioritize investments. Without a unifying framework and an entity with the authority, resources, time, and responsibility for guiding its implementation, we concluded that it would be very difficult to create an integrated approach to building and sustaining a national biosurveillance capability. We recommended the HSC establish a focal point to lead the development of a national biosurveillance strategy that clarifies roles and responsibilities, provides goals and performance measures, and identifies resource and investment needs, among other elements. However, the recommendations have not been fully implemented.\nThe NSC staff, which supports the HSC, convened an interagency policy group that guided the completion of the National Strategy for Biosurveillance in July 2012, which addresses the intent of our recommendation to establish a focal point. However, our review of the strategy determined that the strategy alone did not fully meet the intent of our recommendation because, among other things, it did not provide the mechanism we recommended to identify resource and investment needs, including investment priorities. Subsequent to the release of the strategy, the NSC staff published a companion implementation plan, but it is not yet clear the extent to which the plan has been widely shared among and adopted by interagency decision makers as a means to help identify opportunities to leverage resources and direct priorities.\nThe National Strategy for Biosurveillance also does not address issues we raised related to state and local biosurveillance efforts, and that we previously recommended. In October 2011, we reported that nonfederal capabilities should also be considered in creating a national biosurveillance strategy. The backbone of biosurveillance is traditional disease-surveillance systems—designed to collect information on the health of humans and animals to support a variety of public-welfare and economic goals. These systems support biosurveillance efforts by recording national health and disease trends and providing specific information about the scope and projection of outbreaks to inform response. Because the resources that constitute a national biosurveillance capability are largely owned by nonfederal entities, a national strategy that considers how to strengthen and leverage nonfederal partners could improve efforts to build and maintain a national biosurveillance capability. Moreover, efforts to build the capability would benefit from a framework that facilitates assessment of nonfederal jurisdictions’ baseline capabilities and critical gaps across the entire biosurveillance enterprise. Such an assessment of capabilities that support biosurveillance is called for in HSPD-10, which notes that the United States requires a periodic assessment that identifies gaps or vulnerabilities in our biodefense capabilities—of which surveillance and detection is a key part—to guide prioritization of federal investments. However, in a 2011 report, we noted that the federal government had not conducted a comprehensive assessment of state and local jurisdictions’ ability to contribute to a national biosurveillance capability.\nWhile the size, variability, and complexity of the biosurveillance enterprise makes an assessment difficult, we concluded in our October 2011 report that the federal government would lack key information about the baseline status, strengths, weaknesses, and gaps across the biosurveillance enterprise until it conducts such an assessment. To address these issues, and building on our June 2010 recommendation to develop a national biosurveillance strategy, we recommended for such a strategy to (1) incorporate a means to leverage existing efforts that support nonfederal biosurveillance capabilities, (2) consider challenges that nonfederal jurisdictions face, and (3) include a framework to develop a baseline and gap assessment of nonfederal jurisdictions’ capabilities. However, the July 2012 strategy did not adequately address the issues we raised related to state and local biosurveillance and acknowledged but did not meaningfully address the need to leverage nonfederal resources.", "Our recent work has also identified challenges with specific biosurveillance capabilities. Specifically, we have identified biosurveillance capability challenges with, among other topics, (1) state and local public heath capabilities, (2) animal health surveillance capabilities, and (3) two DHS specific biosurveillance efforts—the National Biosurveillance Integration Center (NBIC) and the BioWatch Program. In our October 2011 report on nonfederal biosurveillance efforts, we found many of the challenges that state and local officials identified were similar to issues we reported regarding biosurveillance at the federal level. We noted that many of the challenges facing the biosurveillance enterprise were complex, inherent to building capabilities that cross traditional boundaries, and not easily resolved.\nState and Local Public Health Capabilities. In 2011, we found that state and local officials identified common challenges to developing and maintaining their biosurveillance capabilities such as (1) state policies in response to state budget constraints that restricted hiring, travel, and training; (2) obtaining and maintaining resources, such as adequate workforce, equipment, and systems; and (3) the lack of strategic planning and leadership to support long-term investment in crosscutting core capabilities, integrated biosurveillance, and effective partnerships. For example, state and local officials we surveyed reported facing workforce shortages among skilled professionals—epidemiologists, informaticians, statisticians, laboratory staff, animal-health staff, or animal-disease specialists. We also found that although the federal government provided some resources to help control disease in humans and animals in tribal and insular areas, there were no specific efforts to ensure that their efforts can contribute to the national biosurveillance capability. Additionally, in 2011, we found that nonfederal partners relied heavily on grants and cooperative agreements to sustain their biosurveillance capabilities. For example, the Public Health Emergency Preparedness cooperative agreement (PHEP) and the Epidemiology and Laboratory Capacity for Infectious Diseases cooperative agreement (ELC) were essential for public health epidemiology and laboratory staff. We concluded that without assessing the baseline nonfederal capabilities that support biosurveillance, identification of investment needs for a national biosurveillance capability cannot be established.\nAnimal Surveillance Capabilities. In the area of animal surveillance, we reported in May 2013 that USDA’s Animal and Plant Health Inspection Service (APHIS) had developed a new approach for its livestock and poultry surveillance activities, but had not yet integrated these efforts into an overall strategy with goals and performance measures aligned with the nation’s larger biosurveillance policy. Under its prior approach, APHIS focused its disease surveillance programs on preventing the introduction of certain foreign animal diseases and monitoring, detecting, and eradicating other reportable diseases already present in domestic herds. Under this previous approach, information about nonreportable diseases, including those that are new or reemerging, was not always captured by the agency’s disease surveillance efforts. We also reported in 2013 that under its new approach APHIS had begun to broaden its approach by monitoring the overall health of livestock and poultry and using additional sources and types of data to better detect and control new or reemerging diseases. For example, APHIS had been monitoring for the presence of pseudorabies—a viral swine disease that may cause respiratory illness and death—at slaughter facilities, but under the new approach, it proposed monitoring these facilities for a range of other diseases as well. However, we concluded that without integrating APHIS’s new approach to livestock and poultry surveillance activities into an overall strategy with goals and measures aligned with broader national homeland security efforts to detect biological threats, APHIS may not be ideally positioned to support national efforts to address the next threat to animal and human health. We recommended that APHIS integrate its new surveillance approach with an overall strategy that guides how its new approach will support national homeland security efforts to enhance the detection of biological threats. However, while the agency agreed, this recommendation has not been implemented.\nDHS Biosurveillance Efforts. In 2015, we identified persistent challenges related to two of DHS’s biosurveillance capabilities, NBIC and the BioWatch program. We reported in 2009 that NBIC was not fully equipped to carry out its mission because it lacked key resources—data and personnel—from its partner agencies, which may have been at least partially the result of collaboration challenges it faced. For example, some partners reported that they did not trust NBIC to use their information and resources appropriately, while others were not convinced of the value that working with NBIC provided because NBIC’s mission was not clearly articulated. In the 2009 report, we recommended that NBIC develop a strategy for addressing barriers to collaboration and develop accountability mechanisms to monitor these efforts. DHS agreed, and in August 2012, NBIC issued the NBIC Strategic Plan, which is intended to provide NBIC’s strategic vision, clarify the center’s mission and purpose, and articulate the value that NBIC seeks to provide to its partners, among other things. In September 2015, we reported that despite NBIC’s efforts to collaborate with interagency partners to create and issue a strategic plan that would clarify its mission and efforts, a variety of challenges remained. Notably, many of its federal partners continued to express uncertainty about the value NBIC provided. We identified options for policy or structural changes that could help NBIC better fulfill its biosurveillance integration mission, such as changes to NBIC’s roles, but we did not make specific recommendations.\nAdditionally, since 2012, we have reported that DHS has faced challenges in clearly justifying the need for the BioWatch program and its ability to reliably address that need (to detect aerosolized biological attacks). In September 2012, we found that DHS approved a next- generation BioWatch acquisition in October 2009 without fully developing knowledge that would help ensure sound investment decision making and pursuit of optimal solutions. We recommended that before continuing the acquisition, DHS reevaluate the mission need and possible alternatives based on cost-benefit and risk information. DHS concurred and in April 2014, canceled the acquisition because an alternatives analysis did not confirm an overwhelming benefit to justify the cost. Having canceled the next generation acquisition, DHS continues to rely on the currently-deployed BioWatch system for early detection of an aerosolized biological attack. However, in 2015, we found that DHS lacks reliable information about the current system’s technical capabilities to detect a biological attack, in part because in the 12 years since BioWatch’s initial deployment, DHS has not developed technical performance requirements for the system. We reported in October 2015 that DHS commissioned tests of the current system’s technical performance characteristics, but without performance requirements, DHS cannot interpret the test results and draw conclusions about the system’s ability to detect attacks. DHS is considering upgrades to the current system, but we recommended that DHS not pursue upgrades until it establishes technical performance requirements to meet a clearly defined operational objective and assesses the system against these performance requirements. DHS concurred and is working to address the recommendation.\nChairman Johnson, Ranking Member Carper, and Members of the Committee, this concludes my prepared statement. I would be happy to respond to any questions you may have.", "For questions about this statement, please contact Chris Currie at (404) 679-1875 or curriec@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Individuals making key contributions to this statement include Kathryn Godfrey (Assistant Director), Susanna Kuebler (Analyst- In-Charge), Russ Burnett, Marcia Crosse, Mary Denigan-Macauley, Tracey King, Jan Montgomery, Steve Morris, and Tim Persons. Key contributors for the previous work that this testimony is based on are listed in each product.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 2, 2, 2, 1, 2, 2, 2, 3, 3, 1 ], "alignment": [ "h3_title", "", "", "h3_full", "h0_title h2_title h1_title h3_title", "h0_full", "h0_full h1_full", "h3_full h2_full", "h2_full", "h3_full h2_full", "h3_full" ] }

{ "question": [ "What is a big issue of the biodefense enterprise?", "How does this issue play into leadership?", "How is the responsibility of overseeing performed?", "How does the GAO suggest HSC solve the lack of leadership?", "How has the NSC tackled the issue of leadership?", "What further steps can still be taken?", "How did the Blue Ribbon Study Panel on Biodefense call to further leadership action?", "How did this report conflict with the GAO's approach?", "How did the GAO evaluate biodefense in 2011?", "How did the GAO suggest biodefense improve?", "What action has been taken on their suggestion?", "What challenges does biosurveillance face?", "What did GAO recommend regarding the establishment of a biosurveillance strategy?", "How have these recommendations been implemented?", "What other issues did the GAO find with biosurveillance?", "What are some of these challenges?", "How have these challenges been addressed?", "What does this statement address?", "What is the report based on?", "What did the GAO additionally review?", "What work did the GAO review to prepare for the report?" ], "summary": [ "The biodefense enterprise is fragmented and does not have strategic oversight to promote efficiency and accountability.", "Specifically, the biodefense enterprise lacks institutionalized leadership enterprise-wide to provide strategic oversight and coordination.", "In 2011, GAO reported, there are more than two dozen presidentially appointed individuals with biodefense responsibilities and numerous federal agencies with mission responsibilities for supporting biodefense activities, but no individual or entity with responsibility for overseeing the entire biodefense enterprise.", "In 2011, GAO reported that the Homeland Security Council (HSC) should consider establishing a focal point for federal biodefense coordination.", "In December 2014, National Security Council (NSC) staff, which supports the HSC, told GAO that two of its directorates work together as the focal point for federal biodefense efforts.", "This is an important step in promoting a comprehensive and coordinated approach to biodefense, but strategic leadership issues persist.", "In October 2015, a report by the Blue Ribbon Study Panel on Biodefense stated strategic leadership issues persist and called for a focal point to provide strategic leadership, noting that elevating authority above the agency-level can help overcome the challenges faced by the biodefense enterprise.", "The Study Panel found that White House councils and offices generally only become involved when a specific biodefense issue affects a prominent ongoing responsibility—a method which is not consistent with our call for a strategic approach.", "In 2011, GAO also reported that while some high-level biodefense strategies have been developed, there is no broad, integrated national strategy that encompasses all stakeholders with biodefense responsibilities that can be used to guide the systematic identification of risk; assess resources needed to address those risks; and prioritize and allocate investment across the entire biodefense enterprise.", "GAO reported that the overarching biodefense enterprise would benefit from strategic oversight mechanisms, including a national strategy, to help ensure efficient, effective, and accountable results, and suggested the HSC take action.", "However, as of February 2016, such a strategy had not been developed.", "Biosurveillance, an aspect of biodefense, also faces key challenges at all levels of government that transcend what any one agency can address on its own, and our more recent and ongoing work continues to highlight these challenges.", "In 2010, GAO recommended the HSC establish a focal point to lead the development of a national biosurveillance strategy that clarifies roles and responsibilities, provides goals and performance measures, and identifies resource and investment needs, among other elements.", "However, the recommendations have not been fully implemented.", "Since 2009 GAO's has also identified challenges with specific biosurveillance capabilities.", "Specifically, GAO has identified biosurveillance capability challenges with, among other topics, (1) state and local public heath capabilities, (2) animal health surveillance capabilities, and (3) two Department of Homeland Security biosurveillance efforts—the National Biosurveillance Integration Center (NBIC) and the BioWatch Program (which aims to provide early indication of an aerosolized biological weapon attack).", "However, not all recommendations have been implemented.", "This statement summarizes GAO's work on challenges to building and maintaining the nation's biodefense and biosurveillance.", "This statement is based on GAO work issued from December 2009 through March 2016 on various biodefense and biosurveillance efforts.", "GAO also reviewed the 2015 report of the Blue Ribbon Study Panel on Biodefense for updates, but has not independently assessed the entirety of the conclusions, recommendations or methods.", "To conduct the prior work, GAO reviewed relevant laws, presidential directives, policies, strategic plans, and other reports; surveyed states; and interviewed federal, state, and industry officials, among others." ], "parent_pair_index": [ -1, -1, 1, 1, -1, 4, -1, 6, -1, -1, 1, -1, -1, 1, -1, 3, 4, -1, -1, 1, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 3, 3, 3, 3, 4, 4, 4, 5, 5, 5, 5, 5, 5, 2, 2, 2, 2 ] }

{ "title": [ "", "Background", "Discrimination", "The Health Insurance Portability and Accountability Act of 1996 (HIPAA)", "The Americans with Disabilities Act", "Overview", "EEOC Interpretation of the ADA Regarding Genetic Discrimination", "Supreme Court ADA Decisions", "The ADA and Health Insurance", "Executive Order", "Privacy", "Constitutional Protections", "Federal Statutes", "Privacy Act of 1974", "The Freedom of Information Act (FOIA)", "The Americans with Disabilities Act (ADA)", "The Health Insurance Portability and Accountability Act (HIPAA)", "State Statutes", "Federal Legislation", "Legislation in the 110th Congress", "Legislation in the 109th Congress", "Legislation in the 108th Congress", "Legislation in the 107th Congress", "Legislation in the 106th Congress" ], "paragraphs": [ "", "In April 2003, the sequence of the human genome was deposited into public databases. Scientists involved in the Human Genome Project (HGP) reported that the finished sequence consists of overlapping fragments covering 99% of the coding regions of the human genome, with an accuracy of 99.999%. These rapid advances provide powerful tools for determining the causes, and potentially the cures, for many common, complex diseases such as diabetes, heart disease, Parkinson's disease, bipolar illness, and asthma.\nIn congressional testimony Dr. Francis Collins, the Director of the National Human Genome Research Institute, described the potential the information generated by the HGP holds for medicine and public health. He stated that \"The human genome sequence provides foundational information that now will allow development of a comprehensive catalog of all of the genome's components, determination of the function of all human genes, and deciphering of how genes and proteins work together in pathways and networks. Completion of the human genome sequence offers a unique opportunity to understand the role of genetic factors in health and disease, and to apply that understanding rapidly to prevention, diagnosis, and treatment. This opportunity will be realized through such genomics-based approaches as identification of genes and pathways and determining how they interact with environmental factors in health and disease, more precise prediction of disease susceptibility and drug response, early detection of illness, and development of entirely new therapeutic approaches.\"\nAs Collins stated, with completion of the human genome sequence, scientists will now focus on understanding the clinical and public health implications of the sequence information. All disease has a genetic component and therefore genomic research has the potential to substantially reduce the collective burden of disease in the general population. Clinical genetic tests are becoming available at a rapid rate, with 1,013 clinical genetic tests currently available. In addition, private insurers are beginning to include some clinical genetic tests in their health insurance benefits packages as evidence of the tests' clinical validity accumulates. For example, some health plans have coverage policies for specific conditions, such as hereditary cancer testing, Cystic Fibrosis, Tay Sachs disease, and hereditary hemochromatosis.\nThese scientific advances in genetics, while promising, are not without potential problems. The ethical, social and legal implications of genetic research have been the subject of significant scrutiny and a portion of the funds for the Human Genome Project are set aside to support the analysis and research of these issues. As scientific knowledge about genetics becomes increasingly widespread, numerous researchers and commentators, including Dr. Francis Collins, have expressed concerns about how this information will used. In congressional testimony, Dr. Collins stated: \"while genetic information and genetic technology hold great promise for improving human heath, they can also be used in ways that are fundamentally unjust. Genetic information can be used as the basis for insidious discrimination....The misuse of genetic information has the potential to be a very serious problem, both in terms of people's access to employment and health insurance and the continued ability to undertake important genetic research.\"\nThis concern has encompassed fear of discrimination in many aspects of life, including employment and health and life insurance. A study on discrimination found that a number of institutions, including health and life insurance companies, health care providers, blood banks, adoption agencies, the military and schools, were reported to have engaged in genetic discrimination against asymptomatic individuals. The discriminatory practices included allegedly treating a genetic diagnosis as a preexisting condition for insurance purposes, refusal by an adoption agency to allow a woman at risk for Huntington's disease to adopt based on the woman's genetic risk, and termination from employment after disclosure of a risk of Huntington's disease. Similarly, another study reported that twenty-two percent of the respondents indicated that they or a family member were refused health insurance as a result of a genetic condition.\nBoth the U.S. Chamber of Commerce and America's Health Insurance Plans (AHIP) have countered that there is no convincing evidence that employers or insurers engage in genetic discrimination and that federal legislation to prohibit discrimination based on genetic information is unnecessary. Larry Lorber, representing the U.S. Chamber of Commerce, stated in congressional testimony that \"There is little to no evidence of employer collection or misuse of genetic information in today's workplace. This is despite continued predictions that, in the absence of a bill, the fear of increased insurance costs, absenteeism, and low productivity would inevitably drive vast numbers of employers to genetic testing of the workforce and employment discrimination based on genetic makeup. Whether it is due to the threat of liability under existing protections, fear of public backlash, moral concerns or simply a lack of interest, employer collection and misuse of genetic information remains largely confined to the pages of science fiction.\" He goes on to state that, \"the current body of Federal law, including the ADA, Title VII of the Civil Rights Act, HIPAA and other Federal laws are more than ample to deal with any misuse of genetic information.\" In discussions with the Secretary's Advisory Committee on Genetics, Health and Society (SACGHS), the Chamber stated that while it does not believe that employers are engaging in genetic discrimination, it does recognize that the fear of potential discrimination may warrant a legislative solution. In addition, America's Health Insurance Plans states that, \"As a matter of practice, health insurance plans do not use or disclose such private health information [genetic information] for purposes outside of normal insurance coverage activities. Moreover, federal and state laws currently prohibit the inappropriate use of genetic information.\"\nLegal cases of genetic discrimination have been few. However, studies have shown that public fear of discrimination is substantial and negatively influences the uptake of genetic testing and the use of genetic information by consumers and health professionals. SACGHS learned that 68% of Americans are concerned about who would have access to their personal genetic information; 31% state this concern would prevent them from having a genetic test; and 68% agree that insurers would do everything possible to use genetic information to deny health coverage. A 2004 survey conducted by the Genetics and Public Policy Center found that 92% of Americans oppose employer access to personal genetic information and 80% oppose access to this information by health insurers. In addition, SACGHS as well as its predecessor Committee, the Secretary's Advisory Committee on Genetic Testing (SACGT), sponsored two public forums to gather perspectives on genetic discrimination. Many comments were received from patients, consumers, health professionals, scientists, genetic test developers, educators, industry representatives, policymakers, lawyers, students and others representing a wide range of diverse ethnic and racial groups. The comments and testimony revealed several anecdotal cases of discrimination. SACGT sent two letters to the Secretary of HHS urging support for nondiscrimination protections:\nDuring consultations with the public SACGT heard from many Americans who are concerned about the misuse of genetic information by third parties, such as health insurers and employers, and the potential for discrimination based on that information. Many stated that fear of genetic discrimination would dissuade them from undergoing a genetic test or participating in genetic research studies. Others stated that they would pay out of pocket for a genetic test to prevent the results from being placed in their medical record. Such concerns are a deterrent to advances in the field of genetic testing and may limit the realization of the benefits of genetic testing.\nThe SACGHS held a half day session where it heard testimony from members of the public, health care providers, insurers, employers and other stakeholders. This testimony revealed actual cases of genetic discrimination as well as considerable fear of genetic discrimination and altered behavior due to this fear. The Committee compiled the comments it received both orally and in writing, produced a DVD highlighting the oral testimony it received, and provided an extensive legal analysis concluding that current law does not provide adequate protection against genetic discrimination in health insurance and employment. This information was shared with the Secretary of HHS, with a recommendation that it also be shared with key Members of Congress. The Committee was interested in independently investigating the claims made by opponents that genetic discrimination was not occurring and that current law provides adequate protection against discrimination.\nA joint report by the Department of Labor, the Department of Health and Human Services, the Equal Employment Opportunity Commission (EEOC) and the Department of Justice summarized the various studies on discrimination based on genetic information and argued for the enactment of federal legislation. The report stated that \"genetic predisposition or conditions can lead to workplace discrimination, even in cases where workers are healthy and unlikely to develop disease or where the genetic condition has no effect on the ability to perform work\" and that \"because an individual's genetic information has implications for his or her family members and future generations, misuse of genetic information could have intergenerational effects that are far broader than any individual incident of misuse.\" Concluding that existing protections are minimal, the report went on to call for the enactment of legislation which states that (1) employers should not require or request that employees or potential employees take a genetic test or provide genetic information as a condition of employment or benefits, (2) employers should not use genetic information to discriminate against, limit, segregate, or classify employees, and (3) employers should not obtain or disclose genetic information about employees or potential employees under most circumstances. According to the Labor Department report, employers should be able to (1) use genetic information for monitoring for the effects of a particular substance in the workplace under certain circumstances, and (2) disclose genetic information for research and other purposes with the written, informed consent of the individuals. In addition, the report states that the statutory authority of federal agencies or contractors to promulgate regulations, enforce workplace safety and health laws, or conduct occupational or other health research should not be limited.\nThe National Council on Disability (NCD), an independent federal agency that advises the President and Congress on issues affecting individuals with disabilities, published a position paper arguing for the enactment of federal legislation prohibiting genetic discrimination on March 4, 2002. The NCD argues that recent advances in genetic research have brought an increasing potential for genetic discrimination, that genetic discrimination is a historical and current reality, that genetic discrimination undermines the purposes of genetic research and testing, that genetic test information has little value for purposes of making employment decisions and insurance decisions, and that existing laws are insufficient to protect individuals from genetic discrimination.\nPresident Bush has also made the prohibition of genetic discrimination one of the key components of his health care reform agenda. In his June 2001 radio address to the nation, the President stated that, \"Genetic discrimination is unfair to workers and their families. It is unjustified - among other reasons, because it involves little more than medical speculation. A genetic predisposition toward cancer or heart disease does not mean the condition will develop. To deny employment or insurance to a healthy person based only on a predisposition violates our country's belief in equal treatment and individual merit.\" The Administration has indicated that it favors enactment of legislation to prohibit the improper use of genetic information in health insurance and employment.\nIt should be emphasized that legal issues relating to genetics may vary depending on whether insurance, employment or other types of discrimination, or medical research are involved. Approaches to addressing the issues raised in these contexts vary from taking no legislative action, addressing certain specific concerns (as was done in the Health Insurance Portability and Accountability Act), or more far reaching approaches such as comprehensive legislation on genetics or legislation focused on all medical records, including genetic information.\nGenerally legal issues raised regarding genetics have been based on two main concepts: privacy and discrimination. The privacy interests of an individual in his or her genetic information have been seen as significant and protecting these interests is seen as making discriminatory actions based on this information less likely. However, another approach would be to prohibit this potential misuse of the information by prohibiting discrimination. Some statutes, like the Americans with Disabilities Act (ADA), 42 U.S.C. §§ 12101 et seq., take a two-pronged approach to similar issues regarding medical information about disabilities by both protecting the confidentiality of the information and by prohibiting discriminatory acts.\nCurrently there are no federal laws that directly and comprehensively address the issues raised by the use of genetic information. There are, however, a few laws that address parts of these issues but the only federal law that directly addresses the issue of discrimination based on genetic information is the Health Insurance Portability and Accountability Act (HIPAA). On February 8, 2000, President Clinton issued an executive order prohibiting discrimination against federal employees based on protected genetic information. On December 20, 2000, the Department of Health and Human Services issued final regulations on medical privacy which are not specific to genetics but cover all personal health information, including genetic information. This rule went into effect on April 14, 2001 but was amended in 2002. In addition, many states have enacted laws which vary widely in their approaches to the protection of genetic information.", "", "P.L. 104 - 191 , the Health Insurance Portability and Accountability Act of 1996 (HIPAA), has been hailed as taking \"important steps toward banning genetic discrimination in health insurance\" but has also been criticized as not going far enough. The act prohibits a group health plan or issuer of a group health plan from using genetic information to establish rules for eligibility or continued eligibility and provides that genetic information shall not be treated as a preexisting condition in the absence of the diagnosis of the condition related to such information. It also prohibits a group health plan or issuer of a group health plan from using genetic information in setting a premium contribution. These protections apply to individuals within the group plans; they do not apply to the acceptance of the whole group or to the premiums set for the group. Thus, HIPAA prohibits group health plans or issuers of group health plans from charging an individual a higher premium than a similarly situated individual; however, the law does not prevent an entire group from being charged more.\nThe act would not prohibit group health plans or issuers of plans (i.e., insurers) from requiring or requesting genetic testing, does not require them to obtain authorization before disclosing genetic information, and does not prevent them from excluding all coverage for a particular condition or imposing lifetime caps on all benefits or on specific benefits. In addition, this act does not apply to individual health insurance policies, and does not address the issues of the use of genetic information in contexts other than health insurance such as employment.", "", "The Americans with Disabilities Act (ADA), 42 U.S.C. § 12101 et seq., prohibits discrimination against an individual with a disability in employment, public services, public accommodations, and communications. The threshold issue in any ADA case is whether the individual alleging discrimination is an individual with a disability. The act defines the term disability with respect to an individual as having \"(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual, (B) a record of such an impairment; or (C) being regarded as having such an impairment.\" Although the statutory language of the ADA does not reference genetic traits, there was a discussion of the issue during congressional debate. So far there have been no judicial decisions but one case was brought by the EEOC and settled. In addition, Terri Seargent filed with the EEOC alleging genetic discrimination and received a determination on November 21, 2000 that the EEOC's investigation supported her allegation of discrimination under the ADA.", "The ADA has been interpreted by the Equal Employment Opportunity Commission (EEOC) as including genetic information relating to illness, disease, or other disorders. The legislative history was cited by the EEOC in its guidance to the definition of disability for its compliance manual. In this guidance, the EEOC examined the definition of disability under the ADA, noting that the definition was composed of three prongs: disability means (1) a physical or mental impairment that substantially limits one or more of the major life activities of an individual, (2) a record of such an impairment, or (3) being regarded as having such an impairment. It was under the third prong that the EEOC determined that discrimination based on genetic information relating to illness, disease, or other disorders was prohibited.\nAlthough this EEOC interpretation was widely heralded as a significant step for the protection of rights for individuals whose genes indicate an increased susceptibility to illness, disease or other disorders, it is limited in its application and may be even more limited after the recent Supreme Court decisions on the definition of disability. However, the EEOC has not withdrawn this guidance and at Senate hearings, EEOC Commissioner Paul Miller stated that the ADA \"can be interpreted to prohibit employment discrimination based on genetic information. However, the ADA does not explicitly address the issue and its protections are limited and uncertain.\" In addition, Commissioner Miller observed that even if the ADA were found to cover genetic discrimination, the requirements of the ADA may not protect workers from all types of genetic discrimination. He stated, \"for example, the ADA does not protect workers from requirements or requests to provide genetic information to their employers....In addition, once the applicant is hired, the employer may request that the employee take a medical exam, such as a genetic test, if the employer can demonstrate that the information from that test is job related and consistent with business necessity.\"\nThe first ADA case alleging genetic discrimination was filed with the EEOC by Terri Seargent. Ms. Seargent, whose situation was extensively discussed during Senate debate on genetic discrimination in the 106 th Congress, had a promising career as a manager for a small insurance broker in North Carolina. She had positive performance evaluations but after medical tests determined that she had Alpha 1 Antitrypson Deficiency, a condition that affects the lungs and liver, and she began taking expensive medication, she was terminated from her employment. Ms. Seargent filed with the EEOC alleging genetic discrimination and received a determination on November 21, 2000 that the EEOC's investigation supported her allegation of discrimination under the ADA.\nThe EEOC settled its first court action challenging the use of workplace genetic testing under the ADA against Burlington Northern Santa Fe Railway (BNSF). The settlement, announced on April 18, 2001, ended genetic testing of employees who filed claims for work-related injuries based on carpal tunnel syndrome. EEOC Commissioner Paul Steven Miller stated \"The Commission will continue to respond aggressively to any evidence that employers are asking for or using genetic tests in a manner that violates the ADA. Employers must understand that basing employment decisions on genetic testing is barred under the ADA's 'regarded as' prong, as stated in EEOC's 1995 policy guidance on the definition of the term 'disability.' Moreover, genetic testing, as conducted in this case, also violates the ADA as an unlawful medical exam.\"", "Although the combination of the ADA's legislative history and the EEOC's guidance has led commentators to argue that the ADA would cover genetic discrimination, the merit of these arguments has been uncertain since there have been no reported cases holding that the ADA prohibits genetic discrimination. This uncertainty has increased in light of Supreme Court decisions on the definition of disability under the ADA.\nThe first Supreme Court ADA case to address the definition of disability was Bragdon v. Abbott , a 1998 case involving a dentist who refused to treat an HIV infected individual outside of a hospital. In Bragdon, the Court found that the plaintiff's asymptomatic HIV infection was a physical impairment impacting on the major life activity of reproduction thus rending HIV infection a disability under the ADA. In two 1999 cases the Court examined the definitional issue whether the effects of medication or assistive devices should be taken into consideration in determining whether or not an individual has a disability. The Court in the landmark decisions of Sutton v. United Airlines and Murphy v. United Parcel Service, Inc., held, contrary to the interpretation given by the EEOC, that the determination of whether an individual has a disability should be made with reference to mitigating measures. In reaching this holding, the Court looked to the first prong of the definition of disability (having a physical or mental impairment that substantially limits one or more of the major life activities of an individual) and emphasized that the phrase \"substantially limits\" appears in the present indicative verb form \"requiring that a person be presently—not potentially or hypothetically—substantially limited in order to demonstrate a disability....A person whose physical or mental impairment is corrected by medication or other measures does not have an impairment that presently 'substantially limits' a major life activity.\" In Albertsons Inc. v. Kirkingburg the Court held unanimously that the ADA requires proof that the limitation on a major life activity by the impairment is substantial. The Court in Sutton also looked at the findings enacted as part of the ADA which stated that \"some 43,000,000 Americans have one or more physical or mental disabilities\" and found that this figure was inconsistent with the argument that the statute covered individuals without looking at the mitigating effects of medications or devices. The individualized nature of the inquiry into whether an individual was an individual with a disability was emphasized.\nMore recently the Court held in Toyota Motor Manufacturing v. Williams, that to be an individual with a disability under the act, an individual must have substantial limitations that are central to daily life, not just limited to a particular job. The Court held that \"to be substantially limited in performing manual tasks, an individual must have an impairment that prevents or severely restricts the individual from doing activities that are of central importance to most people's daily lives.\" Significantly, the Court also stated that \"[t]he impairment's impact must also be permanent or long-term.\"\nAlthough the Court's decision in Sutton did not turn on the third prong of the definition of disability (being \"regarded as having such an impairment\") the Court did address the interpretation of this part of the definition. There are two ways, the Court stated, that an individual can fall within the \"regarded as\" prong: (1) a covered entity mistakenly believes that a person has a physical impairment that substantially limits one or more major life activities, or (2) a covered entity mistakenly believes that an actual impairment substantially limits one or more major life activities. The Court found that, on its own, the allegation that an entity has a vision requirement in place does not establish a claim that the entity regards an individual as substantially impaired in the major life activity of working. The term \"substantially limits\" was regarded as significant. It requires \"at a minimum, that plaintiffs allege they are unable to work in a broad class of jobs.\" The Court emphasized that it was \"assuming without deciding\" that working is a major life activity and that the EEOC regulations interpreting \"substantially limits\" are reasonable and found that even using the EEOC interpretation, the plaintiffs in Sutton failed to allege adequately that their vision is regarded as an impairment that substantially limits them in a major life activity. Being precluded from being a global airline pilot was not sufficient since they could obtain other, although less lucrative jobs, as regional pilots or pilot instructors.\nThe \"regarded as\" prong was directly at issue in Murphy . In Murphy the Court held that the fact that an individual with high blood pressure was unable to meet the Department of Transportation (DOT) safety standards was not sufficient to create an issue of fact regarding whether an individual is regarded as unable to utilize a class of jobs. Like Sutton , the holding in Murphy emphasized the numerous other jobs available to the plaintiff.\nThe Supreme Court's decisions on the ADA did not directly address genetic discrimination and it is possible that the ADA could be interpreted to cover a particular genetic defect. However, the reasoning used in the Court's recent decisions appears to make it unlikely that an ADA claim based on genetic discrimination would be successful. There are several factors that lead to this conclusion.\nFirst, the Supreme Court in Sutton specifically struck down an interpretation by the EEOC regarding the use of mitigating factors and raised questions concerning the validity of the EEOC's interpretation. The Court also found no statutory authority for agency interpretation of the definition of disability. The EEOC had taken the position that whether or not an individual has a disability should be determined by what his or her condition would be without medication or an assistive device. Rejecting this EEOC interpretation, in Sutton the Supreme Court noted that no agency was given the authority to interpret the term \"disability\" but that because both parties accepted the regulations as valid \"we have no occasion to consider what deference they are due, if any.\" Similarly, in Murphy the Court clearly stated that its use of the EEOC regulations did not indicate that the regulations were valid. However, in its earlier decision in Bragdon v. Abbott , the Court had found its conclusion that HIV infection was covered by the ADA to be \"reinforced by administrative guidance issued by the Justice Department....\" The cases subsequent to Bragdon did not examine this seeming contradiction so exactly how a future decision would view EEOC regulations and guidance is uncertain. This issue is especially important regarding potential cases of genetic discrimination since the EEOC has published guidance indicating that the ADA covers genetic discrimination, and there are no reported cases.\nSimilarly, the Supreme Court showed little indication to examine the legislative history of the ADA. The Court in Sutton held that it was not necessary to consider the legislative history of the ADA regarding the issue of whether individuals should be examined in their uncorrected state or with the use of mitigating medications or devices. It found that the statutory language was sufficient to support its holding on this issue. Although the issue regarding genetic discrimination is distinct from that of the use of mitigating medications and devices, the Court's general reluctance to examine legislative history in Sutton may indicate that the language on genetic discrimination quoted above from the congressional debates also would not be examined.\nThe Court's reliance in Sutton upon the findings in the ADA that 43,000,000 Americans have one or more physical disabilities also indicates that the Court may not find genetic defects to be covered. The number of individuals cited in the findings as having a disability was seen by the Court as inconsistent with the argument that the statute covered individuals whose disabilities were mitigated by medications or devices. Since the prevalence of genetic defects is believed to be widespread, coverage of genetic defects could arguably include almost every individual. Thus, it is possible that the Court could use the same rationale as in Sutton to find genetic defects not included.\nIn Bragdon v. Abbott, where the Court found that HIV infection was covered under the ADA, the majority opinion spent considerable time discussing the immediate physiological effects of the infection. This would appear to be consistent with the holding in Sutton that the \"substantially limits\" definitional language requires that the substantial limitation not be potential or hypothetical. In addition, in Toyota Motor Manufacturing v. Williams substantial limitations were seen by the Court as those that are central to daily life, not just limited to a particular job. This reasoning could be contrasted to the situation presented by genetic defects which in many cases do not ever manifest. Interestingly, in his dissenting opinion in Bragdon v. Abbott, then Chief Justice Rehnquist, who was in the majority in Sutton , stated that the argument regarding coverage of HIV infection \"taken to its logical extreme, would render every individual with a genetic marker for some debilitating disease 'disabled' here and now because of some possible future effects.\" Whether the Court would now share this view that such coverage of genetic discrimination is an invalid interpretation of the definition is uncertain, especially since the Court in Bragdon was discussing the first prong of the definition, not the \"regarded as\" prong which is the most likely basis for coverage of genetic defects.\nIn other cases the Court provided considerable guidance concerning the \"regarded as\" prong of the definition of disability, the most likely aspect of the definition to be used to find coverage of genetic defects. Including the requirement that the individual be regarded as \"substantially limited\" in a major life activity, the Court found that this language meant that being precluded from a particular job was not sufficient to be substantially limited in the major life activity of working if other jobs in the same class could be obtained. And when this specific issue was raised in Murphy , the plaintiff was not found to be regarded as substantially limited in the major life activity of working. The main point of this rather complicated discussion is that making the case that one is regarded as substantially limited in a major life activity, particularly the major life activity of working, is likely to be difficult.\nThe Supreme Court's decisions do not directly address ADA coverage of genetic discrimination. They emphasize an individualized approach to the determination of whether an individual has a disability under the ADA. Although an argument could be made that the ADA would cover individuals with genetic defects in certain cases, the Court's decisions, particularly Sutton and Murphy , use reasoning that would make it unlikely that most ADA claims based on genetic discrimination would be successful.\nIn addition, even assuming the ADA was found to apply, it may not protect employees from having their employers have access to their genetic information. Although the ADA prohibits an employer from making medical inquiries prior to a job offer, the employer may obtain medical information in certain cases after the offer of employment has been made. Assuming that the prohibitions against discrimination in the ADA would apply, it is difficult to prove that genetic information was the reason for discrimination. This raises issues relating to the privacy of genetic information.", "Title III of the ADA provides that no individual shall be discriminated against on the basis of disability in the full and equal enjoyment of the goods, services, facilities, privileges, advantages, or accommodations of any place of public accommodation. A place of public accommodation is defined in part as an insurance office. It could be argued that discrimination in insurance on the basis of genetic information would be a violation of Title III of the ADA. However, such an argument would be limited since, in addition to the limitations of the definition of disability discussed previously, the ADA specifically states that Titles I through IV \"shall not be construed to prohibit or restrict an insurer....from underwriting risks, classifying risks, or administering such risks that are based on or not inconsistent with State law.\" The ADA also provides that this provision \"shall not be used as a subterfuge to evade the purposes of titles I and III.\" The issue of insurance was discussed by the Department of Justice in its technical assistance manual which observed that \"[t]he ADA, therefore, does not prohibit use of legitimate actuarial considerations to justify differential treatment of individuals with disabilities in insurance.\" Thus, if an insurer uses legitimate actuarial considerations regarding providing insurance to an individual with a genetic condition, it is unlikely that there would be a violation of the ADA.", "On February 9, 2000, President Clinton signed Executive Order 13145 prohibiting genetic discrimination against employees in federal executive departments and agencies. In announcing the executive order at a meeting of the American Association for the Advancement of Science, the President stated that \"This extraordinary march of human understanding imposes on us a profound responsibility to make sure that the age of discovery can continue to reflect our most cherished values.\" Many commentators lauded the executive order, and quoted with approval its description as \"preventive policy making—to put in place the kind of protections that the public needs and deserves before we find ourselves in a needless crisis situation.\" However, it has also been criticized both on a philosophical level and in the details of its coverage. The EEOC has issued guidance on the executive order.\nThe executive order defines \"protected genetic information\" as \"(A) information about an individual's genetic tests; (B) information about the genetic tests of an individual's family members; or (C) information about the occurrence of a disease; or medical condition or disorder in family members of the individual.\" Current health status information would not be protected under this executive order unless it was derived from the information described above.\nThe executive order requires executive departments and agencies to implement the following nondiscrimination requirements:\nthe employing entity shall not discharge, fail or refuse to hire, or otherwise discriminate against any employee because of protected genetic information or because of information about a request for or receipt of genetic services; the employing entity shall not limit, segregate or classify employees in any way that would deprive or tend to deprive any employee of employment opportunities or otherwise adversely affect that employee's status because of protected genetic information or because of information about a request for or receipt of genetic services; the employing entity shall not request, require, collect, or purchase protected genetic information with respect to an employee or information about a request for or receipt of genetic services; the employing entity shall not disclose protected genetic information with respect to an employee or information about a request for or receipt of genetic services with certain exceptions; the employing entity shall not maintain protected genetic information or information about a request for or receipt of genetic services in general personnel files. Such materials shall be treated as confidential medical records and kept separate from personnel files.\nThere are certain exceptions to these prohibitions. For example, the employing entity may request or require information if such current condition could prevent the applicant or employee from performing the essential functions of the job, or where it is to be used exclusively to determine whether further medical evaluation is needed to diagnose a current disease. Genetic monitoring of biological effects of toxic substances in the workplaces are permitted in certain circumstances.", "", "Although the Constitution does not expressly provide for a right to privacy, the Supreme Court has found some right to informational privacy. However, these rights are limited by judicial deference to government's need to acquire the information and by the fact that such a constitutional right would be limited to state action. As a practical matter, this would mean that federal or state collections of information may receive some constitutional protection but the collection and use of information by private health plans or organizations would not be covered.\nThe ninth circuit court of appeals in Norman - Bloodsaw v. Lawrence Berkeley Laboratory touched upon privacy issues in the context of genetic information. The Lawrence Berkeley Laboratory, a research institution jointly operated by state and federal agencies, allegedly tested the blood and urine of its employees for several medical conditions, including sickle cell trait. The employees sued alleging various statutory and constitutional violations including the violation of the right to privacy. The district court had dismissed the claims but the court of appeals remanded observing that \"[o]ne can think of few subject areas more personal and more likely to implicate privacy interests than that of one's health or genetic make-up.\"", "", "Certain federal statutes may provide some privacy protection for medical records. The Privacy Act of 1974, 5 U.S.C. § 552a, prohibits the disclosure of records maintained on individuals by federal government agencies except under certain conditions. Subsection 552a(f)(3) allows agencies to establish special procedures for individuals who wish to access their medical records. The intent of this provision as described in the House report was to ensure rules so that an individual who would be adversely affected by the receipt of such data may be apprized of it in a manner which would not cause such adverse effects.", "The Freedom of Information Act (FOIA), 5 U.S.C. §§ 552 et seq., establishes a right of access to records maintained by agencies within the executive branch of the federal government. It contains several exemptions, including one for \"personnel and medical files and similar files the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.\" Both the Privacy Act and FOIA may, then, provide some privacy protections for genetic information but they are limited in their scope and would not encompass information held by a private entity.", "The ADA provides for some privacy protections for individuals with disabilities in the context of employment. Before an offer of employment is made, an employer may not ask a disability related question or require a medical examination. The EEOC in its guidance on this issue stated that the rationale for this exclusion was to isolate an employer's consideration of an applicant's non-medical qualifications from any consideration of the applicant's medical condition. Once an offer is made, disability related questions and medical examinations are permitted as long as all individuals who have been offered a job in that category are asked the same questions and given the same examinations. The ADA also requires that information obtained regarding medical information be kept in a separate medical file. The precise reach of the protections, especially regarding predictive genetic information is uncertain. As was discussed previously, it is not clear whether the definition of disability under the ADA would cover an individual with a genetic predisposition to a condition when that condition has not manifested.", "The Health Insurance Portability and Accountability Act (HIPAA) contains requirements for the standardization of electronically transmitted health insurance financial claims and administrative transactions, such as the submission of claims, processing of enrollments, verification of insurance eligibility, and payment and remittance advice. HIPAA required the Secretary of Health and Human Services (HHS) to make recommendations to Congress by August 1997 concerning the protection of privacy of individually identifiable health information and Congress had until August 1999 to enact legislation on this issue. If Congress did not enact legislation, HIPAA requires the Secretary of HHS to promulgate regulations on privacy protections. The Secretary of HHS issued final regulations on December 20, 2000.\nThe final privacy regulations, which became effective on April 14, 2001, and were modified on August 14, 2002, apply to health insurers, providers, and health care clearinghouses and give patients the right to inspect, copy and in certain situations, amend their medical records. The regulations cover all personal health information in paper, oral or electronic form. Individually identifiable health information is defined broadly and includes genetic information as well as information about an individual's family history. Covered entities are required to have in place reasonable safeguards to protect the privacy of patient information and limit the information used or disclosed to the minimum amount necessary to accomplish the intended purpose of the disclosure. Civil money penalties are provided, although there is no private right of action, and egregious violations carry federal criminal penalties of up to $250,000 and ten years in prison. Although these regulations are general and not specific to genetics, they will have an effect on genetic information. In the comments to the regulations, the Department noted that many commentators requested additional protections for sensitive information, including genetic information. In response, the Department noted that generally the regulations do not differentiate among types of protected health information.", "Although there is limited federal law relating to the use of genetic information, many states have enacted statutes dealing with various aspects of these issues. Early state statutes focused on particular genetic conditions. The first statute to prohibit discrimination based on a genetic trait was enacted in North Carolina and prohibited employment discrimination based on the sickle cell trait. In 1991 Wisconsin became the first state to enact a comprehensive law to prohibit discrimination based on genetic test results. Currently, the states vary in their provisions with some prohibiting discrimination in employment while others deal solely with discrimination in insurance. A recent survey of state law found that thirty-four states have enacted genetic nondiscrimination in employment laws. These laws vary and the National Conference of State Legislatures noted:\nAll laws prohibit discrimination based on the results of genetic tests; many extend the protections to inherited characteristics, and some include test results of family members, family history and information about genetic testing, such as the receipt of genetic services. Most states also restrict employer access to genetic information, with some prohibiting employers from requesting, requiring and obtaining genetic information or genetic test results, or directly or indirectly performing or administering genetic tests. Some states may also make exceptions to statutory requirements if, for example, genetic information may identify individuals who may be a safety risk in the workplace.\nA related survey found that forty-seven states have passed laws pertaining to the use of genetic information in health insurance. Many state genetic laws also include specific provisions relating to genetic privacy. In a recent survey, twenty-seven states were found to require consent to disclose genetic information while seventeen states require informed consent for a third party to perform or require a genetic test or obtain genetic information. Eighteen states were found which establish specific penalties for violating genetic privacy laws.\nAlthough these state statutes do provide some types of coverage, they do not cover employer self-funded plans providing private health insurance for employees and their dependents. These plans are exempt from state insurance laws due to the preemption provision in the federal Employee Retirement Income Security Act (ERISA). Since it has been estimated that over one-third of the nonelderly insured population obtains its coverage through self-funded plans and these types of plans are increasing, the ERISA exemption limits the application of state laws significantly.", "", "H.R. 493 , the Genetic Information Nondiscrimination Act of 2007 (GINA), was introduced by Representative Slaughter and 143 cosponsors on January 16, 2007. After being reported out of the House Education and Labor Committee, the House Energy and Commerce Committee, and the House Ways and Means Committee, the bill passed the House on April 25, 2007, by a vote of 420 to 3. H.R. 493 , as passed by the House, contains provisions prohibiting genetic discrimination in health insurance (Title I) and in employment (Title II). On March 5, 2008, the text of H.R. 493 as passed by the House was added to the end of the Paul Wellstone Mental Health and Addiction Equity Act of 2007 ( H.R. 1424 ) in the engrossment of H.R. 1424 . On April 24, 2008, the Senate took up H.R. 493 , replaced the existing language with an amendment in the nature of a substitute, and passed the measure, as amended, by a vote of 95-0. H.R. 493 , as amended and passed by the Senate, is very similar to the version passed by the House last year. The most significant difference is new language strengthening the \"firewall\" between Title I and Title II of the act. The House is expected to pass H.R. 493 (as amended) during the week of April 28, 2008.\nSenator Snowe, joined by 22 cosponsors, introduced S. 358 , a companion bill to H.R. 493 , on January 22, 2007. Senator Snowe noted in her introductory remarks that \"in June of 2003, after sixteen months of bipartisan negotiation, we achieved a unified, bipartisan agreement to address genetic discrimination. Today we again introduce the legislation encompassing that agreement, which the Senate has twice passed ... unanimously.\" S. 358 , which, like H.R. 493 , contains provisions prohibiting genetic discrimination in health insurance (Title I) and in employment (Title II), was reported out of the Senate Health, Education, Labor, and Pensions Committee on March 29, 2007.\nH.R. 493 , as passed originally by the House and most recently by the Senate, prohibits health insurance plans from denying enrollment or charging higher premiums to individuals or groups based on an individual's or family member's genetic information. It also prohibits health insurance plans from requesting or requiring that any individual, or family member of an individual, undergo a genetic test. In addition, it contains privacy provisions amending the HIPAA statute to require revisions in the HIPPA Privacy Rule prohibiting certain uses and disclosures of genetic information.\nH.R. 493 , as passed originally by the House and most recently by the Senate, provides that references to genetic information include genetic information on a fetus carried by a pregnant woman and, with respect to an individual utilizing assisted reproductive technology, includes genetic information of any embryo legally held by the individual or family member. H.R. 493 allows group health plans to obtain genetic information for purposes of payment, and allows a plan to request that an individual undergo a genetic test for the purposes of research, but the plan must make clear that this would be entirely voluntary on the part of the individual and would not be used for underwriting purposes.\nH.R. 493 , as passed originally by the House and most recently by the Senate, also prohibits discrimination in employment because of genetic information and, with certain exceptions, prohibits an employer from requesting, requiring, or purchasing genetic information. If such information is obtained, the bill requires that it be treated as part of a confidential medical record and provides that an employer is considered to be in compliance with the maintenance of information requirements if the genetic information is treated as a confidential record under § 102(d)(3)(B) of the Americans with Disabilities Act. In addition, the bill does not prohibit an entity covered by regulations promulgated pursuant to part C of Title XI of the Social Security Act or section 264 of the Health Insurance Portability and Accountability Act from any use or disclosure of health information that is authorized by those regulations. H.R. 493 adds a provision in Title II, like that in Title I, relating to the genetic information of a fetus or embryo. There are detailed provisions on enforcement that generally apply the remedies available in existing civil rights laws such as Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-4 et seq.\nOn January 17, 2007, the White House issued a statement calling upon Congress to pass genetic nondiscrimination legislation. The administration praised the Senate for passing a bipartisan genetic nondiscrimination bill in the 109 th Congress and noted that \"the Administration looks to build on that success and work with both houses of Congress, and the business community, to pass a bill the President can sign into law.\" The news release noted the importance of genetic nondiscrimination protections for the ability to use new genetic technologies, and observed that \"the President believes it is critical that an individual's personal genetic information not be used by an employer to deny a job....[and] that insurance companies do not use genetic information to deny an application for coverage.\"", "In the 109 th Congress, S. 306 , the Genetic Information Nondiscrimination Act of 2005, was introduced by Senator Snowe on February 7, 2005. The Senate Health, Education, Labor and Pensions Committee reported S. 306 out with an amendment in the nature of a substitute by a voice vote. The bill was passed, with an amendment, on February 17, 2005 by a vote of 98-0. The amendment deleted former section 103 which would have added a prohibition of discrimination based on genetic information or services in church health insurance plans to the Internal Revenue Code. The Administration indicated that it favored enactment of legislation to prohibit the improper use of genetic information in health insurance and employment and supported the enactment of S. 306 , 109 th Congress. A companion bill, H.R. 1227 , was introduced in the House on March 10, 2005 by Representative Biggert. H.R. 1227 was referred to the House Committees on Education and the Workforce, Energy and Commerce, and Ways and Means.\nS. 306 was similar to S. 1053 , which passed the Senate in 2003. It prohibits health insurance plans from denying enrollment or charging higher premiums to individuals based on the individual's or family member's genetic information. In addition, it contains privacy provisions prohibiting certain uses and disclosures of genetic information as well as prohibiting the collection of genetic information for insurance underwriting purposes. S. 306 also prohibits discrimination in employment because of genetic information and, with certain exceptions, prohibits an employer from requesting, requiring, or purchasing genetic information. If such information is obtained, the bill requires that it be treated as part of a confidential medical record. There are detailed provisions on enforcement which generally apply the remedies available in existing civil rights laws such as Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-4 et seq.\nAnother bill, H.R. 6125 , 109 th Congress, was introduced in the House on September 20, 2006 by Representative Paul. This bill would have prohibited discrimination based on genetic information by certain group health plans and in employment by federal, state or local entities or recipients of federal financial assistance or contractors. Employees or family members who have been adversely effected would have had a cause of action in federal court for compensatory and punitive damages, with the punitive damages limited to no more than 30% of compensatory damages.", "Several bills were introduced in the 108 th Congress to address genetic discrimination and privacy. For example, S. 16 , the Equal Rights and Equal Dignity for Americans Act of 2003 introduced by Senator Daschle on January 17, 2003, contained nondiscrimination provisions relating to insurance and employment. On May 1, 2003, Representative Slaughter introduced H.R. 1910 , The Genetic Nondiscrimination in Health Insurance and Employment Act, which prohibited genetic discrimination in insurance and employment. H.R. 1910 was a companion to S. 1053 , introduced by Senator Snowe on May 13, 2003, in the Senate.\nOn October 14, 2003, the Senate passed the Genetic Information Nondiscrimination Act of 2003 ( S. 1053 ). This bill prohibited health insurance plans from denying enrollment or charging higher premiums to individuals based on the individual's or family member's genetic information. In addition, the bill banned the collection, use and disclosure of genetic information for insurance underwriting purposes. In the employment context, this bill prohibited the use of genetic information in employment decisions, such as hiring, firing, job assignments and promotions. The bill also prevented the acquisition and disclosure of genetic information as well as applies the procedures and remedies authorized under the Civil Rights Act of 1964 to cases of genetic discrimination. Although President Bush supported genetic discrimination legislation and the House held a hearing in July 2004, the House did not pass a bill in the 108 th Congress.", "Legislation relating to genetic discrimination and privacy was a major issue in the 107 th Congress. The Senate version of the Patient Protection Act, S. 1052 , which passed the Senate on June 29, 2001, contained an amendment prohibiting certain genetic discrimination by group health plans and health insurance issuers. It also contains a provision relating to confidentiality. Congress did not pass the legislation prior to the adjournment of the 107 th Congress.\nOther Senate legislation in the 107 th took various approaches. S. 318 , introduced by Senator Daschle, would have prohibited genetic nondiscrimination in health insurance and employment. S. 1995 sponsored by Senators Snowe, Frist and Jeffords, also would have prohibited genetic discrimination in insurance and employment but was less broad that S. 318 . S. 19 , the Protecting Civil Rights for all Americans Act introduced by Senator Daschle, contained nondiscrimination provisions relating to insurance and employment. Senator Snowe also introduced S. 382 , the Genetic Information Nondiscrimination in Health Insurance Act of 2001, which would have prohibited discrimination in insurance. S. 450 , the Financial Institution Privacy Protection Act of 2001 introduced by Senator Nelson, contained provisions protection the privacy of health information, including genetic information.\nIn the House, Representative Slaughter introduced H.R. 602 , the Genetic Nondiscrimination in Health Insurance and Employment Act, which would have prohibited genetic discrimination in insurance and employment. H.R. 602 was paralleled by S. 318 in the Senate.", "Although legislation specifically relating to genetic discrimination and privacy was not enacted during the 106 th Congress, a provision relating to health insurance was considered in the conference on H.R. 2990 . The Senate amended H.R. 2990 as passed by the House, striking all the language after the enacting clause and substituting the language in S. 1344 . This Senate bill would have amended ERISA, the Public Health Service Act and the Internal Revenue Code to prohibit health plans or health insurance issuers, in both group and individual markets, from using predictive genetic information to set premiums. It also contained confidentiality provisions.\nSenator Daschle had offered a more comprehensive amendment to the FY2001 Labor-HHS Appropriations bill, S. 2553 . It would have prohibited insurance companies from raising premiums or denying coverage on the basis of genetic tests and would have also barred employers from using predictive genetic information to make employment-related decisions. The amendment was defeated by a vote of 54-44." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 3, 1, 1, 2, 2, 3, 3, 3, 3, 1, 1, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "h0_title h1_title", "h1_full", "h0_title", "", "", "h0_full", "", "", "h2_title", "", "h2_title", "", "", "", "h2_full", "h2_full", "h2_title h1_title", "h1_full", "h2_full", "h2_full h1_full", "", "h1_full" ] }

{ "question": [ "How were genetics introduced publicly in a big way?", "What issues did this advancement introduce?", "What did the Human Genome Project do?", "What benefits did these maps have?", "What issues does the predisposition to disease cause?", "Overall, what kinds of issues does genetic technology introduce?", "How has genetic information been handled legally?", "How was genetic discrimination in insurance first addressed?", "How does Congress consider genetic discrimination?", "What act was introduced to assist this?", "What happened to this act?", "What other act was added to assist this goal?", "What happened to this act?", "How was the Genetic Information Nondiscrimination Act passed?", "What was introduced as a companion to this act?", "How was the bill handled by the House?", "What is this report about?", "How will it be updated?" ], "summary": [ "In April 2003, the sequence of the human genome was deposited into public databases.", "This milestone, which has been compared to the discoveries of Galileo, and other advances in genetics have created novel legal issues relating to genetic information.", "The Human Genome Project produced detailed maps of the 23 pairs of human chromosomes and sequenced 99% of the three billion nucleotide bases that make up the human genome.", "The sequence information should aid in the identification of genes underlying disease, raising hope for genetic therapies to cure disease, but this scientific accomplishment is not without potential problems.", "For instance, the presence of a specific genetic variation may indicate a predisposition to disease but does not guarantee that the person will manifest the disease: How should an employer or insurer respond?", "The ethical, social and legal implications of these technological advances have been the subject of significant scrutiny and concern.", "The legal implications of such information have been addressed in various ways largely by states, but also by Congress.", "The Health Insurance Portability and Accountability Act of 1996, P.L. 104-191, is the first federal law to specifically address discrimination and insurance issues relating to genetic discrimination.", "Congress is currently considering genetic discrimination legislation.", "H.R. 493, the Genetic Information Nondiscrimination Act of 2007 (GINA), was introduced in the 110th Congress by Representative Slaughter and 143 cosponsors on January 16, 2007.", "It passed the House on April 25, 2007. A companion bill, S. 358, 110th Congress, was introduced by Senator Snowe and 22 cosponsors on January 22, 2007, and has been reported out of the Senate Labor and Human Resources Committee.", "On March 5, 2008, the text of H.R. 493 as passed by the House was added to the end of the Paul Wellstone Mental Health and Addiction Equity Act of 2007 (H.R. 1424) in the engrossment of H.R. 1424.", "On April 24, 2008, the Senate took up H.R. 493, replaced the existing language with an amendment in the nature of a substitute, and passed the measure, as amended, by a vote of 95-0. The House is expected to pass H.R. 493 (as amended) during the week of April 28, 2008.", "In the 109th Congress, S. 306, the Genetic Information Nondiscrimination Act of 2005, was passed on February 17, 2005, by a vote of 98-0. In the 108th Congress, the Senate passed the Genetic Information Nondiscrimination Act of 2003, S. 1053.", "A companion bill, H.R. 1227, was introduced on March 10, 2005, and another bill, H.R. 6125 was introduced on September 20, 2006.", "H.R. 1910 was introduced in the House and hearings were held, but the bill was not passed in the 108th Congress.", "This report discusses current federal law, state statutes, and legislation.", "It will be updated as needed." ], "parent_pair_index": [ -1, 0, -1, 2, 2, -1, -1, -1, -1, 2, 3, 2, 5, -1, 0, 1, -1, 3 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 0, 1, 1, 1, 1, 1, 1, 1, 2, 2, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "The Core of the Clause: Member Immunity and Component Privileges", "Supreme Court Interpretations", "Who Is Protected?", "What Constitutes a Legislative Act?", "Member Interactions with the Executive Branch", "Application of the Clause to Employment and Personnel Actions", "Nondisclosure Privilege: A Continued Circuit Split", "The Acquisition and Use of Information by Congress", "Conclusions" ], "paragraphs": [ "[F]or any Speech or Debate in either House, [The Senators and Representatives] shall not be questioned in any other Place.\nU.S. Const. Art I, § 6 cl. 1", "The Constitution's Speech or Debate Clause (Clause) represents a key pillar in the American separation of powers. The Clause, which derives its form from the language of the English Bill of Rights and has deep roots in the historic struggles between King and Parliament, serves chiefly to protect the independenc e, integrity, and effectiveness of the legislative branch by barring executive or judicial intrusions into the protected sphere of the legislative process. These prohibited intrusions may take various forms, and, judicial interpretation of the Clause's relatively ambiguous language has developed along several related lines of cases.\nFirst and foremost, the Clause has been interpreted as providing Members of Congress (Members) with general immunity from liability for all \"legislative acts\" taken in the course of their official responsibilities. This \"cloak of protection\" shields Members from \"intimidation by the executive\" or a \"hostile judiciary\" by protecting against either the executive or judicial powers from being used to improperly influence or harass legislators through retaliatory litigation. This overarching immunity principle has traditionally been viewed as advancing the primary purpose of the Clause: that of preserving the independence of the legislative branch.\nThe Clause has also been said to serve a good governance role, barring judicial or executive processes that may constitute a \"distraction\" or \"disruption\" to a Member's representative or legislative role. The Court has cited this \"distraction\" principle, and the Clause's broad proscription that Members not be \"questioned in any other place,\" as justification for extending the Clause's immunity protection beyond criminal actions initiated by the executive branch—which clearly implicate the separation of powers—to private civil suits initiated by members of the public—which generally implicate the separation of powers only to a lesser degree.\nEven when absolute immunity is not appropriate—for example, when a charge or claim does not arise directly out of a legislative act but is rather entangled with protected and unprotected acts—the Clause appears to provide Members with complementary evidentiary and testimonial privileges which may be invoked by a Member to protect against the introduction of specific \"legislative act\" evidence. Although not explicitly articulated by the Supreme Court, lower federal courts have generally viewed these component privileges as a means of effectuating the protections afforded by the Clause by barring the introduction of specific documentary evidence of protected legislative acts for use against a Member and protecting a Member from being questioned regarding those same acts.\nSome appellate opinions have recognized that the Clause must also include a broad documentary nondisclosure privilege to protect Members from the perils and burdens of revealing written legislative materials, even when the documents are not used as evidence against the Member. Although this nondisclosure privilege has not been adopted by the Supreme Court, it has been utilized to extend the protections of the Clause to prohibit the compelled disclosure of documents in various circumstances, including during searches conducted as a part of a criminal investigation. Some courts, however, have rejected this reasoning, considering it an undue expansion of the Clause. These courts have instead held that, at least in criminal cases, the Clause prohibits only the evidentiary use of privileged documents, not their mere disclosure to the government for review as part of an investigation.\nThe Clause has also been interpreted to protect Congress's ability to obtain and use information without interference from the judiciary. These cases tend to emphasize the structural aspects of the Clause's role in the separation of powers and, more specifically, the proper relationship between Congress and the courts. For example, courts have generally read the Clause as prohibiting the judicial branch from invalidating or blocking a congressional subpoena, or from interfering with how Congress, and its Members, choose to use information within the legislative sphere.", "In fashioning an evolving interpretation, the Supreme Court has described the Clause as a provision in which the text simply cannot be interpreted literally. \"Deceptively simple\" phrases such as \"shall not be questioned,\" \"Speech or Debate,\" and even \"Senators and Representatives\" have been the subject of significant debate. While there appears to be much about the Clause that is unclear, it is well established that the Clause seeks to secure the independence of legislators by providing Members with immunity from criminal prosecutions or civil suits that stem from acts taken within the legislative sphere. This general immunity principle forms the core of the protections afforded by the Clause.\nThe Supreme Court has consistently and repeatedly suggested the Clause's immunity principle should be interpreted \"broadly\" to effectuate the purpose of maintaining an independent legislature. Once it is determined that the Clause applies to a given action, the resulting protections from liability are \"absolute,\" and the action \"may not be made the basis for a civil or criminal judgment against a Member.\" Unlike some constitutional provisions, the Clause does not require a court to engage in a balancing of interests.\nThe Clause's general immunity principle is perhaps best understood as complemented—and effectuated—by two component privileges that courts have viewed as emanating from the Clause. The evidentiary component of the Clause prohibits evidence of legislative acts from being introduced for use against a Member. Similarly, the testimonial component of the Clause generally may be invoked when a Member is questioned about his legislative acts, either in a trial, before the grand jury, or in a deposition, and, in some courts, to block the compelled disclosure of documents pursuant to a subpoena or a warrant. The Supreme Court has not explicitly framed the protections of the Clause by reference to these two independent component privileges, but has instead used language that implies only their existence. As such, these privileges are neither clearly established nor described, and, especially in regard to the testimonial privilege, relatively unsettled. Nevertheless, in understanding the Speech or Debate Clause, it would seem prudent to describe the Clause as composed of a general immunity principle, complemented by component evidentiary and testimonial privileges.\nAlthough there appears to be some agreement on the existence of the immunity principle and the evidentiary and testimonial privileges, the Supreme Court's relatively ambiguous treatment of the interactions between the different aspects of the Clause has led to significant disagreement among the lower courts. For example, the Court's silence on the scope of the testimonial component of the Clause, combined with the inherent confusion surrounding what constitutes a \"testimonial\" disclosure in other areas of federal law, has led to a deep split among the federal appellate courts as to whether the Clause protects against nonevidentiary disclosures of written legislative materials—for example, disclosures made in response to discovery subpoenas or search warrants —or, to the contrary, whether such disclosures are covered only by the evidentiary component of the Clause, and therefore disclosure of such documents is protected only when used for evidentiary purposes.\nDespite the doctrinal uncertainty, it would appear that the different aspects of the Clause may be best summarized in the following way. First, the immunity principle of the Clause acts as a jurisdictional bar to legal actions seeking to hold a Member liable, either civilly or criminally, for protected legislative acts. When the claim itself does not require proof of a legislative act, but rather arises from nonlegislative or unprotected activity, the Member is not immune, and the criminal or civil action may go forward. Second, during the course of the litigation, the Member may nonetheless assert the evidentiary privilege to block the introduction of specific evidence reflecting protected legislative acts. Third, the testimonial privilege may be invoked in a variety of circumstances in order to protect the Member from compelled testimony, or in some courts from disclosing documents, about those acts.\nViewing the Clause holistically, it becomes apparent that whether a court chooses to address a Speech or Debate case by reference to the general immunity principle, or the evidentiary and testimonial privileges, in some cases the ultimate result may be the same. For example, a Member may avoid liability that may have otherwise attached to his actions either because the court relies on the Clause's immunity principle, or because the party initiating the legal action is unable to prove his case without resort to evidence and testimony that is protected by the evidentiary and testimonial privilege components of the Clause.\nAs a result of the breadth of these protections, the Clause seemingly makes it more difficult for the executive branch to prosecute Members for unlawful acts committed in the context of legislative activity, including those offenses directly related to corruption. This impact on executive enforcement of the law was fully understood at the time the Clause was adopted, and considered a necessary consequence of protecting legislators from undue influence or intimidation.\nThe Clause does not, however, turn Members into \"supercitizens\" by providing them with a blanket exemption from legal liability for any and all illegal acts. Rather, the Clause immunizes or protects only a certain class of actions, known as \"legislative acts,\" that are undertaken as part of the legislative process. Not all actions taken by a Member in the course of his congressional duties are considered legislative acts. In fact, many acts that may otherwise be considered \"official,\" in that they relate to governmental duties, are not covered by the protections of the Clause. The Clause protects only those acts that are an \"integral part of the deliberative and communicative processes\" through which Members engage either in \"the consideration and passage or rejection of proposed legislation\" or \"other matters which the Constitution places within the jurisdiction of either House.\" The legislative act limitation and other aspects of the Clause are discussed in greater detail below.", "A series of decisions from the Supreme Court address the general scope of the Clause and elucidate the distinction between legislative acts, such as voting or debating, which are accorded protection under the Clause and are not subject to \"inquiry,\" and political or other nonlegislative acts, which are not protected by the Clause and therefore may serve as the basis for a legal action. These cases suggest at least three noteworthy themes. First, despite the text, the protections afforded by the Clause extend well beyond \"speeches\" or \"debates\" undertaken by \"Senators and Representatives.\" Second, otherwise legitimate political interactions external to the legislative sphere—for example, disseminating information outside of Congress—are generally not considered protected legislative acts. Third, the Clause does not immunize criminal conduct that is clearly no part of the \"due functioning\" of the legislative process.\nThe Supreme Court adopted a broad interpretation of \"Speech or Debate\" from its first assessment of the Clause in the 1881 case Kilbourn v. Thompson . In Kilbourn , the Court considered whether a civil action could be maintained against Members who were responsible for initiating and approving a contempt resolution ordering an unlawful arrest. The Members defended themselves on the ground that their acts were protected by the Clause. The Court agreed, determining that the Members were not subject to suit for their actions. The Court adopted an interpretation of the Clause that extended protections beyond mere legislative deliberation and argument, holding that \"it would be a narrow view of the constitutional provision to limit it to words spoken in debate.\" Instead, the Court determined that the Clause applied to \"things generally done in a session of the House by one of its members in relation to the business before it,\" including the presentation of reports, the offering of resolutions, and the act of voting. Accordingly, the Court concluded that although the arrest itself may have been unlawful, the Members were immune from suit and could not be \"brought in question\" for their role in approving the resolution \"in a court of justice or in any other place,\" as that act was protected by the Clause.\nThe Court only rarely addressed the Clause after Kilbourn . It was not until the 1966 case United States v. Johnson that the Court embarked on an early attempt to define the protections afforded by the Clause in the context of a criminal prosecution of a Member. In Johnson , a former Member challenged his conviction for conspiracy to defraud the United States that arose from allegations he had agreed to give a speech defending certain banking interests in exchange for payment. In prosecuting the case, the government relied heavily on the former Member's motive for giving the speech, introducing evidence that the speech had been made solely to serve private, rather than public, interests. Focusing on the admission of this protected evidence, the Court overturned the conviction. \"However reprehensible such conduct may be,\" the Court concluded that a criminal prosecution, the \"essence\" of which requires proof that \"the Congressman's conduct was improperly motivated,\" was \"precisely what the Speech or Debate Clause generally forecloses from executive and judicial inquiry.\" The opinion noted that the Clause must be \"read broadly to effectuate its purposes,\" ultimately concluding that the Clause prohibits a prosecution that is \"dependent\" upon the introduction of evidence of \"the legislative acts\" of a Member or \"his motives for performing them.\"\nAlthough overturning the conviction, the Court remanded the case to the district court for further proceedings, holding that the government should not be precluded from bringing a prosecution \"purged of elements offensive to the Speech or Debate clause\" through the elimination of all references to the making of the speech. The Johnson case therefore stands for at least two important propositions. First, the opinion demonstrated that the government is not prohibited from prosecuting conduct that merely relates to legislative duties, but is not itself a legislative act. When a legislative act is not an element of the offense, the government may proceed with its case by effectively \"purg[ing]\" the introduction of evidence offensive to the Clause. Second, though not explicitly articulating such a privilege, the opinion impliedly introduced the evidentiary component of the Clause by holding that even though a case may go forward, the Clause may be invoked by Members to bar admission of specific protected evidence.\nLess than a decade after Johnson , the Supreme Court issued two decisions on the same day in 1972 that established important limitations on the types of actions that are protected by the Clause. In United States v . Brewster , which involved a Member's challenge to his indictment on a bribery charge, the Court reaffirmed Johnson and clarified that \"a Member of Congress may be prosecuted under a criminal statute provided that the Government's case does not rely on legislative acts or the motivation for legislative acts.\" The Court made clear that the Clause does not prohibit inquiry into illegal conduct simply because it is \"related \" to the legislative process or has a \"nexus to legislative functions,\" but rather, the Clause protects only the legislative acts themselves. By adhering to such a limitation, the Court reasoned that the result would be a Clause that was \"broad enough to insure the historic independence of the Legislative Branch, essential to our separation of powers, but narrow enough to guard against the excesses of those who would corrupt the process by corrupting its Members.\"\nBrewster also drew an important distinction between legislative and political acts. The opinion labeled a wide array of constituent services, though \"entirely legitimate,\" as \"political in nature\" rather than legislative. As a result, the Court suggested that \"it has never been seriously contended that these political matters ... have the protection afforded by the Speech or Debate Clause.\"\nTurning to the terms of the bribery indictment, the Court framed the fundamental threshold question for any prosecution of a Member of Congress as: \"whether it is necessary to inquire into how [the Member] spoke, how he debated, how he voted, or anything he did in the chamber or in committee in order to make out a violation of this statute.\" With regard to bribery, the Court reasoned that because acceptance of the bribe is enough to prove a violation of the statute, there was no need for the government to present evidence that the Member had later voted in accordance with the illegal promise, \"[f]or it is taking the bribe, not performance of the illicit compact, that is a criminal act.\" Because \"taking the bribe is, obviously, no part of the legislative function\" and was therefore \"not a legislative act,\" the government would not be required to present any protected legislative evidence in order to \"make out a prima facie case.\" In that sense, the Court distinguished the case before it from Johnson . Whereas the prosecution in Johnson relied heavily on showing the motive for Johnson's floor speech, the prosecution in Brewster need not prove any legislative act, but only that money was accepted in return for a promise.\nFinally, Gravel v. United States exemplifies that communications outside of the legislative process are generally not protected by the Clause. Gravel involved a Speech or Debate challenge to a grand jury investigation into the disclosure of classified documents by a Senator and his aides. After coming into possession of the \"Pentagon Papers\"—a classified Defense Department study addressing U.S. involvement in the Vietnam War—Senator Mike Gravel disclosed portions of the document at a subcommittee hearing and submitted the entire study into the record. The Senator and his staff had also allegedly arranged for the study to be published by a private publisher. A grand jury subsequently issued a subpoena for testimony from one of Senator Gravel's aides and the private publisher. Senator Gravel intervened to quash the subpoenas.\nThe Gravel opinion began by reasoning that \"[b]ecause the claim is that a Member's aide shares the Member's constitutional privilege, we consider first whether and to what extent Senator Gravel himself is exempt from process or inquiry by a grand jury investigating the commission of a crime.\" In addressing the scope of the Senator's protections, the Court implied the existence of the testimonial component of the Clause, noting that the protections of the Clause protect a Member from compelled questioning. The Court did so by stating, without further discussion, that it had \"no doubt\" that \"Senator Gravel may not be made to answer—either in terms of questions or in terms of defending himself from prosecution—for the events that occurred at the subcommittee meeting.\"\nThe Gravel opinion also drew a clear line of demarcation between protected legislative acts and other unprotected acts not \"essential to the deliberations\" of Congress. Although the Senator was protected for his actions at the hearing, the Senator's alleged arrangement for private publication of the Pentagon Papers was not \"part and parcel of the legislative process\" and was therefore not protected by the Clause. In reaching this determination, the Court established a working definition of \"legislative act\" that remains applicable today, holding that a legislative act is an:\nintegral part of the deliberative and communicative processes by which Members participate in committee and House proceedings with respect to the consideration and passage or rejection of proposed legislation or with respect to other matters which the Constitution places within the jurisdiction of either House.\nPrivate publication, as opposed to publication in the record, was \"in no way essential to the deliberations of the Senate.\" Thus, the Clause provided no immunity from testifying before the grand jury relating to that arrangement.", "Although the text of the Speech or Debate Clause refers only to \"Senators and Representatives,\" and therefore clearly applies to actions by any Member of Congress, it is well established that protections of the Clause generally apply equally to congressional staff. In Gravel , the Court held that the Clause protects an aide's action when the Clause would have protected the same action if it were done by a Member. An aide, the Court reasoned, should be viewed as the \"alter ego\" of the Member he serves. The Gravel Court recognized that the Member and his aide must be \"treated as one,\" noting:\n[I]t is literally impossible, in view of the complexities of the modern legislative process, with Congress almost constantly in session and matters of legislative concern constantly proliferating, for Members of Congress to perform their legislative tasks without the help of aides and assistants; that the day-to-day work of such aides is so critical to the Members' performance that they must be treated as the latter's alter egos; and that if they are not so recognized, the central role of the Speech or Debate Clause—to prevent intimidation of legislators by the Executive and accountability before a possibly hostile judiciary—will inevitably be diminished and frustrated.\nAt issue in Gravel were the actions of a Member's personal staff. Other decisions of the Court have extended the protections of the Clause to committee staff, including those in the position of chief counsel, clerk, staff director, and investigator.\nHowever, it should be noted that any protections under the Clause that are enjoyed by congressional staff flow from the Member. They do not inhere personally to the individual. As a result, an \"aide's claim of privilege can be repudiated and thus waived by the [Member].\"", "It is apparent that the key determination in Speech or Debate Clause cases is whether the conduct directly in question, or on which evidence or testimony is sought, constitutes a legislative act. If legislative, the Member is exempt from criminal or civil liability that may otherwise have attached to that act, and evidence of the act may not be introduced or testimony by the Member compelled. As the Court has repeatedly stated, Members are \"immune from liability for their actions within the 'legislative sphere,' even though their conduct, if performed in other than legislative contexts, would in itself be unconstitutional or otherwise contrary to criminal or civil statutes.\" If the underlying conduct is not legislative, however, the prosecution or civil claim is not barred by the Clause, and evidence of the act is not privileged.\nExamining judicial precedent regarding acts that are \"legislative,\" it would appear that Members enjoy protection under the Clause when:\nspeaking or acting on the House or Senate floor; introducing and voting on bills and resolutions; preparing and submitting committee reports; speaking or acting at committee meetings and hearings; conducting official investigations and issuing subpoenas; and engaging in fact-finding and information-gathering for legislative purposes.\nConversely, actions that have not been viewed as \"integral\" to the legislative process and, therefore, have not been interpreted to be protected legislative acts include:\nspeaking outside of Congress; writing newsletters and issuing press releases; privately publishing a book; distributing official committee reports outside the legislative sphere; engaging in political activities; engaging in constituent services, including acting as a conduit between a constituent and the executive branch; promising to perform a future legislative act; and accepting a bribe.\nThe general legal guidance provided by the Court in Gravel and other cases does not clearly categorize every type of action in which Members may regularly engage. As a result, determining whether novel conduct, not analogous to past precedent, should be viewed as a legislative act may sometimes be difficult.\nOne federal appellate court, however, has adopted a two-step analysis for identifying whether certain conduct is protected by the Clause. In United States v. Menendez , Senator Robert Menendez challenged, on Speech or Debate grounds, an indictment alleging that he solicited and accepted gifts in exchange for his efforts to influence executive branch action for the benefit of a friend. In rejecting the Senator's claim, the U.S. Court of Appeals for the Third Circuit (Third Circuit) laid out its analytical framework, noting that first \"we look to the form of the act to determine whether it is inherently legislative or non-legislative.\" Some acts, the court reasoned, are \"so clearly legislative\" that \"no further examination has to be made.\" These \"manifestly legislative acts\" are entitled to absolute protection under the Clause, even if undertaken for an \"unworthy purpose.\" Other acts, the court suggested, are just as clearly nonlegislative, and receive no protection under the Clause. If an act is either clearly legislative or clearly nonlegislative, the Third Circuit has suggested that a court should, at step one, give effect to that clear categorization. If, however, an act does not fall neatly into either category, the court may proceed to the second step of the inquiry where it may consider \"the content, purpose, and motive of the act to assess its legislative or non-legislative character.\" These so-called \"ambiguously legislative\" acts, the court reasoned, \"will be protected or unprotected based on their particular circumstances.\" In this instance, the court determined that the alleged acts were \"outside the constitutional safe harbor\" because the Senator was \"essentially lobbying on behalf of a particular party....\"\nThis approach may be subject to criticism in light of the Supreme Court's repeated warning that inquiries into the motive or purpose underlying actions of Members are generally not permitted by the Clause. The Court has expressly held that \"in determining the legitimacy of a congressional act we do not look to the motives alleged to have prompted it.\" Other courts have rejected an analytical approach that would empower a court to look beneath an act that appears legislative. For example, the U.S. Court of Appeals for the Fourth Circuit (Fourth Circuit) has held that the Clause not only protects \"acts which are manifestly legislative,\" but \"also forbids inquiry into acts which are purportedly or apparently legislative, even to determine if they are legislative in fact.\"\nWhile the Menendez opinion acknowledged Supreme Court precedent, it nonetheless determined that \"only after we conclude that that an act is in fact legislative must we refrain from inquiring into a legislator's purpose or motive.\" Prior to such a determination, the Third Circuit suggested, a court should—and at times must—make such an inquiry to prevent nonlegislative acts from being \"misrepresented\" as legislative acts.", "A closer look at judicial treatment of Member interactions with the executive branch reveals some of the difficulty in determining whether certain conduct qualifies as a legislative act. While interactions with the executive branch may be viewed as \"official\" and \"legitimate,\" they are not always \"legislative.\" It seems from Brewster and Johnson , for example, that communicating with an executive branch agency on behalf of a constituent is not a protected legislative act. Interactions with the executive branch intended to \"influence\" executive policy for nonlegislative reasons are similarly not legislative acts. The Gravel opinion further narrowed the class of interactions with the executive branch that could be deemed legislative, holding that:\nMembers of Congress are constantly in touch with the Executive Branch of the Government and with administrative agencies—they may cajole, and exhort with respect to the administration of a federal statute—but such conduct, though generally done, is not protected legislative activity.\nThis passage suggests that even communications and interactions with the executive branch pertaining to an agency's administration and execution of a federal statute, though wholly unrelated to constituent services, are similarly unprotected.\nYet, when the interaction is connected to the conduct of \"oversight,\" the action may be more likely to be viewed as legislative and subject to the protections of the Clause. For example, in Eastland v. United States Serviceman's Fund , the Supreme Court held that \"the power to investigate ... plainly falls\" within the definition of legislative. Thus, interactions with the executive branch taken pursuant to an authorized congressional investigation, including those actions taken at hearings, in issuing subpoenas, or pursuing contempt, have all been interpreted to be protected legislative acts.\nLess formal oversight contacts with the executive branch (for example, actions taken by individual Members not pursuant to an official committee investigation) have not always received protections under the Clause. In Menendez , the Third Circuit held that a claim of conducting \"'oversight' does not automatically result in Speech or Debate protections.\" Instead, the court reasoned that \"oversight activities exist along a spectrum\" in which some informal actions are unprotected, but other \"informal attempts to influence the Executive Branch on policy, for actual legislative purposes, may qualify as 'true legislative oversight' and merit Speech or Debate immunity.\" Lobbying on behalf of a particular party, the court held, was an action \"outside the constitutional safe harbor\" created by the Clause.\nTo the contrary, other courts have held that \"the applicability of the Speech or Debate Clause's protections does not hinge on the formality of the investigation.\" \"The controlling principle,\" one court has asserted, is \"whether information is acquired in connection with or in aid of an activity that qualifies as 'legislative' in nature.\" Consistent with this reasoning, federal courts have found \"fact finding,\" \"field investigations,\" and \"information gathering\" by individual Members to be protected legislative acts.\nOne way to harmonize these \"informal contacts\" cases is perhaps that when a Member is seeking to obtain information from the executive branch, the act is \"legislative,\" but when the Member is attempting to \"influence\" executive branch policy, the act is not legislative, at least generally. It would appear difficult, however, to draw a distinction between \"cajoling\" executive branch officials on the \"administration of a federal statute,\" which is unprotected, and \"true legislative oversight.\" Oversight often serves many purposes, including a desire to influence executive branch operations. For example, a committee may solely be seeking information, or it may be conducting an investigation for the purposes of pushing the agency to implement the law in the manner that Congress desires. Nevertheless, there remains significant uncertainty concerning what types of Member communications with the executive branch are protected by the Clause.", "The Speech or Debate Clause plays a key role in civil actions challenging Members' employment and personnel actions. These cases generally arise under the Congressional Accountability Act (CAA), which made several civil rights, labor and employment, and workplace safety laws applicable to congressional offices. After seeking confidential counseling and mediation, the CAA expressly authorizes \"covered employees\" to bring a civil action for violations of the incorporated laws, not against an individual Member, but against the \"employing office.\" The CAA also prohibits any employing office from retaliating against an employee for alleging a CAA violation. Settlements and judgments reached under a CAA authorized action are paid out of funds appropriated to the legislative branch. The law, it appears, was \"intended to subject the legislative branch to liability for violation of federal employment laws, not to subject its [M]embers personally to such liability.\" Moreover, the law expressly provides that the authorization to bring a civil suit under the CAA \"shall not constitute a waiver ... of the privileges of any Senator or Member of the House of Representatives under [the Clause].\" The Supreme Court has held that \"[t]his provision demonstrates that Congress did not intend the Act to be interpreted to permit suits that would otherwise be prohibited under the Speech or Debate Clause.\"\nThe judicial framework for analyzing the Clause's application to Member employment and personnel decisions has evolved over time. Prior to enactment of the CAA, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) had determined that the Clause immunized Members from claims challenging personnel decisions concerning most of their staff. In Browning v. Clerk of the United States House of Representatives , the D.C. Circuit broadly held that \"personnel decisions are an integral part of the legislative process to the same extent that the affected employee's duties are an integral part of the legislative process.\" The court, therefore, held that the Clause protected personnel actions taken by Members that impacted any employee whose \"duties were directly related to the due functioning of the legislative process.\" Thus, the Clause's application depended on the functions and duties of the impacted employee.\nThe Browning holding, however, was subsequently called into question by two later decisions outside the Speech or Debate Clause context that addressed the \"administrative\" nature of personnel decisions. First, in Forrester v . White , the Supreme Court held that judicial immunity for \"judicial acts\" did not extend to an employment decision, which the court categorized as an administrative act rather than a judicial act. Second, in Gross v . Winter , the D.C. Circuit extended that reasoning to the legislative sphere. In an opinion addressing common law legislative immunity enjoyed by members of the D.C. City Council, rather than Speech or Debate Clause protections enjoyed by Members, the court relied on Forrester to hold that the \"functions ... legislators exercise in making personnel decisions ... are administrative, not [] legislative.\" These cases arguably implied that a Member's personnel decision should be viewed as nonlegislative, and, therefore, not protected by the Clause.\nForrester and Gross suggest that the initial shift away from Browning 's reasoning predated the enactment of the CAA in 1995. Moreover, the courts have explained that the CAA \"does nothing to a Member's Speech or Debate Clause immunity.\" Therefore, it does not appear that the CAA compelled the courts to alter their approach to these types of claims. Yet, after enactment of the CAA, the courts continued to diverge from the course charted by Browning , ultimately leading to a rejection of that decision's determination that the Clause generally acts as a bar to employment-related claims. In the 2004 decision of Bastien v. Office of Campbell , the first case addressing how the Clause applies to the CAA, the U.S. Court of Appeals for the Tenth Circuit (Tenth Circuit) \"hesitate[d] to embrace\" the D.C. Circuit's reasoning in Browning , finding instead that \"a personnel decision is not a 'legislative act,' ... and is therefore not entitled to immunity.\" The Clause provided protections in CAA-related claims, according to the court, only to the extent that other \"legislative acts must be proved to establish the claim ...\"\nTwo years later, the D.C. Circuit reconsidered Browning in Fields v. Office of Johnson . That consolidated case involved CAA claims for racial, gender, and disability discrimination and retaliation brought by a pair of House and Senate staffers. There was no clear majority opinion in Fields , but the en banc court was unanimous in deciding both that the Clause does not require automatic dismissal of CAA claims and that the Browning framework was no longer consistent with Supreme Court precedent and should be abandoned. The plurality opinion explicitly rejected Browning 's test for determining when the Clause protects a Member's personnel decisions, holding that regardless of the role of the given employee, \"many personnel decisions\" lack any \"nexus\" to legislative acts and are, therefore, not protected by the Clause.\nThe Fields plurality, which has been relied upon in subsequent opinions, articulated a new framework for evaluating CAA claims that highlights the distinction between the Clause's general immunity principle and the component evidentiary and testimonial privileges. The plurality determined that the general immunity principle did not \"bar\" the suit because the personnel actions in question were not themselves legislative acts. However, the plurality reasoned that \"when the Clause does not preclude suit altogether, it still 'protect[s] Members from inquiry into legislative acts or the motivation for actual performance of legislative acts'\" through the component evidentiary and testimonial privileges. Thus, although generally not barring a CAA suit altogether, the Clause may \"hinder\" the suit by \"preclud[ing] some relevant evidence.\" This was especially so in a claim for discrimination that \"rests not on the fact that action was taken ... but on the reason that action was taken,\" which would likely require the plaintiff to disprove the Member's proffered motivation for taking the challenged personnel action.\nThe Fields plurality opinion was relied upon in Howard v. Office of the Chief Admin istrative Officer of the United States House of Representatives . That case involved a CAA claim for racial discrimination and retaliation brought by a former House employee. As in the Fields plurality, the court determined that the claim itself was not barred, as the personnel action in question was not a \"legislative act.\" But the court highlighted that \"in many employment discrimination cases, proof of 'pretext' will be crucial to the success of the claimant's case,\" and those allegations of pretext, the court reasoned, must be proven \"using evidence that does not implicate protected legislative matters.\" In some cases, the court warned, a plaintiff may not be able to meet the required burden of proof because the Clause bars him \"from inquiring into legislative motives ... or conduct part of or integral to the legislative process....\" In the instant case, the court remanded to the district court with directions that the plaintiff's claims be allowed to proceed, under the caveat that \"it remain[ed] to be seen\" whether, due to the \"strictures\" of the Clause, the plaintiff would be able to produce sufficient evidence to prove her claim. Indeed, it was ultimately determined that the employee failed to produce sufficient evidence showing the asserted reason for her termination was pretextual.\nThe CAA also authorizes congressional employees to bring sexual harassment claims for violations of Title VII of the Civil Rights Act of 1964, although such claims appear to have only rarely been evaluated by federal courts. In Scott v. Office of Alexander , the former scheduler for a Member brought a CAA claim that included counts alleging sexual harassment and retaliation for reporting that harassment in the form of a demotion. The majority of the district court decision focused on the plaintiff's retaliation claim. Applying F ields , the court determined first that the demotion itself was not a legislative act, and thus the claim was not barred by the Clause's general immunity principle.\nHowever, the court also held that a retaliation claim \"operates in the same way\" as the discrimination claims brought in Fields and Howard . Thus, the plaintiff would be required to rebut the Member's assertion of nonretaliatory reasons for her demotion in order to show that it was pretextual. Through an affidavit, the Member had asserted that Scott was demoted because of scheduling errors that caused him to miss votes and committee hearings. The court concluded that:\nAlthough Plaintiff argues that her \"case would not require impermissibly questioning anything that Defendant may have done during the course of an actual vote or hearing,\" whether the Congressman missed or attended an actual vote or hearing, and the reasons why he may have attended or missed an actual vote or hearing, are inquiries that impermissibly relate to the legislative process. Accordingly, the Court finds that Defendant has asserted, through the Congressman's affidavit, legitimate, non-retaliatory reasons for Plaintiff's demotion that are protected from inquiry by the Speech or Debate Clause.\nAs a result, the court held that \"the evidentiary privilege of the Clause prevents Plaintiff from refuting the Member's stated reasons for her demotion.\" Because the plaintiff had not presented any evidence \"unrelated to the Congressman's stated reasons for Plaintiff's demotion that would not require an inquiry into [] legislative acts,\" the court dismissed the retaliation claim.\nWith respect to the sexual harassment claim, the court held that the defendant's argument that the claim was barred by the Clause was not properly before the court. Nevertheless, the court provided some insight into how the Clause may apply to evidence supporting alleged sexual harassment, as opposed to alleged retaliation. Whereas the plaintiff was \"precluded from seeking discovery or otherwise inquiring about the Congressman's reasons for removing Plaintiff as Scheduler,\" the court suggested that \"[t]he proper focus of the remaining discovery ... appears to be the conduct that other individuals may have observed at times relevant to the Complaint, and what Plaintiff may have told others about such conduct.\" That evidence, it would appear, would not be protected by the Clause's component privileges.\nIn sum, the Clause's general immunity principle does not typically act as an absolute bar to employment-related claims brought under the CAA. However, it would appear that there may be cases in which a CAA claim fails as a result of the application of the Clause's evidentiary and testimonial privileges, which may effectively block a plaintiff from presenting evidence of related legislative acts necessary to support the claim.", "Although the precise scope of the protections afforded by the Clause have not been clearly articulated by the Supreme Court, there appears to be some agreement among the lower courts that the Clause provides immunity from direct liability for legislative acts; prohibits the use of legislative-act evidence in the course of litigation; and protects a Member from being compelled to respond to questioning regarding his legislative acts. There is stark disagreement, however, as to whether the Clause encompasses a general documentary \"non-disclosure privilege\" that applies unrelated to whether such documents are introduced into evidence. When accepted, this privilege appears to be included within the testimonial component of the Clause, and may apply in a variety of situations, including protecting Members from compelled compliance with an administrative or civil discovery subpoena for legislative-act documents, or from disclosures reflecting legislative acts that occur during a search executed as part of a criminal investigation.\nThe D.C. Circuit has established the documentary nondisclosure privilege. In a series of opinions, the circuit court determined that the Clause bars any compelled disclosure—not just the evidentiary use—of written materials that fall \"within the sphere of legitimate legislative activity.\" According to the D.C. Circuit, this privilege is broad and \"absolute,\" and applies with equal \"vigor\" as the other aspects of the Clause.\nThe U.S. Court of Appeals for the Ninth Circuit (Ninth Circuit) and the Third Circuit have rejected this documentary nondisclosure privilege, considering it an undue expansion of the Clause. Instead, these courts have held, at least in criminal cases, that the Clause prohibits only the evidentiary use of privileged documents, not their mere disclosure to the government for review as part of an investigation. The disagreement has not been addressed by the Supreme Court.\nThe D.C. Circuit position is perhaps best exemplified by two cases: Brown & Williamson Tobacco Corporation v . Williams and United States v. Rayburn House Office Building .\nBrown & Williamson arose when a former employee of a law firm disclosed to a congressional committee stolen documents that were obtained while the firm was representing Brown & Williamson. The law firm brought an action against the former employee in state court, and during that proceeding, the court issued subpoenas to two Members of the committee requiring the return of the stolen documents. The case was removed to federal court, where the Members sought to quash the subpoenas on Speech or Debate grounds.\nThe court agreed with the Members, blocking the subpoenas and extending the Clause to include a general nondisclosure privilege. In doing so, the court rejected three conclusions that had been reached by the Third Circuit in an earlier case. First, the court rebuffed the idea that a Member must be named as a party to the suit in order for litigation to \"distract them from their legislative work.\" \"Discovery procedures\" in any civil case, the court reasoned, \"can prove just as intrusive\" as being a party to a case. The court similarly disagreed with the assertion that the testimonial component of the Clause applies only when Members or their aides are \"personally questioned,\" suggesting instead that \"documentary evidence can certainly be as revealing as oral communications.\" Finally, the court dismissed the assertion that when applied to documents, the Clause's protection \"is one of nonevidentiary use, not of nondisclosure.\" Instead, noting the antidistraction purpose of the Clause, the court held that \"the nature of the use to which documents will be put ... is immaterial if the touchstone is interference with legislative activities.\" The court concluded that \"a party is no more entitled to compel congressional testimony—or production of documents—than it is to sue a congressman.\"\nThe D.C. Circuit later extended the nondisclosure privilege to scenarios in which the government executes a search warrant as part of a criminal investigation of a Member. In United States v. Rayburn House Office Building , a Member sought the return of documents seized by the Federal Bureau of Investigation (FBI) during a search of the Member's office, arguing the search—which was pursuant to a warrant for nonlegislative, unprotected documents—was executed in a way that violated the Clause. In order to distinguish between protected and unprotected documents, the warrant permitted FBI agents to review \"all of the papers in the Congressman's office.\"\nThe D.C. Circuit held that the search violated the Clause because the Executive's procedures \"denied the Congressman any opportunity to identify and assert the privilege with respect to legislative materials before their compelled disclosure to Executive agents.\" The court noted that despite the limited scope of the warrant, the FBI's review of the Member's papers to determine which were responsive \"must have resulted in the disclosure of legislative materials to agents of the executive.\" That compelled disclosure was inconsistent with the protections of the Clause. In reaching this conclusion, the court reaffirmed the nondisclosure privilege articulated in Brown & Williamson , and then extended it to the criminal context, concluding that \"there is no reason to believe that the bar does not apply in the criminal as well as the civil context.\" The court also reaffirmed its view of the absolute nature of the nondisclosure privilege, noting that the \"non-disclosure privilege of written materials ... is [] absolute, and thus admits of no balancing.\"\nThe court carefully distinguished between the lawfulness of searching a congressional office pursuant to a search warrant—which the court held was clearly permissible—and the lawfulness of the way the search was executed. The court declined, however, to expressly delineate acceptable procedures that could avoid future violations, noting only that there appears to be \"no reason why the Congressman's privilege under the Speech or Debate Clause cannot be asserted at the outset of a search in a manner that also protects the interests of the Executive in law enforcement.\"\nThe D.C. Circuit's legal reasoning in Rayburn has been rejected by both the Ninth and Third Circuits. In United States v. Renzi , the Ninth Circuit held that the Clause does not prohibit the compelled disclosure of legislative documents to the government in the course of executing a warrant in a criminal investigation, at least when the underlying criminal action is not itself barred by the immunity prong of the Clause. Renzi involved a Speech or Debate Clause challenge brought by a former Member to portions of a 48-count indictment that included charges that he agreed to provide certain legislative favors in exchange for personal benefits. Specifically, the Member relied on the nondisclosure privilege articulated in Rayburn to argue, in part, that the government's unlawful review of privileged documents allowed it to obtain evidence that was used against him. The Ninth Circuit rebuffed Renzi's argument, as well as the reasoning in Rayburn , instead finding that the Clause does not encompass a documentary nondisclosure privilege.\nAfter noting that the Supreme Court has not recognized the existence of a general nondisclosure privilege, the Renzi court laid out the three principal reasons that led it to disagree with the D.C. Circuit's reasoning. First, the court objected to the D.C. Circuit's reliance on the notion that \"distraction\" from a Member's legislative duty, on its own, can serve \"as a touchstone for application of the Clause's testimonial privilege.\" Instead, the court reasoned that because \"legislative distraction is not the primary ill the Clause seeks to cure,\" that rationale must be \"anchored\" to a barred action—for example, an investigation into a protected act—before it can preclude inquiry. In cases where the underlying action is not precluded, the court stated that \"other legitimate interests exist\" and must be taken into account, most notably \"the ability of the executive to adequately investigate and prosecute corrupt legislators for non-protected activity.\"\nSecond, the circuit court indicated that previous decisions by the Supreme Court have suggested that the executive branch may review legislative materials as part of an investigation. For example, in United States v. Helstoski , the Supreme Court reasoned that the executive branch could redact \"legislative\" aspects of certain documents so that the \"remainder of the evidence would be admissible.\" From this language, the circuit court noted that:\nBecause the Executive would be hard pressed to redact a document it was constitutionally precluded from obtaining or reviewing, we see no tenable explanation for this caveat except that the Clause does not blindly preclude disclosure and review by the Executive of documentary \"legislative act\" evidence.\nThird, the court determined that any interpretation of the Clause that permitted the courts, but not the executive branch, to review protected legislative documents would be inconsistent with the separation-of-powers rationale that undergirds the Clause. The Clause, the court noted, is a \"creature born of separation of powers\" and thus must apply \"in equal scope and with equal strength to both the Executive and the Judiciary.\" The court specifically criticized the D.C. Circuit's opinion in Rayburn on the grounds that it prohibited \"'any executive branch exposure to records of legislative acts' ... while noting that the Judiciary could review evidence claimed to be privileged.\" \"Such a distinction,\" the court stated, \"cannot exist.\"\nThe precise holding of Renzi appears to be that the Clause does not prohibit the government from reviewing protected legislative documents as part of the execution of a warrant connected to an investigation into nonlegislative acts. However, the opinion suggests that there may be times when the testimonial component of the Clause would create a nondisclosure privilege in response to a subpoena for documents. Citing to the concurrence in Rayburn , the Ninth Circuit indicated that execution of a warrant has no testimonial aspects since the Member is not required to \"respond\" in any way. However, the court reasoned that \"it is entirely true that sometimes the very disclosure of documentary evidence in response to a subpoena duces tecum may have some testimonial import.\" This language would appear to suggest that the Ninth Circuit has not foreclosed the idea of the existence of some form of documentary nondisclosure privilege—for instance, one more intimately connected to the testimonial privilege component—that may apply in situations where a subpoena is issued for legislative documents. The central focus for the court appears to have been whether the disclosure is \"testimonial,\" and therefore more directly implicating the \"question[ing]\" prohibited by the Clause.\nThe Third Circuit similarly rejected the existence of a documentary nondisclosure privilege during criminal investigations in In re Fattah . There, a Member challenged a warrant, served on Google, authorizing the government to search his email on the grounds that such a search was barred by the Clause. Specifically, the Member asserted that the privilege created by the Clause was \"one of non-disclosure.\" The court rejected this argument, holding that \"it cannot be ... that the privilege prohibits disclosure of evidentiary records to the Government during the course of an investigation.\" The court rested its decision primarily on the effect such a broad privilege would have on criminal prosecutions, noting that a nondisclosure privilege during criminal investigations would \"shelter\" Members from criminal responsibility and \"eradicate the integrity of the legislative process\" by \"unduly amplify[ing] the protections\" of the Clause. The court ultimately refused to extend the testimonial component of the Clause to documentary disclosures, concluding that:\n... while the Speech or Debate Clause prohibits hostile questioning regarding legislative acts in the form of testimony to a jury, it does not prohibit disclosure of Speech or Debate Clause privileged documents to the Government. Instead, as we have held before, it merely prohibits the evidentiary submission and use of those documents.\nHow, and whether, the Supreme Court resolves this ongoing disagreement over the existence of a documentary nondisclosure privilege could have a significant impact on the protections afforded to Members by the Clause. For example, if the Court were to adopt the position of the Third and Ninth Circuits, that ruling would directly limit a Member's ability to invoke the Clause as a shield against the disclosure of documents to the executive branch during a criminal investigation. More generally, however, the disagreement between the D.C. Circuit and the Third and Ninth Circuits is one relating to the fundamental purpose of the Clause. The opinions in Renzi and Fattah appear to have adopted a legal reasoning that minimizes the role of the \"distraction\" rationale in defining the scope of the Clause. Were the Supreme Court to embrace that reasoning, it could potentially lead to a narrowing of the Clause's protections, especially in scenarios in which information is sought from a Member in a proceeding to which he is not a party.", "A final line of cases relates to Speech or Debate Clause protections for the acquisition and use of information by Congress. These cases typically arise from lawsuits in which a party asks a court to invalidate or block a congressional subpoena, or to direct Congress or its Members in how they may use information that is within their possession. Generally, a court will not interfere with lawful efforts by Congress to exercise its subpoena power, nor will a court act to limit the ability of Members to use or distribute information within the legislative sphere. In some sense, these cases tend to emphasize the structural and institutional aspects of the Clause's role in the separation of powers.\nIn Eastland v. United States Serviceman's Fund , the Supreme Court concluded that the Clause acts as a significant barrier to judicial interference in Congress's exercise of its subpoena power. In this case, a private nonprofit organization filed suit against the Chairman of a Senate subcommittee asking the Court to enjoin a congressional subpoena issued to a bank for the nonprofit's account information. The subpoena was issued as part of an investigation into alleged \"subversive\" activities harmful to the U.S. military conducted by the organization. The Court held that because the \"power to investigate and to do so through compulsory process plainly\" constitutes an \"indispensable ingredient of lawmaking,\" the Clause made the subpoena \"immune from judicial interference.\" Eastland is generally cited for the proposition that the Clause prohibits courts from entertaining preenforcement challenges to congressional subpoenas. As a result, the lawfulness of a subpoena usually may not be challenged until Congress seeks to enforce the subpoena through either a civil action or contempt of Congress.\nWhile it is generally true that courts will not interfere in valid congressional attempts to obtain information, especially through the exercise of the subpoena power, the concurrence in Eastland and a subsequent appellate court decision suggests that the restraint exercised by the courts in deference to the separation of powers is not absolute. Justice Marshall's concurrence in Eastland clarified that the Clause \"does not entirely immunize a congressional subpoena from challenge.\" Rather, according to Justice Marshall, the Clause requires only that a Member \"may not be called upon to defend a subpoena against constitutional objection.\" Thus, Justice Marshall implied that if a challenge to the legitimacy of a subpoena is directed not at Congress or its Members, it may be permitted to proceed.\nSuch a claim arose, however, in the case of United States v. AT&T . In that case, a congressional subcommittee subpoena was issued to AT&T for all letters sent to the company by the Department of Justice (DOJ) that had identified certain phone lines the DOJ wished to monitor. DOJ filed suit, seeking to enjoin AT&T from complying with the subpoena, citing national security concerns. The subcommittee Chairman intervened in the case, asserting that judicial interference in the subcommittee's investigation was barred by the Clause. After the court's attempts to initiate a settlement between the parties failed, the D.C. Circuit ultimately rejected the Chairman's argument, noting generally that the Clause \"was not intended to immunize congressional investigatory actions from judicial review.\" Instead, the court concluded, the Clause \"is personal to members of Congress\" such that when Members or their aides are not \"harassed by personal suit against them, the Clause cannot be invoked to immunize the congressional subpoena from judicial scrutiny.\" The court went on to establish an exception to the general prohibition on preenforcement interference with congressional subpoenas. When a party is \"not in a position to assert its claim of constitutional right by refusing to comply with a subpoena,\" because the subpoena was issued to a neutral third party, the Clause \"does not bar the challenge so long as members of the Subcommittee are not, themselves, made defendants in a suit to enjoin implementation of the subpoena.\"\nOnce information is in the possession of Congress, courts generally will not curtail the ability of Members to use or distribute that information within the legislative sphere. For example, in Doe v. McMillan , a case dealing with the inclusion of specific students' names in a committee report on the D.C. public schools, the Supreme Court noted that \"[a]lthough we might disagree with the Committee as to whether it was necessary, or even remotely useful, to include the names of individual children in the ... Committee Report, we have no authority to oversee the judgment of the Committee in this respect ...\"\nThe D.C. Circuit has also issued a series of opinions protecting Congress's authority to freely and independently assess and use information within its possession, no matter how it was obtained. In Hearst v. Black , the court concluded that it was not within its authority to tell a Senate committee that it was barred from \"keeping\" or \"making any use of\" certain unlawfully obtained documents. Similarly, in McSurely v. McClellan , a case involving the receipt of documents by a committee that were obtained pursuant to an unlawful search by a congressional investigator, the court noted that \"the law is clear that even though material comes to a legislative committee by means that are unlawful or otherwise subject to judicial inquiry the subsequent use of the documents by the committee staff in the course of official business is privileged legislative activity.\" Finally, in Brown & Williamson , the court suggested that the Clause supplied Congress with the \"privilege to use materials in its possession without judicial interference.\"\nThese principles were applied recently in the case of Senate Permanent Subcommittee on Investigations v. Ferrer , in which a Senate subcommittee initiated a civil action to enforce a subpoena issued to the Chief Executive Officer (CEO) of an online advertising website for documents relating to sex trafficking. As part of that proceeding, the CEO asked the D.C. Circuit to order that the subcommittee destroy or return certain documents he had produced in response to the subpoena. The court refused to comply with that request, citing to the aforementioned cases, and reasoning that \"[t]o circumscribe the committee's use of material in its physical possession would ... 'destroy[]' the independence of the Legislature and 'invade[]' the constitutional separation of powers.\" The court ultimately held that \"the separation of powers, including the Speech or Debate Clause, bars this court from ordering a congressional committee to return, destroy, or refrain from publishing the subpoenaed documents.\"", "The Speech or Debate Clause is perhaps the greatest constitutional bulwark against inappropriate executive or judicial intrusions into both the functioning of Congress as an institution and the representative role of individual Members. The Clause seeks to ensure an independent legislature by providing Members with immunity from liability for legislative acts in both criminal and civil cases. That immunity appears to be complemented by both an evidentiary and a testimonial privilege that protects against the compelled disclosure of information reflecting those acts. However, the scope of those privileges, especially with regard to the disclosure of documents for nonevidentiary purposes, is subject to debate among the federal courts. The issue would appear to be ripe for Supreme Court review." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 2, 1, 1, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "h0_title h1_title", "h0_full h1_full", "", "", "", "", "", "", "h0_full" ] }

{ "question": [ "What does the Speech or Debate Clause state?", "What is this Speech or Debate Clause's main purpose?", "How has the clause been interpreted differently?", "How has the clause been interpreted?", "How does the clause provide Members criminal and civil immunity?", "How does the immunity protect Members?", "How does the clause provide other privileges?", "How do the lower courts view these privileges?" ], "summary": [ "The Speech or Debate Clause (Clause) of the U.S. Constitution states that \"[F]or any Speech or Debate in either House,\" Members of Congress (Members) \"shall not be questioned in any other Place.\"", "The Clause serves various purposes: principally to protect the independence and integrity of the legislative branch by protecting against executive or judicial intrusions into the protected legislative sphere, but also to bar judicial or executive processes that may constitute a \"distraction\" or \"disruption\" to a Member's representative or legislative role.", "Despite the literal text, protected acts under the Clause extend beyond \"speeches\" or \"debates\" undertaken by Members of Congress, and have also been interpreted to include all \"legislative acts\" undertaken by Members or their aides.", "Judicial interpretations of the Clause have developed along several strains.", "First and foremost, the Clause has been interpreted as providing Members with general criminal and civil immunity for all \"legislative acts\" taken in the course of their official responsibilities.", "This immunity principle protects Members from \"intimidation by the executive\" or a \"hostile judiciary\" by prohibiting both the executive and judicial powers from being used to improperly influence or harass legislators.", "Second, the Clause appears to provide complementary evidentiary and testimonial privileges.", "Although not explicitly articulated by the Supreme Court, lower federal courts have generally viewed these component privileges as a means of effectuating the purposes of the Clause by barring evidence of protected legislative acts from being used against a Member, and protecting a Member from compelled questioning about such acts." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 1, -1, 3 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 1 ] }

{ "title": [ "Background", "FSM and RMI Government Revenues", "Compact of Free Association (1986–2003)", "Amended Compacts of Free Association (2004– Present)", "Compact Grants and Trust Fund Contributions", "Compact Trust Fund Management and Implementation", "Compact Trust Fund Structure", "Compact Accountability, Management Structures, and Reporting", "Programs and Services Provided in Compact-Related Agreements", "Programs Authorized by U.S. Legislation", "The FSM and RMI Continue to Rely on U.S. Grants and Programs That End in 2023", "U.S. Compact Grants and Other Grants Continue to Provide Substantial Support to the FSM and RMI Budgets", "U.S. Grants Scheduled to End in 2023 Support About One- Third of Total FSM Government Expenditures", "End of the Programs and Services Agreements Would Also Affect FSM and RMI Budgets", "Compact Trust Funds Face Continuing Risks That Trust Fund Committees Have Not Yet Addressed", "Previous Studies of Compact Trust Funds Found Increasing Risks to Disbursements and Sustainability under Current Rules", "Updated Projections Show Continuing Risks to Compact Trust Fund Disbursements and Sustainability", "FSM Compact Trust Fund Projections", "RMI Compact Trust Fund Projections", "Reducing Disbursements, Making Additional Contributions, and Changing Disbursement Policies Would Each Affect the Outlook of the Compact Trust Funds", "Compact Trust Fund Committees Have Not Addressed Issues Related to Distribution Policies, Fiscal Procedures, and Disbursement Timing", "Trust Fund Committees Have Not Developed Distribution Policies Required by the Compact Trust Fund Agreements", "Trust Fund Committees Have Not Established Fiscal Procedures Required by Compact Trust Fund Agreements", "Trust Fund Committees Have Not Addressed Issues Related to Disbursement Timing", "FSM and RMI Decrement Plans Were Not Implemented Because of Increased Revenues, but Each Country Has Begun New Planning Efforts", "Previous Decrement Management Plans Were Not Implemented Because of Growth in Revenues", "FSM Long-Term Fiscal Framework", "RMI Decrement Management Plan", "FSM and RMI Have Developed Plans for Health, Education, and Infrastructure", "FSM Sector Plans", "RMI Sector Plans", "FSM, RMI, and U.S. Planning Groups Have Been Formed to Prepare for Transition to Trust Fund Income", "FSM Joint Compact Review and Planning Committee", "RMI Compact Review Commission", "Ongoing U.S. Interagency Working Group", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Federal Funds and Programs", "Compact Trust Funds", "FSM and RMI Plans", "Appendix II: U.S. Compact Sector Grants and Trust Fund Contributions, 2004 through 2023", "Appendix III: Compact Grants Supporting Health and Education in the FSM and RMI", "Appendix IV: Status of U.S. Grants and Programs in the FSM and RMI After 2023", "Compact Sector and Audit Grants End in 2023, but Kwajalein-Related Grants for the RMI Will Continue", "FSM and RMI are No Longer Eligible for Many Programs Replaced by the Supplemental Education Grant", "Some Programs and Services in the Programs and Services Agreement Will End, while Others May Continue under Other Authorities", "Programs Identified in the Amended Compacts’ Implementing Legislation Generally Continue after Fiscal Year 2023", "Programs Identified in Other Legislation Generally Continue after Fiscal Year 2023", "Appendix V: Compact Trust Fund Baseline Outcomes Calculated with Varying Return Assumptions", "Appendix VI: FSM and RMI Country Trust Funds", "FSM Trust Fund", "RMI D Account", "Appendix VII: Potential Trust Fund Strategies and Model Results", "Potential Strategies That Would Permit Disbursement from the A Account", "Appendix VIII: Status of Other Planned Actions in the FSM and RMI Decrement Management Plans", "Appendix IX: Comments from the Department of the Interior", "Appendix X: Comments from the U.S. Postal Service", "Now on page 68.", "Appendix XI: Comments from the Federated States of Micronesia", "GAO Comments", "Appendix XII: Comments from the Republic of the Marshall Islands", "GAO Comments", "Appendix XIII: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The FSM and the RMI are independent countries located about 3,000 miles southwest of Hawaii (see fig. 1).\nThe FSM is a federation of four semiautonomous states—Chuuk, Kosrae, Pohnpei, and Yap—whose population and income vary widely. Chuuk, the largest state by population, has the lowest per capita gross domestic product (GDP). Overall, the FSM had a 2016 population of approximately 102,000 and a GDP per capita of about $3,200. The RMI’s 2016 population was approximately 54,000 with a GDP per capita of about $3,600. The RMI’s most recent census, in 2011, found that approximately three-quarters of the population lived in Majuro, the nation’s capital, and on the island of Ebeye in the Kwajalein Atoll. Table 1 shows the FSM’s, FSM states’, and RMI’s estimated population and annual GDP per capita in fiscal year 2016.", "The FSM states maintain considerable authority, relative to the FSM national government, to allocate U.S. assistance and implement budgetary policies. While the United States provides compact sector grants directly to the FSM national government, a large portion of these grants is passed through and provided to the four FSM states. The states also receive other U.S. program grants that have been passed through from the national government but may also receive grants directly from U.S. agencies.\nOverall, FSM public sector revenue sources include U.S. compact and program grants; grants from other countries; taxation, including taxation of foreign corporations domiciled in the FSM; and Parties to the Nauru Agreement fishing fees charged to vessels operating in its waters. In addition to maintaining departmental budgets, both the FSM national government and the FSM states have government-owned enterprises and component units, such as public utilities and port authorities, whose operations are supported by public funds. Some of these component units also receive U.S. compact sector grants or other U.S. grants passed through the FSM national or state governments or directly from U.S. agencies. According to Graduate School USA, the FSM’s public sector accounted for about 53 percent of all employment in the FSM in fiscal year 2016.\nThe RMI government is responsible for allocating U.S. assistance in that country, though the RMI’s 24 local governments exercise local government authority. RMI public sector revenue sources include U.S. compact and program grants, grants from other countries, ship and corporate registry earnings, and Parties to the Nauru Agreement fishing fees. The RMI government also has state-owned enterprises and component units whose operations are supported by public funds. Some of these component units receive U.S. compact sector grants or other U.S. grants passed through the RMI government or directly from U.S. agencies. According to Graduate School USA, in fiscal year 2016, RMI’s public sector accounted for approximately 48 percent of all employment in the RMI. The U.S. Army Garrison–Kwajalein Atoll, located near Ebeye island, also provides a significant source of employment for Marshallese. In September 2017, U.S. Army Garrison-Kwajalein Atoll officials estimated that approximately 1,100 Marshallese were employed at the garrison.", "U.S. relations with the FSM and the RMI began during World War II, when the United States ended Japanese occupation of the region. Beginning in 1947, the United States administered the region under a United Nations trusteeship. During the 1940s and 1950s, the RMI was the site of 67 U.S. nuclear weapons tests on or near Bikini and Enewetak Atolls. The four states of the FSM voted in a 1978 referendum to become an independent nation, while the RMI established a constitutional government and declared itself a republic in 1979. Under the trusteeship agreement, both newly formed nations remained subject to the authority of the United States until 1986.\nIn 1986, following a period of negotiations, the United States entered into a compact of free association with the FSM and the RMI that provided for economic assistance to the two countries, secured U.S. defense rights, and allowed FSM and RMI citizens to migrate to the United States. The compact provided a framework for the United States and the two countries to work toward achieving the following three main goals: (1) establish self-government for the FSM and the RMI, (2) ensure certain national security rights for all of the parties, and (3) assist the FSM and the RMI in their efforts to advance economic development and self- sufficiency. The compact’s third goal was to be accomplished primarily through U.S. direct financial assistance to the FSM and the RMI.\nUnder the original compact, the FSM and the RMI used funds for general government operations; capital projects, such as building roads and investing in businesses; debt payments; and targeted sectors, such as energy and communications. The FSM concentrated much of its spending on government operations at both national and state levels, while the RMI emphasized capital spending. While the original compact set out specific obligations for reporting and consultations regarding the use of compact funds, the FSM, RMI, and U.S. governments provided little accountability over compact expenditures and did not ensure that funds were spent effectively or efficiently.", "In 2003, following a period of negotiations, the United States approved separate amended compacts with the FSM and the RMI that went into effect on June 25, 2004, and May 1, 2004, respectively.", "The amended compacts’ implementing legislation authorized and appropriated direct financial assistance to the FSM and the RMI in fiscal years 2004 through 2023, with the base amounts decreasing in most years. The annual decrements in assistance are added to the amounts deposited in the trust funds established under the amended compacts for the two nations. Earnings from the compact trust funds are intended to provide an annual source of revenue after the scheduled end of compact sector grants at the end of fiscal year 2023. Both the compact sector grants and trust fund contributions are partially adjusted for inflation each fiscal year. Appendix II provides additional information on the base and inflation-adjusted amounts of U.S. compact sector grants and trust fund contributions in fiscal years 2004 through 2023.\nThe amended compacts and associated fiscal procedures agreements require that compact sector grants support the countries in six core sectors—education, health, infrastructure, environment, private sector development, and public sector capacity building—with the education and health sectors having priority. These grants are described in section 211(a) of each compact and are referred to as compact sector grants or 211(a) grants. Section 211(b) of the RMI compact further states that the RMI must target a specified amount of grants to Ebeye and other Marshallese communities within Kwajalein Atoll. The RMI MUORA states that the Kwajalein-related funds provided to the RMI in the compacts shall be provided through fiscal year 2023 “and thereafter for as long as this agreement remains in effect.”", "The amended compacts and their subsidiary trust fund agreements provided that each trust fund is to be managed by a compact trust fund committee. Each compact trust fund committee includes representatives from both the United States and the respective country, but the United States is required by the terms of the trust fund agreements to hold the majority of votes on each committee. The Director of Interior’s Office of Insular Affairs serves as the chair of each committee. Trust fund committee responsibilities include overseeing fund operation, supervision, and management; investing and distributing the fund’s resources; and concluding agreements with any other contributors and other organizations. As part of this oversight, the committees are to establish an investment and distribution policy. The committees are also to determine fiscal procedures to be used in implementing the trust fund agreements based on the fiscal procedures used for compact grant administration unless otherwise agreed by the parties to the agreement.\nThe trust fund agreements between the United States and the FSM and the RMI allow for the agreements to be amended in writing at any time, with mutual consent of the governments. However, the U.S. legislation implementing the amended compacts requires that any amendment, change, or termination of all or any part of the compact trust fund agreements shall not enter into force until incorporated into an act of Congress.\nAccording to the trust fund agreements, each trust fund committee is to appoint a trustee and an independent auditor. Each committee has retained an Executive Administrator to manage the daily operations of the trust fund. In addition, the committee has the authority to appoint 1 or more investment advisers and may enter into a separate agreement with 1 or more money managers. The investment policy statement for each fund guides the fund’s investment strategy and portfolio.", "The compact trust fund agreements state that no funds, other than specified trust fund administrative expenses, may be distributed from the compact trust fund prior to October 1, 2023. From fiscal year 2024 onward, the maximum allowed disbursement from each compact trust fund is the amount of the fiscal year 2023 annual grant assistance, as defined by the trust fund agreement, with full adjustment for inflation.\nIn addition, the trust fund committees may approve additional amounts for special needs. The RMI compact trust fund agreement excludes from the calculation of the allowed disbursement the amount of the Kwajalein- related assistance defined in section 211(b) of the RMI compact. Although the compact trust fund agreements state the maximum allowable disbursement level, they do not establish or guarantee a minimum disbursement level.\nEach country’s compact trust fund consists of three interrelated accounts: the “A” account, the “B” account, and the “C” account.\nThe A account is the trust fund’s corpus and contains the initial, and any additional, U.S. and FSM or RMI contributions; contributions from other countries; and investment earnings. No funds, other than specified trust fund administrative expenses, may be disbursed from the A account.\nThe B account is the trust fund’s disbursement account and becomes active in fiscal year 2023. All income earned in 2023 will be deposited in the B account for possible disbursement in 2024. Each subsequent year’s investment income will similarly be deposited into the B account for possible disbursement the following year. If there is no investment income, no funds will be deposited in the B account for possible disbursement the following year.\nThe C account is the trust fund’s buffer account. Through 2022, any annual income exceeding 6 percent of the fund balance is deposited in the C account. From 2023 onward, if annual income from the A account is less than the previous year’s disbursement, adjusted for inflation, the C account may be tapped to address the shortfall. After 2023, any funds in the B account in excess of the amount approved for disbursement the following fiscal year are to be used to replenish the C account as needed, up to the maximum size of the account. The size of the C account is capped at three times the amount of the estimated annual grant assistance in 2023, including estimated inflation. If there are no funds in the C account, and no prior year investment income in the B account, no funds will be available for disbursement to the countries the following year.\nFigure 2 shows the compact trust fund account structure and associated rules.\nAccording to the U.S. trust fund agreements with the FSM and the RMI, contributions from other donors are permitted. In May 2005, Taiwan and the RMI reached an agreement that Taiwan will contribute a total of $40 million to the RMI’s compact trust fund A account between 2004 and 2023. A “D” account may also be established to hold any contributions by the FSM and the RMI governments of revenue or income from unanticipated sources. According to the trust fund agreements, the D account must be a separate account, not mixed with the rest of the trust fund. Only the RMI has a D account, governed in part by an agreement between Taiwan and the RMI.", "The amended compacts’ implementing legislation and their subsidiary fiscal procedures agreements established committees to oversee compact grants to each country—the Joint Economic Management Committee (JEMCO) for the FSM and the Joint Economic Management and Financial Accountability Committee (JEMFAC) for the RMI. Each five- member committee comprises three representatives from the U.S. government and two representatives from the corresponding country, with the Director of Interior’s Office of Insular Affairs serving as the chair.\nJEMCO’s and JEMFAC’s designated roles and responsibilities include the following: reviewing the budget and development plans from each of the governments; approving grant allocations and performance objectives; attaching terms and conditions to any or all annual grant awards to improve program performance and fiscal accountability; evaluating progress, management problems, and any shifts in priorities in each sector; and reviewing audits called for in the compacts.\nJEMCO and JEMFAC can require that terms and conditions be attached to any and all annual compact sector grant awards to improve program performance and fiscal accountability. Under the fiscal procedures agreements governing the amended compacts, the Office of Insular Affairs is responsible for using financial reports to monitor each country’s budget and fiscal performance and for using performance reports submitted by the countries to evaluate sector grant performance. The FSM and the RMI also must adhere to specific fiscal control and accounting procedures and are required to submit annual audit reports, within the meaning of the Single Audit Act as amended.\nThe FSM and RMI compacts require each country to develop multiyear plans that are strategic in nature and continuously reviewed and updated through the annual budget process and that address the assistance for the defined sectors. In 2013, we recommended that Interior, as Chair of JEMCO and JEMFAC, ensure that the FSM and the RMI complete plans to address the impact of declining compact sector grants (in this report, decrement management plans). In November 2013, the FSM finalized its decrement management plan for fiscal years 2014 through 2023; the plan indicated that a similar planning process is to be repeated in 3-year intervals. In September 2014, the RMI finalized its decrement management plan for fiscal years 2015 through 2023; the plan similarly stated that a comprehensive planning process to address the ongoing decrement may proceed on a 3-year update schedule. Each decrement management plan includes commitments for budget reductions in the national governments and, in the FSM, the state governments, as well as plans to undertake actions such as tax reform.", "The amended compacts’ implementing legislation incorporates by reference related agreements extending programs and services to the FSM and RMI. The programs and services agreement with each country identifies the following programs and services as being available to each country: U.S. postal services, weather services, civil aviation, disaster preparedness and response, and telecommunications. Each programs and services agreement extends for 20 years from the compact’s entry into force. Therefore, the agreement with the FSM ends on June 24, 2024, and the agreement with the RMI ends on April 30, 2024.", "The amended compacts’ implementing legislation (Pub. L. No. 108-188) and other U.S. legislation authorize other U.S. grants, programs, and services for the FSM and RMI. Pub. L. No. 108-188 authorized an annual supplemental education grant (SEG) for the FSM and RMI in fiscal years 2005 through 2023, to be awarded in place of grants formerly awarded to the countries under several U.S. education, health, and labor programs. The FSM and RMI are not eligible for the programs replaced by the SEG during these years. Unlike the compact sector grants, the amended compacts’ implementing legislation authorized the SEG but did not appropriate funds for it. Funding for the SEG is appropriated annually to the U.S. Department of Education (Education) and transferred to Interior for disbursement. Other provisions of the amended compacts’ implementing legislation, as well as other U.S. law, make the FSM and RMI eligible for a number of additional programs. Other federal departments are responsible for the administration and oversight of their respective programs in the FSM and RMI.", "Compact sector grants and the SEG, each of which end in 2023, continue to support a substantial portion of government expenditures in the FSM and RMI. In the FSM, compact sector grants and the SEG support about one-third of all government expenditures. The four FSM states rely on these grants to a greater extent than the FSM national government does. In the RMI, compact sector grants and the SEG support about one- quarter of all government expenditures. The end of the compacts’ programs and services agreements in 2024 would also require the FSM and RMI to bear additional costs to provide services currently provided by the United States as part of the Agreements. Appendix IV provides a detailed summary of programs and services we identified that have been provided through the amended compacts, the amended compacts’ implementing legislation, compact-related agreements, and other provisions of U.S. law, as well as their status in the FSM and RMI after 2023.", "", "The FSM national and state governments overall continue to rely on U.S. support for program expenditures. Compact sector grants, the SEG, and other U.S. grants supported almost half of FSM national and state government expenditures in fiscal year 2016. Compact sector and supplemental education grants that end in 2023 supported approximately one-third of total FSM national and state government expenditures in fiscal year 2016, while other U.S. grants supported an additional 15 percent of total FSM government expenditures (see fig. 3).\nCompact sector and supplemental education grants that end in 2023 support a larger proportion of FSM state governments’ expenditures than of the FSM national government’s expenditures. In fiscal year 2016, compact sector grants and the SEG supported 8 percent of national government expenditures but supported 50 percent or more of each state’s government expenditures. Among the FSM states, Chuuk—both the largest state and the state with the lowest per capita income in the FSM—has the highest percentage of its expenditures supported by U.S. grants. (See table 2 for a summary of FSM national and state government expenditures supported by compact sector grants and the SEG, and by other U.S. grants.) Compact sector grants and the SEG support an even higher proportion of FSM states’ health and education expenditures. See app. III for a summary of the role of compact funds in the FSM health and education sectors.\nThe RMI continues to rely on U.S. support for program expenditures. Compact sector and supplemental education grants that end in 2023 supported approximately 25 percent of the RMI’s $123.5 million in government expenditures in fiscal year 2016, while other U.S. grants supported an additional 8 percent. Compact Kwajalein-related grants that do not end in 2023 supported an additional 3 percent (see fig. 4). Compact sector grants and the SEG support an even higher proportion of RMI health and education expenditures. See app. III for a summary of the role of compact funds in the RMI health and education sectors.", "FSM and RMI budgets would be affected if the countries were to assume responsibility for providing some additional programs and services currently provided by the United States. Current U.S. law enables U.S. agencies to continue providing some programs and services now provided under the agreements after they end in 2024. However, under current law, some programs and services provided in the programs and services agreements will end and would require the FSM and RMI to bear additional costs. See appendix IV for a summary of the status of programs and services provided under the programs and services agreements after the agreements end.", "Previous studies of the FSM and RMI compact trust funds, including a review we conducted in 2007, found that after fiscal year 2023 the funds are unlikely to provide maximum annual disbursements, may provide no disbursements at all in some years, and are unlikely to sustain the funds’ fiscal year 2023 value. Our updated projections for the compact trust funds show similar outlooks. Several potential strategies could improve the compact trust funds’ outlook; some of these strategies could be implemented under the current trust fund agreements, while other strategies may require changing the trust fund agreements. The compact trust fund committees have not yet prepared distribution policies, required by the trust fund agreements, that could assist the countries in planning for the transition to trust fund income. In addition, the committees have not established fiscal procedures for oversight of compact trust fund disbursements as required by the trust fund agreements. Further, the trust fund committees have not yet addressed a potential misalignment between the timing of their annual calculation of the amounts available to disburse and the FSM’s and RMI’s budget timelines, potentially complicating each country’s planning and management.", "Previous studies of the compact trust funds have found that some yearly disbursements from the funds after 2023 are likely to fall short of the inflation-adjusted amount of annual grant assistance in 2023 and that the funds may provide no disbursement at all in some years. Our 2007 analysis of the compact trust funds projected a wide range of potential balances and found that the funds’ capacity to provide the maximum allowable disbursement would likely decrease over time. In addition, our analysis showed an increasing likelihood that the trust funds would exhaust the C account and be unable to provide any disbursements in the latter years of our projection. Other analyses have similarly found risks of low or zero disbursements and risks to sustainability.\nGraduate School USA has prepared an annual series of economic reports on each country, including analyses of their compact trust funds.\nIn 2015, an Asian Development Bank report separately analyzed the trust funds.\nThe International Monetary Fund projected the status of the trust funds as part of its biennial FSM and RMI consultations.", "Our updated projections for the FSM and RMI compact trust funds after 2023 indicate a continued likelihood that, given their balance at the end of fiscal year 2017 and current compact trust fund rules—the baseline scenario—the funds will be unable to provide maximum disbursements (equal to the inflation- adjusted amount of annual grant assistance in 2023) in some years; unable to provide any disbursement at all in some years, with the likelihood of zero disbursement in a given year increasing over time; and unable to maintain the inflation-adjusted value of the compact trust fund after fiscal year 2023.\nThe compact trust funds’ C account—designed as a buffer to protect disbursements from the B account in years when the funds do not earn enough to fund the disbursement—could be exhausted by a series of years with low or negative annual returns. Since current rules do not allow disbursements from the compact trust fund corpus (the A account), exhaustion of the C account would result in zero disbursement in years when fund returns are zero or negative. Thus, there may be no funds available to disburse even if the funds’ A accounts have a balance. As a result of low or zero disbursements, the countries could face economic and fiscal shocks and significant challenges in planning programs and budgets.", "Our model projects that, given the baseline scenario and a 6 percent net return, the FSM compact trust fund will experience declining disbursements relative to the maximum allowable disbursements; an increasing chance of zero disbursements; and a declining likelihood of maintaining its 2023 balance. See appendix I for a full description of our methodology and appendix V for the baseline results with alternative net returns.\nProjected disbursements. We project that the FSM compact trust fund will, on average, be able to provide disbursements equal to 82 percent of the maximum allowable disbursement—the inflation- adjusted amount of 2023 annual grant assistance—in its first decade of disbursements. The likely average disbursement falls to 49 percent of the maximum in the next decade and falls further in subsequent decades. In addition, the amount available for disbursement may fluctuate substantially from year to year. Depending on the compact trust fund’s performance in the previous year, disbursements may be higher or lower than the average amount if the balance in the C account is not sufficient to provide additional disbursements.\nLikelihood of providing zero disbursement. We project a 41 percent likelihood that the FSM compact trust fund will be unable to disburse any funds in 1 or more years during the first decade of trust fund disbursements. This likelihood increases over time, rising to 92 percent in fiscal years 2054 through 2063.\nLikelihood of maintaining inflation-adjusted 2023 balance. We project a 13 percent likelihood that the FSM compact trust fund will maintain or exceed its inflation-adjusted fiscal year 2023 value in fiscal year 2033. This likelihood decreases in later years.\nFigure 5 shows our projections of the FSM compact trust fund’s average disbursements as a percentage of maximum disbursement, the likelihood of 1 or more years of zero disbursement, and the likelihood of the fund’s maintaining its inflation-adjusted fiscal year 2023 balance given the baseline scenario and a 6 percent net return.\nThe FSM also maintains its own trust fund separate from the compact trust fund (see app. VI for additional information). We did not independently project the FSM Trust Fund’s future balance or potential disbursements after 2023.", "Our model projects that, given the baseline scenario and a 6 percent net return, the RMI compact trust fund will experience declining disbursements relative to the maximum allowable disbursements; an increasing chance of zero disbursements; and a declining likelihood of sustaining its 2023 balance.\nProjected disbursements. We project that the RMI compact trust fund will, on average, be able to provide disbursements nearly equal to the inflation-adjusted amount of 2023 annual grant assistance as defined by the trust fund agreement—the maximum allowable—in its first decade of disbursements. However, the projected disbursements as a percentage of the maximum disbursements decline by about 10 percentage points in each subsequent decade. In addition, the amount available to disburse may fluctuate substantially from year to year. Depending on the compact trust fund’s performance in the previous year, disbursements may be higher or lower than the average amount if the balance in the C account is not sufficient to provide additional disbursements.\nLikelihood of providing zero disbursement. We project a 15 percent likelihood that the RMI compact trust fund will be unable to disburse any funds in 1 or more years during the first decade of trust fund disbursements. This likelihood increases over time, rising to 56 percent in fiscal years 2054 through 2063.\nLikelihood of maintaining inflation-adjusted 2023 balance. We project a 41 percent likelihood that the RMI compact trust fund will maintain or exceed its inflation-adjusted fiscal year 2023 value in fiscal year 2033. This likelihood decreases in later years.\nFigure 6 shows our projections of the RMI compact trust fund’s average disbursements as a percentage of maximum disbursement, its likelihood of 1 or more years of zero disbursement, and its likelihood of maintaining its inflation-adjusted fiscal year 2023 balance given the baseline scenario and a 6 percent net return.\nThe RMI also maintains its own D account separate from the compact trust fund (see app. VI for additional information). We did not independently project the D account balance or potential disbursements from the D account after 2023.", "We conducted a series of simulations to determine the likely effects of potential strategies for improving the outlook of the FSM and RMI compact trust funds. Prior studies by Graduate School USA, the Asian Development Bank, and the International Monetary Fund examined the effects of three general approaches for improving the trust funds’ outlooks: (1) reducing planned disbursements from the funds, (2) making additional contributions to the funds, and (3) changing the compact trust fund disbursement policies. These prior studies included strategies that would require changing the trust fund agreements to permit disbursements from the A account. To isolate the impact of individual changes on compact trust fund balance and disbursements, we developed and analyzed five potential strategies based on the approaches examined in the prior studies. 1. Annual disbursements are reduced below the maximum allowable disbursement. 2. Additional annual contributions are made to the trust fund in fiscal years 2018 through 2023. 3. The trust fund agreement disbursement policies are modified to limit the annual disbursement to a fixed percentage of the fund’s moving average balance over the previous 3 years, up to the maximum disbursement amount defined by the current trust fund agreement. 4. The trust fund agreement disbursement policies are modified to reduce the amount of the annual disbursement if the compact trust fund’s moving average balance over the previous 5 years is lower than a primary target amount. 5. The trust fund agreement disbursement policies are modified to set the target disbursement as 2.1 percent of the compact trust fund’s balance in fiscal year 2024. The disbursement amount is further decreased if the fund’s moving average balance over the previous 5 years is lower than the primary target balance.\nImplementing either of the first two potential strategies would not require any changes to disbursement provisions in the existing trust fund agreement, but implementing any of the remaining three strategies may require such changes. In strategies 3, 4, and 5, we analyzed strategies that would permit disbursement from the A account. Disbursing from the A account would require changing the compact trust fund agreements. The agreements can be amended in writing at any time, with mutual consent of the governments. However, the U.S. legislation implementing the amended compacts requires that any amendment, change, or termination of all or any part of the compact trust fund agreements shall not enter into force until incorporated into an act of Congress.\nAll of the potential strategies we analyzed would reduce or eliminate the risk of the compact trust funds experiencing years of zero disbursement. However, all of the potential strategies would require the countries to exchange a near-term reduction in resources for more predictable and sustainable disbursements in the longer term. Appendix VII presents the detailed results of our analysis.", "", "Under the compact trust fund agreements, each trust fund committee must develop a distribution policy, with the intent that compact trust fund disbursements will provide an annual source of revenue to the FSM and RMI after fiscal year 2023. The trust fund committees could use distribution policies to address risks to each fund’s sustainability. For example, the committees have the discretion to disburse an amount below the established maximum. Our analysis of potential strategies for improving the funds’ outlook shows that reducing the size of disbursements would improve each compact trust fund’s long-term sustainability. According to interviews with, and documents provided by, the trust funds’ administrator, the committees reviewed presentations in 2016, 2017, and early 2018 from the authors of previous studies and fund managers regarding the likely status of the trust funds after 2023 and have also reviewed options for addressing risks to the trust funds’ disbursements and sustainability, including changes to disbursement provisions in the compact trust fund agreements. However, as of January 2018, according to the trust funds’ administrator, neither committee had developed a distribution policy. Without a distribution policy that provides information about the size of expected disbursements, the FSM and RMI are hampered in their current and ongoing efforts to plan for the potential reduction in U.S. compact assistance after 2023.", "The compact trust fund committees have not yet established fiscal procedures for compact trust fund disbursements after fiscal year 2023. Each trust fund agreement requires the respective committee to determine the fiscal procedures to be used in implementing the trust fund agreement. The committees are to base their procedures on the compact fiscal procedures agreements, which define the membership and duties of the JEMCO and JEMFAC and single audit report requirements, among other things, unless the parties to the trust fund agreement agree to adopt different fiscal procedures. No compact trust fund disbursements are to be made unless the committee has established such trust fund fiscal procedures.\nU.S., FSM, and RMI officials are aware of the need to determine the fiscal procedures that will govern oversight of compact trust fund disbursements. Issues related to future oversight of compact trust fund disbursements have been raised for discussion with U.S. representatives on JEMCO and JEMFAC. However, according to an RMI representative on the compact trust fund committee, that committee has not discussed fiscal procedures for the compact trust fund disbursements. In addition, FSM officials noted that they were unsure whether the JEMCO or the compact trust fund committees would approve specific projects. Without fiscal procedures in place, the trust fund committees will not be able to provide disbursements and the United States, the FSM, and the RMI will lack clear guidance to ensure oversight for trust fund disbursements.", "The timing of the trust fund committees’ calculation of the amounts available for annual disbursement to the FSM and the RMI does not align with the countries’ budget and planning timelines. The amounts available for disbursement in a given fiscal year cannot be determined until each fund’s returns have been determined at the end of the prior year. Further, if the disbursement amounts are calculated from audited fund returns as determined by annual audits required by the trust fund agreements, the amounts may not be determined until as late as March 31, 6 months into the fiscal year for which the disbursement is to be provided. However, both the FSM and the RMI government budget cycles are completed before the annual amounts available for disbursement will be known. As a result, the FSM and RMI would have to budget without knowing the amount to be disbursed, complicating their annual budget and planning processes. See figures 7 and 8 for the FSM and RMI budget timelines for fiscal year 2024, based on their current budget calendars, relative to the dates when the compact trust fund disbursement amounts will be determined on the basis of the funds’ unaudited end-of-fiscal-year balances and of their audited balances. Standards for Internal Control in the Federal Government—which is applicable to the U.S. government but can be adopted as a best practice by nongovernmental entities—states that management should use quality information to achieve the entity’s objectives. For example, as part of using quality information, the entity obtains relevant data from reliable internal and external sources in a timely manner based on the identified information requirements.\nGiven the FSM’s and RMI’s current budget processes, the FSM and RMI will not have accurate and timely information on the amounts that will be available for annual disbursements for each fiscal year. The FSM Secretary of Finance and Administration, a member of the compact trust fund committee, indicated that she is aware of the discrepancy between the timing of the trust fund disbursement calculations and dates in the FSM’s budget and planning cycle and stated that the FSM would raise the issue of this discrepancy as part of its planning for the transition to relying on compact trust fund disbursements. One of the RMI’s representatives on the compact trust fund committee stated that the timing of the disbursement calculations was a challenge and would complicate RMI planning and management. Each trust fund committee received a briefing in 2016 from the trust funds’ administrator that discussed issues associated with the timing of the disbursement calculations. However, as of January 2018, the committees had not determined how they would address this issue.", "The FSM and RMI did not implement planned budget reductions to address decreasing compact sector grants because of increasing revenue from other sources. FSM officials stated that they did not implement their plan’s planned budgetary reductions due to increasing revenues for the state and national governments. The RMI also did not implement budget reductions but used increased revenue, particularly from fishing fees, to offset the decrement in compact sector grants. FSM and RMI strategic plans in the key sectors of education and health focus on strategic goals and priorities rather than addressing the effect of the 2023 transition on health and education budgets. However, FSM and RMI infrastructure plans discuss funding requirements and potential alternative funding sources. The FSM, the RMI, and the United States have each established bodies to plan to address issues related to the 2023 transition to trust fund income.", "", "The FSM has not implemented budget reductions scheduled in its decrement management plan, the FSM-Wide Long-Term Fiscal Framework (Long-Term Fiscal Framework). The FSM’s plan included a firm commitment for a 6 percent reduction in real terms in FSM state expenditures in fiscal year 2014. Two additional 6 percent expenditure reductions were planned for fiscal years 2017 and 2020, but these were contingent reductions that would not be implemented if the FSM states received offsetting revenue to address the reductions. According to FSM national government officials, revenue increases, including growth in revenue from fishing fees, have enabled the FSM to avoid implementing the 2017 contingent 6 percent expenditure reductions, and the further reductions in fiscal year 2020 are not likely to be implemented. FSM officials cited multiple reasons for not implementing the planned reductions: Increasing revenue to the state and national governments. The FSM’s Long-Term Fiscal Framework included a plan to increase the proportion of compact sector grant funding distributed among the FSM states and reduce the proportion retained by the national government. This change in the FSM’s internal compact grant distribution formula reduced the amount of the decrement in compact sector grants received by the states that would have otherwise occurred. The FSM national government’s revenue from fishing fees has increased rapidly in recent years, allowing it to use this revenue in place of compact sector grants.\nEffect of inflation adjustments on compact sector grants.\nAccording to FSM officials, because of inflation adjustments, the nominal value of the compact sector grants has not significantly declined. As a result, the FSM government questions the need for expenditure reductions.\nIn addition to scheduling budget reductions, the FSM’s Long-Term Fiscal Framework included plans to implement unified tax reform measures, which also have not been implemented. However, plans to reduce the national government’s share of compact sector grants and to use surpluses to mitigate the effect of fiscal reforms were implemented. (See app. VIII for a summary of the FSM’s planned actions and their implementation.) As of January 2018, the FSM had not updated the Long- Term Fiscal Framework but had included information updates in its annual budget submittal.", "The RMI government has not implemented budget reductions scheduled in its decrement management plan. The RMI’s decrement management plan divided proposed budgetary reductions into three periods: fiscal years 2016 through 2017, fiscal years 2018 through 2020, and fiscal years 2021 through 2023. Only the reductions in the first period were to be considered binding, with adjustments in the later periods subject to review during the next 3-year planning cycle. According to RMI government officials, significant growth in fishing fee revenue and growth in ship registry and income tax revenue has minimized the initially anticipated impact of the compact decrements, thereby reducing the need to implement expenditure reductions. RMI officials noted that it expected to continue to use its own revenue in place of compact funds in fiscal years 2019 through 2023.\nIn addition to scheduling the budget reductions, the RMI decrement management plan includes plans to implement new taxes, program fishing fees into the annual budget, reduce subsidies to state-owned enterprises, and reduce compensation to Majuro landowners for the use of their land for utilities. The RMI has programmed a portion of its fishing fee surplus into the annual budget in each fiscal year from 2015 to 2017 but has not implemented other planned actions. (See app. VIII for a summary of planned actions and their implementation.) As of January 2018, the RMI government had not updated its plan and did not intend to do so, according to RMI officials. However, the officials stated that the government has incorporated elements of the plan, particularly its expenditure analysis, into the RMI’s medium term budget and investment framework, a planning and budgeting document submitted to JEMFAC in August 2017. In comments on a draft of this report, the RMI stated that it is developing a long-term fiscal framework in addition to the medium term budget and investment framework. According to the RMI, the long-term fiscal framework will have a 10-year outlook through 2028 and take into account compact decrements and anticipated resources from the compact trust fund and other sources.", "", "FSM national and state infrastructure plans provide specific budgetary information to address the fiscal year 2023 transition from compact sector grants to trust fund income, such as funding requirements and sources of funding for planned infrastructure projects in fiscal years 2016 through 2025. The FSM national and state health and education plans generally focus on the national and state health and education departments’ strategic goals and priorities rather than discussing budget changes or new revenue generation strategies to address the possibility of reduced resources after 2023.\nIn addition to preparing sector strategic development plans, the FSM national and state governments issued the 2023 Action Plan in 2014, designed to address fiscal and economic challenges before and after compact sector grant funding ends in fiscal year 2023. In contrast to the FSM Long-Term Fiscal Framework, which committed to specific expenditure reductions and government actions prior to fiscal year 2023, the 2023 Action Plan includes an economic growth strategy that seeks to boost private sector development. The plan addresses economic growth strategies and improved performance in key economic sectors such as tourism, agriculture, and fisheries and identifies the need for the FSM national and state governments to limit expenditure growth in the medium and long terms.", "The RMI’s infrastructure plan addresses the scheduled cessation of compact sector grant assistance in fiscal year 2023 through a review of potential future budgets, while the RMI’s education and health plans outline strategic goals and priorities. Similar to the FSM’s infrastructure plans, the RMI National Infrastructure Plan reviews budget information to address the fiscal year 2023 transition, such as planned infrastructure investments and potential alternative funding sources for fiscal years 2017 through 2026. The RMI’s national education and health plans primarily focus on goals and objectives to address key challenge areas in health and education over the next few fiscal years and do not discuss specific budget changes for the transition in 2023.", "Both the FSM and the RMI have formed planning committees and charged them with planning for the fiscal year 2023 transition from compact sector grants to compact trust fund income. In addition, the U.S. Department of State (State) has organized a U.S. interagency planning group to help coordinate U.S. policy related to the transition.", "In 2016, the FSM national government established a Joint Compact Review and Planning Committee to coordinate FSM planning for the transition from compact sector grants to trust fund income in 2023. The committee is mandated to, among other things, set goals in anticipation of the end of compact grants, develop strategies and alternatives, identify financial assistance sources, analyze economic information, and provide periodic reports to the FSM Congress. The committee first met in May 2017. In September 2017, the committee hired an Executive Director, who in turn hired an economist and Executive Secretary prior to the committee’s February 2018 meeting. As of January 2018, according to FSM officials, the committee had not produced any publicly available products but had collected information from various FSM government agencies.", "According to the RMI Office of Compact Implementation, the RMI established the Compact Review Commission in late 2016 to plan for the fiscal year 2023 transition from compact sector grants to trust fund income. According to the Office of Compact Implementation, the commission is mandated to review the compact and make recommendations to the cabinet regarding priorities to be addressed for the fiscal year 2023 transition. Specific priorities may include the status of federal programs that will expire in fiscal year 2023, the adequacy of the compact trust fund to provide needed revenue, and other issues relevant to the cessation of compact grant assistance. In January 2018, the RMI Presidential Cabinet appointed a Compact Review Commission Coordinating Committee, consisting of the RMI Ambassador to the United States, the Director of the RMI Office of Compact Implementation, the Secretary of Finance, a private sector representative, and a legal adviser, and directed it to coordinate the commission’s meetings, actions, and reporting.", "State began holding regular meetings of the Interagency Working Group on the Freely Associated States in February 2017 to provide guidance and oversight for policy concerning the Compacts of Free Association and to coordinate U.S. policy in light of the fiscal year 2023 transition. The group met monthly through the rest of 2017, except in November. The monthly meetings have focused individually on the FSM and RMI, as well as addressed cross-cutting issues such as donor coordination. For example, in March and July 2017, the group’s monthly meetings focused on the FSM and included participation by the U.S. Ambassador and the FSM Ambassador, respectively. Similarly, in April and June 2017, the group’s monthly meetings focused on the RMI and included participation by the U.S. and RMI ambassadors, respectively. According to State officials, the meetings will continue indefinitely on a monthly basis.", "The U.S. compacts of free association with the FSM and the RMI provided a framework for the United States and the two countries to work toward, among other things, the goal of assisting the FSM and the RMI in their efforts to achieve economic development and self-sufficiency. The end of U.S. compact sector grants in fiscal year 2023 and the beginning of disbursements from the compact trust funds in fiscal year 2024 will mark a key transition in these ongoing efforts, and the FSM and RMI are currently preparing plans for addressing issues associated with the transition to compact trust fund income. The countries’ transition to relying on income from the compact trust funds will likely require significant budgetary choices. However, lacking the trust fund distribution policies required under the trust fund agreements, the FSM and RMI are hampered in their efforts to plan for the potential reduction in U.S. compact assistance after 2023. In addition, without the required fiscal procedures governing trust fund actions after 2023, the trust fund committees will be unable to make disbursements and the United States, the FSM, and the RMI will not have assurance of necessary oversight of trust fund disbursements. Finally, without alignment between the timing of the trust fund committees’ annual calculation of the amounts available for disbursement and the countries’ annual budget cycles, the FSM and RMI will have to plan their budgets for each fiscal year without knowing the amount of the disbursements from the compact trust funds.", "We are making the following six recommendations to Interior: The Secretary of the Interior should ensure that the Director of the Office of Insular Affairs, as Chairman of the FSM compact trust fund committee, works with other members of the committee to develop a distribution policy for the FSM compact trust fund, as required by the compact trust fund agreement, that takes into account potential strategies that could address risks to the fund’s ability to provide a source of income after fiscal year 2023. (Recommendation 1)\nThe Secretary of the Interior should ensure that the Director of the Office of Insular Affairs, as Chairman of the FSM compact trust fund committee and of the FSM Joint Economic Management Committee, works with other members of the committees to develop the fiscal procedures required by the compact trust fund agreement. (Recommendation 2)\nThe Secretary of the Interior should ensure that the Director of the Office of Insular Affairs, as Chairman of the FSM compact trust fund committee, works with other members of the committee to address the timing of the calculation of compact trust fund disbursements. (Recommendation 3)\nThe Secretary of the Interior should ensure that the Director of the Office of Insular Affairs, as Chairman of the RMI compact trust fund committee, works with other members of the committee to develop a distribution policy for the RMI compact trust fund, as required by the compact trust fund agreement, that takes into account potential strategies that could address risks to the fund’s ability to provide a source of income after fiscal year 2023. (Recommendation 4)\nThe Secretary of the Interior should ensure that the Director of the Office of Insular Affairs, as Chairman of the RMI compact trust fund committee and of the RMI Joint Economic Management and Financial Accountability Committee, works with other members of the committees to develop the fiscal procedures required by the compact trust fund agreement. (Recommendation 5)\nThe Secretary of the Interior should ensure that the Director of the Office of Insular Affairs, as Chairman of the RMI compact trust fund committee, works with other members of the committee to address the timing of the calculation of compact trust fund disbursements. (Recommendation 6)", "We provided a draft of this report to the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, the Interior, Labor, State, the Treasury, and Transportation; the Federal Communications Commission; the Federal Deposit Insurance Corporation; the Federal Emergency Management Agency; the National Science Foundation; USAID; and the U.S. Postal Service, as well as to the FSM and RMI. We also provided copies of the draft to the administrator of each compact trust fund and to Graduate School USA for their technical review. The Department of the Interior, the U.S. Postal Service, and the FSM and RMI provided official comments, which are reproduced in appendixes IX through XII with, where relevant, our responses. The Departments of Agriculture, Education, Health and Human Services, Labor, State, and Transportation; the Federal Deposit Insurance Corporation; USAID; the RMI; the trust funds’ administrator, and Graduate School USA provided technical comments, which we incorporated as appropriate.\nThe following summarizes the official comments from Interior, the U.S. Postal Service, the FSM, and the RMI, and our responses.\nInterior concurred with our recommendations and stated that discussions to address them are ongoing within the trust fund committees. In addition, Interior stated that a working group comprising staff from Interior’s Office of Insular Affairs and the Department of State’s Office of Australia, New Zealand and Pacific Island Affairs will present recommended actions related to our recommendations to the trust fund committees in 2018.\nThe U.S. Postal Service stated that, in general, the report includes helpful information on the compact obligations regarding postal services provided to the FSM and RMI. However, the U.S. Postal Service also provided additional information on the reimbursement shortfall for its services since 2002 in the freely associated states. The U.S. Postal Service stated that it recommends that, upon expiration of the programs and services agreements, the FSM and RMI be treated as international postal origin and destination points.\nThe FSM concurred with our recommendations to Interior. In addition, the FSM stated that the programs and services provided by U.S. agencies were essential to the FSM and should continue to the greatest extent possible after 2023. The FSM would like to work with U.S. officials to ensure timely approval of continuing these programs and services. The FSM also noted that we had reported the potential for the FSM compact trust fund to not provide disbursements sufficient to cover the estimated value of expiring federal services in 2002, prior to the signing of the amended compact. Further, the FSM provided additional information regarding its Long-Term Fiscal Framework and summarized ongoing public sector and tax reform efforts and its own contributions to the FSM Trust Fund.\nThe RMI concurred with our recommendations to Interior and provided additional comments regarding the recommendations. The RMI asserted that, absent accountability issues, the maximum annual disbursement amount should be disbursed from the compact trust fund. However, as our report notes, the compact trust fund agreements state the maximum allowable disbursement level and do not establish or guarantee a minimum disbursement level. The RMI also stated that it would prefer that future accountability procedures be based on a new agreement rather than a reshaping of the current fiscal procedures agreement. In addition, the RMI raised the issue of compensation under the tax and trade provision of the original compact as well as the effect of delays in investing the RMI compact trust fund on its current value. We discuss the tax and trade provisions in Appendix VII of our report. The RMI also recommended that amendments to the trust fund agreement should not require action by the U.S. Congress. As our report notes, the U.S. legislation implementing the amended compacts requires that any amendment, change, or termination of all or any part of the compact trust fund agreements shall not enter into force until incorporated into an act of Congress. Finally, the RMI noted that programs and services provided through the amended compacts' implementing legislation (Pub. L. No. 108-188) and the compact programs and services agreement were essential and that the RMI could not replace them by using its own resources.\nWe are sending copies of this report to the appropriate congressional committees and to the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, the Interior, Labor, State, the Treasury, and Transportation; the Federal Communications Commission; the Federal Deposit Insurance Corporation; the Federal Emergency Management Agency; the National Science Foundation; USAID; and the U.S. Postal Service, as well as the President of the FSM and the President of the RMI. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have questions about this report, please contact me at (202) 512-3149 or gootnickd@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix XIII.", "We were asked to review issues related to the Federated States of Micronesia’s (FSM) and Republic of the Marshall Islands (RMI) transition from compact grant assistance to relying on income from the compact trust funds. This report examines (1) the use and role of federal funds and programs in the FSM and RMI budgets, (2) projected compact trust fund disbursements and potential strategies to address risks to those disbursements, and (3) FSM and RMI efforts to prepare for the scheduled decrements in compact grant funding and the transition to relying on compact trust fund income.", "To identify the use and role of federal funds and programs, we reviewed relevant documents and interviewed knowledgeable U.S., FSM, and RMI officials during our site visits to the RMI in July 2017 and in the FSM in July and August 2017. We reviewed U.S. law; the amended compacts and associated programs and services agreements and military use and operating rights agreements with each country; each country’s government and component unit single audit reports for fiscal years 2012 through 2016; and U.S. Region IX reports for fiscal years 2015 and 2016. We analyzed expenditure and funding data in FSM and RMI single audit reports, including their Schedule of Expenditures of Federal Awards, to identify the sources of funds expended by the FSM national and state governments, the RMI national government, and their component units and calculated federal funds as a percentage of each entity’s total resources. We reviewed the single audit reports and found that the auditors did not express any qualified or adverse opinions regarding the information they used to prepare the audits’ Schedule of Expenditures of Federal Awards, which lists the amount and use of federal grants. We concluded that these data are sufficiently reliable for estimating the role of federal programs in the FSM and RMI budgets.\nTo identify the FSM and RMI national government component units and FSM state government component units, we reviewed the websites of, and audit reports from, the FSM Office of the National Public Auditor and the RMI Office of the Auditor-General and confirmed the list of component units we identified with FSM and RMI officials. We also discussed the uses of federal funds in the countries with FSM national and state government officials, RMI government officials, and FSM and RMI component unit representatives during our site visits to the countries. Our portrayal of the role of federal funds in the government and component unit budgets does not capture the value of any noncash goods and services that do not appear in the single audit reports. In addition, it does not capture benefits that some programs provide to individuals, such as U.S. Department of Agriculture rural housing loans and Federal Deposit Insurance Corporation insurance that benefits depositors at the Bank of the Federated States of Micronesia.\nTo determine the legal status of U.S. programs, services, and grants after fiscal year 2023, we analyzed the amended compacts, the compact- related agreements, and U.S. law governing the programs, services, and grants that we identified to determine whether, under current law, they would still be available to the FSM and RMI after the end of that fiscal year. For the programs and services agreement with each country, we reviewed the status of programs and services when the agreements end in fiscal year 2024. Our legal analysis included programs, services, and grants that we identified from the compacts, the amended compacts’ implementing legislation, the military use and operating rights agreements, and the programs and services agreements. We also included in our legal analysis the programs (1) that we identified through the single audit reports and Region IX reports and (2) that were not already identified through our review of the compacts, the amended compacts’ implementing legislation, and the compact-related agreements; and (3) that the single audit reports showed as having expenditures above $200,000 in any year in fiscal years 2012 through 2016 or the Region IX reports identified as providing more than $200,000 in federal funding in fiscal years 2015 or 2016. We prepared an initial list of federal programs based on our review. We then provided our list of programs to the FSM, the RMI, and the U.S. Departments of State and the Interior for their review and updated the list on the basis of information they provided.\nWe prepared a preliminary analysis of the post-2023 status of the programs and funding sources we identified and asked officials of the relevant U.S. agencies to review and comment on the accuracy of the list. As part of this analysis, we contacted officials from the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, the Interior, Labor, State, and Transportation; the Federal Communications Commission; the Federal Deposit Insurance Corporation; the Federal Emergency Management Agency; the National Science Foundation; the U.S. Agency for International Development; and the U.S. Postal Service. We incorporated into our analysis the comments that these officials provided, and we again asked for their review of our analysis before we completed our draft report. Our conclusions are based on a review of current law. Therefore, any changes in the applicable law subsequent to our report but before 2023 may affect the FSM’s and RMI’s eligibility for U.S. programs and funding. In addition, the availability of programs depends on appropriations made for that purpose. Although we took multiple steps to validate our list of programs with the FSM and RMI and the relevant U.S. agencies, our analysis may not have captured all U.S. grants and programs provided in the FSM and RMI.", "To examine projected compact trust fund disbursements and actions to address risks, we reviewed previous studies of the compact trust funds; the U.S.-FSM and U.S.-RMI compact trust fund agreements; and other governance and reporting documents such as investment policy statements, presentations to the compact trust fund committees, audits, and annual reports. We also interviewed FSM and RMI officials, compact trust fund committee members, authors of the previous studies, and the funds’ administrator, investment advisers and money managers.\nTo project the compact trust funds’ likely income at their current value and under current trust fund rules (i.e., the baseline scenario), we built a Monte Carlo simulation model and performed 10,000 trial runs of projected returns and disbursements over a four-decade time period, using random values for key variables.\nWe used the following key assumptions in our compact trust fund analysis:\nCompact trust fund balance. We used the unaudited FSM and RMI fiscal year 2017 year-end compact trust fund balances.\nC account balance. We estimated the C account balance on the basis of the unaudited FSM and RMI fiscal year 2017 year-end balances.\nTo assess the reliability of the unaudited balances, we reviewed the previous years’ audits and confirmed with the trust funds’ Administrator that previous years’ audits had not resulted in any significant differences between the preliminary balances and the final audited balances. We concluded that the unaudited balances were sufficiently reliable as a basis for our projections of future trust fund performance. The March 2018 audited fund balances, released after we completed our analysis, were within $5 of the unaudited fund balances.\nAmount of future compact trust fund contributions. We based the amounts of future annual U.S. contributions to both trust funds on the inflation-adjusted amounts estimated in the U.S. Department of the Interior’s (Interior) Office of Insular Affairs’ Budget Justifications and Performance Information, Fiscal Year 2018. For the RMI, we assumed that Taiwan would continue to contribute $2.4 million per year to the RMI’s A account each year through 2023 in keeping with Taiwan’s May 2005 agreement with the RMI.\nEstimated annual grant assistance for fiscal year 2023. We based our estimates of fiscal year 2023 assistance on the inflation-adjusted amounts estimated by the Office of Insular Affairs. The office estimated that the FSM would receive $82 million in annual grant assistance in fiscal year 2023 and that the RMI would receive $36 million, including Kwajalein-related assistance. In keeping with the RMI compact trust fund agreement, we excluded from our analysis grants provided to the RMI under compact section 211(b) for Kwajalein-related assistance, resulting in an estimated $27 million in grant assistance to the RMI under compact section 211 in fiscal year 2023. The actual amount of annual grant assistance in fiscal year 2023 will depend on actual inflation rates in the years preceding 2023. Different assumptions about the inflation rates will result in different estimates of the amount of fiscal year 2023 annual grant assistance.\nNet rate of return. In the baseline scenario, we present our results based on a 6 percent rate of return after fees are deducted. To select and assess the reasonability of this projected net rate of return, we reviewed the capital market assumptions and projections used by the money managers for the compact trust funds as well as historical market rates of return. However, because projecting the funds’ long- term performance using the current portfolio and economic assumptions has limitations, we also conducted our analyses using different nominal values for the net returns—5 percent, 7 percent, and 8 percent—in each case using a standard deviation of 13 percent. These results are presented in appendix V. We assumed a normal distribution, but we tested the same baseline analyses with a t- distribution and found that a t-distribution did not substantially affect the results.\nInflation rate after fiscal year 2023. We applied the 2 percent long- term inflation rate projected by the Congressional Budget Office.\nTo further analyze actions that could address risks to the compact trust funds, we modeled alternative strategies for managing the funds that were analyzed by previous studies of the compact trust funds. We identified previous studies through a literature search and by interviewing cognizant agency and trust fund officials. On the basis of this review, we developed five potential strategies that are representative of the approaches identified in previous studies. These five strategies are examples of many possible strategies, including varying amounts of disbursement reductions, additional contributions, and methods of calculating annual disbursements. We are not recommending any specific strategy. To provide additional information about potential outcomes, we also analyzed another four strategies that assumed a lower amount of additional trust fund contributions, lower disbursement reductions, or a lower percentage of the compact trust fund balance that could be withdrawn (see app. VII). To help ensure that we had appropriately reproduced the methods used in previous studies, we shared our preliminary results for strategy 4, which modeled the Moving Adjustment Rule, and strategy 5, which modeled the Sustainability Adjustment for Enhanced Reliability (SAFER), with the Graduate School USA representatives who had initially prepared these potential strategies. We analyzed each strategy separately to isolate the impact of individual changes in the strategy on compact trust fund balance and disbursements. However, in practice, these individual changes could occur in combination with each other. We again performed the Monte Carlo analysis, using the same key assumptions as in the baseline scenario, to determine the likely effects, relative to the baseline, of five potential strategies representing three approaches: (1) reducing annual compact trust fund disbursements; (2) making additional contributions; (3) and changing the disbursement policies, including strategies that would require changing the trust fund agreements to permit disbursements from the A account. We present the results of this analysis with a 6 percent net return, a standard deviation of 13 percent, and a normal distribution and tested the results with 5 percent, 7 percent, and 8 percent net returns (see app. VII for further details).\nTo summarize and compare our simulation results for the baseline and alternate scenarios, we analyzed the average disbursements in nominal dollars, the average disbursements in comparison with maximum disbursements, the likelihood of 1 or more years with zero disbursement, and the likelihood that the trust funds will maintain their inflation-adjusted value after fiscal year 2023.\nWe calculated the average disbursement in the given time periods by averaging simulated disbursements over 10-year periods (averaging first over 10 years and then over 10,000 simulated cases).\nWe calculated the average disbursement as a percentage of the maximum allowable disbursement by averaging the ratio of each simulated disbursement to the maximum inflation-adjusted allowable disbursement in the given period (averaging first over 10 years and then over 10,000 simulated cases).\nWe calculated the likelihood of zero disbursement by counting cases with 1 or more years of zero disbursement among the 10,000 simulated cases in each 10-year period.\nWe calculated the likelihood that the fund balance will maintain its inflation-adjusted fiscal year 2023 value by counting simulation cases where the simulated balance exceeds or equals its projected inflation- adjusted 2023 balance in the given year.\nWe report the disbursement results averaged by decade for the first 40 years of compact trust fund disbursements—fiscal years 2024 through 2033, fiscal years 2034 through 2043, fiscal years 2044 through 2053, and fiscal years 2054 through 2063—to summarize the overall trend in disbursements. However, depending on market volatility, disbursements during these decades are likely to fluctuate from year to year. While the projected per-decade averages can show long-term trends in the funds’ disbursements and sustainability and provide a comparison of the likely effects of the potential strategies we analyzed, the projected averages do not provide information about the volatility of changes in annual disbursement. We compare the compact trust funds’ projected value with the projected inflation-adjusted fiscal year 2023 value through 2063 in 10- year increments beginning in fiscal years 2033.\nTo document the status of the FSM Trust Fund and the RMI’s D account and their potential use to supplement FSM and RMI resources after 2023, we reviewed information about the FSM laws establishing the FSM Trust Fund, FSM economic reports, and the RMI-Taiwan agreement regarding the D account. We also interviewed FSM and RMI officials. We did not independently verify the FSM’s projections of the future size of, and disbursements from, its trust fund. The information on foreign law or on foreign government operations in this report is not the product of our original analysis, but is derived from interviews and secondary sources.", "To examine FSM and RMI efforts to prepare for the scheduled compact grant decrements, we reviewed each country’s decrement management plans to determine the FSM’s and RMI’s planned budget reductions and other actions. We then reviewed the FSM’s and RMI’s single audit reports and budget documents and interviewed FSM and RMI officials to determine whether the planned reductions had been implemented. We compared the planned actions to current legislation, single audit reports, or recent reports that discussed the status of FSM and RMI economic and financial reforms. In addition, we interviewed Interior, FSM, and RMI officials to determine whether FSM and RMI decrement management plans had been revisited or updated, why the plans were or were not adhered to, and whether the countries planned any future updates to the plans. We also conducted interviews with U.S. officials from the Department of State, a representative of Graduate School USA, and representatives of the World Bank and the International Monetary Fund regarding each country’s previous and current planning efforts.\nTo assess whether the FSM and RMI strategic plans for the key sectors of health, education, and infrastructure addressed the 2023 transition from compact grants and other U.S. assistance to compact trust fund income, we first obtained the relevant plans from department heads in each key sector of the FSM and RMI national governments and FSM state governments and confirmed our identification of the documents with FSM and RMI officials. We reviewed the plans to determine whether they included any discussion of budget projections, economic or financial reforms, alternative funding sources or other revenue generation strategies, and expenditure cuts or saving strategies for periods before and after fiscal year 2023. We also reviewed the FSM’s 2023 Action Plan and the RMI’s updated Medium Term Budget and Investment Framework to determine whether these documents discussed budget changes to address the 2023 transition.\nThrough our interviews with U.S., FSM, and RMI officials, we also learned about other ongoing planning efforts to address the 2023 transition: the U.S. Interagency Working Group on the Freely Associated States, the FSM Joint Compact Review and Planning Committee, and the RMI Compact Review Commission. Following our interviews, we reviewed and summarized documentation related to the working group’s purpose, meetings, and membership. We also contacted FSM and RMI committee members and officials to obtain additional information on the mandate, membership, and status of the FSM and RMI committees. The information contained in this report on foreign law or on foreign government operations is not the product of our original analysis, but is derived from interviews and secondary sources.\nWe conducted this performance audit from March 2017 to May 2018 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "The amended compacts’ implementing legislation authorized and appropriated direct financial assistance to the FSM and the RMI in fiscal years 2004 through 2023, and provided for partial inflation adjustment of the base amount of compact sector grants and trust fund contributions each year. The base amount is partially inflation-adjusted by the percentage that equals two-thirds of the percentage change in the U.S. gross domestic product implicit price deflator, or 5 percent, whichever is less in any 1 year, using the beginning of 2004 as a base. As the base amount of compact sector grants decreases, the trust fund contributions generally increase by an equivalent amount. Figure 9 shows the amount of compact sector grants and trust fund contributions each fiscal year from 2004 through 2023.\nThe cumulative inflation adjustment largely offsets the amount of the decrement, resulting in a relatively steady nominal amount of compact sector grants after inflation adjustments (see fig. 10). However, because the inflation adjustment is not equal to full inflation, the value of compact sector grants continues to decline in real terms.", "U.S. grants that end in 2023 play a significant role in the budgets of the FSM states and the RMI in the health and education sectors. The colleges of both countries have also relied on compact sector grants but rely even more on Pell grants to support their operation.\nFSM states rely on U.S. grants scheduled to end in 2023 for the majority of their health and education expenditures. In fiscal year 2016, compact sector grants and the SEG supported 60 percent or more of health expenditures and 82 percent or more of state education expenditures. Table 3 shows the states’ health and education expenditures of compact sector grants and the supplemental education grant (SEG) in fiscal year 2016. In fiscal years 2012 through 2016, compact sector grants and the SEG supported 56 to 99 percent of FSM states’ health expenditures and 82 to 100 percent of FSM states’ education expenditures.\nTotal expenditures (dollars)\nAmount (dollars)\nU.S. compact sector, supplemental education, and other grants also supported approximately 76 percent of the average $21 million in annual expenditures of the College of Micronesia–FSM, an FSM government component unit, in fiscal years 2012 through 2016. Compact sector grants and the SEG, each of which end in 2023, supported approximately 15 percent of the college’s annual expenditures. Pell grants, which provide support for education expenses for qualifying students, supported more than half of the college’s annual expenditures. College officials told us that the college would be unable to operate without Pell grants. According to officials from the U.S. Department of Education, the college will remain eligible after 2023 to receive Pell grants that benefit its students as long as such grants are available to institutions and students in the United States (see app. IV).\nThe RMI relies on U.S. grants scheduled to end in 2023 for health and education expenditures. In fiscal year 2016, compact sector and supplemental education grants scheduled to end in 2023 supported approximately 25 percent of RMI health expenditures and approximately 59 percent of RMI education expenditures (see table 4). Kwajalein-related grants increased these percentages to 32 percent for health and 66 percent for education. In total, in fiscal years 2012 through 2016, compact sector grants and the SEG supported approximately 58 percent of RMI education expenditures and 29 percent of health expenditures. During this period, the percentage of education expenditures supported by compact sector and supplemental education grants scheduled to end in 2023 remained relatively steady and the percentage of health expenditures decreased slightly.\nU.S. compact sector, supplemental education, and other grants also supported approximately half of the average $11.9 million in annual expenditures of the College of the Marshall Islands, an RMI government component unit, in fiscal years 2012 through 2016. Compact sector grants and the SEG, each of which end in 2023, supported approximately 8 percent of the college’s annual expenditures. Pell grants supported about 39 percent of the college’s expenditures. According to officials from the U.S. Department of Education, the college will remain eligible after 2023 to receive Pell grants that benefit its students, as long as such grants are available to institutions and students in the United States (see app. IV). Also in fiscal years 2012 through 2016, compact sector and supplemental education grants scheduled to end in 2023 supported about half of the expenditures of the RMI government component unit, the Marshall Islands Scholarship, Grant, and Loan Board, which provides financial assistance for educational and training opportunities. Kwajalein- related compact grants that do not end in 2023 supported an additional 13 percent of the board’s expenditures.", "The amended compacts, compact-related agreements, the amended compacts’ implementing legislation, and other U.S. laws provide grants or eligibility for U.S. programs and services for the FSM and RMI. The amended compacts provided compact sector, Kwajalein-related, and audit grants. Under current law, compact sector and audit grants are each scheduled to end in 2023, but the RMI military use and operating rights agreement (MUORA) extended the time frame of Kwajalein-related compact grants for as long as the agreement is in effect. The amended compacts’ implementing legislation provided additional grants, including authorizing a supplemental education grant (SEG), and identified several specific U.S. programs as available to the FSM and RMI. Under current law, the additional grants end in 2023 but the statutory authorizations for some programs identified in Pub. L. No. 108-188 provide for the continued eligibility of the FSM and RMI to receive benefits under the programs. However, after fiscal year 2023, the FSM and RMI will no longer be eligible under current U.S. law for some programs that the SEG replaced. The compact-related programs and services agreements with each country identify additional programs and services that the United States makes available to the FSM and RMI. While these agreements will end in 2024, under current law, some U.S. agencies may continue to provide programs and services similar to those provided in the agreement under other authorities. Based on the status of current law, the FSM’s and RMI’s eligibility for other programs we identified that have been provided under other current U.S. laws will not change after fiscal year 2023.", "Under current law, compact sector grants provided to the FSM and the RMI under their compact sections 211(a) are scheduled to end in 2023. However, the RMI is scheduled to continue to receive $7.2 million, partially inflation adjusted, related to the U.S. military base in Kwajalein Atoll and provided under section 211(b) of its compact. Under the terms of the RMI MUORA, the United States agreed to provide these Kwajalein- related grants for as long as the MUORA is in effect. The MUORA continues until 2066 and may be extended at the discretion of the United States until 2086. The amended RMI compact provides for $18 million, partially inflation adjusted, in annual payments to the RMI government to compensate for impacts from the U.S. Army Garrison–Kwajalein Atoll. These payments will continue for as long as the MUORA is in effect.\nAnnual compact grants of up to $500,000 (not inflation adjusted) to each country to pay for required annual audits of compact grants are scheduled to end in 2023. See table 5 for a summary of compact sector, Kwajalein- related, and audit grants.", "The supplemental education grant (SEG) authorized by the amended compacts’ implementing legislation is scheduled to end in fiscal year 2023 and, under current law, FSM and RMI eligibility for most programs that the SEG replaced will not resume after fiscal year 2023. Absent changes to current law, the FSM and RMI will not be eligible after fiscal year 2023 for the following programs that the SEG replaced during fiscal years 2005 through 2023: U.S. elementary and secondary education grant programs, adult education and literacy programs, career and technical education programs, job training programs, and Head Start early education programs. However, under other provisions of current law, qualifying individuals in the FSM and RMI will be eligible after fiscal year 2023 for undergraduate education grants and work-study programs that the SEG replaced. See table 6.", "Although the programs and services agreements with the FSM and RMI will end in fiscal year 2024, current U.S. law enables U.S. agencies to continue providing some programs and services now provided under the agreements. No current provisions of U.S. law will enable the Federal Emergency Management Agency (FEMA) to provide disaster response funding or enable the Federal Deposit Insurance Corporation to provide deposit insurance or the U.S. Postal Service to provide services to the FSM and RMI after the agreements end. However, the National Weather Service, the U.S. Department of Transportation’s (DOT) Federal Aviation Administration (FAA), and the U.S. Agency for International Development (USAID) could, under other legal authorities, provide services similar to those they now provide under the programs and services agreements.\nNational Weather Service. The programs and services agreements authorize the National Weather Service to fund the operations of weather stations in the FSM and RMI, which it can continue to fund after the end of the Agreements under other authorities, according to Department of Commerce officials.\nFederal Aviation Administration. The programs and services agreements authorize DOT’s FAA to provide technical assistance in the FSM and RMI, which it can continue to provide after the end of the Agreements under other provisions of current U.S. law. However, DOT officials stated that FAA would require new bilateral agreements with the FSM and the RMI in order for the countries to continue to receive the civil aviation safety services that FAA currently provides under the programs and services agreements. The FAA would also seek reimbursement for any technical assistance it provides to the FSM and RMI. With regard to the civil aviation economic services of the programs and services agreements, DOT officials stated that, while the FSM and RMI could voluntarily decide to allow U.S. air carriers to continue operations in the FSM and RMI, new bilateral agreements would be needed to assure that result.\nU.S. Agency for International Development. Following a U.S. presidential disaster declaration, FEMA provides the funding for disaster relief and reconstruction, which is programmed through USAID. Under current law, FEMA funds will no longer be available for this purpose once the agreements end; however, USAID will be able to provide foreign disaster assistance funding to the FSM and RMI under the same terms as it provides this assistance to other countries. After the programs and services agreements end, FEMA will be able to support disaster relief efforts only if USAID or the countries request it to do so on a reimbursable basis.\nIn addition, according to State and Interior officials, telecommunications- related services that the two agencies provide to the FSM and RMI under the programs and services agreements will continue as long as the FSM and RMI provide appropriate authorization for such services. Table 7 shows the status after fiscal year 2024 of programs and services currently provided to the FSM and the RMI under the agreements.", "Additional grants provided to the FSM and the RMI under the amended compacts’ implementing legislation will end in fiscal year 2023, but the countries’ eligibility for programs now provided under that legislation will generally continue under current U.S. law. Grants provided under the amended compacts’ implementing legislation for (1) judicial training in the FSM and the RMI, and (2) agricultural and planting programs on the RMI’s nuclear-affected Enewetak Atoll are scheduled to end. However, under current U.S. law, legal authorities permitting the operation of other programs would remain available to the FSM and RMI after fiscal year 2023. Eligibility under these legal authorities continues either because the amended compacts’ implementing legislation does not specify an ending date or because other provisions in current U.S. law make the FSM and RMI eligible for the program.\nPrograms provided in the amended compacts’ implementing legislation include U.S. Department of Agriculture Rural Utilities Service grant and loan programs; U.S. Department of Education Pell grants for higher education and grants under Part B of the Individuals with Disabilities Education Act for children with disabilities; programs for nuclear-affected areas in the RMI; and additional programs provided by the Departments of Commerce and Labor as well as law enforcement assistance provided by the U.S. Postal Service. See table 8 for a summary of the programs identified in the amended compacts’ implementing legislation and their status as of the end of fiscal year 2023.", "In addition to being eligible for the programs provided through the compact, its associated agreements, and the amended compacts’ implementing legislation, the FSM and RMI are also eligible for a number of programs under other provisions of current U.S. law. The FSM and RMI have each received funds from the U.S. Department of Agriculture for forestry and rural housing programs, multiple Health and Human Services public health program grants, Interior technical assistance and historic preservation programs, and the DOT FAA airport improvement program, among others. Under current U.S. law, the legal authorities permitting the provision of these programs in the FSM and RMI would not necessarily change after 2023. Table 9 shows the FSM’s and RMI’s eligibility for these additional grants and programs under current law after fiscal year 2023.", "In order to the test the sensitivity of our compact trust fund projections to assumptions about the future rate of return, we also performed our Monte Carlo analysis using alternate rates of return. We projected the compact trust fund disbursements and balance under current compact trust fund rules on the basis of a 6 percent net return and also estimated the trust fund on the basis of 5 percent, 7 percent, and 8 percent net returns. Higher rates of return would improve the outlook for each compact trust fund. However, even with higher rates of return, our analysis shows a high likelihood that available compact trust fund disbursements will not reach an amount equivalent to maximum disbursements permitted by the compact trust fund agreement (i.e., the inflation-adjusted amount of fiscal year 2023 annual grant assistance, as defined by the trust fund agreements), a continuing risk of zero disbursements, and a decreasing likelihood that the fund will maintain or exceed its inflation-adjusted balance in fiscal year 2023. See tables 10 and 11 for our projections of FSM and RMI compact trust fund disbursements, likelihood of 1 or more years with zero disbursement, and likelihood of maintaining or exceeding its inflation-adjusted fiscal year 2023 value.", "The FSM and RMI each maintain their own country trust funds separate from the compact trust funds. These country trust funds are also available to provide a source of revenue after compact grants end at the end of fiscal year 2023. We did not independently project the future balance or potential disbursements from the FSM Trust Fund after 2023.", "The FSM maintains its own trust fund, separate from the compact trust fund, which can provide additional resources after fiscal year 2023 to offset a reduction in resources relative to those made available as of fiscal year 2023. The FSM Trust Fund, established in 1999, has grown rapidly in recent years. In fiscal years 2012 through 2017, the FSM appropriated a total of $73.3 million for contributions to its trust fund. In addition, in 2015, the FSM changed its tax law to allocate 20 percent of revenue collected by the states to state subaccounts within the FSM Trust Fund. Along with investment gains, these appropriations and contributions of tax revenue have increased the FSM Trust Fund’s balance from $8 million at the end of fiscal year 2011 to $115 million as of the end of fiscal year 2017. As of 2017, the FSM proposed to continue adding $10 million annually from national government surpluses into its trust fund, with the aim of achieving a balance of $250 million by fiscal year 2023 and $10 million in annual disbursements. However, as of early 2018, according to FSM officials, the FSM planned to add $15 million per year to the FSM Trust Fund and projected that the fund would have a balance of $275 million by the end of fiscal year 2023. However, like the compact trust fund, the full balance of the FSM Trust Fund is not available for disbursement. Under current FSM law, funds in the FSM Trust Fund may not be withdrawn until fiscal year 2024. In addition, according to FSM officials, the FSM can withdraw only the fund’s earnings and cannot withdraw the inflation-adjusted value of the FSM Trust Fund corpus.", "The RMI also maintains its own trust fund—the compact trust fund’s D account. Although managed alongside the compact trust fund, the D account is not subject to the same disbursement provisions as the compact trust fund’s A, B, and C accounts. Instead, disbursements from the D account are subject to the provisions of the agreement between Taiwan and the RMI under which Taiwan contributed the $10 million that the RMI used to establish the D account. According to the terms of this agreement, the RMI may withdraw income after consultation with Taiwan but may not withdraw funds from the D account’s $10 million corpus. At the end of fiscal year 2017, the D account had a balance of $15.1 million, with $5.1 million potentially available for use by the RMI.", "We conducted a series of simulations to determine the likely effects of potential strategies for improving the outlook of the FSM and RMI compact trust funds. Prior studies by Graduate School USA, the Asian Development Bank, and the International Monetary Fund examined the effects of three general approaches for improving the trust funds’ outlooks: (1) reducing planned disbursements from the funds, (2) making additional contributions to the funds, and (3) changing the compact trust fund disbursement policies. To isolate the impact of individual changes on the compact trust fund balance and disbursements, we developed and analyzed five potential strategies based on those examined in the previous studies. Reduced disbursements and additional contributions could occur without changes to the trust fund agreement, but changes to the disbursement policies may require changing the agreements. In strategies 3, 4, and, 5, we analyzed strategies that would permit disbursement from the A account. Disbursing from the A account would require changing the compact trust fund agreements. Table 12 shows the 5 potential strategies we analyzed.\nWe analyzed two potential strategies that could be implemented without changes to the trust fund agreements: reductions in the amount of disbursements and additional contributions to the trust funds.\nStrategy 1: Annual disbursements are reduced below the maximum allowable disbursement. We analyzed the likely effects of reducing disbursements to an amount 30 percent below the maximum disbursement, relative to the baseline scenario, for both the FSM and the RMI compact trust funds.\nFor the FSM, the average size of the disbursements would be lower in the first 10 years of our projection, fiscal years 2024 through 2033, but greater in later years. For the RMI, the average disbursement size would remain lower than the disbursement amounts we projected using the baseline scenario. Disbursement amounts would remain volatile from year to year if the balance in the C account is not sufficient to provide additional disbursements.\nFor both countries, the risk of zero disbursements would be reduced, but not eliminated, in each decade.\nFor both countries, the likelihood that the funds would maintain or exceed their inflation-adjusted fiscal year 2023 value after fiscal year 2023 would be higher in each decade.\nReductions in annual disbursements could be effected by the compact trust fund committees at their discretion, without changes to the compact trust fund agreements. However, reductions in annual disbursements below the maximum amount would require each country to permanently adjust to having fewer resources for their budgets and economies than the compact grants provided.\nStrategy 2: Additional annual contributions are made to the trust fund in fiscal years 2018 through 2023. We analyzed the likely effects of additional contributions equivalent to 5 percent of each country’s fiscal year 2016 GDP, relative to the baseline scenarios, for both the FSM and the RMI compact trust funds.\nThe average size of the disbursements would be greater.\nDisbursement amounts would remain volatile from year to year if the balance in the C account is not sufficient to provide additional disbursements.\nThe risk of zero disbursements would be reduced but not eliminated.\nThe likelihood that the funds would maintain or exceed their inflation- adjusted fiscal year 2023 value after fiscal year 2023 would be higher.\nAdditional contributions to the FSM or RMI trust funds could be accepted at the discretion of compact trust fund committees, without changes to the compact trust agreements. However, unless the compact trust fund committees could identify other donors for these contributions, the countries would have to choose to reprogram existing revenues from other uses into compact trust fund contributions. The addition of funds from other donors would have no negative impact on the trust funds’ outlook if other conditions remained unchanged.", "We analyzed three additional potential strategies that would involve calculating annual disbursements as a percentage of the FSM and RMI compact trust funds’ balance and which would permit disbursement from the A account. Disbursing from the A account would require changing the compact trust fund agreements, necessitating negotiation and agreement between the United States and each country and statutory enactment by the U.S. Congress. In strategy 3, disbursements are calculated as a fixed percentage of the funds’ moving average balance over the previous 3 years. In strategies 4 and 5, disbursements are calculated on the basis of the funds’ moving average balance over the previous 5 years as well as the committees’ determination of the target size for the funds’ balance or disbursements. All three potential strategies would require the FSM and the RMI to exchange a reduction in resources for more predictable disbursements in the longer term.\nStrategy 3: The annual disbursement is set as a fixed percentage of the fund’s moving average balance over the previous 3 years, up to the maximum disbursement amount defined by the current trust fund agreement. We analyzed the likely effects of limiting annual disbursements to 5 percent of the moving average balance over the previous 3 years, relative to the baseline scenario for the FSM and the RMI compact trust funds.\nIn earlier years, average disbursements from the compact trust funds would be smaller than those in the baseline scenario; in later years, average disbursements would exceed those in the baseline scenario. For the FSM, the average disbursement would start to exceed that in the baseline scenario in the second decade after disbursements begin (fiscal years 2034-2043). For the RMI, the average disbursement would start to exceed that in the baseline scenario in the fourth decade after disbursements begin (fiscal years 2054-2063). Disbursement amounts would be less volatile from year to year than the volatility that could be experienced in the baseline scenario when the balance in the C account is not sufficient to provide additional disbursements.\nThe risk of zero disbursements would be eliminated.\nThe likelihood that the funds would maintain or exceed their inflation- adjusted fiscal year 2023 value after that year would be higher than in the baseline scenario.\nStrategy 4: The amount of the annual disbursement is reduced if the compact trust fund’s moving average balance over the previous 5 years is lower than a primary target amount. We analyzed the likely effects of implementing this strategy, relative to the baseline scenario for the FSM and the RMI compact trust funds.\nIn the FSM, the average disbursement would be lower than that in the baseline scenario in earlier years but higher than that in the baseline scenario in the fourth decade after disbursements begin (i.e., fiscal years 2054-2063). In the RMI, the average disbursement would be lower than that in the baseline scenario in earlier years but would equal that in the baseline scenario in the fourth decade after disbursements begin (i.e., fiscal years 2054-2063). Disbursement amounts would be less volatile from year to year than the volatility that could be experienced in the baseline scenario when the balance in the C account is not sufficient to provide additional disbursements.\nThe risk of zero disbursements would be greatly reduced but not eliminated. In the FSM, the risk would be 55 percentage points lower than in the baseline scenario in the fourth decade after disbursements begin (i.e., fiscal years 2054-2063). In the RMI, the risk would be less than 5 percent in each decade.\nThe likelihood that the funds would maintain or exceed their inflation- adjusted fiscal year 2023 value after that year would be higher than in the baseline scenario.\nStrategy 5: The target disbursement is set as 2.1 percent of the compact trust fund’s balance in fiscal year 2024. The disbursement amount is further decreased if the fund’s moving average balance over the previous 5 years is lower than the primary target balance. Our analysis projected the following effects of implementing this strategy relative to the baseline scenario for the FSM and the RMI compact trust funds:\nFor both countries, the average disbursement would be smaller than that in the baseline scenario in the first 3 decades after disbursements begin (i.e., fiscal years 2024-2053) but would exceed that in the baseline scenario in the fourth decade. Disbursement amounts would be less volatile from year to year than the volatility that could be experienced in the baseline scenario between 2024 and 2063 when the balance in the C account is not sufficient to provide additional disbursements.\nThe risk of zero disbursements would be almost eliminated.\nThe likelihood that the funds would maintain or exceed their inflation- adjusted fiscal year 2023 value would be much higher.\nFigures 11 through 16 compare projected compact trust fund disbursements and fund balances in the baseline scenario with projected disbursements and fund balances for the five selected potential strategies for improving the trust funds’ outlook.\nThe amounts of disbursement reductions and additional contributions varied among the strategies examined in prior studies. To provide additional information about potential trust fund outcomes, we analyzed another four examples of the selected strategies that assumed a lower amount of additional trust fund contributions, lower disbursement reductions, or a lower percentage of the compact trust fund balance that could be withdrawn. Tables 13 and 14 show the results for all 9 analyses.", "In addition to planning budget reductions in the FSM Long-Term Fiscal Framework (its decrement management plan) and the RMI Decrement Management Plan, the FSM and RMI planned other actions such as tax reforms and subsidy reductions to address the scheduled decrement in compact sector grants. The FSM implemented two of three planned actions and the RMI implemented one of four planned actions. The FSM did not implement unified tax reform measures but implemented a change in the formula for sharing compact sector grants with the FSM states and using planned surpluses to mitigate the effects of fiscal reforms. The RMI did not implement planned new taxes, reductions in subsidies to state- owned enterprises, or reductions in payments to Majuro landowners for the use of their land for utilities. The RMI did program a portion of its fishing fee surplus into the annual budget.\nAs of January 2018, the FSM national government had implemented two of three actions that the FSM Long-Term Fiscal Framework indicated the FSM would take in addition to budget reductions. 1. Implementing unified tax reform measures\nNot implemented. The FSM Long-Term Fiscal Framework states that substantial effort and progress has been made towards comprehensive tax and revenue reform and that the FSM national and state governments anticipated that the Long-Term Fiscal Framework process would provide further impetus towards tax reform. However, according to FSM officials, two FSM states (Pohnpei and Yap) did not approve the Unified Revenue Act. According to FSM officials, the FSM is currently considering other models for tax reform and plans to revisit the issue in the future. 2. Reducing the national government’s share of compact grants and reallocating it to the FSM states Implemented. According to the Long-Term Fiscal Framework, FSM Public Law 18-12 reduced the national government’s share of fiscal year 2014 compact grants from 10 percent to 5 percent, with the amount of the reduction passed along to the FSM states. In May 2014, FSM Public Law 18-57 further reduced the national government’s share of compact grants to 0 percent and increased the amount of compact grants allocated to the state governments, according to the FSM. 3. Using planned surpluses for actions such as possible contributions to activities that mitigate the effects of fiscal reforms, the FSM’s compact trust fund, retiring debt, or reform costs.\nImplemented. The FSM national government has made additional trust fund contributions but, according to FSM officials, has made a policy decision to make these contributions to the FSM Trust Fund instead of the compact trust fund.\nAs of January 2018, the RMI national government had implemented one of four other actions that its decrement management plan indicated it would take. 1. Implementing a value-added tax and net profits tax in 2017\nNot implemented. Officials from the RMI Economic Policy, Planning, and Statistics Office and Ministry of Foreign Affairs confirmed that tax reform has not been implemented due to political challenges. However, a tax task force has been established to revisit tax revenue reforms. 2. Programming 80 percent of unallocated Marshall Islands Marine Resources Authority fishing fee surplus into the annual budget in fiscal year 2015 and using the remaining 20 percent to develop the fishing industry.\nImplemented. The RMI programmed a portion of its fishing fees into the annual budget in fiscal years 2015 through 2017—$15.8 million in fiscal year 2015, $26.3 million in fiscal year 2016, and $40 million in fiscal year 2017. Although fishing fees were programmed into the budget, according to RMI’s Office of Compact Implementation, the formula allocating 80 percent of fishing fee revenue into the annual budget and the remaining 20 percent to develop the fishing industry is part of proposed RMI legislation but has not become law. 3. Reducing state-owned enterprise subsidies by 10 percent in fiscal years 2016 and 2018.\nNot implemented. The RMI national government did not reduce the total amount of state-owned enterprise subsidies by 10 percent in fiscal years 2016 as committed in the 2014 decrement management plan. Audit reports for state-owned enterprises in fiscal years 2015 and 2016 indicate that, while the RMI reduced subsidy amounts for some state-owned enterprises, other subsidy amounts increased and overall subsidies were higher in both fiscal years 2015 and 2016 than in fiscal year 2014. See table 15. for the government’s use of their land for utilities by 20 percent in fiscal years 2016, 2018, and 2021.\nNot implemented. The RMI national government has not reduced government transfers to Majuro landowners to compensate for the government’s use of their land for utilities due to political challenges, according to RMI officials. RMI Ministry of Finance officials stated that, as of January 2018, there had been no reductions in government transfers to Majuro landowners. According to RMI government officials, the total rent payment bill has in fact increased as utilities in Majuro have expanded.", "", "", "", "", "1. The FSM refers to our testimony in 2002 regarding the potential for the FSM compact trust fund to not provide funds sufficient to cover the estimated value of expiring federal services as early as 2002. 2. The FSM includes a graphic showing the effect of the partial inflation adjustments and the decrement in the compact sector grants. We include a similar portrayal of this analysis in figure 10 in this report. 3. The FSM states that the amount of the decrement in compact sector grants that is used for annual contributions to the FSM compact trust fund should be recorded as an FSM contribution to the fund. However, Section 215 of the FSM compact refers to the annually decreasing amounts provided to the compact trust fund as set forth in Section 216 of the FSM compact as United States contributions to the compact trust fund.", "", "1. The RMI states that, absent accountability issues, the maximum annual disbursement amount should be disbursed from the compact trust fund. However, as our report notes, although the compact trust fund agreements state the maximum allowable disbursement level, they do not establish or guarantee a minimum disbursement level. 2. The RMI states that the 2-year delay in investing the compact trust fund will result in a compounded total loss of $33.6 million by the end of fiscal year 2023. Our 2007 analysis of the trust funds included information about the delays in establishing the trust funds. We did not update our 2007 analysis of the loss in income due to the delay in investing the compact trust fund for this report. 3. The RMI notes that the amended compacts' implementing legislation extended several important federal programs. Appendix IV of this report presents our conclusions, based on our analysis of current law, that the RMI will remain eligible as of the end of fiscal year 2023 for special education programs and for some programs replaced by the supplemental education grant.", "", "", "In addition to the contact named above, Emil Friberg (Assistant Director), Ming Chen, Neil Doherty, Mark Dowling, Reid Lowe, Moon Parks, Shaundra Patterson, and Michael Simon made key contributions to this report. Justin Fisher, Jeff Isaacs, Julie Hirshen, Risto Laboski, Courtney LaFountain, and Jeffery Malcolm provided technical assistance." ], "depth": [ 1, 2, 2, 2, 3, 3, 3, 3, 3, 3, 1, 2, 3, 2, 1, 2, 2, 3, 3, 2, 2, 3, 3, 3, 1, 2, 3, 3, 2, 3, 3, 2, 3, 3, 3, 1, 1, 1, 1, 2, 2, 2, 1, 1, 1, 2, 2, 2, 2, 2, 1, 1, 2, 2, 1, 2, 1, 1, 1, 2, 1, 2, 1, 2, 1, 2, 2 ], "alignment": [ "h3_title", "", "", "h3_title", "h3_full", "", "", "", "", "", "", "", "", "", "h3_title h1_full", "h3_full", "", "", "", "h1_full", "h1_title", "", "", "h1_full", "h2_full h4_title", "", "", "", "h4_title", "", "h4_full", "h2_full", "", "", "", "h3_full", "", "", "h0_full h4_full h2_title", "", "h4_full", "h4_full h2_full", "", "h0_full", "h0_title", "", "", "h0_full", "", "", "", "", "", "", "h3_full h1_full", "", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What do the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) rely on?", "What do these grant and programs support?", "How will the end of these grants and programs cause change?", "What else might the FSM and RMI receive after 2023?", "What needs to be addressed from the compact trust funds?", "What risks did the GAO find with trust funds?", "What strategies can address the risks?", "How could changing trust fund policies address the risks?", "What issues are there in this change?", "What overarching concerns restrict disbursement changes?", "What did FSM and RMI not implement?", "What do FSM and RMI plans currently address?", "Specifically, how do they address the 2023 transition?", "How has the US supported the FSM and RMI?", "How does grant funding behave?", "How is the usual decrease handled for the FSM and RMI?", "How has the intended funding of trust fund earnings been contradicted by GAO findings?", "What was the GAO asked to review?", "What does this report examine?", "What materials did the GAO review to prepare for the report?", "What additional action did the GAO take to prepare?" ], "summary": [ "The Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) continue to rely on U.S. grants and programs, including several that are scheduled to end in 2023.", "U.S. compact sector and supplemental education grants, both scheduled to end in 2023, support a third of the FSM's and a quarter of the RMI's expenditures.", "Agreements providing U.S. aviation, disaster relief, postal, weather, and other programs and services are scheduled to end in 2024, but some agencies may provide programs and services similar to those in the agreements under other authorities.", "FSM and RMI eligibility for some other U.S. grants and programs is expected to continue after 2023.", "Disbursements from the compact trust funds face risks that the trust fund committees have not addressed.", "GAO found that the trust funds are increasingly likely to provide no annual disbursements in some years and to not sustain their value.", "Potential strategies such as reduced trust fund disbursements or additional contributions from the countries or other sources could help address these risks.", "Changing the trust fund disbursement policies could also address these risks but may require revising the trust fund agreements with each country.", "However, the trust fund committees have not prepared distribution policies, required by the agreements, which could assist the countries in planning for the 2023 transition to trust fund income.", "The committees also have not prepared the required fiscal procedures for oversight of the disbursements or addressed differences between the timing of their annual determination of the disbursement amounts and the FSM's and RMI's annual budget cycles.", "The FSM and RMI did not implement planned budget reductions to address decreasing compact grants owing to increased revenues from other sources that offset the grant decreases.", "Current FSM and RMI infrastructure plans address the 2023 transition, while health and education plans focus on strategic goals.", "Both countries have established new compact planning committees to identify future challenges and develop plans for the 2023 transition to trust fund income.", "In 2003, the United States approved amended compacts of free association with the FSM and RMI, providing a total of $3.6 billion in economic assistance in fiscal years 2004 through 2023 and access to several U.S. programs and services.", "Compact grant funding, overseen by the Department of the Interior, generally decreases annually.", "However, the amount of the annual decrease in grants is added to the annual U.S. contributions to the compact trust funds, managed by joint U.S.-FSM and U.S.-RMI trust fund committees.", "Trust fund earnings are intended to provide a source of income after compact grants end in 2023, but GAO and others have previously found that the trust funds may not provide sustainable income.", "GAO was asked to examine preparations for the transition in 2023.", "This report examines (1) the use and role of U.S. funds and programs in FSM and RMI budgets, (2) projected trust fund disbursements and potential strategies to address risks to those disbursements, and (3) FSM and RMI plans to prepare for grant decreases and the transition to trust fund income.", "GAO reviewed compact agreements, audit reports, and U.S. law; modeled trust fund performance under existing conditions and using potential strategies; and reviewed FSM and RMI plans.", "GAO visited each country and interviewed FSM, RMI, and U.S. officials." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 1, 1, 3, 3, -1, -1, 1, -1, -1, 1, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3, 3, 3, 4, 4, 4, 0, 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "Background", "GSA Made Design Choices That Decreased and Increased O&M Costs", "Some GSA Design Choices Have Decreased O&M Costs", "Some GSA Design Choices Have Increased O&M Costs", "GSA Does Not Fully Consider O&M and Functionality Effects When Making Design Choices", "GSA Does Not Fully Consider How Design Choices Affect O&M Costs", "Design Excellence Buildings Generally Function Well, but Some Costly Design Choices Did Not Improve Functionality", "GSA Does Not Systematically Collect and Share Information on Common O&M Cost Experiences That Could Affect Design Choices", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Buildings Constructed under the General Services Administration’s (GSA) Design Excellence Program", "Appendix III: Survey of General Services Administration (GSA) Building Managers and Summarized Results", "This appendix provides a copy of the survey completed by managers for all 78 buildings constructed under GSA’s Design Excellence Program included in our review. The appendix also includes the responses received for each of the close- ended questions (1a, 1b, 1c, 1e, 2a, 3a, and 4a); it does not include information on open-ended responses (1d, 1f, 2b, 3b, 3c, 4b, and 5). The purpose of this survey was to gather responses on how design choices affected operation and maintenance (O&M) costs and building function. See appendix I for additional information on our survey methodology.", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "The federal government is the largest real property owner in the United States with a vast inventory costing billions of dollars annually to operate and maintain. Federally owned buildings include courthouses, offices, warehouses, schools, hospitals, housing, data centers, and laboratories, among other things. GSA acts as the federal government’s landlord, and is responsible for designing, constructing, and managing federal buildings for other federal agencies and the judiciary to occupy. There are currently approximately 1,600 federally owned buildings under GSA’s custody and control.\nAccording to the Office of Management and Budget (OMB), agencies, including GSA, should have accurate information on acquisition and “lifecycle” costs of current and proposed assets, including costs for designing and constructing the building, O&M, and disposal. For example, when planning and designing new federal buildings, GSA must analyze building energy and water systems (e.g., for air conditioning and heating) to identify those with the lowest acquisition and operating costs. In addition, once the building is constructed, GSA building managers and O&M contractors are responsible for maintaining the building, which includes tasks related to recurring maintenance and repair (e.g., on heating and cooling systems), maintaining the property’s roads and grounds, cleaning and janitorial services, and paying for utilities.\nIn 1994, GSA instituted the Design Excellence Program, a process for designing, constructing, renovating, altering, and repairing federal courthouses and office buildings. This program was developed in response to criticisms that federal buildings lacked architectural distinction. It stresses creativity in the design of buildings with the intent of constructing spaces that meet the tenant’s functional needs while also becoming public landmarks. More specifically, the program aims to meet several guidelines—called the Guiding Principles for Federal Architecture— including designing spaces that: reflect the dignity, enterprise, vigor, and stability of the U.S. government; avoid uniformity; and are built in locations in which federal buildings can be incorporated into the existing public streets and landscape.\nAccording to GSA officials, the Design Excellence Program also streamlines how GSA selects and manages the private-sector architects and engineering firms it hires for new projects. The process consists of four primary stages: planning for the prospective tenant’s needs and general project details (e.g., request for proposal announcement); selecting and working with an architectural and engineering firm to design the building; selecting a contractor to construct the building; and occupancy by the tenants.\nThe process is overseen by a GSA project team, consisting of a project manager, contracting officer, officials from GSA’s Office of the Chief Architect, and additional subject matter experts, who work with the federal tenant that plans to occupy the space.\nA large number of the federal courthouses and office buildings constructed and controlled by GSA in the last 20 years have been completed under the Design Excellence Program. Under the program, GSA has constructed 78 facilities including 62 courthouses and 16 federal office buildings, including a data center and laboratories. These buildings account for more than 36-million square feet of space, are located in 33 states and the District of Columbia, and many have won architecture and design awards. Figure 1 shows examples of federal courthouses and office buildings constructed under the Design Excellence Program.", "", "According to interviews with GSA officials and building tenants, GSA has made choices in some Design Excellence buildings intended to reduce long-term O&M costs. For example: Increased natural light. All 10 of the Design Excellence buildings we visited were designed to include interior natural light, which some building managers reported reduced energy costs. According to GSA officials, natural light is not only aesthetically pleasing; it also improves lighting quality for building tenants and reduces lighting costs. For example, the First Street Federal Courthouse (Los Angeles, California) has a light well as part of its atrium and a serrated glass façade that maximizes natural light. Building officials said that 22 of the 24 courtrooms in the building receive natural light from multiple sources, reducing energy usage and requiring less frequent replacement of lighting. In addition, building officials at the Albert Armendariz, Sr., U.S. Courthouse (El Paso, Texas) reported extensive natural light from a three story window wall and the front atrium; both features provide ample light for building tenants. (See fig. 2).\nDurable and easily maintained materials and finishes. In most of the 10 Design Excellence buildings we visited, GSA officials and building tenants reported selecting materials and finishes that (1) are highly durable and easy and inexpensive to clean; (2) are expected to last a long time; and (3) required little maintenance. For example, the lobby walls and floors of the Ronald Reagan Federal Building and Courthouse (Santa Ana, California) are made out of travertine, a very durable stone, which has lasted more than 15 years without the need for repairs or replacement. In addition, officials at a few buildings noted that the decision to install carpet tiles in lieu of large patches of carpet has made it very easy and relatively inexpensive to maintain and repair office spaces and courtrooms.\nLow-maintenance landscaping. Several of the 10 Design Excellence buildings we visited incorporated native flora into the landscape design, which can reduce energy and water costs. For example, officials planted native, drought resistant plants around the First Street Federal Courthouse (Los Angeles, California). Building officials at the Las Cruces U.S. Courthouse (Las Cruces, New Mexico), which is located in a desert environment, also reported most of the native landscape around the courthouse does not require watering.", "According to our survey respondents—building managers at all 78 Design Excellence buildings included in our review—certain GSA design choices, such as multistory atriums and custom windows, have resulted in increased O&M costs compared to an average GSA building without those features. Almost all Design Excellence building managers (76 out of 78) reported that certain design choices resulted in increased O&M costs that would not have occurred had that design choice not been selected. For example, 67 out of 78 building managers for Design Excellence buildings stated that the effect of including multistory open spaces, like atriums, increased O&M costs due to the challenges associated with heating and cooling, making needed repairs, and cleaning these spaces. (See table 1). Building managers and tenants we spoke with confirmed our survey results, and provided examples of design choices that resulted in unexpected O&M cost increases. For example, officials noted increased O&M costs associated with separate structures and multistory atriums that were difficult to access for cleaning and repairs.\nSeparate Structures. Managers from only 21 of 78 Design Excellence buildings reported having an attached, but separate structure (e.g., pavilions, rotundas, restaurants, and other additional spaces connected to the building), but managers at 19 of those buildings stated that the effect of such design features increased O&M costs. For example, one federal building we visited had a rotunda with a domed roof that, according to building managers, has multiple gutter leaks that are not currently accessible due to the design of the space. As a result, maintenance staff continuously patch the ceiling without addressing the cause of the leaks (see fig. 3).\nAtriums and Lobbies. Managers from 67 of 78 Design Excellence buildings reported their buildings’ multistory atriums and lobbies increased O&M costs. Several GSA managers we interviewed identified additional costs to maintain a multistory atrium or lobby, including costs for renting expensive scaffolding or mechanical lifts. For example, one Design Excellence building we visited has water leaks in the lobby ceiling, which can only be reached by extensive and expensive scaffolding (see fig. 4).\nLarge, Custom Windows. Managers from 65 of 78 Design Excellence buildings reported that the effect of design choices related to their buildings’ windows increased O&M costs. In addition, several Design Excellence buildings we visited had custom or uniquely shaped windows, which occasionally increased the costs to replace, repair, or maintain them. For example, GSA officials at one courthouse reported repairing one two-story, custom-made window pane, which cost $80,000 to fabricate and $50,000 to install. The courthouse had eight of these windows, and a GSA official stated that the windows are an attractive feature of the building that introduced natural light, but a different window choice would have been cheaper to maintain (see fig. 5).\nMission Spaces. Managers from 48 Design Excellence buildings reported that the effect of design choices related to mission spaces (i.e., spaces in which federal employees conduct work) increased O&M costs. Specifically, managers from 32 buildings stated that design choices made in mission spaces increased repair costs, and managers from 30 buildings reported increased cleaning costs. GSA officials at several buildings we visited discussed challenges accessing and maintaining mechanical systems incorporated into tenant mission spaces. For example, one Design Excellence building includes a heating, ventilation, and air-conditioning (HVAC) system that is hidden under a raised floor within mission spaces. Because building managers cannot easily access the system, there are maintenance delays and challenges identifying and making necessary repairs, which ultimately result in higher O&M costs. Building officials reported they considered replacing the HVAC system, but doing so would cost approximately $55 million. (See fig. 6).\nOther Design Choices. According to Design Excellence building managers that responded to our survey and at locations we visited, the effect of several other design choices including energy efficient elements (e.g., solar panels and green roofs), courtyards, floors, and circulation (e.g., hallways, stairways, and elevators) increased O&M costs. For example, according to these officials, (1) the design of green roofs led to water leaks; (2) the design of courtyards led to problems maintaining unique landscaping; (3) flooring choices, specifically selected materials, led to premature scuffing and cracking; and (4) the design of hallways and stairways made them difficult to maintain.", "With the Design Excellence Program, GSA aims to create buildings that are cost-effective and function well for tenants. However, GSA makes design choices for Design Excellence buildings during the planning and design stages of new projects without fully considering the effect of these choices on O&M costs and functionality.", "GSA does not estimate most O&M costs during planning and design. Specifically, according to GSA officials we interviewed and planning documents we reviewed, when planning and designing new buildings, officials estimate the costs of major energy systems, such as boilers and chillers. However, based on our review of GSA and industry data, these systems only account for about one-third of O&M costs in Design Excellence buildings. GSA officials stated that they do not estimate the remaining two-thirds of O&M costs—which include maintenance, cleaning, and landscaping—until late in the building’s construction. However, GSA officials also said that it would be costly to make significant design changes at that point in the process. In addition, the O&M estimates for maintenance, cleaning, and landscaping are for the purpose of selecting a contractor to provide these services, not as a means for addressing or reducing future O&M costs, according to officials.\nGSA building and regional managers who are responsible for addressing the O&M consequences of design choices told us that they were not always integrated or asked to participate in planning and designing new Design Excellence buildings. Specifically, GSA building and regional managers at several of the buildings we visited stated that they were never, or seldom, consulted on O&M costs and issues during the design process, nor did they have an opportunity to review design documents. A few GSA building managers we spoke with stated that on rare occasions when they were consulted their input was rarely incorporated, or was requested too late in the construction stage to allow for necessary changes. According to these officials, if given the chance, they could have highlighted issues with certain design choices that would significantly increase O&M costs and could have offered potential solutions to reduce those costs. Officials responsible for overseeing the Design Excellence Program told us that other officials with an understanding of issues surrounding O&M are involved in the process for designing new buildings through, for example, subject matter reviews of the design concepts. Officials agreed, however, that more could be done to formally involve the perspective of facilities staff, such as building managers, who are responsible for the day-to-day management of O&M.\nWe found that GSA’s lack of consideration of how design choices may affect the O&M costs of Design Excellence buildings could be attributed to existing procedures that do not emphasize the need to consider such costs during the planning and design stage. Specifically, GSA’s procedures for planning, designing, and constructing new Design Excellence buildings focus on design creativity, construction challenges, budget, and schedule and do not direct GSA to estimate O&M costs during planning and design. While these procedures promote several factors to consider in a building’s design—including aesthetics, functionality, and constructability—and generally require firms to submit documentation on budget and schedule, they do not call for information on expected O&M costs. In addition, these procedures do not include seeking input on design decisions from facilities personnel who will have responsibility for the ongoing O&M once the building is occupied.\nFederal standards for internal control state that federal agencies should use complete and relevant information when making decisions and design control activities, including procedures, to achieve objectives. These federal standards also state that federal agencies should ensure the communication of information internally, for example through procedures that allow management to receive quality information from personnel, to help achieve the entity’s objectives. In addition, guidance from GSA and the Office of Management and Budget directs officials to consider and strive for the lowest possible costs, including O&M costs, when designing buildings.\nInformation on how specific design choices could affect ongoing O&M costs would allow GSA to better understand the impact of those choices. Such information is critical as O&M accounts for a significant proportion of resources dedicated to federal buildings over the long-term. According to GSA and industry associations, O&M costs are significantly higher over time than all other costs, including for construction, and typically account for between 60 and 80 percent of building lifecycle costs. To illustrate this point, we analyzed GSA construction and O&M data for Design Excellence buildings. As figure 7 shows, we estimate that over an average building’s age (60 years) the total construction and O&M costs for GSA’s 78 existing Design Excellence buildings could be about $18 billion—$8.1 billion for construction (45 percent) and $9.9 billion for O&M (55 percent). Because GSA’s procedures do not direct officials to estimate about two-thirds of O&M costs or fully integrate officials with an understanding of the O&M consequences of design decisions, officials may not have been aware of how design choices would affect approximately $6.6 billion (two-thirds of $9.9 billion) in O&M costs. In addition, without procedures that clearly emphasize the need to more fully consider O&M costs in Design Excellence buildings during the planning and design stage, GSA and other stakeholders may not have a complete picture of all relevant information necessary to make informed decisions on how to best design future federal buildings.\nGSA realizes that the focus of Design Excellence projects has been on design and construction, not O&M costs, and, in September 2017, initiated a process, called “Operational Excellence”, to more fully consider O&M costs. This process includes considering ways to more fully consider O&M costs during planning and design, including developing a cost tool that would estimate future O&M costs. In addition, GSA is considering ways to update existing procedures for designing and constructing new buildings to include a more comprehensive evaluation of potential O&M costs, for example, by more fully integrating knowledgeable personnel at key stages. However, according to GSA officials, they are still in the early stages of determining what needs to be done in part due to a small staff, which includes one full-time employee and one part-time employee. As of March 2018, GSA has not established a schedule for updating its procedures to require considering O&M during design.", "Most design choices made for Design Excellence buildings, including the shape and size of courtrooms and the lighting in hallways, have had a positive effect on overall building functionality (i.e., helped the tenant agency achieve its mission), according to officials we surveyed and interviewed. For example, GSA building managers we surveyed reported the functionality of at least one design choice in most buildings (72 of 78 buildings) as good or very good. Specifically, they reported that in most buildings, the overall functionality of design choices was good in many of the areas we asked them about. In addition, building managers reported that the functionality of the following design choices was also good or very good: selected material color (53 buildings) and lighting (58 buildings); shape and size of the space (61 buildings); pedestrian circulation (61 buildings); and temperature control in the areas critical for a building’s operation, such as courtrooms or office space (46 buildings).\nGSA and tenant agency officials whom we interviewed were also positive about how the design choices affected the functionality of their buildings, especially the use of windows and atriums to allow natural light. Tenants also reported they enjoyed other features of the new buildings, including commissioned artwork and the design of the interior and exterior. Tenants’ satisfaction with the function of Design Excellence buildings may, in part, reflect the condition of their previous office space. For example, one tenant noted that moving from temporary trailers into a state-of-the-art courthouse was a substantial functional improvement.\nHowever, we found that increased spending on certain design choices did not always provide improved functionality for the building tenant. For example, GSA building managers reported that in many buildings (67 of 78) atriums and lobbies (i.e., vertical penetrations) have increased O&M costs due to higher repair, cleaning, and energy costs. At the same time, building managers reported that in 51 of those 67 buildings, choices made in the design of multistory atriums and lobbies, e.g., material color and lighting, did not have a positive effect on building functionality (see table 2). Similarly, the decision to install solar panels and green roofs (e.g., energy efficient elements), increased O&M costs in several areas, particularly repair costs, but in over half of the buildings with these features, building managers did not report an improvement in functionality. For example, in two courthouses we visited solar panels installed with the intention of saving on energy costs are not supplying as much power as expected and, therefore, have not yet provided the expected energy benefits.\nTenants we interviewed also noted that in some cases, design choices have not functioned well and are costly to maintain and operate. According to a tenant at one Design Excellence office building, while the decision to construct a multistory atrium has added aesthetic value for federal employees, it has also resulted in challenges balancing air pressure between the atrium and the adjacent office spaces. These differences in air pressure have resulted in uncomfortable working conditions, such as fluctuating temperatures, which have hampered productivity. Another tenant told us about design choices such as long hallways and elevators that do not stop at all floors, making it difficult for tenant employees to move efficiently through the building. Some of these design choices, such as elevators with mechanical systems at the bottom of the elevator shaft, have proven costly to maintain as they age more quickly. Other tenants noted that the selection of heating and cooling systems, which automatically adjust building temperatures based on time of day, for example, have not functioned as planned, resulting in variable temperatures and employee discomfort.\nIn addition, GSA has sometimes made design choices in buildings that do not apply to one of the primary functional goals of the Design Excellence Program—to serve as a landmark that positively represents the federal government to the public. Specifically, GSA does not consider that some buildings, due to their purpose or location, are unlikely to function as landmarks because they have limited interaction with or limited visibility by the public. In this regard, we found that most Design Excellence buildings (66 of 78) are visible and accessible to the general public, i.e., “public-facing”. Many of these buildings have succeeded in becoming public landmarks and several have won awards for their design. Specifically,\n62 serve as courthouses, which are visible from public streets and people may enter to observe judicial proceedings or conduct personal business. See figure 8 for an example of a Design Excellence courthouse with publicly visible exteriors and interiors.\nFour serve as office buildings for various federal agencies that are publicly accessible.\nIn contrast, we found that 12 Design Excellence office buildings restrict the public from accessing interior spaces. Specifically,\nSeven can be seen from public sidewalks or roads, even though the building is not open to the public, such as the U.S. Secret Service Headquarters and FBI field office buildings. As a result, these buildings’ exteriors could be public landmarks that represent the federal government, but the interior design features are not publicly accessible. For example, the Ronald H. Brown U.S. Mission to the United Nations Building in New York City has an impressive and publicly visible exterior façade but restricts public access to a multi- story rotunda and art space (see fig. 9).\nFive have obstructed views from public roads and sidewalks in addition to restricting public access to the interior. Neither the exterior nor interior design choices, which can be expensive to operate and maintain, in these buildings can be seen or appreciated by the public. For example, according to the tenant agency and GSA officials, the visually impressive interior atrium and courtyard at the Ariel Rios Federal Building have proven logistically challenging and expensive to maintain and are not accessible to the public. In addition, the façade of the National Oceanic and Atmospheric Administration Satellite Operations Facility, which, according to GSA officials, is expensive to maintain and repair, is not accessible by the public. (See fig. 10).\nAccording to GSA officials, when they carry out their planning and design for Design Excellence buildings, they do not differentiate between buildings that will be public-facing and those that will not. This approach may be in part due to the fact that GSA’s procedures for planning and designing new Design Excellence buildings do not call for consideration of how design choices may have different functional benefits, including whether the interior and exterior of planned buildings would be accessible to the public. Federal standards for internal control state that federal agencies should use complete and relevant information when making decisions and designing control activities, including procedures to achieve objectives. By taking a “one size fits all” approach and not considering the functionality of design choices, such as how a building’s location and intended use will affect the public’s ability to see the exterior and interior, GSA may be selecting design choices that increase O&M costs without improving functionality.", "According to GSA officials, GSA currently does not systematically collect and share information on how design choices made for previous Design Excellence projects have affected O&M costs with the project teams— consisting of a project manager, contracting officer, and other GSA officials—that are responsible for overseeing the planning and design of new buildings. GSA has evaluated what is and is not working effectively in some existing Design Excellence buildings and has on occasion shared these evaluations with project teams. For example, GSA has evaluated the performance of 6 out of 78 Design Excellence buildings. These evaluations included identifying design decisions that led to higher O&M costs and, on one occasion, developed a formal presentation to share these lessons with the team working on a new Design Excellence project.\nAccording to officials, GSA requires agency personnel with subject matter expertise to review building design concepts provided by private-sector architects and engineers. GSA also fosters information sharing through procedures that encourage project teams to exchange ideas, lessons learned, and concerns. However, these processes either (1) are not done in a consistent or systematic way, or (2) require information sharing among a small group of officials, i.e., a project team, which might not have visibility over the extensive design choices made in all existing buildings. While all of these information-sharing initiatives offer benefits, GSA’s procedures do not include a systematic collection and sharing of information with the project teams responsible for managing new Design Excellence projects on how design choices affected O&M costs in existing Design Excellence buildings. According to GSA officials, they are considering formalizing this sort of information collection and sharing as part of the Operational Excellence process, but as previously noted, GSA is in the early stages of setting up this initiative and has not established a schedule for completing its actions or updating its procedures.\nAs discussed, some design choices in existing Design Excellence buildings have decreased or increased O&M costs. Since GSA does not systematically share how these types of design choices affected O&M costs with teams responsible for planning and designing new buildings, similar issues could occur in future buildings. For example, we previously mentioned that building managers indicated that using durable materials, low maintenance landscaping, and energy-efficient lighting can reduce long-term O&M costs.\nBuilding managers also reported common issues caused by design choices that led to increased costs including: Inefficiently located mechanical systems. Building managers reported the location of mechanical systems in Design Excellence buildings often led to increased cost. Specifically, building managers reported the location of these systems increased repair costs (41 out of 77 buildings) and energy costs (32 out of 77 buildings). In the Design Excellence buildings we visited, building managers and tenants reported issues with the location of mechanical systems (4 buildings). For example, officials indicated that air-conditioning systems were placed in inefficient locations that required more energy usage because water had to be pumped unnecessarily far distances (see fig. 11).\nDifficult-to-access lights. Building managers reported that design choices for the location of interior lights increased maintenance costs in the majority of Design Excellence buildings (55). In particular, managers reported that the location of lights in atriums and lobbies (38 buildings) and courtrooms and other mission spaces (33 buildings) increased costs. In addition, GSA officials at locations we visited said that lights above tall staircases, ceiling lights in atriums and auditoriums, and lights directly above permanent structures led to additional costs, including the need to use scaffolding or rent large equipment to maintain these lights. (See fig. 12). One way that a majority of GSA building managers (61) we surveyed are attempting to mitigate high maintenance cost for lighting issues is to install energy efficient equipment, such as light-emitting diode (LED) lights.\nDifficult-to-maintain materials and finishes. In 68 Design Excellence buildings, building managers reported that materials or finishes were chosen that are easily worn. Similarly, in buildings we visited (4 buildings), GSA officials reported that decisions on the materials used or configuration of exterior surfaces (e.g., the roof or façade) of a Design Excellence building led to repair and maintenance problems, particularly water leaks. (See fig. 13).\nHard to clean surfaces. Cleaning surfaces, especially in atriums, can be a challenge for maintaining Design Excellence buildings. For example, building managers we surveyed reported that the decision to install certain types of window treatments increased cleaning costs (49 buildings). In three buildings we visited, building managers and tenants also said Design Excellence buildings required special equipment or scaffolding to clean windows or surfaces, which led to increased cleaning costs. (See fig. 14).\nAccording to federal standards for internal control, agencies should use and communicate complete and relevant information when designing control activities, including procedures to achieve objectives. Without a formalized process for systematically collecting and sharing how design choices affected O&M costs in existing buildings, designs for future Design Excellence buildings may not benefit from the successful strategies used by others to reduce O&M costs or may continue to repeat problematic choices that may result in increased O&M costs.", "Through the Design Excellence Program, GSA has achieved excellence in architecture and the design of federal buildings. Buildings constructed under the Design Excellence Program have created unique and aesthetically pleasing workspaces, have met the functional needs of tenant agencies, and have become public landmarks. However, because GSA does not have program procedures that call for consideration of how certain design features may affect O&M, it may not be fully aware of the costs of including these features in its building design and plans. Specifically, GSA does not estimate or gather all perspectives from building and regional managers on the full O&M costs of design choices, or consider the extent to which they will improve the functionality of the building for tenants and the public. For example, GSA’s one-size fits all approach in designing these buildings does not consider whether non- public buildings need the same costly architectural elements as buildings intended to serve as public landmarks. Further, GSA is missing opportunities to improve future building designs by not systematically gathering and sharing information on the common design choices that had both positive and negative effects on O&M costs. Without a clear picture of the ongoing costs of these choices, GSA and other stakeholders are missing critical information to better inform the design and construction of new buildings. While GSA has just begun an Operational Excellence initiative to help identify future O&M costs, it is not clear what actions GSA will take to improve consideration of O&M costs during planning and design or when it will take those actions.", "We are making the following four recommendations to GSA:\nThe Administrator of the General Services Administration should update existing procedures to require GSA officials to estimate the full operations and maintenance costs of design choices in the planning and design process for new Design Excellence buildings. (Recommendation 1)\nThe Administrator of the General Services Administration should update existing procedures to require GSA officials to obtain information from personnel responsible for addressing the operations and maintenance consequences of design choices at key decision points during the planning and design of new Design Excellence buildings. (Recommendation 2)\nThe Administrator of the General Services Administration should update existing procedures to require GSA officials to further consider and document, during the planning and design of new Design Excellence buildings, how design choices may affect building functionality, such as whether a building is publicly visible and accessible. (Recommendation 3)\nThe Administrator of the General Services Administration should update existing procedures to require GSA officials to systematically collect and share information with project teams responsible for overseeing the planning and design of new buildings on the positive and negative effects of common design choices on operations and maintenance costs in existing Design Excellence buildings. (Recommendation 4)", "We provided a draft of this report to GSA, the U.S. Administrative Office of Courts, the Department of Homeland Security, the Department of Justice, and the Department of Commerce for comment. In written comments, reproduced in appendix IV, GSA stated that it agreed with our recommendations and provided several technical comments. GSA clarified its policies for selecting and analyzing the lifecycle costs of building systems. In addition, GSA stated that table 2 in our report did not capture the full functional benefits and reasons for making certain design choices. As we noted in the report, this table does not preclude that a specific design choice may be functional or have functional benefits. We also included several of the examples GSA highlighted in their comments, such as the functional need for a separate structure, which may serve key security functions. GSA also stated that our conclusions did not indicate that most Design Excellence buildings functioned well. We added language to the conclusions to clarify this point.\nThe U.S. Administrative Office of Courts, the Department of Homeland Security, the Department of Justice, and the Department of Commerce did not provide comments.\nWe are sending copies of this report to the appropriate congressional committees, the Administrator of the General Services Administration, Director of the Administrative Office of U.S. Courts, Attorney General, and the Secretaries of Homeland Security and Commerce. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-2834 or rectanusl@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix V.", "This report assesses the extent to which: (1) the General Services Administration (GSA) made design choices that affect operations and maintenance (O&M) costs; (2) GSA considers O&M costs and functionality when planning and designing buildings; and (3) GSA systematically collects and shares information on O&M costs related to design choices in existing buildings.\nTo address all of our objectives, we reviewed applicable federal regulations; GSA procedures, policies, and standards for designing, constructing, and operating federal facilities, including specific policies and procedures for Design Excellence buildings; our prior work; and reports by other federal agencies and related professional organizations on topics, including the standard costs of operating and maintaining office buildings. Our review examined 78 federal buildings and courthouses that GSA constructed under the Design Excellence Program—referred to as “Design Excellence buildings”—since the program started in 1994. At our request, GSA provided a list of all buildings under the agency’s custody and control that were constructed under the Design Excellence Program. Based on input from GSA officials indicating that large campuses were unlikely to have reliable O&M data, we excluded nine buildings that are part of the White Oak Campus in Silver Spring, Maryland. We reviewed relevant GSA documents pertaining to the remaining 78 Design Excellence buildings, including the most recent Asset Business Plans detailing investment needs for maintenance and repairs, strategies for efficient operations, building use, and tenant satisfaction. We analyzed GSA-provided historical data on construction and O&M costs from 2000 to 2016 for the buildings in our review and projected O&M future costs. To calculate our projection, we made several assumptions, including (1) that annual O&M costs would increase at the same level as 2016 O&M costs ($174 million), and (2) that Design Excellence buildings will reach the average age of all current GSA buildings (60 years). We assessed the reliability of these data through electronic testing and reviewing documentation on the data. We determined that the data provided were sufficiently reliable for the purpose of illustrating the extent to which O&M costs make up total building costs.\nWe also conducted a web-based survey of GSA building managers responsible for overseeing O&M for the 78 Design Excellence buildings included in our review. The survey addressed the extent to which certain design choices affect O&M costs and building functionality. We developed the survey based on our objectives, prior GAO work, and site visits to 10 Design Excellence buildings. We pretested the survey with GSA officials at three Design Excellence buildings, which were selected based on building age, location, total square feet, fiscal year 2016 O&M costs, and the building’s primary use (e.g., office or courthouse). As part of our pretesting, we asked GSA building managers to explain their understanding of survey questions and made edits based on their comments. We conducted the survey from November 2017 to March 2018 and our response rate was 100 percent (78 out of 78). See appendix III for a copy of the survey and summarized responses.\nWe visited 10 Design Excellence buildings in three GSA regions to view design choices and O&M activities. As part of these site visits, we conducted interviews that included tenant agencies located in these buildings, GSA building managers responsible for managing these buildings and officials from GSA regional offices with oversight responsibilities for these buildings. To select our site visit locations and ensure geographic and agency diversity, we considered several factors including building operating costs, size, location, and the tenant agency. Based on these criteria we selected the buildings listed in table 3. The interviews and tours we conducted during our site visits do not allow us to generalize the findings to all Design Excellence buildings. Information gathered from our site visits did allow us to show how O&M costs were considered in specific Design Excellence buildings and the effects of design choices.\nWe also interviewed GSA officials located in GSA Headquarters within the Office of Design and Construction, including the Chief Architect, and the Office of Facilities Management. We also interviewed GSA regional officials within the Office of Facilities Management in four of GSA’s 11 regional offices: Greater Southwest Region, National Capital Region, Pacific Rim Region, and Southeast Sunbelt Region. We selected regional offices based on the location of our site visits and included one additional regional office based on it having the highest total O&M operating costs of the eight remaining regional offices. We discussed several topics with GSA officials, including how O&M costs were considered during planning and design and how information on the O&M costs of design choices are shared.\nTo determine the extent to which GSA considers O&M costs and functionality when planning and designing buildings, we analyzed Federal Real Property Profile (FRPP) data. Our analysis of U.S. government- owned office buildings that are less than 40 years old, occupied, and needed for a tenant’s mission, identified five potentially relevant variables to explain variation in the O&M costs: building type (i.e., whether a building was constructed under the Design Excellence Program), size, age, and condition of the building, as well as the median hourly wage of O&M services in the building’s location. After controlling for these variables, we found that size and median hourly wage but not building type had a statistically significant relationship to O&M costs. We assessed the reliability of these data through electronic testing as well as a review of documentation for each federal data source. We determined that the data provided were sufficiently reliable for the purpose of describing our attempts to identify factors that influence O&M costs in federal buildings. We also requested and received additional information from the building managers of Design Excellence federal office buildings. Specifically we asked for information on the extent to which these federal office buildings are public-facing, have restrictions on public entry and are visible from public sidewalks or roads, and what the daily volume of public visitors was.\nWe compared GSA’s efforts to consider O&M costs in the planning and design of Design Excellence buildings to pertinent Standards for Internal Control in the Federal Government on using complete and relevant information when making decisions and design control activities, including procedures, to achieve objectives, as well as on communicating information internally. In addition, we compared GSA’s efforts to consider these costs in the planning and design of Design Excellence buildings to guidance from GSA and the Office of Management and Budget that directs agency officials to consider and strive for the lowest possible costs, including O&M costs, when designing buildings. We also compared GSA’s efforts to consider functionality when planning and designing these buildings to pertinent Standards for Internal Control in the Federal Government on using complete and relevant information when making decisions and design control activities, including procedures, to achieve objectives.\nTo assess the extent to which GSA systematically collects and shares information on O&M costs related to design choices in existing Design Excellence buildings, we reviewed Post Occupancy Evaluations commissioned by GSA on six Design Excellence buildings. These evaluations contain information, such as how GSA buildings are performing and the extent to which they comply with GSA’s federal standards for public buildings. These evaluations can include reviews of operations and maintenance documentation, interviews and surveys with building occupants, and interviews with relevant GSA staff, architectural and engineering design team staff, and an on-site evaluation. We also compared GSA’s process for collecting and sharing how design choices affected O&M costs in existing buildings to pertinent Standards for Internal Control in the Federal Government on using and communicating complete and relevant information when designing control activities, including procedures, to achieve objectives.\nWe conducted this performance audit from May 2017 to May 2018 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "GSA created the Design Excellence Program in 1994. Under this program, GSA has constructed 78 buildings in 33 states and the District of Columbia, buildings that range in size from about 35,000- to over 3- million gross square feet (see table 4).", "", "", "", "Lori Rectanus, (202) 512-2834 or rectanusl@gao.gov.", "In addition to the contact named above, Keith Cunningham (Assistant Director); Matthew Cook (Analyst in Charge); Eli Albagli; Sarah Arnett; Colin Ashwood; Melissa Bodeau; Lacey Coppage; Caitlin Cusati; Terrence Lam; Joshua Ormond; Dae Park; Minette Richardson; Kelly Rubin; Ardith Spence; and Dave Wise made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 2, 1, 2, 2 ], "alignment": [ "h0_full", "h0_title h1_title", "", "h0_full h1_full", "h1_full", "h1_full", "h1_full", "h0_full h2_full h1_full", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What are the goals of the General Services Administration's (GSA) Design Excellence Program?", "How have the design choices for Design Excellence Buildings changed costs?", "How did the GSA comment on their design choices to the GAO?", "What choices increased O&M costs?", "What fault does the GSA have in their design choices?", "How does the GSA consider O&M costs?", "Why does the GSA fail to estimate O&M cost until so late in the process?", "How does this choice make the project less cost effective?", "How did the GAO evaluate cost and functional choices?", "What was a choice that increased costs without increasing functionality?", "How does the GSA handle collection of design choices?", "What have they evaluated in the past?", "What issues lie in the inconsistent collection of design choices?" ], "summary": [ "The goals of the General Services Administration's (GSA) Design Excellence Program are to creatively design federal buildings that meet federal agencies' functional needs and become public landmarks.", "Some design choices for Design Excellence buildings have decreased ongoing operations and maintenance (O&M) costs, but others have increased those costs.", "GSA's building managers and tenants told GAO that design choices that have reduced O&M costs include the use of durable materials and low maintenance landscaping.", "Other design choices have increased O&M costs. For example, according to GAO's survey of 78 building managers of Design Excellence buildings, multistory atriums often led to additional O&M costs, including the need to erect expensive scaffolding for maintenance.", "While GSA aims to create Design Excellence buildings that are cost-effective and functional, it makes design choices without fully considering their effect on O&M costs and functionality.", "For example, GSA officials do not estimate the majority of O&M costs, such as the building maintenance associated with their design choices until the design is almost finalized.", "This outcome is partly because GSA procedures do not direct GSA officials to develop such estimates during the design and planning of Design Excellence buildings and because building and regional managers responsible for addressing the O&M consequences are also not involved in the design and planning process.", "As a result, important cost information that could help building project teams make the most cost-effective design choices is not available to help them.", "In addition, while building managers GAO surveyed reported that GSA's design choices generally support a building's functionality, they also reported that some design choices increased O&M costs without improving functionality.", "For example, they identified design choices related to material color and lighting that increased O&M costs but did not enhance the functionality of the building for the tenants.", "Although GSA has developed some information on how design choices can affect O&M costs, it does not consistently collect and share such information.", "For example, GSA has evaluated the performance of only six Design Excellence buildings, and does not systematically collect information on how design choices have affected O&M costs in all existing buildings.", "Without a process to collect and share such information, future buildings may not benefit from these lessons, and problematic choices may be repeated." ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, 1, 1, -1, 4, -1, 0, -1 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 5, 5, 5 ] }

{ "title": [ "", "Introduction", "Eligibility", "Modified Adjusted Gross Income", "Medicaid Enrollment Trends", "Share of Enrollment Versus Expenditures, by Population", "Benefits", "Traditional Medicaid Benefits", "Alternative Benefit Plans", "Long-Term Services and Supports", "Medicaid Service Spending", "Beneficiary Cost Sharing", "Service Delivery Models", "Financing", "Federal Share", "State Share", "Expenditures", "Provider Payments", "Medicaid Program Waivers", "Program Integrity", "Selected Issues", "ACA Medicaid Expansion", "State Decisions", "Dual-Eligible Beneficiaries", "Impact of ACA Health Insurance Annual Fee on Medicaid", "Maintenance of Effort", "Medicaid Resources" ], "paragraphs": [ "", "Medicaid is a joint federal-state program that finances the delivery of primary and acute medical services, as well as long-term services and supports (LTSS), to a diverse low-income population, including children, pregnant women, adults, individuals with disabilities, and people aged 65 and older. In FY2014, Medicaid is estimated to have provided health care services to 65 million individuals at a total cost of $498 billion, with the federal government paying $303 billion of that total.\nMedicaid is an important health care safety net for low-income populations, with approximately 18% of the U.S. population enrolled in Medicaid in calendar year (CY) 2013. For some types of services, Medicaid is a significant payer. For instance, in CY2013, Medicaid accounted for 43% of national spending on LTSS, and Medicaid pays for almost half of all births in the United States.\nMedicaid is one of the largest payers in the U.S. health care system, representing 15% of national health care spending in CY2013; in that year, private health insurance and Medicare accounted for 33% and 20%, respectively.\nMedicaid was enacted in 1965 as part of the same law that created the Medicare program (the Social Security Amendments of 1965; P.L. 89-97). State participation in Medicaid is voluntary, though all states, the District of Columbia, and the territories choose to participate. States are responsible for administering their Medicaid programs. Medicaid is financed jointly by the federal government and the states. Federal Medicaid spending is an entitlement, with total expenditures dependent on state policy decisions and use of services by enrollees.\nStates must follow broad federal rules to receive federal matching funds, but they have flexibility to design their own versions of Medicaid within the federal statute's basic framework. This flexibility results in variability across state Medicaid programs. Each state has a Medicaid state plan that describes how the state will administer its Medicaid program. States submit these Medicaid state plans to the federal Centers for Medicare & Medicaid Services (CMS) for approval.\nMedicaid was designed to provide coverage to groups with a wide range of health care needs that historically were excluded from the private health insurance market (e.g., individuals with disabilities who require LTSS or indigent populations in geographic locations where access to providers is limited). Because of the diversity of the populations that Medicaid serves, Medicaid offers some benefits that typically are not covered by major insurance plans offered in the private market (e.g., nursing facility care or early and periodic screening, diagnosis, and treatment [EPSDT] services). Medicaid also pays for Medicare premiums and/or cost sharing for low-income seniors and individuals with disabilities, who are eligible for both programs and referred to as dual-eligible beneficiaries . For other Medicaid enrollees, out-of-pocket costs generally are nominal, which may not be the case with most employer-sponsored insurance or coverage through health insurance exchanges (also referred to as marketplaces ). The Medicaid program pays for special classes of providers, such as federally qualified health centers (FQHCs), rural health clinics (RHCs), and Indian Health Service (IHS) facilities that provide health care services to populations in areas where access to traditional physician care may be limited.\nSince its inception, the Medicaid program has expanded in a number of different directions. Federal laws have changed virtually every aspect of the program, affecting eligibility, benefits, beneficiary cost sharing, and fraud and abuse protections, among others. The Patient Protection and Affordable Care Act (ACA; P.L. 111-148 as amended) is the most recent federal law to make fundamental revisions to the Medicaid program, including a substantial expansion of Medicaid eligibility that began in 2014. The ACA likely will broaden Medicaid's role in providing health care coverage to the U.S. population and increase the likelihood that, going forward, Congress's attention to health policy issues will involve Medicaid.\nThe ACA was designed to reduce the number of U.S. citizens without health insurance by preserving the existing system of employer-based health insurance, making changes to the individual insurance market, and expanding coverage to the uninsured through Medicaid and health insurance exchanges. Under the ACA, Medicaid and the health insurance exchanges are envisioned to work in tandem to provide a continuous source of subsidized coverage for lower-income individuals and families. Medicaid agencies are required to coordinate with the health insurance exchanges to educate people about new health insurance options and assist them in navigating the enrollment process.\nThis report describes the basic elements of Medicaid, focusing on who is eligible, what services are covered, how enrollees share in the cost of care, how the program is financed, and how providers are paid. The report also explains waivers, program integrity activities, and the dual-eligible population. In addition, the report addresses the following selected issues: the ACA Medicaid expansion, the impact of the ACA health insurance annual fee on Medicaid, and the ACA maintenance of effort (MOE) requirement with respect to Medicaid eligibility.", "Eligibility for Medicaid is determined by both federal and state law, whereby states set individual eligibility criteria within federal standards. Individuals must meet both categorical (e.g., elderly, individuals with disabilities, children, pregnant women, parents, certain non-elderly childless adults) and financial (i.e., income and sometimes assets limits) criteria. In addition, individuals need to meet federal and state requirements regarding residency, immigration status, and documentation of U.S. citizenship. Some eligibility groups are mandatory, meaning all states with a Medicaid program must cover them; others are optional. States are permitted to apply to CMS for a waiver of federal law to expand health coverage beyond the mandatory and optional groups listed in federal statute (see the \" Medicaid Program Waivers \" section for more information).\nIf a state participates in Medicaid, the following are examples of groups that must be provided Medicaid coverage:\nlow-income families that meet the financial requirements (based on family size) of the former Aid to Families with Dependent Children (AFDC) cash assistance program; pregnant women and children through the age of 18 with family income at or below 133% of the federal poverty level (FPL); low-income individuals who are aged 65 and older, or who are blind, or who are under the age of 65 and disabled who qualify for cash assistance under the Supplemental Security Income (SSI) program; recipients of adoption assistance and foster care (who are under the age of 18) under Title IV–E of the Social Security Act; certain individuals who age out of foster care, up to the age of 26, and do not qualify under other mandatory groups noted above; and certain groups of legal permanent resident immigrants (e.g., refugees for the first 7 years after entry into the United States; asylees for the first 7 years after asylum is granted; lawful permanent aliens with 40 quarters of creditable coverage under Social Security; immigrants who are honorably discharged U.S. military veterans) who meet all other financial and categorical Medicaid eligibility requirements.\nExamples of groups to which states may provide Medicaid include\npregnant women and infants with family income between 133% and 185% of FPL; certain individuals who qualify for nursing facility or other institutional care and have incomes up to 300% of SSI benefit level, referred to as the 300 percent rule ; medically needy individuals who are members of one of the broad categories of Medicaid covered groups (i.e., are aged, have a disability, or are in families with children) and have high medical expense, but have income that exceed the applicable income requirements; working people with disabilities; and non-elderly adults who otherwise are not eligible for Medicaid with income at or below 133% of FPL (i.e., the ACA Medicaid expansion). (For more information about the ACA Medicaid expansion, see \" ACA Medicaid Expansion .\")", "As of January 1, 2014, MAGI rules are used in determining eligibility for most of Medicaid's non-elderly populations, including the ACA Medicaid expansion. This change could mean some individuals who previously were eligible for Medicaid no longer would be found eligible (and vice versa) due to the change in the way income is counted for Medicaid eligibility. For example, the conversion to MAGI might make some children who previously were eligible for Medicaid ineligible because stepparent income often is excluded from the pre-ACA income counting rules but included for MAGI. By contrast, children previously not eligible might become eligible because MAGI excludes child support income, which generally was included under the pre-ACA income counting rules.\nMedicaid's MAGI income-counting rule is set forth in law and regulation. For Medicaid, MAGI is defined as the Internal Revenue Code's adjusted gross income (AGI, which reflects a number of deductions, including trade and business deductions, losses from sale of property, and alimony payments) increased by certain types of income (e.g., tax-exempt interest income received or accrued during the taxable year and the nontaxable portion of Social Security benefits) . In addition, under Medicaid regulations certain types of income are subtracted (e.g., certain scholarships and fellowships) to arrive at MAGI.\nUnder the MAGI counting rules, the state looks at each individual's MAGI, deducts 5%, which the law provides as a standard disregard, and compares that income to the new income standards set by the state in coordination with CMS. See Table A-1 for the state-by-state MAGI-based eligibility levels adjusted for the 5% disregard effective January 1, 2015.\nThe transition to the MAGI income rules had significant implications for the Medicaid eligibility determination process. It represented a major change in terms of the types of information collected (such as what counts as income) and the definition of household (such as the inclusion of the income of a stepparent) compared with former Medicaid eligibility rules. These changes necessitated a redesign of the existing Medicaid eligibility and enrollment systems for each state. These systems were integrated with the health insurance exchanges as well as with other social programs that serve low-income populations (e.g., the Temporary Assistance for Needy Families [TANF] and the Supplemental Nutrition Assistance Program [SNAP]).", "Figure 1 shows historical and projected Medicaid enrollment for FY2000 through FY2023 (see Table B-1 for state-by-state Medicaid enrollment for FY2012). The figure shows steady enrollment growth, especially among nondisabled children and adults as a result of the recessions. During periods of economic downturns, Medicaid programs face enrollment increases at a faster rate because job and income losses make more people eligible. One study estimated that for every 1% increase in the national unemployment rate, Medicaid enrollment increases by 1 million individuals.\nThe ACA Medicaid expansion is projected to add 4.3 million newly eligible adults to Medicaid in FY2014 and 12.0 million newly eligible adults by FY2023. Regardless of whether a state decides to implement the ACA Medicaid expansion, all states are expected to experience an increase in Medicaid enrollment due to the woodwork effect. The woodwork effect is the term for uninsured individuals who are eligible for Medicaid without the expansion but decide to enroll in Medicaid due to increased media attention and outreach efforts associated with the ACA.", "Different Medicaid enrollment groups have very different service utilization patterns. Larger enrollment groups account for a smaller proportion of Medicaid expenditures, while some smaller enrollment groups are responsible for a larger proportion of Medicaid expenditures. As shown in Figure 2 , for FY2012, roughly half of Medicaid enrollees were children without disabilities, who accounted for only about 20% of Medicaid's total benefit spending. The next-largest enrollee group—adults—accounted for about 25% of all enrollees but only about 16% of benefit expenditures. In contrast, individuals with disabilities represented about 17% of Medicaid enrollees but accounted for the largest share of Medicaid benefit spending (about 44%). Finally, the elderly represented about 9% of Medicaid enrollees but about 21% of all benefit spending. While these statistics vary somewhat from year to year and state to state, the patterns described above generally hold true across years.", "Medicaid coverage includes a wide variety of preventive, primary, and acute care services as well as LTSS (see \" Long-Term Services and Supports \" for more information about LTSS). Not everyone enrolled in Medicaid has access to the same set of services. Different eligibility classifications determine available benefits. Federal law provides two primary benefit packages for state Medicaid programs: (1) traditional benefits and (2) alternative benefit plans (ABPs). Each of these packages is summarized in Table 1 . For the medically needy subgroup, states may offer a more restrictive benefit package than is available to other enrollees. In addition, states can use waiver authority (e.g., Section 1115 of the Social Security Act) to tailor benefit packages to specified Medicaid subgroups (see \" Medicaid Program Waivers \" for more information about Section 1115 waivers).", "The traditional Medicaid program requires states to cover a wide array of mandatory services (e.g., inpatient hospital care, lab and x-ray services, physician care, nursing facility services for individuals aged 21 and older). In addition, states may provide optional services, some of which commonly are covered (e.g., personal care services, prescription drugs, clinic services, physical therapy, and prosthetic devices).\nStates define the specific features of each covered benefit within four broad federal guidelines:\nEach service must be sufficient in amount , duration , and scope to reasonably achieve its purpose. States may place appropriate limits on a service based on such criteria as medical necessity. Within a state, services available to the various population groups must be equal in amount, duration, and scope. This requirement is the comparability rule . With certain exceptions, the amount, duration, and scope of benefits must be the same statewide, referred to as the statewideness rule . With certain exceptions, enrollees must have freedom of choice among health care providers or managed care entities participating in Medicaid. (See \" Service Delivery Models \" for information about managed care.)\nThe breadth of coverage for a given benefit can, and does, vary from state to state, even for mandatory services. For example, states may place different limits on the amount of inpatient hospital services a beneficiary can receive in a year (e.g., up to 15 inpatient days per year in one state versus unlimited inpatient days in another state)—as long as applicable requirements are met regarding comparability; statewideness; sufficiency of amount, duration, and scope; and freedom of choice. Exceptions to state limits may be permitted under circumstances defined by the state.", "As an alternative to providing all the mandatory and selected optional benefits under traditional Medicaid, the Deficit Reduction Act of 2005 (DRA; P.L. 109-171 ) gave states the option to enroll state-specified groups in what was referred to as benchmark or benchmark-equivalent coverage but currently are called ABPs. The ACA made significant changes to both ABP design and requirements.\nUnder ABPs, states may waive the statewideness and comparability requirements that apply to traditional Medicaid benefits. This flexibility permits the state to define populations that are served and the specific benefit packages that apply. In general, ABPs may cover fewer benefits than traditional Medicaid, but there are some requirements, such as coverage of EPSDT services (for children under the age of 21), family planning services and supplies, and both emergency and nonemergency transportation to and from providers that might make them more generous than private insurance.\nStates that choose to implement the ACA Medicaid expansion are required to provide ABP coverage to the individuals eligible for Medicaid through the expansion (with exceptions for selected special-needs subgroups). In addition, states have the option to provide ABP coverage to other subgroups.\nABPs must cover at least the 10 essential health benefits (EHBs) that also apply to the qualified health plans offered in the health insurance exchanges. In addition, ABP coverage must comply with the federal requirements for mental health parity, and special rules also apply with regard to prescription drugs, rehabilitative and habilitative services and devices, and preventive care. Medicaid beneficiaries enrolled in such coverage must have access to services provided by rural health clinics and federally qualified health centers.", "LTSS refers to a broad range of health and health-related services and supports needed by individuals who lack the capacity for self-care due to a physical, cognitive, or mental disability or condition. Among the Medicaid LTSS benefits, the only state plan benefits that participating states are required by federal law to cover are nursing facility services and home health. States may cover other types of LTSS, including case management services, personal care services, and private duty nursing.\nAs the largest single payer of LTSS in the United States, Medicaid plays a key role in providing these services. In FY2014, Medicaid LTSS accounted for 26% of all Medicaid spending despite the fact that LTSS recipients represent a relatively small share of the total Medicaid population (See Figure 3 ). An estimated 4.2 million Medicaid beneficiaries (or 6.4%) of the 66 million total enrolled Medicaid population received LTSS in FY2010.\nMedicaid funds LTSS for eligible beneficiaries in both institutional and home - and community-based settings, though the services offered di ffer substantially by state. Moreover, states are required to offer certain Medicaid institutional services to eligible beneficiaries, while the majority of Medicaid home - and community-based services (HCBS) are optional for states. In recent decades, federal authority has expanded to assist states in increasing and diversifying their Medicaid LTSS coverage to include HCBS. As a result, the share of Medicaid LTSS spending for HCBS has increased considerably, from 3 3 % o f Medicaid LTSS spending in 2003 to 51 % of Medicaid LTSS spending in 2013.", "Figure 3 below shows the nationwide distribution of Medicaid expenditures across broad categories of service for FY2014. These data illustrate that 37% of benefit spending is for capitated payments under managed care arrangements (see \" Service Delivery Models \" for information about managed care), while LTSS account for a little more than a quarter and acute care services represent another quarter of Medicaid benefit payments. In general, when other sources of insurance/payment are available (including Medicare), Medicaid wraps around that coverage (i.e., additional coverage for services covered under Medicaid but not under the other source of coverage).", "Federal statutes and regulations address the circumstances under which enrollees may share in the costs of Medicaid, both in terms of participation-related cost sharing (e.g., monthly premiums) and point-of-service cost sharing (e.g., co-payments [i.e., flat dollar amounts paid directly to providers for services rendered]). States can require certain beneficiaries to share in the cost of Medicaid services, but there are limits on (1) the amounts that states can impose, (2) the beneficiary groups that can be required to pay, and (3) the services for which cost sharing can be charged.\nIn general, premiums and enrollment fees often are prohibited. However, premiums may be imposed on certain enrollees, such as individuals with incomes above 150% of FPL, certain working individuals with disabilities, and certain children with disabilities.\nStates can impose cost sharing, such as co-payments, coinsurance, deductibles, and other similar charges, on most Medicaid-covered benefits up to federal limits that vary by income. Some subgroups of beneficiaries are exempt from cost sharing (e.g., children under 18 years of age and pregnant women).\nThe aggregate cap on all out-of-pocket cost sharing is generally up to 5% of monthly or quarterly household income.", "In general, benefits are made available to Medicaid enrollees via two service delivery systems: fee-for-service or managed care . Under the fee-for-service delivery system, health care providers are paid by the state Medicaid program for each service provided to a Medicaid enrollee. Under the managed care delivery system, Medicaid enrollees get most or all of their services through an organization under contract with the state. States traditionally have used the fee-for-service service delivery model for Medicaid, but since the 1990s, the share of Medicaid enrollees covered by the managed care model has increased dramatically. In FY2011, about 72% of Medicaid enrollees were covered by some form of managed care and all but four states (Alaska, Idaho, New Hampshire, and Wyoming) used managed care coverage to some extent.\nThere are three types of Medicaid managed care:\nManaged care organizations (MCOs) —states contract with MCOs to provide a comprehensive package of benefits to certain Medicaid enrollees. States usually pay the MCOs on a capitated basis, which means the states prospectively pay the MCOs a fixed monthly rate per enrollee to provide or arrange for most health care services. MCOs then pay providers for services to enrollees. Primary care case management (PCCM)— states contract with primary care providers to provide case management services to Medicaid enrollees. Typically, under PCCM, the primary care provider receives a monthly case management fee per enrollee for coordination of care, but the provider continues to receive fee-for-service payments for the medical care services utilized by Medicaid enrollees. Limited benefit plans —these plans look like MCOs in that states usually contract with a plan and pay it on a capitated basis. The difference is that limited benefit plans provide only one or two Medicaid services (e.g., behavioral health or dental services).\nWhile managed care has been used largely for healthier Medicaid subgroups (i.e., children and parents), some states are turning to this type of service delivery model for the elderly and individuals with disabilities.\nIn addition to these two main types of service delivery models, some states use alternative models, such as premium assistance and health savings accounts. Some states are using these alternative models for their ACA Medicaid expansion. For example, Arkansas uses premium assistance through the private option for the ACA Medicaid expansion and Michigan uses health savings accounts.", "The federal government and the states jointly finance Medicaid. The federal government reimburses states for a portion (i.e., the federal share) of each state's Medicaid program costs. Because federal Medicaid funding is an open-ended entitlement to states, there is no upper limit or cap on the amount of federal Medicaid funds a state may receive. In FY2014, Medicaid expenditures totaled $498 billion. The federal share totaled $303 billion and the state share was $195 billion.", "The federal government's share of most Medicaid expenditures is established by the federal medical assistance percentage (FMAP) rate, which generally is determined annually and varies by state according to each state's per capita income relative to the U.S. per capita income. The formula provides higher FMAP rates, or federal reimbursement rates, to states with lower per capita incomes, and it provides lower FMAP rates to states with higher per capita incomes.\nFMAP rates have a statutory minimum of 50% and a statutory maximum of 83%. In FY2015, 13 states have the statutory minimum FMAP rate of 50%, and Mississippi has the highest FMAP rate of 74% (see Table B-1 for each state's FY2015 FMAP rate).\nThe FMAP rate is used to reimburse states for the federal share of most Medicaid expenditures, but exceptions to the regular FMAP rate have been made for certain states (e.g., the District of Columbia and the territories), situations (e.g., during economic downturns), populations (e.g., certain women with breast or cervical cancer and individuals in the Qualifying Individual program), providers (e.g., Indian Health Service facilities), and services (e.g., family planning and home health services). In addition, the federal share for most Medicaid administrative costs does not vary by state and is generally 50%.\nThe ACA included FMAP exceptions, including the newly eligible federal matching rates and the expansion state federal matching rates. Under the newly eligible federal matching rate, from 2014 through 2016, states receive a 100% federal matching rate for the cost of individuals who are newly eligible for Medicaid due to the ACA expansion. As shown in Table 2 , this newly eligible federal matching rate phases down to 95% in 2017, 94% in 2018, 93% in 2019, and 90% thereafter. The expansion state federal matching rate is available for individuals in expansion states who were eligible for Medicaid on March 23, 2010, and are in the new eligibility group for non-elderly, nonpregnant adults at or below 133% of FPL. The formula used to calculate the expansion state federal matching rates is based on a state's regular federal matching rate, so the expansion state federal matching rates will vary from state to state until 2019, at which point the newly eligible and the expansion state federal matching rates will converge at 93% and phase down to 90% for 2020 and subsequent years.\nWhile most federal Medicaid funding is provided on an open-ended basis, certain types of federal Medicaid funding are capped. For instance, federal disproportionate share hospital (DSH) funding to states cannot exceed a state-specific annual allotment. Also, Medicaid programs in the territories (i.e., American Samoa, Guam, Northern Mariana Islands, Puerto Rico, and the Virgin Islands) are subject to annual spending caps.", "The federal government provides broad guidelines to states regarding allowable funding sources for the state share (also referred to as the nonfederal share ) of Medicaid expenditures. However, to a large extent, states are free to determine how to fund their share of Medicaid expenditures. As a result, there is significant variation from state to state in funding sources.\nStates can use state general funds (i.e., personal income, sales, and corporate income taxes) and other state funds (e.g., provider taxes, local government funds, tobacco settlement funds, etc.) to finance the state share of Medicaid. Federal statute allows as much as 60% of the state share to come from local government funding. Federal regulations also stipulate that the state share not be funded with federal funds (Medicaid or otherwise). In state fiscal year 2013, on average, 73% of the state share of Medicaid expenditures was financed by state general funds, and the remaining 27% was financed by other state funds.\nA few funding sources have received a great deal of attention over the past couple of decades because states have used these funds in some financing mechanisms designed to maximize the amount of federal Medicaid funds coming to the state. This process is referred to as Medicaid maximization . In general, some states have used Medicaid maximization strategies that involve the coordination of fund sources, such as provider taxes and intergovernmental transfers, and payment policies, such as DSH and other supplemental payments to draw down federal Medicaid funds without expending many, if any, state general funds.", "The cost of Medicaid, like most health expenditures, generally has increased at a rate significantly faster than the overall rate of U.S. economic growth, as measured by gross domestic product. In the past, much of Medicaid's expenditure growth has been due to federal or state expansions of Medicaid eligibility criteria, but per enrollee costs for Medicaid also have increased faster than the economy. However, when compared to other forms of health insurance, Medicaid per enrollee expenditures are relatively low.\nMedicaid expenditures are influenced by economic, demographic, and programmatic factors. Economic factors include health care prices, unemployment rates (see the \" Medicaid Enrollment Trends \" section for a discussion of the impact of the unemployment rate on Medicaid enrollment, which also impacts expenditures), and individuals' wages. Demographic factors include population growth and the age distribution of the population. Programmatic factors include state decisions regarding optional eligibility groups, optional services, and provider payment rates. Other factors include the number of eligible individuals who enroll, utilization of covered services, and enrollment in other health insurance programs (including Medicare and private health insurance).\nFigure 4 shows actual Medicaid expenditures from FY1997 to FY2014 and projected Medicaid expenditures from FY2015 through FY2023 (see Table B-1 for state-by-state expenditures for FY2014). These figures are broken down by state and federal expenditures. In FY2014, Medicaid spending on services and administrative activities in the 50 states, the District of Columbia, and the territories totaled $494 billion. Medicaid expenditures are estimated to grow to $835 billion in FY2023.\nHistorically, in a typical year, the average federal share of Medicaid expenditures was about 57%, which means the average state share is about 43%. However, the federal government's share of Medicaid expenditures increased with the implementation of the ACA Medicaid expansion because the federal government is funding a vast majority of the cost of the expansion through the newly eligible and expansion state federal matching rates. In FY2014, the average federal share of Medicaid increased to 60%, and the federal share of Medicaid is expected to remain at that level through FY2023.", "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.\nLow Medicaid physician payment rates in many states and their impact on provider participation have been perennial concerns for policymakers. Still, during the most recent recession, which ended in 2009, many states reduced Medicaid provider payment rates due to budget pressures. However, over the past couple years, more states have been enhancing rather than reducing provider rates overall due to improvements in state finances.\nThe ACA required that Medicaid payment rates for certain primary care services be raised to what Medicare pays for these services for CY2013 and CY2014. The federal government picked up the entire cost of that increase in primary care rates (i.e., the difference between Medicare payment rates and the existing Medicaid payment rates as of July 1, 2009) for those two years. While the ACA requirement and the enhanced federal funding have expired, one survey found that 15 states planned to continue the higher payment rates at least partially, 24 states did not plan to continue the higher rates, and the remaining states had not made a decision at the time the survey was conducted.\nIn some cases, states make supplemental payments to Medicaid providers that are separate from, and in addition to, the standard payment rates for services rendered to Medicaid enrollees. Often, providers receive supplemental payments in a lump sum. States are permitted to make supplemental payments to providers, but federal regulations specify upper payment limit (UPLs), which prohibit using federal matching funds for Medicaid fee-for-service payments in excess of what would have been paid under Medicare payment principles. The institutions subject to the UPL requirement are hospitals (separated into inpatient services and outpatient services), nursing facilities, intermediate care facilities for the intellectually disabled, and freestanding nonhospital clinics.\nMedicaid DSH payments are one type of supplemental payment, and federal statute requires that states make Medicaid DSH payments to hospitals treating large numbers of low-income patients. In FY2014, federal DSH allotments totaled $11.7 billion. The ACA made aggregate reductions in Medicaid DSH allotments for FY2014 through FY2020, but multiple subsequent laws have amended these reductions. Under current law, the aggregate reductions to the Medicaid DSH allotments are to impact FY2018 through FY2025 and in FY2026 states' DSH allotments are to rebound to their pre-reduced levels with the annual inflation adjustments for FY2018 to FY2025.", "The Social Security Act authorizes several waiver and demonstration authorities to provide states with the flexibility to operate their Medicaid programs. Each waiver authority has a distinct purpose and specific requirements. Under the various waiver authorities, states may try new or different approaches to the delivery of health care services or adapt their programs to the special needs of particular geographic areas or groups of Medicaid enrollees. The primary Medicaid waiver authorities include the following:\nSection 1115 Research and Demonstration Projects —Under Section 1115 of the Social Security Act, the Secretary of HHS may waive Medicaid requirements contained in Section 1902 (including but not limited to what is known as freedom of choice of provider, comparability of services, and statewideness ). States use this waiver authority to change eligibility criteria to offer coverage to new groups of people, to provide services that are not otherwise covered, to offer different service packages or a combination of services in different parts of the state, to cap program enrollment, and to implement innovative service delivery systems, among other purposes. Section 1915(b) Managed Care/Freedom of Choice Waivers —Section 1915(b) of the Social Security Act permits states to establish mandatory managed care programs or otherwise limit enrollees' choice of providers. Section 1915(c) Home- and Community-Based Services (HCBS) Waivers— Section 1915(c) authorizes the Secretary of HHS to waive certain requirements of Medicaid law, allowing states to cover a broad range of HCBS (including services not available under the Medicaid state plan) for certain persons with LTSS needs. Specifically, under Section 1915(c) states can waive rules regarding statewideness and comparability of services. States also may apply certain income counting rules to persons in HCBS waivers that allow an individual who otherwise might not qualify to be eligible for Medicaid. Section 1915(b)/(c) Waivers —Section 1915(b) and (c) waivers allow states to provide HCBS to disabled and elderly populations in a managed care setting or within a limited pool of providers. States must apply for each waiver authority concurrently and comply with the individual requirements of each waiver.\nStates often operate multiple waiver programs with their state plans. Key characteristics of these primary Medicaid waiver authorities compared with state plan requirements are summarized in Table 3 . The statutory requirements that may be waived under each type of waiver are different, but all types of waivers are time limited and approvals are subject to reporting and evaluation requirements. In addition, all types of waivers must comply with various financing requirements (e.g., budget neutrality, cost-effectiveness, or cost-neutrality).", "Program integrity initiatives are designed to combat fraud, waste, and abuse in the Medicaid program. Some oversight efforts focus on preventing fraud and abuse through effective program management, while others focus on addressing problems after they occur through investigations, recoveries, and enforcement activities. Areas such as eligibility determination have multiple program integrity initiatives, whereas other areas, such as managed care, have received comparatively little attention in the past.\nMultiple agencies at the federal and state levels are involved in program integrity. The federal agencies are CMS, the Office of the Inspector General for the Department of HHS, the Department of Justice, and the Government Accountability Office. The state agencies involved with program integrity activities include the state Medicaid agencies and the federally required Medicaid Fraud Control Units (MFCUs). Coordination of Medicaid program integrity activities can be a problem because there are so many agencies working on such initiatives and each state develops its own approach to program integrity.\nThe federal government and states contribute equally to fund most Medicaid activities to combat waste, fraud, and abuse, although for some activities the federal government provides additional funds through enhanced FMAP rates. As mentioned earlier, all states receive the same FMAP rate for administrative expenditures, including most program integrity activities, which generally is 50%. States receive higher FMAP rates for selected administrative activities, such as 90% for the startup of MFCUs and 75% for ongoing MFCU operation.\nThe ACA included some provisions to increase uniformity among Medicare, Medicaid, and CHIP program integrity activities. For instance, the ACA introduced additional provider screening requirements that are applicable to Medicare, Medicaid, and CHIP. The ACA also created an integrated Medicare and Medicaid data repository to enhance program integrity data sharing among federal and state agencies and law-enforcement officials. Moreover, the ACA established a recovery audit contractor (RAC) requirement for Medicaid, under which state Medicaid agencies contract with an RAC to identify and recover overpayments and identify underpayments.", "Currently, the Medicaid program is dealing with several major issues, which mostly stem from the implementation of the ACA. First, the ACA Medicaid expansion began on January 1, 2014. Since the expansion is optional for states, some states are implementing the expansion, some are still deciding, and others have chosen not to implement the expansion. Second, the coordination of care for dual-eligible beneficiaries is a focus of federal and state policymakers. Third, a new ACA health insurance annual fee may increase Medicaid expenditures through higher Medicaid MCO rates. Finally, the ACA included a Medicaid maintenance of effort (MOE) provision, which expired on January 1, 2014, for adults but continues until September 30, 2019 for children.", "The primary goal of the ACA is to increase access to affordable health insurance for the uninsured and to make health insurance more affordable for individuals who already have such coverage. The ACA Medicaid expansion is one of the major insurance coverage provisions included in the law.\nAs enacted, beginning in 2014, the ACA Medicaid expansion created a new mandatory Medicaid eligibility group: all adults under the age of 65 with income up to 133% of FPL (effectively 138% of FPL; see \" Eligibility \" for more information). The ACA requires most of the individuals covered under the ACA Medicaid expansion to receive ABP coverage (see \" Benefits \" for more information), and the law provides enhanced federal matching rates for coverage of this new eligibility group (see \" Federal Share \" for more information).\nOriginally, it was assumed that all states would implement the ACA Medicaid expansion in 2014 as required by statute because implementation was required for states to receive any federal Medicaid funding. However, on June 28, 2012, the U.S. Supreme Court issued its decision in National Federation of Independent Business (NFIB) v. Sebelius finding that the federal government cannot terminate the federal Medicaid funding a state receives for its current Medicaid program if a state does not implement the ACA Medicaid expansion.", "Since the federal government cannot terminate current Medicaid federal matching funds if a state does not implement the Medicaid expansion required by the ACA, the Supreme Court's ruling in NFIB effectively made state participation in the ACA Medicaid expansion voluntary. However, if a state accepts the ACA Medicaid expansion funds, it must abide by the new expansion coverage rules.\nCMS informed states that they face no deadline for deciding whether to implement the ACA Medicaid expansion and, according to CMS, states also can discontinue the expansion at any time. If states want to take full advantage of the 100% federal financing for the newly eligible enrollees, however, they must have implemented the expansion on January 1, 2014. The statute explicitly provides the 100% federal funding for the newly eligible enrollees for 2014, 2015, and 2016 rather than for the first three years a state implements the expansion.\nOn January 1, 2014, when the ACA Medicaid expansion went into effect, 24 states and the District of Columbia included the ACA Medicaid expansion as part of their Medicaid programs. The following states implemented the expansion on later dates: Michigan (April 1, 2014), New Hampshire (August 15, 2014), Pennsylvania (January 1, 2015), and Indiana (February 1, 2015). In addition, Montana Governor Bullock signed the bill adopting the ACA Medicaid expansion on April 29, 2015, but the law directs the state to apply for a Section 1115 waiver to implement the expansion that requires federal government approval. In July 2015, the governor of Alaska informed the legislature of his intent to accept federal Medicaid funding for the ACA Medicaid expansion. In addition, Utah currently is debating the ACA Medicaid expansion. Figure 5 shows state decisions about implementing the ACA Medicaid expansion as of July 2015.", "In FY2011, there were 10.2 million dual-eligible beneficiaries, who are individuals enrolled in both Medicare and Medicaid, which is almost 15% of Medicaid enrollment. Individuals qualify for Medicare either because they are aged 65 or older or because they are under the age of 65, have a disability, and have been receiving Social Security Disability Insurance for two years. As mentioned previously, individuals qualify for Medicaid because they meet both the categorical requirement (i.e., are a member of a covered group, such as children, pregnant women, families with dependent children, the elderly, or the disabled) and financial eligibility requirements, which vary by state.\nAlthough commonly addressed as a single population, dual-eligible individuals are diverse. While dual-eligible beneficiaries tend to be sicker and poorer than the Medicaid population as a whole, not all dual-eligible beneficiaries are in poor health. Individuals receive different types of Medicaid coverage (i.e., full benefits or financial assistance with Medicare premiums and/or cost sharing).\nThere are numerous Medicaid eligibility pathways for dual-eligible beneficiaries, but the two main categories of dual-eligible individuals are full dual-eligible beneficiaries and partial dual-eligible beneficiaries. Full dual-eligible beneficiaries receive full benefits from Medicare, and Medicaid provides them with full benefits in addition to financial assistance with their Medicare premiums and cost sharing. Partial dual-eligible beneficiaries receive full benefits from Medicare and financial assistance from Medicaid for Medicare premiums and cost sharing. In FY2011, there were 7.5 million full duals, with Medicaid spending totaling $134.3 billion, and 2.6 million partial duals with $6.0 billion in Medicaid spending.\nBecause Medicare and Medicaid are different programs, coordinating care and services for dual-eligible beneficiaries presents challenges. Medicare is a national program administered by CMS, while Medicaid is a federal-state partnership under which each state designs and administers its own version of Medicaid under broad federal rules. Coordination of benefits between these distinct programs is administratively complex. Dual-eligible beneficiaries and their service providers must comply with Medicare and Medicaid program rules and processes, which are not always aligned. In addition, delivery of uncoordinated or poorly coordinated health care and related services can be costly and inefficient, affecting dual-eligible beneficiaries' quality of care and increasing Medicare and Medicaid spending. To reduce spending on dual-eligible beneficiaries and improve the quality of their care, federal and state policymakers are focusing on coordinating care for dual-eligible beneficiaries.\nThe ACA established the Medicare-Medicaid Coordination Office within CMS to improve care coordination for dual-eligible beneficiaries. In addition, the ACA provided CMS with the ability to test innovative payment and service delivery models to improve coordination of care and reduce the cost of dual-eligible beneficiaries. With this new authority, CMS is funding demonstration projects to develop approaches to coordinate care for full duals and also to integrate Medicare and Medicaid financing for these individuals.", "The ACA imposes an annual fee on certain for-profit health insurers, starting in 2014. The ACA health insurance annual fee applies to Medicaid MCOs with the exception of nonprofit insurers incorporated under state law that receive more than 80% of their gross revenues from government programs that target low-income, elderly, or disabled populations (such as CHIP, Medicare, and Medicaid). According to one estimate, approximately 80% of Medicaid enrollees covered by managed care receive coverage from a plan impacted by the ACA fee.\nSome insurance plans have informed shareholders and state insurance regulators that they intend to pass on the cost of the fee to businesses and enrollees in the form of higher premiums. Medicaid MCOs do not have the ability to pass on the cost of the fee to enrollees through higher premiums because few Medicaid enrollees pay premiums and when premiums are charged the federal government requires the premiums to be nominal.\nA number of state governors caution that the ACA health insurance annual fee will result in higher costs to Medicaid. Federal regulations require that the capitated amounts paid to Medicaid MCOs be actuarially sound , which means the state must consider MCOs' costs, including health benefits, marketing and administrative expenses, and taxes. For this reason, some states have indicated they are willing to include the cost of the ACA fee in the capitation rates, which likely will increase Medicaid expenditures.", "In response to the economic recession (December 2007 through June 2009), Congress enacted the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 , extended in P.L. 111-226 ). ARRA included a temporary increase in FMAP rates. To receive federal Medicaid matching funds under ARRA states were required to maintain the same Medicaid eligibility standards, methodologies, and procedures in effect on July 1, 2008, through June 30, 2011. This provision is referred to as the ARRA MOE requirement.\nThe ARRA MOE provisions were extended and expanded under the ACA. The ACA MOE provisions were designed to ensure that individuals eligible for Medicaid or CHIP did not lose coverage between the date of enactment of the ACA (March 23, 2010) and the implementation of the health insurance exchanges. Under the ACA MOE provisions, states were required to maintain their Medicaid programs with the same eligibility standards, methodologies, and procedures in place on the date of enactment until the health insurance exchanges were operational. Additionally, the ACA MOE continues 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 its federal Medicaid matching funds.\nThe MOE provisions did not prohibit states from cutting Medicaid in other ways, such as by reducing provider rates or eliminating optional benefits. In addition, it did not prohibit states from expanding Medicaid coverage during the MOE period.\nUnder both the ARRA and ACA MOEs, states were not able to restrict income eligibility for their Medicaid programs, generally speaking, from July 1, 2008, through January 1, 2014 (i.e., when health insurance exchanges were operational). States now have the ability to reduce the cost of Medicaid through reductions to Medicaid eligibility standards for adult populations. However, under current law, the ACA MOE for children is to remain in place until September 30, 2019.", "For more information on Medicaid, the following CRS reports may be of interest.\nCRS Report R42640, Medicaid Financing and Expenditures CRS Report R43656, Traditional Benefits and Alternative Benefit Plans Under Medicaid CRS Report R43328, Medicaid Coverage of Long-Term Services and Supports CRS Report R43778, Medicaid Prescription Drug Pricing and Policy CRS Report R43564, The ACA Medicaid Expansion CRS Report R43850, Out-of-Pocket Costs for Medicaid Beneficiaries: In Brief CRS Report R41210, Medicaid and the State Children's Health Insurance Program (CHIP) Provisions in ACA: Summary and Timeline CRS Report R42865, Medicaid Disproportionate Share Hospital Payments CRS Report R43847, Medicaid's Federal Medical Assistance Percentage (FMAP), FY2016\nAppendix A. State Medicaid and CHIP Income Eligibility Standards\nTable A-1 depicts the modified adjusted gross income (MAGI)-based eligibility levels for Medicaid as of January 1, 2015, based on findings from a 50-state survey. The table expresses these standards as a percentage of the federal poverty level (FPL).\nAppendix B. State-by-State Medicaid Data\nTable B-1 provides the most recent available data for state-by-state Medicaid enrollment, expenditures (including both the federal and state shares), and federal medical assistance percentage (FMAP) rates." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 2, 2, 2, 1, 1, 1, 1, 2, 3, 2, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "h0_full h1_full", "", "", "", "", "h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "h1_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What is Medicaid?", "How does Medicaid compare to Medicare?", "Why is Congress likely to continue overseeing Medicaid?", "Is participation in Medicaid mandatory for states?", "What are the federal government's requirements for states?", "What is the effect of this flexibility?", "What measures exist to allow states to operate Medicaid beyond federal rules?" ], "summary": [ "Medicaid is a means-tested entitlement program that finances the delivery of primary and acute medical services as well as long-term services and supports (LTSS) to an estimated 65 million people at a cost to states and the federal government of $498 billion in FY2014.", "In comparison, the Medicare program provided health care benefits to nearly 54 million seniors and certain individuals with disabilities in that same year at a cost of roughly $606 billion to the federal government.", "Because Medicaid represents a large component of federal mandatory spending, Congress is likely to continue its oversight of Medicaid's eligibility, benefits, and costs.", "Participation in Medicaid is voluntary for states, though all states, the District of Columbia, and the territories choose to participate.", "The federal government requires states to cover certain mandatory populations and benefits, but the federal government also allows states to cover other optional populations and services.", "Due to this flexibility, there is substantial variation among the states in terms of factors such as Medicaid eligibility, covered benefits, and provider payment rates.", "In addition, there are several waiver and demonstration authorities that allow states to operate their Medicaid programs outside of federal rules." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1 ] }

{ "title": [ "", "Introduction", "Background on COLI", "Legislative Proposals in the 112th Congress", "The Life Insurance Employee Notification Act (H.R. 130)", "Past Limitations on COLI", "State Issues and Activities", "Tax Issue Analysis", "Inside Buildup", "Economic Efficiency", "Tax Arbitrage", "Appendix. Legislative Proposals 108th-111th Congresses" ], "paragraphs": [ "", "Life insurance policies taken out by and payable to companies on their employees, directors, officers, owners, and debtors are commonly known as corporate-owned life insurance (COLI) policies. (COLI is also known as company-owned life insurance.) Such policies enjoy the same two basic preferences under the tax laws as other life insurance. First, death benefits paid under life insurance policies are not taxable income to the beneficiaries of the policies. Second, increases in the value of the policies over and above the premiums paid that result from investment earnings on such premiums are not taxable unless the policy is surrendered prior to the death of the insured. This second preference is generally referred to as the \"tax-free inside buildup\" of life insurance. Therefore, the corporation enjoys either tax-deferred growth or tax-free growth of funds invested in COLI plans. This tax treatment of COLI policies explains a large portion of their usage, because it is certainly possible for a corporation to make a similar investment without the complication of a life insurance policy. Without the life insurance policy, however, such investments would be subject to regular taxation.\nIn addition, under certain circumstances, companies have deducted the interest expense for loans from COLI policies from their taxes. Some companies have then used the loan proceeds to pay for the premiums of the life insurance policies, further enhancing the advantages of COLI-related transactions. Congress has increasingly restricted the instances in which this interest is allowed to be tax deductible. The payment of premiums by the company, on the other hand, is not tax deductible.\nAlthough the federal tax preferences for life insurance have been passed by Congress, the ability of firms, as well as individuals, to purchase such insurance in the first place is regulated by the states. Because of this, the state and federal governments effectively have a joint role in the regulation of life insurance policies for tax purposes. The most basic requirement that states have instituted for purchasers of life insurance is that a policyholder must be able to demonstrate \"an insurable interest\" in the insured. Companies have typically justified an insurable interest in employees, officers, directors, and owners based on the potential financial costs associated with the death of those individuals. Some states require the insurable interest to be established only at the time the insurance is purchased; therefore, companies may continue to hold life insurance policies and enjoy the tax advantages of COLI policies covering insureds no longer employed by the company.", "COLI can be acquired on an individual or group basis, and the employer generally becomes the applicant, owner, premium payer, and beneficiary of the policy. Because the corporation pays all of the premiums and receives all of the benefits, neither the individuals actually insured nor their heirs receive any of the death benefits. Thus, COLI is not an employee benefit and should not be confused with group life insurance benefits that employers provide to their employees. COLI can take many forms. Traditionally, narrow-based programs known as \"key man insurance\" have been used by corporations to insure the lives of their top executives and to protect themselves against the death of those key employees who are especially difficult or costly to replace. Other related uses of narrow-based COLI programs have included the financing of individual stock redemption agreements or deferred compensation plans for key employees.\nAccording to news reports, some companies have used broad-based COLI programs that covered not only key officials, but all or most of a corporation's employees. This application of the principles of COLI apparently developed to generate a funding source for other corporate purposes (e.g., executive benefits, supplemental pensions, and broader employment-related benefits, such as retiree medical plans). The use of COLI to fund retiree medical benefits is largely attributable to the promulgation of Statement 106 by the Financial Accounting Standards Board (FASB 106). Under FASB 106, post-retirement benefits, including retiree health benefits, are required to be recognized as a cost as they are earned over the working lifetime of the employee, rather than as they are paid after retirement. If these accrued benefits are not funded in some manner, they create a growing balance sheet liability.\nThe COLI benefits accruing to a corporation from the death payouts on employees and the tax-free inside buildup in the value of the policies can be used to create a balance sheet asset that the corporation can use to offset the liability and finance the cost of retiree benefits. Advocates of using COLI to finance such post-retirement benefits assert that without such funding, many companies would discontinue their voluntary retirement health benefits. On the other hand, critics claim that companies should not profit from the deaths of rank-and-file employees, sometimes referring to COLI as \"janitor's insurance\" or \"dead peasant insurance,\" and note that although companies claim to be using COLI to finance employee benefits, there is no regulation of this use as there is for benefit plans under the Employee Retirement Income Security Act (ERISA), which also provides for tax-preferred investments to fund employee benefits.\nWhen banks purchase COLI policies, they are sometimes referred to as bank-owned life insurance (BOLI) policies. In 1996, the Office of the Comptroller of the Currency (OCC) issued general guidelines for national banks to ensure that bank purchases of BOLI are \"consistent with safe and sound banking practices.\" The OCC determined that a purchase of life insurance is incidental to banking and therefore legally permissible, if it is convenient or useful in connection with the conduct of the bank's business. The OCC guidelines specifically state that national banks may use COLI as a financing or cost recovery vehicle for pre- and post-retirement employee benefits, that the value of COLI is a corporate asset even after the employer/employee relationship is terminated, and that employees have no interest in the insurance other than their general claim against corporate assets arising from the corporation's obligation to provide the stated benefits.\nAlthough COLI is not particularly well known, it has drawn attention both in the print media and even in film. In April 2002, the Wall Street Journal initiated a three-part series subtitled \"Janitor's Insurance—Profiting When Employees Die\" on COLI plans. The articles were critical of COLI and named major corporations that reportedly have put millions of dollars into COLI policies insuring thousands of employees. Following the Wall Street Journal series, other major newspapers, including the Washington Post , carried articles critical of COLI/BOLI. The Wall Street Journal focused more recently on COLI, reporting in May 2009 on the most recent filings by banks on their usage of COLI. In 2008, COLI reported by banks totaled $122.8 billion. COLI also drew popular notice as it was criticized in a Michael Moore film, Capitalism: A Love Story .", "", "H.R. 130 was introduced by Representative Gene Green on January 5, 2011. This bill would require employee notice of COLI, including the benefit amount and the beneficiary of the policy and their violation would constitute an unfair trade practice. Enforcement of these requirements would fall to the Federal Trade Commission. This proposal is similar to the limitations included in the Pension Protection Act of 2006 (discussed below), but these requirements would be enforced through the Federal Trade Commission Act, rather than the Internal Revenue Code.", "Capping legislative activity from the 109 th Congress, the Pension Protection Act of 2006 included language adding requirements to the tax code in order for a COLI policy to enjoy the typical tax advantages of life insurance. These requirements were that these policies must be on directors or highly compensated individuals and that insured employees must be notified and provide written consent at the time the life insurance contract is issued. The term \"highly compensated\" employee includes any employee receiving a salary in the top 35% of the company. Companies were also required to file a yearly return with the Secretary of the Treasury detailing their usage of COLI policies. Note, however, that the information from these returns are confidential as is most tax information.\nThe interest in COLI over the past few years is only the most recent congressional focus on the issue. Since 1986, the tax benefits of COLI relating to the tax deductibility of interest on COLI-related loans have been limited by legislation. In 1986, Congress capped deductible interest for indebtedness exceeding $50,000 per individual contract. Only interest on loans related to policies purchased after June 20, 1986, was specifically covered. It has been suggested that companies responded to this limitation by expanding the coverage of life insurance from upper management to rank and file employees, thus generating more COLI-related loans, albeit at the capped amount. In 1996, Congress approved legislation that entirely eliminated (with a phase-out rule) the interest deduction for loans on policies covering employees or officers, except for key persons. Further, Congress capped deductible interest rates on key persons and pre-1986 contracts based on an average corporate bond rate. At least one business reacted by proposing to expand life insurance contract coverage and related tax-advantaged loans to policies covering customers, specifically mortgagors.\nCongress addressed this behavioral response in 1997 by further restricting interest expense deductions for life insurance loans. The 1997 change required that interest deductions be reduced through a pro rata calculation based on the ratio of the cash value of a corporation's life insurance policies to a corporation's total assets. However, policies for employees, directors, officers, and specified owners were explicitly excluded from this calculation, suggesting the change was intended to address specific policies, such as those covering borrowers. This mechanical approach has the effect of disallowing the interest deduction for cases such as lender policies covering mortgagors.\nIn addition to the increased restrictions Congress imposed on COLI interest deductions, the Internal Revenue Service (IRS) successfully litigated several cases of what it considered to be abuse. Also, the IRS offered a settlement initiative to encourage the disclosure of questionable transactions and induce payment of a portion of the presumed tax liability.\nGiven the several restrictions imposed, it is useful to identify the type of interest expense associated with COLI loans that continues to be tax deductible. Interest deductions on debt related to COLI remain for at least two types of policies: contracts purchased on or before June 20, 1986, as a result of the Tax Reform Act's grandfather rule, and policies covering key persons. Furthermore, because debt is fungible, and because the interest expense a company pays to support investment in general is tax deductible, some companies may borrow for other purposes and simultaneously have the finances available to purchase tax-advantaged COLI policies. Under such circumstances, debt that is in fact used to finance COLI is difficult to distinguish from that which is not.\nPresident Clinton included an expansion of the pro rata limitation for interest expense deductions as a component of his FY1999, FY2000, and FY2001 budget proposals. These proposals would have expanded the mechanical pro rata approach passed in 1997 by eliminating the exceptions from the calculation, other than for 20% owners. However, the proposals were not adopted. The Joint Committee on Taxation estimated that disallowing interest deductions in relation to the proportion of assets invested in COLI would have generated $200 million in additional revenue in FY2004 and $5.8 billion over the following 10 years (FY2004 through FY2013).", "Unlike many other financial institutions that are regulated primarily at the federal level, insurance companies have been regulated by the states for the past 150 years. State laws in the large majority of states require that to purchase COLI, the employer must have an insurable interest in the life of an insured employee. However, the exact wording of these statutes varies. In general, the state statutes provide that an insurable interest exists if the insured employees would benefit from an employee benefit plan provided by the employer, or that the insurable interest depends on the loss to the corporation if the insured dies. Some states provide for an insurable interest in both situations.\nIf an insurable interest does exist, the next issue under state laws is whether companies must give notice to, or receive the consent of, employees covered under a COLI policy. At least 48 states now have laws requiring some form of notification or consent from an insured employee before a COLI policy can be issued. A number of states require actual consent (opt-in), some in writing, but others assume consent if the employee does not object (opt-out). In 1993, state insurance regulators, through their trade association, the National Association of Insurance Commissioners (NAIC), adopted model COLI guidelines explaining that COLI is generally used to provide employee benefits, such as a retiree health benefit plan. Following the controversy generated on the issue, the NAIC revised these guidelines at the end of 2002. The revised NAIC guidelines recommend that states considering a legislative response to insurable interest concerns should consider the following elements for inclusion in their law (2002 additions in italics):\n1. The law should recognize that employers have a lawful and substantial economic interest in the lives of key employees and in other employees who have a reasonable expectation of benefitting from an employee welfare benefit plan.\n2. Employers should be required to notify eligible employees of their proposed participation in the plan and the employees should be given an opportunity to refuse to participate. On a prospective basis, employers should obtain written consent of each individual being insured. Consent would include an acknowledgment that the employer may maintain the life insurance coverage even after the insured individual's employment has terminated.\n3. An employer shall not retaliate in any manner against an employee or a retired employee for refusing consent to be insured.\n4. For non-key or non-managerial employees, the amount of coverage should be reasonably related to the benefits provided to the employees.\n5. With respect to employer-provided pension and welfare benefit plans, the life insurance coverage purchased to finance the plans should only be allowed on the lives of those employees and retirees who, at the time their lives are first insured under the plan, would be eligible to participate in the plan.\nBecause the NAIC has no ability to compel the states to act on this or any other issue, these revisions become effective only on a state-by-state basis, as state legislatures enact laws following the guidelines. As of January 2010, the NAIC reports 43 states have adopted these guidelines. Meanwhile, as to BOLI policies held by banks, OCC guidelines applicable to national banks encourage compliance with other applicable legal and regulatory considerations, such as state insurable interest laws, but do not specifically address the issue of employee notification or consent.", "Life insurance policies often combine features of insurance and tax-favored savings accounts. The investment income from the money paid into life insurance policies (commonly called inside buildup) is not included in taxable income until it is paid out to the policyholder. If the accumulated income is paid out as a death benefit, it can escape inclusion and taxation entirely. In addition, the tax-favored nature of life insurance also brings to the forefront questions concerning economic efficiency and opportunities for tax arbitrage.", "A general benefit granted to life insurance policies is the tax treatment of inside buildup. Inside buildup refers to the increase in the cash value of a life insurance policy. Under current law, inside buildup is not taxed. This tax treatment in conjunction with the tax-free status applied to most death benefits, makes investments in life insurance policies virtually tax-free.\nThe current treatment of inside buildup is commonly justified using market failure arguments. Proponents of the current treatment argue that individuals systematically underestimate the hardship that their death will impose on their families and that in the absence of the current tax treatment, society would purchase a sub-optimal amount of insurance. In the case of corporations, COLI can be seen as a hedge against the future lost productivity of the covered employee.\nIn addition, proponents assert that information asymmetries do not allow for the accurate pricing of insurance contracts leading to what economists call the problem of adverse selection. Adverse selection, in the context of insurance, describes the situation where the demand for insurance (either the propensity to buy insurance, or the quantity purchased, or both) is positively correlated with the risk of loss (e.g., higher risks buy more insurance), and the insurer is unable to allow for this correlation in the price of insurance. This information asymmetry does not allow for the accurate pricing of insurance and leads to market failure. Finally, the current tax treatment of inside buildup could be justified based upon the principle of constructive receipt.\nThe market failure arguments are not, however, compelling in the context of COLI. First, the corporate structure and reporting make it more likely that corporations understand the economic value of each employee, relative to an average family. As a result corporations are unlikely to systematically underestimate the value of a key employee and, as a result, underinsure. Secondly, the likelihood of COLI purchase is not related to the probability of death of the covered employee, but instead to the employee's value to the corporation. Accordingly, the favorable tax treatment of inside buildup cannot be used to offset adverse selection. Finally, even if the above points were justified, there is no compelling evidence that the current tax treatment of inside buildup (or COLI) is successful in reducing underinsurance.", "Some argue that COLI is a means of funding certain types of necessary business expenditures. In particular, it is argued that COLI provides a self-help mechanism for companies to prefund obligations under certain business expenditures that occur after a key employee is no longer employed by the company. The current tax treatment of COLI makes it a cost-effective funding method for such obligations relative to other types of investments.\nThe current tax treatment of COLI, however, distorts investment decisions. By encouraging corporations to choose COLI over competing investment vehicles such as bonds or retained earnings, the result could be overinvestment in COLI relative to a scenario where investment decisions are motivated without regard to taxes. In addition, the current tax treatment of COLI may encourage a tax-induced increase in the value of those types of benefits. Finally, it can be argued that the COLI policies have no relation to the employee benefits being provided. That is, the tax favored benefits paid at the time of death, fund the benefits of individuals who are still alive.", "In addition to the general tax benefit available to all life insurance policies, businesses may borrow against life insurance policies to achieve an additional tax benefit. This arbitrage opportunity occurs when tax free inside buildup is offset by deductible interest expenses and is commonly cited as chief motivation for COLI transactions.\nTo the extent that COLI transactions are motivated by arbitrage opportunities, COLI is undesirable on economic grounds. On economic grounds, the tax arbitrage encourages the misallocation of corporate resources from more productive uses to life insurance. This outcome may be defended based upon the potential to use COLI proceeds to fund business obligations, but this argument is not persuasive given the resources of a business are fungible. The current treatment of COLI also subverts the goal of horizontal equity in the tax code, by not taxing the input and output of such transactions. As a result, taxpayers with the same economic income have different taxable income, which leads to different tax liabilities.\nIn addition, Congress has previously demonstrated concern with the use of tax arbitrage. For example, the Pension Protection Act of 2006 restricted the tax arbitrage opportunities for COLI to a select few senior members of a corporation and current legislative proposals would further restrict arbitrage opportunities.", "Legislative Proposals in the 111 th Congress\nThe President's 2011 Budget Proposal, proposed February 1, 2010, would have reduced the ability of companies to claim an interest expense deduction from COLI. Specifically, the proposal would have repealed the exception from the pro rata interest expense disallowance rule for contracts covering employees, officers, or directors, other than 20%-owners of a business that is the owner or beneficiary of the contracts. This proposal was not acted upon by the 111 th Congress.\nH.R. 251 , the Life Insurance Employee Notification Act, was introduced by Representative Gene Green on January 7, 2009. It would have deemed the nondisclosure of employer-owned life insurance coverage of employees an unfair trade practice under Section 5(a)(1) of the Federal Trade Commission Act. It also would have required a detailed written notice to each employee and former employee for whom the employer carries a COLI policy. Representative Green introduced the same language in previous Congresses. This proposal is similar to the limitations included in the Pension Protection Act of 2006 but with a different enforcement mechanism.\nH.R. 3669 , the Employer-Owned Life Insurance Limitation Act, was introduced by Representative Luis Gutierrez September 29, 2009. This bill would have prohibited COLI policies on employees with a salary of less than $1 million per year. Employers would have been required to disclose COLI policies to those insured. Enforcement would have been through a civil private right of action and criminal penalties.\nLegislation in the 110 th Congress\nH.R. 150 , the Life Insurance Employee Notification Act, was introduced by Representative Gene Green on January 4, 2007. It would have deemed the nondisclosure of employer-owned life insurance coverage of employees an unfair trade practice under Section 5(a)(1) of the Federal Trade Commission Act. It also would have required a detailed written notice to each employee and former employee for whom the employer carries a COLI policy. Representative Green introduced the same language in the 108 th Congress as H.R. 414 and the 109 th Congress as H.R. 107 .\nLegislation in the 109 th Congress\nH.R. 4 , the Pension Protection Act of 2006, was introduced by Representative John Boehner on July 28, 2006, after conference negotiations to resolve the differences between H.R. 2830 and S. 1783 . It passed the House on July 28, the Senate on August 3, and became P.L. 109-280 when it was signed by the President on August 17. It included, in Section 863, language to add requirements to the tax code in order for a COLI policy to enjoy the typical tax advantages of life insurance. These requirements were that these policies must be on directors or highly compensated individuals and that insured employees must be notified and provide written consent at the time the life insurance contract is issued. Companies were also required to file a yearly return with the Secretary of the Treasury detailing their usage of COLI policies. This language grew out of Finance Committee activity during the 108 th Congress. Although this language would have been more restrictive than then-current COLI requirements, the Joint Tax Committee's revenue estimates from the 108 th Congress found that it would not raise appreciable revenue. This would suggest that the language would not substantially change the total amount of COLI policies purchased, though it might change the types of employees who are covered by those policies.\nH.R. 2830 was originally introduced by Representative John Boehner as the Pension Protection Act of 2005; after being amended by the Senate, its title became the Pension Security and Transparency Act of 2005. As introduced and passed by the House, it did not include provisions addressing the COLI issue. After its passage by the House in December 2005, the Senate took up the bill on March 3, 2006, and amended it with the text of S. 1783 , including the COLI language, as detailed below. After conference negotiations on this bill, the House and Senate ultimately took up and passed H.R. 4 , the Pension Protection Act of 2006.\nS. 1783 , the Pension Security and Transparency Act of 2005, was introduced by Senator Chuck Grassley on September 28, 2005. Its COLI language was identical to that in S. 219 from the 109 th Congress and S. 2424 from the 108 th Congress. The Senate passed S. 1783 on November 16, 2005.\nS. 219 , the National Employee Savings and Trust Equity Guarantee Act of 2005, was introduced by Senator Grassley on January 31, 2005. Its COLI language was identical to that in S. 2424 from the 108 th Congress.\nS. 1953 , also entitled the National Employee Savings and Trust Equity Guarantee Act of 2005, was introduced by Senator Grassley on November 2, 2005. Its COLI language was identical to that in S. 219 and S. 1783 from the 109 th Congress and S. 2424 from the 108 th Congress.\nH.R. 107 , the Life Insurance Employee Notification Act, was introduced by Representative Gene Green on January 4, 2005. It would have deemed the nondisclosure of employer-owned life insurance coverage of employees an unfair trade practice under Section 5(a)(1) of the Federal Trade Commission Act. It would have required a detailed written notice to each employee and former employee for whom the employer carries a COLI policy. Representative Green introduced the same language in the 108 th Congress as H.R. 414 .\nH.R. 2251 , the COLI Best Practices Act of 2005, was introduced by Representative Tom Reynolds on May 11, 2005. It contained in a stand-alone vehicle the requirements found in S. 219 and S. 1783 , namely that tax-advantaged COLI policies cover only directors and highly compensated employees, that such employees be notified and provide written consent, and that companies file yearly returns detailing their COLI use.\nLegislation in the 108 th Congress\nH.R. 414 , the Life Insurance Employee Notification Act, was introduced by Representative Gene Green on January 28, 2003. It would have deemed the nondisclosure of employer-owned life insurance coverage of employees an unfair trade practice under Section 5(a)(1) of the Federal Trade Commission Act. It would also have required a detailed written notice to each employee and former employee for whom the employer carries a COLI policy.\nH.R. 2127 , the Taxpayer Savings and Employee Notification Act of 2003, was introduced by Representative Rahm Emanuel on May 15, 2003. It contained notification provisions as in H.R. 414 , but went beyond notification and would have repealed the tax benefits relating to COLI. H.R. 2127 would have included in a company's taxable gross income both the inside buildup and the proceeds of a company-owned life insurance policy above the premiums paid except in a limited number of circumstances, such as policies on \"key persons.\" Representative Emanuel also introduced a similar amendment on the tax benefits of COLI in the March 12, 2003, Budget Committee Markup of the FY2004 Budget, H.Con.Res. 95 . This amendment was defeated by a vote of 17-24.\nS.Amdt. 662 , by Senator John Edwards, along with Senators John McCain and Lindsey Graham, was offered on May 15, 2003, during the debate on S. 1054 , the Jobs and Growth Tax Relief Reconciliation Act of 2003. This amendment was similar to H.R. 2127 in that it would have eliminated the tax benefits of COLI, but it did not include the notification provisions common to both House bills. The amendment fell on a point of order made by Senator John Kyl under the Congressional Budget Act of 1974 because it was ruled not germane to the underlying reconciliation measure. Prior to this, a motion to waive the point of order was defeated by a vote of 37-63.\nS. 2424 , the National Employee Savings and Trust Equity Guarantee Act was introduced by Senator Chuck Grassley on May 24, 2004, and included language (Section 812) adding requirements to the tax code in order for a COLI policy to enjoy the typical tax advantages of life insurance. These requirements are that these policies must be on directors or highly compensated individuals and that insured employees must be notified and provide written consent at the time the life insurance contract is issued. Companies are also required to file a return with the Secretary of the Treasury detailing their usage of COLI policies. S. 2424 was reported by the Finance Committee but not acted upon by the full Senate before the end of the 108 th Congress.\nConsideration began on the bill that would become S. 2424 while it was still in draft form several months earlier. In a September 17, 2003, markup of the draft S. 2424 , Senator Jeff Bingaman offered an amendment that would remove the tax-preferred nature of the majority of COLI policies. This amendment was adopted by the Finance Committee, but the draft bill was not introduced or brought to the floor at the time. Prior to the next Finance Committee markup, on S. 1637 , the Jumpstart Our Business Strength Act, Senator Bingaman re-filed his amendment. In addition, Senator Kent Conrad filed an amendment, later modified, that would have required notification and would have restricted the tax advantages of COLI to a much lesser extent than Senator Bingaman's amendment. In response to these filings, Chairman Grassley scheduled a hearing to directly consider the issue, and neither amendment was offered at the markup of S. 1637 .\nThe Senate Finance Committee hearing on COLI was held October 23, 2003; it was followed by an additional markup of the draft S. 2424 on February 2, 2004. At this markup, Senator Bingaman's amendment was replaced with a modification presented by the chairman. This modification, ultimately included in S. 2424 and subsequent legislation, was strongly supported by the life insurance industry. It retained the tax-preferred nature of COLI for policies that met notification and consent requirements and that were restricted to \"highly compensated\" employees, including key persons. The Joint Committee on Taxation's revenue estimate indicated that this amendment would have a negligible revenue impact, suggesting that the total volume of COLI usage by corporations will not be significantly affected.\nIn addition to this legislative activity, the Joint Committee on Taxation issued a report recommending repealing the grandfather rules associated with pre-1986 COLI contracts as a result of the committee investigation of the federal tax issues surrounding the Enron corporation." ], "depth": [ 0, 1, 1, 1, 2, 1, 1, 1, 2, 2, 2, 3 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h1_full", "h0_full h2_full", "", "", "h2_full", "h0_full", "h2_title h1_title", "", "h1_full", "h2_title h1_title", "h2_full h1_full" ] }

{ "question": [ "What are COLI policies?", "How are COLI policies distinct from typical life insurance?", "What are the concerns about COLI policies?", "What is the relationship between COLI policies and other life insurance?", "What are corporate perks for funds invested in COLI plans?", "Why do companies choose COLI policies?", "How has Congress regulated COLI?", "What laws passed in 2006 limited COLI's tax advantages?", "What does this report address?", "What are its analyses regarding COLI?", "What does the appendix address?", "When will the report be updated?" ], "summary": [ "Life insurance policies taken out by and payable to companies on their employees, directors, officers, owners, and debtors are commonly known as corporate-owned life insurance (COLI) policies. (COLI is also known as company-owned life insurance.)", "Such policies are separate and distinct from typical group life insurance policies offered to many employees as an employment benefit. In general, only the company, not the employee's family or other beneficiary, receives any benefit from a COLI policy. In some cases, employees or their families have no knowledge of any policy being taken out.", "Concerns about people \"gambling\" on the deaths of strangers has led to \"insurable interest\" laws in most states that require some possibility of financial loss as the result of an insured's death as a prerequisite for the purchase of life insurance. Although employment has generally been accepted to fulfill the need for an insurable interest, many have expressed concern about employers holding policies on lower-paid employees and continuing to hold policies after a worker has left employment.", "Although the chief historical justification for the favorable tax treatment of life insurance focuses on individuals, not companies, COLI policies enjoy the same basic preferences as other life insurance.", "As a result, a corporation enjoys either tax-deferred or tax-free growth of funds invested in COLI plans.", "These tax preferences are a large reason for companies to choose COLI policies rather than simply investing the money in a more straightforward way. Moreover, under certain circumstances, companies have taken loans using the cash value of the life insurance policy as collateral, used the loan proceeds to pay for the premiums of the life insurance policies, and then deducted the interest expense from their taxable income, further enhancing the advantages of COLI-related transactions.", "In the past, Congress has restricted the tax advantages of COLI, including limiting instances in which loan interest is allowed to be tax deductible. The 108th and 109th Congresses saw several bills introduced as well as floor and committee amendments on COLI. The 108th and 109th Congresses saw several bills introduced as well as floor and committee amendments on COLI.", "Language limiting COLI's tax advantages to policies taken out on the highest-paid 35% of employees and linking tax advantages to employee notice and consent was agreed to in the Senate Finance Committee in 2004 and ultimately incorporated into P.L. 109-280, which was passed by the 109th Congress in 2006.", "This report begins with a general background on COLI, followed by current proposals on COLI.", "It then addresses federal limitations on COLI from previous years, discusses state approaches to the issue, and concludes with an analysis of the issue from a public-finance perspective.", "An appendix provides a detailed discussion of proposals addressing COLI from the 108th through 111th Congresses.", "This report will be updated in the event that legislation dealing with COLI progresses." ], "parent_pair_index": [ -1, 0, 0, -1, 0, 1, -1, 3, -1, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 1, 3, 3, 3, 3 ] }

{ "title": [ "", "Slip Laws", "Noncommercial Sources of Slip Laws", "Government Publishing Office", "Library of Congress", "Commercial Sources of Slip Laws", "Lexis Advance", "ProQuest Congressional", "Westlaw", "United States Code Congressional and Administrative News", "The United States Statutes at Large", "Noncommercial Sources of the Statutes at Large", "Government Publishing Office", "Library of Congress", "Commercial Sources of the Statutes at Large", "Hein Online", "Lexis Advance", "ProQuest Congressional", "Westlaw", "United States Code and the Revised Statutes of the United States", "Amended Laws", "Positive Versus Non-Positive Law Titles of the U.S. Code", "Editorial Reclassification", "Annotated Editions of the U.S. Code", "Searching the U.S. Code", "General Index", "Popular Names Table", "Classification Tables", "Table I, Revised Titles", "Table II, Revised Statutes 1878", "Table III, Statutes at Large", "Table IV, Executive Orders, and Table V, Proclamations", "Table VI, Reorganization Plans", "Further Information" ], "paragraphs": [ "When a bill is enacted into law, it may amend or repeal earlier laws, or it may create an entirely new or \"freestanding\" law. Recently enacted laws are first printed individually as separate statutes known as \"slip laws.\" At the end of a Congress, the slip laws are sequentially compiled in the annual federal session law volumes known as the United States Statutes at Large . Most statutes are then broken down by subject matter and incorporated into the 54 volumes and five appendices of the United States Code . This report provides an overview of federal statutes in each of these forms, as well as basic guidance for congressional staff researching statutes.", "When an individual piece of legislation is enacted under the procedures set forth in Article I, Section 7 of the U.S. Constitution, it is characterized as a \"public law\" or a \"private law\" depending on its intended audience. The overwhelming majority of laws passed by Congress are public laws because they have general applicability to the whole of society and are continuing and permanent in nature. Private laws are enacted for the benefit of a named individual or entity (for example, private laws can be enacted to assist a citizen injured by a government program).\nEach newly passed law— public or private —is assigned a number according to the order of its enactment within a particular Congress. This system began in 1957 with the 85 th Congress. Laws enacted prior to 1957 are cited by the date of enactment and the chapter number assigned to them in the Statutes at Large , discussed further below.\nWhen researchers want to obtain a copy of a newly enacted law, they will most likely be looking for the \"slip law.\" A slip law is the first official publication of a public or private law, prepared by the Office of the Federal Register (OFR), and published by the Government Publishing Office (GPO).", "Slip laws are available from non-commercial, public sources in various forms.", "Slip laws in printable pamphlet form can be obtained online from GPO. GPO provides free electronic access to official federal government publications, including public and private laws from the 104 th Congress (1995-1996) forward. Additionally, Federal Depository Libraries, which are libraries designated to receive free government documents, provide no-cost access to certain classes of government documents, including slip laws.", "Public and private laws can also be found through the Library of Congress at Congress.gov, the official website for U.S. federal legislative information. Information on public and private laws may be searched from the 93 rd Congress (1973-1974) forward. The full text of the laws is available beginning with the 101 st Congress (1989-1990).", "In addition to the publicly available resources described above, many commercial, subscription-based sources provide access to slip laws as well. Subscriptions to these sources vary from House to Senate and within individual offices.", "Lexis Advance makes public laws available in the USCS – Public Laws database from 1988 to present.", "ProQuest Congressional makes public laws available in slip law format from 1988 to present.", "Westlaw makes public laws available from 1973 to the previous legislative session in the U.S. Public Laws – Historical database, and public laws from the current legislative session in its U.S. Public Laws database.", "Public laws, from 1973 to present are reprinted in the United States Code Congressional and Administrative News (USCCAN), published by Thomson Reuters. Laws are compiled in slip law format chronologically, along with selected Senate, House, and conference reports associated with the laws, as well as presidential signing statements, proclamations, and executive orders. USCCAN is published both as a bound volume and electronically through a Westlaw subscription.", "Every two years at the end of a congressional session, slip laws (both public and private laws) are accumulated and published chronologically in a series of volumes entitled the United States Statutes at Large ( Statutes at Large ) . The Statutes at Large also contain concurrent resolutions, reorganization plans, proposed and ratified amendments to the Constitution, and proclamations by the President. Until 1948, treaties and international agreements approved by the Senate were also published in the Statutes at Large. Laws are cited by the Statutes at Large volume and page number (e.g., 125 Stat. 753 refers to page 753 of volume 125 of the Statutes at Large ). The printed edition of the Statutes at Large is \"legal evidence of the laws...in all the courts of the United States\" and thus researchers may likely refer to this publication when citing a law before a court.", "", "GPO provides free, electronic access to the Statutes at Large , 1951-2011.", "Earlier volumes of the Statutes at Large, from 1789 to 1950, can be found and searched through the Law Library of Congress's Digitized Collection.", "In addition to the publicly available resources described above, many commercial, subscription-based sources provide access to the Statutes at Large . Subscriptions to these sources vary from House to Senate and within individual offices as well.", "Hein Online makes available the Statutes at Large from 1789 to present, and can also be searched by chapter or public law number.", "Lexis Advance makes available a Statutes at Large database which contains all public and private laws from 1789 to present, as well as treaties with foreign nations and Indian tribes beginning in 1776.", "ProQuest Congressional makes available the Statutes at Large from 1789 to present.", "Westlaw makes available the Statutes at Large from 1789 to 1972.", "The United States Code ( U.S. Code or U.S.C.) is the official government codification of all general and permanent laws of the United States. The U.S. Code has its roots in an 1866 law that initiated a project to \"revise, simplify, arrange, and consolidate all statutes of the United States, general and permanent in their nature....\" This endeavor was not fully realized until 1874, when the Revised Statutes of 1874 became the first official codification of U.S. laws. A second edition making corrections and updates followed in 1878. However, despite numerous efforts to supplement and revise inaccuracies in the Revised Statutes , the publication contained errors. The Revised Statutes were also not updated regularly, making it difficult to know if a particular law had been amended. In 1919, work on a new codification project began, but it was not until 1926 that what is today known as the United States Code came to exist.\nThe U.S. Code has been published by the GPO every six years since its initial publication in 1926. The current edition of the U.S. Code was printed in 2012 and is updated annually with cumulative print supplements. In the U.S. C ode , statutes are grouped by subject matter into 54 titles and five appendices. Each title is organized into chapters and then sections, which is how a particular provision is cited (e.g., 27 U.S.C. §124 refers to Section 124 of Title 27). Source credits and historical notes at the end of each section provide additional information, including the statutory origin of the provision, its effective date, a brief citation, discussion of any amendments, and cross references to related provisions. It is important to note that generally, the U.S. Code is an unofficial restatement of the Statutes at Large organized by topic for ease of access. As discussed further below, the exception to this general rule is when a particular title of the U.S. Code has been enacted into positive law.\nThe Office of the Law Revision Counsel (OLRC) of the U.S. House of Representatives is responsible for maintaining and publishing the U.S. Code . The OLRC oversees the organization of statutes by subject matter, assigning a statute to a U.S. Code section if the law has general applicability and permanence. If a provision is not intended to be permanent or does not have relevance to a wide audience, the OLRC may not include that language in the U.S. Code, or the OLRC may classify the provision as a statutory note or appendix to an existing U.S. Code section. Language enacted as part of government appropriations measures is a common instance of this; for example, provisions appropriating funds to the Office of Highway Administration each fiscal year are not likely to be codified because, by their own terms, they govern for only one year. Nevertheless, it is important to remember that whether a provision is codified or classified as a note or appendix in no way diminishes the statute's significance or authority. Provisions that are not codified in the U.S. Code are still acts of Congress.\nThe language of a law as set forth in the U.S. Code is not necessarily a literal duplication of the law as it was enacted. Because the U.S. Code is arranged by subject, a slip law is often divided up among titles, with different sections of a slip law being assigned to different volumes, chapters and sections of the U.S. Code . There may also be slight changes from the original statute, particularly with regard to section numbers and cross-references, corresponding to U.S. Code sections, not statute sections. The most notable difference between the U.S. Code and the Statutes at Large , however, is that language in the U.S. Code exists as amended to reflect subsequent changes made by later laws.", "When a bill becomes a law, the OLRC will examine whether the law has any non-amendatory or \"freestanding\" provisions to introduce to the Code, or any language that revises, repeals, or adds to already existing statutes. Consider the following sequence of enactments.\nIn 1952, Congress passed the Immigration and Nationality Act (INA). The INA generally consolidated and amended federal statutory law on the admission and removal of aliens in the United States and the terms under which they may become U.S. citizens. The INA was codified at 8 U.S.C . §§1 et seq. In 1986, Congress passed the Immigration Reform and Control Act (IRCA). Section 101 of IRCA amended the INA by adding new §274A to the statute. The amendment to the INA is reflected in 8 U.S.C. §1324a, which was added in 1986. The amending action can be seen in the historical notes of 8 U.S.C. §1324a, which read: \"June 27, 1952, ch. 477, Title II, Ch. 8, §274A, as added Nov. 6, 1986, P.L. 99-603 [...].\" The \"as added\" segment indicates that §274A did not originate in 1952, but was added to the INA on November 6, 1986. In 1996, Congress passed the Illegal Immigration Reform and Immigrant Responsibility Act (IIRIRA). Section 412 of IIRIRA amended §274A of the INA. Section 412 of IIRIRA specifically amended 8 U.S.C . §1324a(b)(1), by striking certain clauses, adding new language, and inserting additional subparagraphs to the existing statute.\nAs the above sequence illustrates, the canvas upon which Congress typically works is the existing realm of federal statutes, and not a blank slate. To that end, it is usually more effective to consult the U.S. Code for the current language of a statute than it is to consult either the slip law or the Statutes at Large , both of which are essentially frozen in their respective times.\nIt can be difficult for a researcher to find amended public laws with up-to-date language, but there are resources available. The House of Representatives' Office of the Legislative Counsel assembles compilations of statutes that are not codified in the U.S. Code or are found in a title that has not been enacted into positive law. Congressional committees and federal agencies may periodically issue similar compilations of amended public laws, especially for statutes significant to their respective jurisdictions. For example, the Civil Rights Division of the Department of Justice provides access to the Americans with Disabilities Act of 1990, As Amended, which includes changes made by the ADA Amendments Act of 2008 to the 1990 law. Additionally, commercial publishers may track changes to existing law by recently enacted legislation. For instance, the commercial database CQ LawTrack notes and lists changes made by each new law to prior laws, though it does not aggregate the text of the amended law itself.", "In 1947, Congress began enacting whole titles of the U.S. Code into law, generally repealing the underlying statutes. When Congress does this, the authoritative legal language is no longer the slip law that enacted it, but the language as presented in a U.S. Code title. This process is known as \"positive law codification\" and the titles that have been enacted are \"positive law titles.\"\nWhy would Congress go through the effort of reenacting laws already in force? According to the OLRC, the U.S. Code is an effective and valuable tool for researching and verifying general and permanent laws, and \"positive law codification improves the usefulness of the Code in a number of significant ways.\" These include\nimproving the organization of a title; restating laws using consistent language and styles; eliminating obsolete provisions; resolving ambiguous language; correcting technical errors; and establishing titles as legal evidence of the law so that they are more authoritative in federal and state courts than the Statutes at Large . Non-positive law titles are considered prima facie evidence of the Statutes at Large and may be refuted by the underlying statute should there be a disparity between the two statutes.\nThe process of positive law codification is a meticulous and time-consuming endeavor; consequently, not all titles have undergone the process. At present there are 27 positive law titles, which are identified with an asterisk on the OLRC's U.S. Code \"Search & Browse\" page.\nFor a researcher, one of the most obvious differences between positive and non-positive law titles is the difference in the history of the enacting laws. In non-positive law titles, the first act listed in the history source credits is what the OLRC terms the \"base law,\" or the act that originated that particular U.S. Code section. For example, 2 U.S.C. §1 reads,\nTime for election of Senators .\nAt the regular election held in any State next preceding the expiration of the term for which any Senator was elected to represent such State in Congress, at which election a Representative to Congress is regularly by law to be chosen, a United States Senator from said State shall be elected by the people thereof for the term commencing on the 3d day of January next thereafter.\n(June 4, 1914, ch. 103, §1, 38 Stat. 384; June 5, 1934, ch. 390, §3, 48 Stat. 879.)\nThe base law for 2 U.S.C. §1 is the Act of June 4, 1914, ch. 103, 38 Stat. 384. In other words, the Act of June 4, 1914 created the language that currently occupies 2 U.S.C. §1. The opening clause of the Act of June 4, 1914 reads, \"An act Providing a temporary method of conducting the nomination and election of United States Senators.\"\nHowever, in positive law titles, the history source credits convey different information. For example, 3 U.S.C. §7 reads:\nMeeting and vote of electors .\nThe electors of President and Vice President of each State shall meet and give their votes on the first Monday after the second Wednesday in December next following their appointment at such place in each State as the legislature of such State shall direct.\n(June 25, 1948, ch. 644, 62 Stat. 673.)\nHere, the Act of June 25, 1948, ch. 644, 62 Stat. 673 is not the base law for 3 U.S.C. §7, because this Act did not create the language of Section 7. Rather, this Act codified and enacted the entirety of Title 3 into positive law. The opening clause of this Act reads, \"An Act To codify and enact into law Title 3 of the United States Code, entitled 'The President.'\" In other words, every section contained in Title 3 has \"Act of June 25, 1948, ch. 644\" as the enacting law in the source credits because the underlying statutes that individually created the whole of Title 3 have been repealed. Accordingly, for a researcher who needs to cite the authoritative language of a section, the words of the section itself will be sufficient. However, a researcher who is looking for the history of the language itself and is perhaps interested in the intent behind its enactment, must take additional steps to locate such information.\nA researcher seeking information on the history or intent of the language in positive law titles of the U.S. Code should examine the \"Front Matter\" located at the very beginning of the title, preceding the legal language. This preface includes a table showing the disposition of all sections of the former title, including where the new sections were previously located, and the original source credits. In the previous example, prior to the process of positive law codification, the language of 3 U.S.C. §7 was located at 3 U.S.C. §5, and the original base law was the Act of February 3, 1887, ch. 90, 24 Stat. 373.", "As discussed in the previous section, one reason for positive law codification is to improve the organization of existing titles. Another way the OLRC improves the organization of existing titles is through a process known as \"Editorial Reclassification.\" In this process, the OLRC reorganizes portions of the law without altering or eliminating any statutory text.\nThe OLRC recently conducted seven editorial reclassification projects. Each one is explained in detail on the OLRC's website, with reasons for the change, major actions, current status, and resources for the transition. As an example, the OLRC transferred Title IV, Part C of the Higher Education Act of 1965 from its current location in the Public Health and Welfare Title, 42 U.S.C . §§2751, et seq., to the Education Title, 20 U.S.C. §§1087-51, et seq. In addition, portions of Title 20 are being reordered to conform to the transfer.", "In addition to the official U.S. Code , researchers may be familiar with such resources as the United States Code Annotated (U.S.C.A.), published by Thomson Reuters, and the United States Code Service (U.S.C.S.), published by LexisNexis. These are privately published editions of the U.S. Code . In addition to the text and historical source credits, such editions include annotations with further historical commentary, cross references to the Code of Federal Regulations (C.F.R.), judicial decisions or attorney general opinions interpreting the sections, and citations to secondary sources, such as law reviews and practice guides. Although these supplements can offer benefits to the researcher, it is important to remember that these versions are unofficial and should be cross-referenced to an official publication, be it the slip law, Statutes at Large, or, in the case of a positive law title, the U.S. Code.", "As previously noted, statutes are incorporated into U.S. Code to facilitate retrieval and access, because searching by subject may be easier than searching by date in some cases. However, there are a number of resources that further simplify locating information in the U.S. Code . The tools listed below are available in both print and electronically via the OLRC, unless otherwise noted.", "The General Index is a comprehensive directory organized alphabetically by subject with the corresponding title and section listed. The General Index is only available in print format.", "The Popular Names Table lists statutes alphabetically by their colloquial names. This can reflect the substance of the law, the sponsor(s) of the law, or any creative acronym for the law. For example, there are entries for the \"Energy Policy Act,\" the \"Dodd-Frank Wall Street Reform and Consumer Protection Act,\" and the \"USA PATRIOT Act.\" The electronic version of the Popular Names Table provides the enacting public law number, Statutes at Large cite, and the U.S. Code citation. The Popular Names Table's print version published by Thomson West with the U.S.C.A. also lists all the amending laws under the enacting law.", "The Classification Tables aid researchers by indicating where enacted laws appear in the U.S. Code and which sections of the U.S. Code those laws amended. The tables will also indicate which sections of the U.S. Code were repealed, omitted, or transferred.", "Table I conveys where sections of titles enacted as positive law were incorporated into the revised title. If a section is not listed in Table I, then it was either repealed or omitted in the process of becoming positive law.", "Table II shows where sections of the Revised Statutes of 1878 were classified into the U.S. Code .", "If a researcher has a Statutes at Large cite and would like to know where it has been codified, Table III provides the corresponding U.S. Code section.", "Similarly, Tables IV and V indicate where a particular executive order or presidential proclamation is set out in the U.S. Code .", "Likewise, Table VI lists the codification and status of reorganization plans promulgated since 1939. A reorganization plan is a proposal offered by the President to restructure or modify existing federal agencies to improve efficiency by consolidating, transferring, or eliminating certain functions.", "For additional information or specific questions on federal statutes, congressional clients may contact CRS. For programs offering training on statutory research, congressional clients please consult \"Federal Legal Research\" under the \"Events\" section of CRS.gov." ], "depth": [ 0, 1, 2, 3, 3, 2, 3, 3, 3, 4, 1, 2, 3, 3, 2, 3, 3, 3, 3, 1, 2, 2, 2, 2, 2, 3, 3, 3, 4, 4, 4, 4, 4, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full", "", "", "", "", "", "", "", "", "h0_full", "", "", "", "", "", "", "", "", "h0_full h2_full h1_title", "h0_full h2_full h1_full", "h1_full", "", "", "h2_full", "", "", "", "", "", "", "", "", "h0_full" ] }

{ "question": [ "What does this report concern?", "What is the relationship between new statues and earlier ones?", "How are \"slip laws\" published?", "What happens to statutes that are more general and permanent?", "How are statutes amended?", "How does the U.S. Code reflect these changes?", "What remains the \"base law\" after these changes?", "In what cases does the title itself exist as the authoritative language?", "What is an advantage of the U.S. Code compared to the Statutes at Large?", "How does the U.S. Code assist researchers?", "What are the limitations of working with the U.S. Code?" ], "summary": [ "This report provides an overview of federal statutes in their various forms, as well as basic guidance for congressional staff interested in researching statutes.", "When a bill becomes a law, the newly enacted statute may amend or repeal earlier statutes or it may create a new or \"freestanding\" law. Either way, these new statutes are first printed individually as \"slip laws\" and numbered by order of passage as either public laws, or less frequently, private laws.", "Slip laws are later aggregated and published chronologically in volumes known as the United States Statutes at Large (Statutes at Large).", "Slip laws are later aggregated and published chronologically in volumes known as the United States Statutes at Large (Statutes at Large).", "Statutes may be updated and published as amended public laws.", "As the statutes that underlie the U.S. Code are revised, superseded, or repealed, the provisions of the U.S. Code are also updated to reflect these changes.", "In these instances, the authoritative language remains the enacting statute, or the \"base law.\"", "However, some titles of the U.S. Code have been passed into \"positive law,\" meaning the law exists as it does in the U.S. Code and the title itself is the authoritative language. In these instances, it is the U.S. Code sections that are revised, superseded, or repealed, as the underlying statutes have all been revoked.", "In arranging statutes by subject rather than date, the U.S. Code may be more convenient to search than the Statutes at Large.", "Moreover, the Office of the Law Revision Counsel publishes tools known as \"Tables,\" to assist researchers in locating statutes, as well identifying statutes that may have been amended, omitted, transferred, or repealed.", "Nevertheless, certain laws are not added to the U.S. Code, such as laws appropriating funds, and thus researchers will often need to search laws in the other forms discussed herein." ], "parent_pair_index": [ -1, 0, 1, 1, -1, 0, 1, 2, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "Background", "Agencies Use LMR Systems to Meet Their Needs, but Interoperability with Partner Agencies Varies", "Mission Needs Drive Choice of LMR Systems and Devices", "Most Agencies Surveyed Mutually Identified Whether They Required LMR Interoperability, but Ratings of Interoperability Varied", "While Standardized Equipment and Training Help, Proprietary Features and Other Factors Continue to Hinder Interoperability", "Standardized Technology and Training Help Enhance Interoperability", "Use of Certain LMR Features and the Lack of Standard Operating Procedures Continue to Hinder Interoperability", "Use of Proprietary Features and Encryption in Devices", "Limited Use of Interoperability Channels", "Lack of Standard Operating Procedures", "Limited Investment in LMR Systems and Devices", "Some Agencies Use Preapproved Contracts for LMR Procurement, but a More Coordinated Approach Could Lower Costs and Enhance Interoperability", "LMR Procurement Practices", "A Category Management Approach to Procurement Could Lower LMR Costs and Improve Interoperability", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "Public safety personnel across the nation—including first responders, law enforcement officers, and natural resource managers, among others— rely on LMR systems to gather and share information while conducting daily operations and to coordinate their emergency response efforts. These systems are intended to provide secure, reliable, mission-critical voice communications in a variety of environments, scenarios, and emergencies. We reported in 2012 that these public safety communications systems are fragmented across thousands of federal, state, and local jurisdictions and often lack “interoperability,” or the ability to communicate across agencies and jurisdictions. Figure 1 displays the typical components of an LMR system, including handheld portable radios, mobile radios typically mounted in vehicles, base stations, and repeaters, which retransmit radio signals to extend the coverage area.\nHandheld portable radios are typically carried by the LMR user and tend to have a limited transmission range.\nMobile radios are often located in vehicles and use the vehicle’s power supply and a larger antenna, providing a greater transmission range than handheld portable radios.\nBase station radios are located in fixed positions, such as dispatch centers, and tend to have the most powerful transmitters. A network is required to connect base stations to the same communication system.\nRepeaters increase the effective communication range of handheld portable radios, mobile radios, and base station radios by retransmitting received radio signals.\nLMR networks connect different base stations to the same communications system and operate by transmitting voice and data through radio waves at specific frequencies and channels within the radio frequency portion of the electromagnetic spectrum. According to DHS, the shortage of available channels within a single radio band resulted in the expansion of public safety systems into multiple radio frequency bands within the radio frequency spectrum. In the United States, NTIA administers spectrum for federal government use and FCC administers spectrum for non-federal use (e.g., state and local government, and commercial use). Federal agencies generally operate on different radio frequency bands than those used by state and local agencies, as shown in figure 2.\nLMR systems that operate on different radio frequency bands are not always interoperable, making it potentially difficult for different jurisdictions to communicate with one another. To address this issue, NTIA has designated specific radio frequencies, known as federal interoperability channels, for use among federal agencies and between federal agencies and non-federal entities with which federal agencies require interoperability. Similarly, FCC designated national interoperability channels for use by the public safety community at the state and local levels. FCC licensees of other Public Safety and Industrial/Business Pool frequencies may also share their facilities with federal users. According to FCC, interoperability channels licensed by FCC are reserved specifically for different agencies or jurisdictions to coordinate and resolve initial interoperability issues when responding to an incident. Federal users may use the national interoperability channels only for interoperability with (and at the invitation of) a non-federal entity.\nTechnology solutions have been developed to enhance interoperability across different radio frequency bands and equipment. According to FCC, advancements in LMR technology—including software-defined radios, multi-band radios, and interoperable gateways—have enhanced interoperability among different LMR devices. Software-defined radios use reconfigurable software that can be changed to alter the radio’s operating parameters without making any changes to the hardware components. Multi-band radios can operate on more than one radio frequency band, with the goal of allowing emergency responders to communicate with partner agencies regardless of the radio frequency band on which they operate. Interoperable gateways use “bridging” or network approaches to enhance interoperability, by using radio network bridges or “gateways” that provide a direct interface between separate radio networks.\nIn addition to these and other technology solutions, a suite of voluntary national standards, known as Project 25 (P25) standards, is intended to facilitate interoperability among different manufacturers’ LMR communications products. The goal of P25 is to specify formal standards for interfaces among the various components of an LMR system commonly used by emergency responders. The P25 standards are intended to benefit the public safety community by promoting marketplace competition for interoperable products and enabling interoperable communications within and among public safety agencies, among other intended benefits.\nTo further support interoperable communications and to address emergency communications breakdowns that undermined response efforts during terrorist attacks in 2001 and Hurricane Katrina in 2005, various pieces of legislation have been enacted over the past 15 years. The Homeland Security Act of 2002 created the Department of Homeland Security, and within the department, a Directorate of Emergency Preparedness and Response responsible for, among other things, “developing comprehensive programs for developing interoperative communications technology, and helping to ensure that emergency response providers acquire such technology.” The Post-Katrina Emergency Management Reform Act of 2006 was enacted to address various shortcomings identified in the preparation for and response to Hurricane Katrina and included legislative reforms related to emergency management. For example, the act required DHS, among other things, to develop the National Emergency Communications Plan and created the Office of Emergency Communications within DHS to improve first responder communications. More recently, the DHS Interoperable Communications Act was enacted in 2015 with the goal to achieve and maintain interoperable communications capabilities among DHS agencies.\nThe Office of Emergency Communications administers the ECPC, which serves as a focal point to improve coordination and share information among 14 federal agencies in support of enhanced interoperability and the ability to provide emergency responders and officials with continued communications during disasters and incidents. According to a 2013 report prepared by the ECPC Research and Development focus group, federal agencies plan to continue to rely on existing LMR systems to support mission-critical emergency communications needs. The Office of Emergency Communications also worked with federal, state, local, and tribal jurisdictions to create its 2014 National Emergency Communications Plan, which it views as the nation’s strategic plan for emergency communications. The long-term vision of the plan—to enable the nation’s emergency response community to communicate and share information across levels of government, jurisdictions, disciplines, and organizations for all threats and hazards, as needed and when authorized—aligns with a broad goal of achieving interoperability. One of the top priorities of the 2014 plan is to identify and prioritize areas for improvement in emergency responders’ LMR systems.\nDHS developed the SAFECOM Interoperability Continuum in partnership with the federal, state, and local LMR users to help agencies and jurisdictions to plan and implement interoperability solutions for data and voice communications. The Interoperability Continuum can be used as a tool by LMR users to track progress in strengthening interoperable communications by addressing five interrelated elements viewed as necessary to achieve interoperability. These five elements are:\nGovernance refers to establishing a shared vision, across jurisdictions and disciplines, and an effective organizational structure to support any project or initiative that seeks to enhance interoperability by providing guidance and support through common policies, processes, and procedures.\nStandard operating procedures (SOP) refer to documents containing formal written guidelines or instructions that outline the expected actions for various scenarios, including normal day-to-day operations and emergency situations. SOPs typically have both operational and technical components and enable LMR users to act in a coordinated fashion in the event of an emergency.\nTechnology refers to the equipment/infrastructure, network, and applications that agencies use to exchange critical information when responding to incidents.\nTraining & Exercises refers to the instructional support designed to develop knowledge, skills, and performance of public safety personnel.\nUsage refers to how often interoperable communications capabilities are used—for example, for daily operations, overseeing planned events, or only for emergency or unplanned events.\nAccording to DHS’s Office of Emergency Communications, LMR systems can be complex and costly to implement, requiring a lifecycle approach to manage them. For example, DHS alone has reported that it owns a collective inventory of LMR equipment valued at more than $1 billion.\nDHS operates and maintains six LMR national networks and almost 520 systems providing mission essential support to approximately 125,000 frontline agents and officers who help to prevent terrorism and secure our national borders, among other responsibilities. Also, according to DHS, since the useful life of an LMR system is 10–15 years, continued investment is needed to operate and maintain these systems and ensure they continue to support users’ needs. In addition to the investments made by federal departments in LMR systems, the federal government has provided billions of dollars in 2015 and 2016 in grant funding for state, local, tribal, and territorial governments to install, expand, and enhance their LMR systems, according to SAFECOM and the National Council of Statewide Interoperability Coordinators.", "", "Based on responses to our survey, federal agencies generally use LMR devices to meet their unique mission or operational requirements. For example, the equipment needed to operate underground in a mining facility is different from what is needed to fight fires (in a high-heat environment, with the user wearing gloves) or for law enforcement (which may require encryption). DHS’s National Response Framework—a guide to how the nation plans to respond to disasters and emergencies— describes 15 emergency support functions, or federal coordinating structures, that group resources and capabilities of federal departments and agencies into functional areas that are most frequently needed in a national response. Based on responses to our survey, the six most frequently cited emergency support functions relating directly to the agencies’ core missions are shown in table 1.\nAlthough there are many manufacturers of LMR systems and devices, most agencies that we surveyed reported using equipment provided by the same manufacturer. Specifically, of the 57 agencies that responded to our related survey questions, more than two-thirds reported using LMR systems (40 of 57) and LMR devices (44 of 57) manufactured by Motorola. In written responses to our survey, agencies reported that they prefer to continue to use equipment from the same manufacturers for various reasons, including ensuring compatibility of new LMR equipment with existing system requirements and reducing the need for training on new equipment and systems.", "For our analysis of agencies’ LMR interoperability requirements and ratings, we asked each agency participating in our survey to identify (from a list of all agencies we surveyed) all other agencies with which the respondent agency requires LMR interoperability. We also asked the respondent agency to rate the level of interoperability with each agency that they had identified, among other questions. We refer to this as “independently” identifying the need for LMR interoperability. We later compared all agency responses to determine whether pairs of agencies identified each other, meaning that both agencies in the pair reported that they require LMR interoperability with each other. We refer to this as “mutually” identifying the need for LMR interoperability.\nNot all federal agencies that responded to our survey reported a need for LMR interoperability with one another, but most agencies mutually and independently agreed whether or not they require it. That is, more than 80 percent of the possible pairs of agencies we surveyed mutually and independently reported that they do not generally require LMR interoperability; and another 5 percent mutually and independently reported that they do generally require it. The remaining approximately 14 percent of possible agency pairs reported a potential need for this two way communication, but this potential need was not mutually and independently reported by both agencies within the pair. For example, the Office of the Secretary of the Interior reported requiring interoperability with 22 other agencies, but only 2 agencies reported requiring interoperability with it. Alternatively, FEMA reported requiring LMR interoperability with only 8 agencies but 21 other agencies reported requiring interoperability with it.\nFigure 3 represents the level of mutual agreement between agencies regarding their need for LMR interoperability. That is, the dots in the figure represent the 57 agencies we surveyed plus the FBI, the gray lines connect pairs of agencies whereby only one agency within the pair identified the need to be interoperable with the other agency (i.e., lack of agreement), and the black lines connect pairs of agencies whereby both agencies within the pair mutually and independently identified the need to be interoperable with one another.\nTable 2 quantifies the information covered in figure 3 for the 1,653 possible agency pairs—given the group size of 57 agencies we surveyed plus FBI—including the specific number of agency pairs that mutually identified a need for LMR interoperability or not, and the number of pairs that did not mutually identify a need for LMR interoperability (i.e., within a possible agency pair, one agency identified a need for interoperability but the other agency did not).\nBased on our survey results, figure 4 shows agencies within federal departments with an identified need for LMR interoperability. Agencies closer to the center of the figure reported requiring interoperability with the greatest number of other agencies whereas those agencies located toward the edge of the figure require interoperability with fewer agencies. Similar to figure 3, each of the 226 gray lines connects an agency pair whereby only one agency within the pair identified the need to be interoperable with the other agency and each of the 86 black lines connects an agency pair whereby both agencies within the pair mutually and independently identified the need to be interoperable with one another.\nAmong the pairs of agencies that agreed on their need for two-way communication, the quality of interoperability—as rated by the agencies requiring it—was generally good. To develop an understanding of the extent to which a mutually identified need for LMR interoperability is actually being achieved, we asked agencies to evaluate the general level of LMR interoperability actually achieved with each of their identified partner agencies. Based on the 86 pairs of agencies that mutually reported that LMR interoperability with each other was required, we expected 172 ratings—that is, a rating from each agency in each pair. However, because FBI did not provide us with its rating of the quality of interoperability with its partner agencies, we received 157 ratings in total.\nAbout 68 percent of the ratings from agencies that mutually agreed on the need to communicate with each other using LMR reported having good or excellent LMR interoperability.\nFigure 5 lists federal agencies (including FBI) that reported the need for LMR interoperability with other federal agencies for daily operations, planned events, or unplanned or emergency events within the past 5 years. The color-coded blocks correspond with each listed agencies’ assessment of the quality of its LMR interoperability with its identified partner agencies. For more detailed information about the specific agencies requiring LMR interoperability, the partner agencies they identified, and their assessment of their levels of interoperability with each identified partner agency, see an interactive graphic which can be viewed at http://www.gao.gov/products/gao-17-12.", "", "The use of standards-based and multi-band LMR equipment and training and exercises have helped to enhance interoperability, according to agencies we surveyed. With respect to standards-based equipment, almost all of the agencies that use LMR equipment to communicate with other agencies have partially or fully implemented the use of P25- compliant LMR devices, according to our survey. P25 standards are intended to facilitate interoperability among communications products of different manufacturers by supporting a variety of LMR system configurations, call types, and features (including encryption). Most agencies that we surveyed (49) reported that their agency or department requires the use of P25 standards-compliant LMR devices; however, not all agencies reported fully using P25 equipment, nor do they all view the standards as helpful. That is, of the 36 agencies that reported having fully implemented P25-compliant equipment, 32 reported that using P25- compliant equipment somewhat or greatly enhances interoperability. Six agencies reported that they do not use P25-compliant LMR devices for the following reasons: (1) it would be difficult for the agency to integrate the technology with its current LMR system, (2) no perceived need for the technology, (3) benefits of the technology are unclear, and (4) the agency requires LMR devices with proprietary or unique features that do not comply with P25 standards.\nAnother LMR technology—the multiband radio (including dual, tri- and quad-band devices)—operates on multiple public-safety radio bands and can help to enhance interoperability across users on different parts of the radio spectrum. However, fewer than half of the agencies responding to this question in our survey—21 out of 56—reported fully implementing the use of multiband radios. More than 85 percent of agencies (18 of 21) that routinely use multiband radios reported that they somewhat or greatly helped interoperability with identified partners. Multiband radios can help enhance interoperability because they enable a single portable radio to operate on multiple radio bands, thereby enhancing LMR interoperability with partners at the state and local level, or with other agencies operating at a different radio frequency band.\nRegarding training and exercises, more than half of the agencies we surveyed (32 of 57) reported that they participate in training on LMR equipment used for daily operations, and almost all of the agencies participating in such training reported that it helped interoperability with partner agencies. In addition to training, exercises can help to reinforce what is learned in training. Nearly one-third of the agencies told us they fully implemented exercises to test specific technologies and procedures, and almost all of those agencies reported they found these exercises to somewhat or greatly help their agency’s interoperability with key partners. Nearly one-quarter of the agencies reported that they fully implemented joint exercises with key partners to gain familiarity with LMR equipment for daily operations, planned events, or unplanned or emergency incidents.\nIn written responses to our survey, agencies noted additional training and exercises that could enhance interoperability, including: making LMR training available online, sharing lessons learned from incidents, and continuing to implement large-scale exercises to gain familiarity with equipment before an emergency occurs. For example, one agency reported that wide-scale wildland fire-fighting exercises involving multiple- county, state, Bureau of Land Management, and Forest Service personnel have been helpful toward achieving interoperability when needed.", "Several factors continue to hinder interoperability, according to agencies we surveyed. In particular, the following factors continue to limit agencies’ progress in achieving interoperability with partner agencies: (1) the use of proprietary features and encryption in devices, (2) the limited use of interoperability channels, (3) the lack of standard operating procedures, and (4) the limited investments in LMR systems and devices.", "Some of the agencies we surveyed reported that proprietary features used within the LMR systems and devices of their partner agencies have hindered interoperability with their partner agencies. As we reported in 2012, while the P25 standards are intended to facilitate interoperability among LMR systems and devices of different manufacturers, the standards remain voluntary. As a result, LMR systems and devices marketed as P25-compliant can also include proprietary features that render the equipment incompatible with equipment from other manufacturers. To help ensure that LMR equipment is truly compliant with the P25 standards, DHS’s Office for Interoperability and Compatibility has partnered with the Department of Commerce Public Safety Communications Research program to develop the P25 Compliance Assessment Program. This voluntary program aims to independently test LMR equipment to ensure that equipment marketed as P25-compliant actually complies with P25 standards for performance and interoperability.\nProprietary Features Increase Switching Costs In GAO-12-343, we reported that the use of proprietary features makes it costly for agencies to switch their LMR devices from one manufacturer to another, since doing so would require replacing or modifying older devices to be compatible with new ones. Thus, these switching costs may compel agencies to continue to buy devices from the incumbent device manufacturer. The cost of switching is particularly high when a manufacturer has installed proprietary features that are not interoperable with competitors’ devices. Additionally, even in cases where devices from different manufacturers are supposed to be compatible—that is, interoperable and compliant with P25 standards—a fear of incompatibility may deter an agency from switching to a new manufacturer when it needs to add additional LMR devices to its existing LMR system.\nMore than a quarter of the agencies responding to these questions in our survey use LMR systems (16 of 56) or devices (20 of 57) with proprietary features and over half (34 of 57) also reported using LMR devices with encryption features. In written responses to our survey, agencies provided reasons for using proprietary features, several of which relate to unique mission-related situations or the need to access other LMR networks, such as state and local networks. For example, agencies noted mission-related situations such as underground operations, high-density and congested environments, and “man-down” signaling to call for help when a LMR user is incapacitated as reasons for including proprietary features. With respect to encryption, one agency noted that its LMR devices use an encryption feature to maintain interoperability with state and local public safety partner agencies using the same type of encryption.\nDHS’s Office of Emergency Communications notes that encryption features in LMR devices can help protect critical information transmitted from one LMR device to another from being compromised or disclosed and can provide assurance that sensitive information is reasonably protected from unauthorized access. Although more than 30 percent of the agencies responding to our survey (18 of 57) reported that incompatible encryption capability with systems used by partner agencies somewhat or greatly hindered their ability to maintain interoperability, we did not observe this result in the specific examples of identified agency pairs and their assessment of their LMR interoperability. That is, agencies that require LMR interoperability rated interoperability with their identified partner agencies similarly regardless of whether or not their identified partner agency uses encryption in its LMR devices. According to DHS officials, partner agencies can enhance interoperability when they agree to share common encryption keys. According to our survey, 14 agencies have implemented SOPs for sharing of encryption keys or agreeing to an encryption standard and 13 of these 14 agencies reported that doing so was greatly or somewhat helpful toward achieving interoperability with their partner agencies.", "Federal and national interoperability channels provide agencies with a set of radio frequencies to use on location, to coordinate and resolve initial challenges to achieving interoperability when responding to an emergency or unplanned event. DHS encourages LMR users to maximize their flexibility and be prepared for emergency events by preprogramming as many interoperability channels into their radios as possible (as permitted by applicable regulations), including the federal and national interoperability channels. DHS’s National Interoperability Field Operations Guide—available on the ECPC library webpage within the www.max.gov website—includes rules and regulations for the use of nationwide and other interoperability channels, and other reference material. LMR users who have not pre-programmed their devices or are unfamiliar using the channels may be slow to respond or experience interoperability difficulties during an emergency event. For example, during the 2013 Boston Marathon bombings, when traditional communications systems— including radio networks and protocols, and some of the radio channels designated for the Marathon under the communications plan—were overloaded, Boston’s police, fire, and public and private emergency medical service personnel used a dedicated radio channel to communicate and quickly summon aid to the scene. By comparison, some regional specialized weapons and tactics (SWAT) teams from state and local police departments and law enforcement councils experienced difficulty communicating because their radios were not programmed to the interoperable channels. Similarly, the after-action report for the 2012 Navy Yard shooting noted that officers from federal and local law enforcement agencies were communicating on separate channels while searching for the gunman, resulting in gaps in communications and increased risk to fellow officers.\nAlthough more than two-thirds of the federal agencies responding to our survey reported that their radios are pre-programmed to the federal and national interoperability channels, 11 of the 57 agencies reported that their radios are not pre-programmed to use these NTIA-regulated federal emergency channels, and 17 of the 57 federal agencies reported that their devices are not pre-programmed to use FCC-regulated national interoperability channels. In written responses related to this survey question, some of these agencies explained that they did not see the need to do so or were unaware that the channels existed. However, as mentioned previously, DHS views these channels as providing greater flexibility to agencies in the event of an emergency. About one-fourth of the agencies responding to our survey reported that training related to accessing federal and national interoperability channels was a medium or high priority for their agency.", "DHS SAFECOM guidance states that interoperability requires not only the technical ability to communicate through the use of compatible LMR equipment but also formalized agreement among federal agencies, state and local entities, and other emergency service organizations to communicate and cooperatively respond to emergencies and disaster events. Agencies can establish such agreements by developing SOPs to define roles, responsibilities, and appropriate usage of dedicated interoperability resources (e.g., interoperability channels) during response operations. DHS’s SAFECOM recommends that partner agencies that need to use LMR to communicate develop SOPs and engage in training for daily operations, planned events, and unplanned or emergency events.\nWe analyzed survey results for agencies that identified the need for LMR interoperability with other agencies, particularly regarding whether the agencies have SOPs related to interoperability. Based on survey responses, when an agency identified the need for LMR interoperability with another agency, the agency also reported having SOPs with the identified agency in about 48 percent of the cases. Furthermore, the quality of interoperability tended to be higher when SOPs were in place than when they were not. In cases where an agency reported requiring LMR interoperability with another agency and having SOPs with that agency, the quality of interoperability was rated as excellent for 40 percent of the cases; good for 45 percent of the cases; and fair, poor, or nonexistent for 15 percent of the cases. In cases where an agency reported requiring a link and not having SOPs with the other agency, interoperability was rated as excellent for 16 percent of cases; good for 51 percent of cases; and fair, poor, or nonexistent in 33 percent of these cases.\nIn addition to having SOPs in place with partner agencies, DHS recommends that agencies engage in training and exercises to gain familiarity with the SOPs to improve response to unplanned or emergency events with partner agencies. However, two-thirds of the agencies responding to this survey question (37 of 56) have not fully implemented training on standard operating procedures, continuity processes, and related topics even though many of these agencies (20 of 37) said that doing so is a medium or high priority for their agency. To encourage agencies requiring LMR interoperability to develop SOPs, DHS has published and distributed guidance on its website and via the ECPC clearinghouse for information on www.max.gov. DHS also recognizes the importance of training to ensure that emergency responders understand SOPs and have the skills needed to carry them out, but according to DHS, it does not have the regulatory authority to require other agencies to develop SOPs or to provide relevant training to federal agencies.", "According to DHS, maintaining an LMR system requires a large investment, due to its high cost and relatively-short life cycle of about 10 to 15 years and deferring maintenance and upgrades to aging LMR systems and devices can limit interoperability. To help ensure effective LMR operations, SAFECOM guidance encourages emergency responders to regularly maintain communications systems and equipment, and to upgrade their systems when appropriate. For example, upgrades may include investing in standards-based equipment, adopting new technologies, and updating the hardware and software of existing LMR systems. However, in response to our survey, more than two-thirds of the agencies that responded to this question (39 of 57) reported that the limited availability of funding to replace or upgrade incompatible or aging LMR equipment greatly or somewhat hindered their ability to maintain interoperability with partner agencies. DHS has produced guidance to help agencies to establish and maintain LMR systems, including planning and budgeting for the long-term maintenance of these communication systems.", "", "Nearly half (27 of 57) of agencies we surveyed reported using contract vehicles to acquire LMR systems and devices. Contract vehicles contain groups of preapproved contracts that enable agencies to purchase LMR equipment from a list of vendors with established prices. We have previously reported that coordinating purchases of like products and services—such as by using preapproved contracts—enables agencies to leverage spending to the maximum extent possible. Agencies using preapproved contracts to purchase LMR equipment reported similar benefits, including cost savings, reduced administrative burden, enhanced interoperability, and standardized equipment. Among the 27 federal agencies that reported using preapproved contracts to procure LMR systems and devices, most reported using contracts sponsored by the DHS or the Department of the Interior, although several other contract vehicles were used by a smaller number of agencies (see fig. 6).\nAmong the agencies that used preapproved contracts, many reported that they have used multiple contract vehicles to purchase LMR equipment in the past 5 years. For example, 13 agencies reported using two or more different vehicles, and three agencies reported using four different vehicles. We have reported that agencies’ use of potentially duplicative contracts to purchase similar goods and services can potentially reduce their benefits by imposing significant costs to the agencies. That is, agencies may miss an opportunity to leverage their buying power, if purchasing under many different agreements.\nTwenty-three agencies we surveyed also have used a sole source or other procurement mechanisms to acquire LMR systems and devices within the past 5 years, whereby agencies contract with one specific manufacturer, without competition, to acquire systems and devices when it is believed to be in the best interest of the agency. In written comments on the survey, some agencies reported using sole source procurements to ensure that all the LMR devices they purchased would work with their existing systems. For example, one agency reported that using a sole source procurement allows it to obtain additional equipment from the same manufacturer as its current LMR system. Another noted that a sole source procurement allows the agency to replace existing equipment with similar equipment, which reduces the cost of training for LMR users and technicians who maintain and repair the equipment. Several other agencies reported using a sole source procurement to ensure that they can obtain LMR devices with needed features to meet operational requirements.", "While some agencies that responded to our survey reported using contract vehicles, many reported that they do not coordinate with other agencies before purchasing new LMR equipment. According to the Office of Management and Budget (OMB), better coordination among agencies interested in commonly-purchased items—such as information technology (IT)—can help the agencies to leverage the government’s purchasing power. We have previously identified using a coordinated procurement approach as a key practice that can reduce procurement costs to agencies. According to GSA, a structured and collaborative approach to procurement can help agencies save money and improve overall performance by better leveraging their purchasing power.\nHowever, in response to our survey, nearly 40 percent of agencies (22 of 57) reported that they have not coordinated procurement activities of LMR devices and related equipment with other federal agencies within the past 5 years, such as by identifying common technical requirements before purchasing new LMR equipment. In written comments on the survey, some of these agencies provided the following reasons for not coordinating LMR procurements:\nDifference in mission: for example, one agency reported that its mission does not overlap with that of other federal agencies, a circumstance that made it difficult to coordinate procurements with them.\nLack of common technical requirements: for example, one agency reported that its radio system needs to have maritime capabilities that most other federal agencies do not need.\nLow quantity of LMR devices: for example, one agency reported that it needs only about 100 LMR devices and trying to coordinate the purchase of such a small quantity would be more burdensome than helpful.\nTiming of procurement: for example, one agency reported that it tried to execute a contract for LMR purchases with another agency in the past, but the timing of the cycles by which the two agencies’ purchased new LMR equipment was difficult to coordinate due to their having two different contract-performance periods.\nAccording to OMB officials, agencies had noted similar reasons for not coordinating other commonly purchased goods, such as IT hardware and software. In particular, OMB officials told us that although agencies may initially struggle to identify common technical requirements, agencies can typically identify and agree to a limited number of standard technical configurations to meet the needs of about 80 percent of common IT requirements, such as those for laptops and desktops. These items make up more than half of the federal government’s overall expenditures and agencies often purchase and manage these items in a fragmented and inefficient manner, according to OMB. In response, in 2014, OMB’s Office of Federal Procurement Policy announced its category management initiative, an approach based on leading practices to manage entire categories of spending across government for commonly purchased goods and services, such as IT hardware and software. The initiative is designed to allow the federal government to buy goods and services more like a single enterprise, leveraging its purchasing power as the world’s largest consumer. OMB identified three critical steps departments and agencies could take to improve procurement practices and achieve cost savings: (1) reduce administrative costs by consolidating acquisitions through fewer high-performing contract vehicles; (2) standardize configurations for common requirements to drive savings; and (3) implement smarter business practices, such as jointly purchasing replacement IT equipment on a regular cycle, to achieve strategic and predictable budget requirements and optimize price and performance.\nAt the time of our review, OMB had not yet considered LMR equipment within its category management initiative, in part because the initial strategic plan for IT focused on implementing OMB policy related to laptops and desktops, software, and mobile devices and services. However, OMB officials acknowledged that a category management approach to LMR procurement may save the government money while also supporting the goal of enhanced LMR interoperability among agencies, largely because it would require agencies to identify their common technical requirements and purchase equipment in larger quantities through fewer transactions. OMB officials said that LMR equipment could be a focus of future efforts once data analysis is conducted to understand how many agencies use LMR equipment, which contract vehicles are used to purchase LMR equipment, and overall LMR expenditures. In our discussion with OMB officials, they noted the widespread use of LMR equipment and the large number of contract vehicles currently being used to purchase LMR equipment as reasons for pursuing a consolidated procurement of LMR equipment through a category management approach. Including LMR equipment in OMB’s category management initiative may enable the federal government to more fully leverage its aggregate buying power to obtain the most advantageous terms and conditions for LMR procurements and realize cost savings. Although the exact amount of federal funds spent each year on LMR equipment government-wide is unknown, we estimate it is likely hundreds of millions of dollars, given the known costs to DHS, a single department. Specifically, DHS has reported that its agencies spent almost $526 million on LMR infrastructure, equipment, and personnel in fiscal year 2016, with plans to continue spending approximately $450 million for each of the next 5 years, on average.\nAccording to OMB officials, the coordination required for a category management approach includes discussions to standardize configurations for common requirements and establish a shared vision through common policies, processes, and procedures. Agencies’ subject matter experts must first identify the common technical standards and features required for a category management approach, according to OMB officials. For example, to develop such standards for the IT goods and services category management initiative, OMB convened IT and procurement professionals from the National Aeronautics and Space Administration, the General Services Administration, and the National Institutes of Health to work with industry partners and representatives from 20 federal agencies to develop a government-wide solution for purchasing IT products and services. As a result of this initiative, three existing contract vehicles were identified as high-performance, and OMB began requiring civilian agencies to use those vehicles to purchase from among six standard configurations of laptops and desktops.\nOur survey results suggest that such coordination, if applied to LMR procurement, could enhance interoperability among partner agencies. For example, many of the agencies that engage in coordinated procurement also reported a better general level of LMR interoperability. Based on survey responses, when an agency identified the need for LMR interoperability with another agency and coordinated with that agency on technical requirements before purchasing new equipment, the quality of interoperability was reported as: excellent in 50 percent of the cases; good in 39 percent of the cases; and worse (fair, poor, nonexistent) in 11 percent of the cases. In cases when an agency identified the need for LMR interoperability with another agency but did not coordinate on technical requirements before purchasing new equipment, a much lower quality of interoperability was reported—that is, LMR interoperability was rated excellent for 13 percent of the cases; good for 55 percent of the cases; and worse (fair, poor, nonexistent) for the remaining 32 percent of the cases. In addition, the cost-saving potential of category management could aid agencies that, as previously noted, reported funding constraints in their ability to replace or upgrade aging LMR equipment to maintain interoperability.", "Several federal agencies have required LMR interoperability with one another in recent years for daily operations, planned events, and during emergencies. Although these agencies spend millions of dollars each year on LMR equipment, many of them do not coordinate with one another before purchasing new equipment—for example, by agreeing to purchase through a limited number of high-performing contract vehicles. As a result, the agencies may be limited in their ability to exert buying power with manufacturers to obtain quantity discounts. This duplication of procurement efforts for similar goods and services imposes significant costs to agencies. OMB recognizes that agencies often purchase and manage items in a fragmented and inefficient manner, through tens of thousands of contracts and delivery orders. To address this issue, OMB’s Office of Federal Procurement Policy directs agencies to implement category management as a way to manage spending across government for commonly purchased goods and services. This approach enables the federal government to leverage its purchasing power and realize cost savings and may also help to enhance interoperability, particularly if taken in combination with inter-agency agreements, and training and exercises. Although OMB’s category management approach includes many IT goods and services, it does not include LMR equipment. By including LMR equipment in the category management initiative, the federal government may be able to more fully leverage its aggregate buying power to save money and obtain the most advantageous terms and conditions for LMR procurements while also helping agencies to more effectively communicate in their day-to-day operations and when responding to emergencies.", "To improve federal agency LMR procurement practices, the Director of OMB should direct the Office of Federal Procurement Policy to: examine the feasibility of including LMR technology in the category if warranted, include LMR technology within the appropriate spend category.", "We provided a draft of this report to OMB, DHS, Commerce, FCC and GSA for their review and comment. OMB, DHS, and Commerce provided technical comments, which we incorporated as appropriate. In commenting on a draft of the report, OMB generally agreed with our recommendations and noted that it is working to identify which IT strategies will produce the best return on investment and that it continues to evaluate its category-specific strategic plans. In DHS’s technical comments, officials stressed that interoperability is achieved by strong leadership and governance structures; planning and coordination; common policies and procedures that promote interoperability across agencies and jurisdictions (e.g., mutual aid agreements, joint procurement policies that ensure equipment is interoperable); regular training and exercises that allow responders to practice interoperability skills; and the purchase of standards-based equipment.\nWe are sending copies of this report to appropriate congressional committees, the Secretary of Homeland Security, the Secretary of Commerce, the Chairman of FCC, the Administrator of GSA, and the Director of OMB. In addition, the report is available at no charge on GAO’s website at http://www.gao.gov.\nIf you or members of your staff have any questions about this report, please contact me at (202) 512-2834 or shear@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Major contributors to this report are listed in appendix II.", "This report focuses on the current LMR technology, procurement practices, policies, and guidance to identify ways that select agencies can further facilitate interoperability among first responders. Specifically, we reviewed (1) LMR systems and devices used by selected federal agencies and the state of LMR interoperability among these agencies; (2) factors that help and hinder interoperability among agencies that use LMR; and (3) selected agencies’ practices for procuring LMR systems. We plan to review federal agencies’ LMR interoperability with tribal, state, and local entities in future work.\nTo obtain information for all of our objectives, we conducted a web-based survey of 74 civilian federal agencies. We were interested in agencies that have used LMR to communicate with at least one other federal agency for daily operations, planned events like presidential inaugurations or unplanned/emergency incidents within the past 5 years. The initial list of federal agencies was identified by the civilian participating members of the Emergency Communications Preparedness Center (ECPC) and confirmed by e-mail; we did not survey agencies from the Department of Defense. These agencies were sent a web-based survey that included questions related to LMR technology used, procurement practices, and technical and non-technical factors that helped or hindered agencies’ ability to achieve interoperability. The first question of the survey was a screening question to confirm that the agency used LMR to communicate with at least one other federal agency. All 74 agencies responded to the screening question. Agencies that met this criterion—58 federal LMR users in all—were further surveyed about the type of equipment they use, interoperability needs, and procurement practices, among other topics. Fifty-seven of the 58 agencies that we identified as federal LMR users responded to the full survey. The Federal Bureau of Investigation (FBI) did not respond to the full survey but provided responses to a limited set of survey questions related to our first objective, identifying agencies with which they require LMR interoperability. Specifically, the FBI provided a list of civilian federal agencies that it required LMR to communicate with within the past 5 years, which we included in the partner agency network analysis. Sixteen agencies that confirmed that they did not use LMR for communication in the first question did not continue with the survey. To ensure that our survey questions and skip pattern were clear and logical and that respondents could answer the questions without undue burden, we pre- tested our survey with five agencies: the Office of the Chief Information Officer at the Department of Interior, the Office of the Chief Information Officer at the Department of Homeland Security; the Forest Service at the Department of Agriculture; the Office of the Inspector General for Tax Administration at the Department of the Treasury; and the Bureau of Diplomatic Security at the Department of State. We administered the survey from April 2016 through June 2016; therefore, responses reflect information and views as of that time.\nWe provide survey results based on the number of respondents to each question because not all respondents answered every question of the survey. Therefore the total number of respondents may be fewer than 57 for some results. We did not ask agencies to provide additional explanation on how they arrived at their responses. The survey and a more comprehensive tabulation of the results can be viewed at GAO-17-13SP. Table 3 provides the list of federal agencies we surveyed.\nTo determine the LMR systems and devices used by the agencies and the state of interoperability among select federal agencies, we asked survey respondents to provide information about the characteristics of LMR systems and devices they currently use. We also asked each agency to identify—from the list of 74 agencies—those agencies with which they have required LMR interoperability within the past 5 years (i.e., “partner agencies”). We asked them to indicate whether LMR interoperability with each partner agency was needed for daily operations, planned events, or unplanned events (including emergencies), and we asked them to rate their current level of interoperability with each partner agency.\nTo identify factors that have helped or hindered agencies’ interoperability with their identified partner agencies, we surveyed agencies’ current practices against recommended practices identified in the five elements of the SAFECOM Interoperability Continuum, which includes governance, standard operating procedures, technology, training and exercises, and usage. For example, we asked agencies to indicate whether they have standard operating procedures related to their LMR interoperability with their partner agencies. For each factor that the agencies have implemented, we asked how much the factor helped, if at all, and for factors that they have not implemented fully, we asked if the factor is a priority for the agency to implement. We also asked agencies to rate the extent to which factors have hindered their ability to maintain interoperability with partner agencies.\nLastly, to understand how LMR procurement practices of select agencies affected interoperability, we surveyed agencies’ procurement practices, including whether they use common contract vehicles and their identified outcomes for each vehicles. In addition, we asked if the agencies have used sole source contracts to procure LMR equipment and an explanation for why they do so. We reviewed literature to identify category management as a potential procurement practice that can leverage the buying power of the federal government to increase cost saving and reduce redundancy. To understand the feasibility of using category management to procure LMR equipment, we asked officials from the Office of Management and Budget what factors they consider when deciding whether a particular technology makes a good candidate for its category management initiative. We also asked the officials if LMR procurement would benefit from inclusion in the category management initiative.\nWe also reviewed relevant legislation and Department of Homeland Security (DHS) planning documents related to interoperability among federal agencies, including the National Emergency Communications Plan, the National Response Framework, and SAFECOM documentation related to five key elements of interoperability. We reviewed our prior reports and others from federal agencies for examples of how factors helped or hindered their interoperability. We interviewed officials from federal agencies with responsibilities related to emergency communications and procurement of LMR equipment, including DHS; the National Telecommunications and Information Administration and the National Institute of Standards and Technology, within the Department of Commerce; the Federal Communications Commission; the General Services Administration; the Office of Management and Budget; and administrators of the ECPC.", "", "", "In addition to the individual named above, Sally Moino (Assistant Director), John Healey, (Analyst in Charge), Teresa Anderson, Jenn Beddor, Melissa Bodeau, Russ Burnett, Thanh Lu, Josh Ormond, Cheryl Peterson, Ernest Powell, Elizabeth Wood, and John Yee made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 3, 3, 3, 3, 1, 2, 2, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "h0_title h2_title", "h0_full", "h0_full h2_full", "", "", "", "", "", "", "", "h1_title", "h1_full", "h1_full", "h1_full", "h2_full", "", "h0_full h2_full", "", "", "" ] }

{ "question": [ "What equipment do the federal agencies use?", "What is the advantage of using equipment from a standard manufacturer?", "Do the agencies GAO surveyed track LMR interoperability?", "What is the level of LMR interoperability?", "How do the agencies that GAO surveyed acquire LMR equipment?", "What are the advantages and disadvantages of this approach?", "What percent of agencies use sole-source procurement or independent approaches?", "In what ways do the agencies purchase their items?", "What are the risks of this tendency?", "How has OMB directed agencies to improve their spending?", "What are the benefits of this approach?", "What are the drawbacks of this approach?", "How could the government improve this approach?", "How has OMB responded to this recommendation?", "What was GAO asked to examine?", "What specific LMR practices did GAO examine?", "How did GAO undertake this assessment?" ], "summary": [ "Federal agencies GAO surveyed generally use land mobile radio (LMR) equipment to meet their core missions, such as public safety, emergency management, or firefighting.", "More than two-thirds of the 57 agencies GAO surveyed reported using equipment from the same manufacturer because, for example, they believe doing so will help ensure compatibility of new LMR equipment with existing system requirements.", "Most agencies GAO surveyed were consistent in identifying each other as agencies with which they have or have not needed LMR interoperability over the past 5 years.", "Of the agencies that identified the need to communicate with each other, about two-thirds reported generally having a good or excellent level of LMR interoperability.", "Nearly half of the agencies GAO surveyed reported using pre-approved vendors with established prices to acquire LMR equipment, mainly through contracts sponsored by the Departments of Homeland Security and the Interior.", "While this approach can facilitate cost savings and interoperability, many of these agencies reported purchasing equipment through multiple agreements, a practice that can reduce these benefits.", "About 40 percent of agencies GAO surveyed reported using sole-source procurement or independent approaches.", "According to the Office of Management and Budget (OMB), in general, agencies often purchase and manage items in a fragmented and inefficient manner.", "This approach can result in duplication of effort, which imposes significant costs on federal agencies.", "OMB has directed agencies to implement “category management” as an improved way to manage spending across government for commonly purchased goods and services.", "This approach enables the government to leverage its purchasing power and realize cost savings.", "However, OMB’s category management initiative does not include LMR equipment even though federal agencies spend millions of dollars annually purchasing such equipment.", "By including LMR equipment in OMB’s category management initiative, the government could more fully leverage its aggregate buying power to obtain the most advantageous terms and conditions for LMR procurements.", "OMB officials agreed that a category management approach to LMR procurement might save the government money while supporting the goal of enhanced interoperability among agencies that require it, but OMB has not examined the feasibility of applying this approach to the procurement of LMR equipment.", "GAO was asked to examine federal agencies’ LMR interoperability and procurement practices.", "GAO examined (1) LMR equipment used by federal agencies and the state of LMR interoperability among these agencies; (2) factors that help and hinder LMR interoperability among agencies; and (3) agencies’ LMR procurement practices.", "GAO surveyed civilian federal agencies, identified through their membership in the Emergency Communications Preparedness Center (57 agencies fully responded to the survey and one agency provided a partial response); reviewed Department of Homeland Security planning documents related to interoperability; and interviewed federal agency officials with responsibilities related to emergency communications and procurement of LMR equipment. GAO also reviewed OMB initiatives to improve federal procurement." ], "parent_pair_index": [ -1, 0, 1, 2, -1, 0, 0, 0, 3, 0, 5, 5, 5, 8, -1, 0, 0 ], "summary_paragraph_index": [ 2, 2, 2, 2, 4, 4, 4, 4, 4, 4, 4, 4, 4, 4, 1, 1, 1 ] }

{ "title": [ "", "The NGO Dilemma1", "Current Status of NGO Humanitarian and Development Activities", "Background on Humanitarian Aid and Development NGOs", "South Korean NGOs", "Education and Capacity Building", "The Digital Library at Kim Chaek University", "The U.S.-North Korea Science Engagement Consortium", "Pyongyang University of Science and Technology", "The Hanns Seidel and Friedrich Naumann Foundations", "The U.S. North Korean Tuberculosis Project", "Track II Diplomacy", "NGO Radio Broadcasts to North Korea", "Appendix. List of Related CRS Reports" ], "paragraphs": [ "", "Non-governmental organizations (NGOs) have been active in North Korea since the 1990s. Their work has raised debates about what role NGOs should play in countries ruled by repressive regimes like North Korea's. NGOs and other providers of aid face an ethical dilemma in such countries: How does one provide assistance to a population without inadvertently supplying aid to groups such as the North Korean military or others who will try to profit from it? In the North Korean case, NGOs have been viewed by many as providing aid, technical advice, and resources at little or no cost to a despotic regime. Many NGOs as well as other relief and development providers believe that aid should go to those in the greatest need and should be non-political. At the same time, the NGOs insisted on transparent delivery of aid. North Korean officials have failed to comply with requirements for transparency and have diverted significant amounts of humanitarian aid.\nOn the other hand, there is evidence that several NGOs have had successes, albeit limited, in a wide range of activities, from providing food aid to sponsoring informal diplomacy. By the late 1990s, several NGOs had set up programs geared toward enhancing capacity and boosting agricultural production in North Korea. Relief agencies offered projects that ranged from alternative types of farming including wider use of greenhouses and hydroponics, hospital renovations, mobile diagnostic clinics, water and sanitation projects, to disaster management training. In food assistance programs, according to several sources, in spite of initial North Korean efforts to hamper NGOs by limiting movements by their staff and refusing to allow Korean speakers to accompany them, over time some NGOs have obtained as good or better access and monitoring than much larger international organizations. Many NGOs felt this gave them some assurance that aid was reaching the right recipients.\nCongress may wish to consider the role of NGOs in North Korea as part of its oversight of the U.S.-North Korean relationship, and also because of their potential role in delivering humanitarian assistance. Recently, the Obama Administration has been considering whether to restart an earlier aid program begun under the Bush Administration in 2008. The South Korean and U.S. governments have received several requests from North Korea for large-scale food aid since late 2010. In February 2011, the spokesperson for the Department of State stated that future food aid would depend on a needs assessment, and whether the U.S. government could ensure that the program would be effectively managed to ensure that no aid would be diverted from its targets. In March, the U.S. Special Envoy for North Korea Policy, Ambassador Stephen Bosworth, also noted that the United States would \"provide food aid when we see a perceived need and in a situation in which we can monitor.\" It is possible that the Administration could use NGOs for aid delivery, as the Bush Administration did from 2008 to 2009.\nSome have argued that through the implementation of their work NGOs may have promoted at least some degree of transparency and a measure of accountability for the aid recipients. It is, however, difficult to assess such effects, given North Korea's isolation.", "As of 2010, a few NGOs have remained active in North Korea, most from European aid agencies. Other active but non-resident NGOs include the Mennonite Central Committee (Canada), First Steps (Canada), the Eugene Bell Foundation (United States/South Korea), Christian Friends of Korea (United States), the Canadian Food Grains Bank, and the Hanns Seidel and the Friedrich Naumann Foundations (Germany). Several European NGOs can expect consular protection from embassies based in Pyongyang, except for Canada, France, and Ireland which have embassies in Seoul. U.S. NGOs rely on the Swedish Embassy in Pyongyang.\nSouth Korea has cut off nearly all bilateral food and fertilizer aid and curbed South Korean NGO contacts with North Korea since the election of President Lee Myung-bak in December 2007. The South Korean government imposed especially tight restrictions after sinking of the South Korean naval corvette Cheonan in March 2010 and North Korea's shelling of a South Korean island in November 2010. Both incidents resulted in the loss of South Korean lives. Many South Korean NGOs criticized the Lee government's restrictions. Several NGOs, among them the Korean Sharing Movement and Good Friends, asked the government to allow them send food to North Korea. These offers were rejected.\nIn 2010, the South Korean and U.S. governments made small donations of aid, some of which NGOs distributed. In January 2010, South Korea donated 10,000 tons of food through the South Korean Red Cross. In March 2010, South Korea sent 20 tons of milk powder. In September 2010, U.S. Agency for International Development (USAID) made $600,000 available to fund flood assistance via Samaritan's Purse, Global Resource Services and Mercy Corps.", "The North Korean government has tightly controlled and monitored NGO activities. Its officials have frequently resisted NGO demands to monitor the distribution of aid. North Korean officials initially blocked NGO efforts to visit the northeast provinces of Chagang, South Hamgyong, North Hamgyong, and Ryanggang, as well as portions of Kangwon, South Hwanghae, and North and South Pyongan (see map at Figure 1 ).\nOfficials also tried to curb NGOs' ability to monitor by excluding Korean speakers from their groups. International organizations and NGOs were not permitted to conduct random site visits. Finally, DPRK officials insisted that NGOs use the government's Public Distribution System to transmit aid. The Public Distribution System is the primary means by which the state allocates food according to the social importance of groups. Between 1998-2000, citing these restrictions on monitoring, some NGOs, notably Doctors without Borders and Oxfam, withdrew from North Korea. Two U.S.-based NGOs, CARE and Catholic Relief Services, left for similar reasons. By 2005, restrictions on NGO travel had dropped substantially but still included smaller portions of the northeast provinces, North and South Pyongan, and Kangwon. North Korean officials ruled out visits to these areas citing security reasons.\nThe North Korean government has assigned government contacts to NGOs, to serve as a conduit for their aid and provide the regime with buffers between the organizations and the public. These were assigned on the basis of national origin or residency, and have shifted frequently over the years that NGOs have worked in the country. Some NGOs have sought to strengthen their hand by coordinating their own work through these North Korean government entities, with varying degrees of success.\nBeginning in 1995, U.S. NGOs, some European NGOs, and international groups such as the World Food Programme fell under North Korea's Flood Damage Rehabilitation Committee's (FDRC) purview. A few U.S. NGOs, the American Friends Service Committee and World Vision International, as well as all South Korean NGOs were assigned to the Asia-Pacific Peace Committee (APPC). In 2005, North Korean officials reassigned the U.S. NGOs to the Korean American Private Exchange Society (KAPES). One European NGO noted that the new North Korean arrangements under KAPES effectively reduced the number of NGOs on the ground and reassigned them with new contacts. The FDRC/KAPES staff are drawn from the North Korean Foreign Ministry or local authorities. The APPC reports to the central committee of the Korean Worker's Party. The APPC also has responsibility for Asian-Pacific states that lack diplomatic relations with North Korea. Generally speaking, North Korean officials refused to grant U.S. or South Korean NGOs residency in order to limit their range of movement in North Korea.\nIn 1996, InterAction, a U.S. NGO consortium comprising more than 150 U.S. NGOs, initiated a process of facilitating and coordinating humanitarian relief with its members in North Korea. Participating NGOs in InterAction also formed the North Korea Working Group to advocate for assistance to North Korea. To facilitate work further, InterAction recommended the establishment of the Food Aid Liaison Unit (FALU), which operated from WFP's office in Pyongyang. WFP and NGOs worked within the system of national food rationing mentioned earlier, referred to as the Public Distribution System.\nA year later, other non-resident NGOs created the Private Voluntary Organization Consortium (PVOC), which included Amigos Internacionales, CARE, Catholic Relief Services, Mercy Corps, and World Vision. The aim of PVOC was to monitor distribution of over 150,000 MT of U.S. government food aid and ensure delivery to workers in cities where factories were closed or idle. Analysts describe the formation of the PVOC as a period of close cooperation between U.S. agencies and NGOs. USAID and United States Department of Agriculture funded the PVOC group's food assistance programs. This permitted some NGOs to move beyond the original food assistance programs and towards development-oriented programs. In 2000, the General Accounting Office (now the Government Accountability Office) reported that the initiative yielded \"mixed results.\" The Consortium reported that the North Korean government's restrictions made it difficult to adequately monitor the distribution of the food. The PVOC withdrew from North Korea shortly after June 2000 after difficulties in its seed potato project.\nNorth Korean officials also began granting several European NGOs residency, among them Doctors Without Borders. European NGOs negotiated residency in North Korea as a condition for their assistance. Some argue that this newly formed community of active and inquiring resident NGOs promoted a new dynamic in North Korean society. North Korean officials encountered NGO representatives who operated on the basis of transparency, and had diverse experiences operating in other countries. As a result, North Korean officials and aid recipients had to adapt to each other.\nResponding to the U.N. World Food Programme and the U.N. Food and Agricultural Organization's (FAO) calls for aid to North Korea in 2008, the United States pledged to donate 500,000 MT of food aid to North Korea for one year. The Bush Administration declared at the time that North Korea had made substantial concessions in monitoring and access which would permit confirmation of aid to the intended targets. The U.S. government arranged to send a portion of that aid, 100,000 MT, through five U.S. NGOs. The U.S. Department of State selected World Vision, Mercy Corps, Samaritan's Purse, Global Resource Services, and Christian Friends of Korea to distribute this aid. The NGO aid consortium operated in two northwest provinces until the North Korea government ordered them to leave the country in March 2009. North Korea offered no explanation for the dismissal.", "Many South Korean NGOs participating in North Korean assistance programs are faith-based, privately run charities. They emphasize confidence-building through frequent contacts. Feelings of patriotism and a desire for national reconciliation motivate many of them. Prominent among these NGOs are Good Friends South Korea/Peace Foundation and the Korean Sharing Movement.\nUntil 1999, the South Korean government had South Korean NGOs contribute through its Red Cross organization. South Koreans also had to obtain the approval of the Ministry of Unification to travel to North Korea. To expedite deliveries, some South Korean NGOs delivered aid through their affiliates. The NGO World Vision Korea, for instance, shipped rice via World Vision International. The U.S. NGO Eugene Bell Foundation shipped aid on behalf of several South Korean Christian NGOs. Other NGOs took advantage of the porous North Korea-China border. Some NGOs ran small cooperative farms in Chinese border states to deliver food to their recipients. Under the \"sunshine\" policy of engaging North Korea, the administrations of President Kim Dae Jung (1998-2003) and President Roh Moo-hyun (2003-2007) lifted many of these restrictions on NGOs. After the June 2000 inter-Korean summit, the South Korean government's aid programs grew substantially. While other NGOs pressed for strict monitoring to minimize the possibility of diversion of aid, the South Korean government delivered large quantities of aid, with less stringent monitoring and fewer follow-up reporting requirements. With the election of President Lee Myung-bak, the South Korean government withheld most bilateral aid and restricted private visits to North Korea.\nDuring the \"sunshine policy era,\" South Korean NGOs set up a variety of food security programs to plant high-yield corn, provide fertilizer, propagate seed potatoes, develop goat milk production, and sponsor greater use of greenhouses and alternative growing techniques. These programs were introduced to offer sustainable food sources. Some NGOs also began programs to supplement nutrition or curb disease, such as providing vitamins, tuberculosis controls, pest control, and developing pharmaceutical firms. By 2000, the South Korean Ministry of Unification supported NGOs whose programs included aid to flood survivors, children, and the elderly. NGOs also initiated programs in medicine and hygiene programs, and aid in natural disaster prevention.", "NGOs have offered programs oriented to build capacity in agriculture and health, sponsoring projects on water and sanitation, seed improvement, animal husbandry, and land management. Other NGOs have promoted programs for study abroad, and courses in English language, banking, and trade. Specific examples include founding a digital library at a North Korean university; establishing of a U.S.-DPRK Scientific Engagement Consortium; creating a privately run foreign university in Pyongyang, sponsoring exchange programs on economics, urban development, and technology; and establishing a reference laboratory for the diagnosis and treatment of multidrug resistant tuberculosis.", "Members of Syracuse University, the Korea Society, and North Korea's Permanent Mission to the United Nations discussed the prospect of a digital library in spring 2001. Syracuse University and the Korea Society sought to improve the opportunities of North Korea students and promote science education. The Permanent Mission selected Kim Chaek University as the project partner. Researchers at Syracuse and Kim Chaek Universities identified the necessary standards to catalog information and develop software from open sources. The sponsors' contact in North Korea was the FDRC. The program relied on private grants from the Korea Society, the Henry Luce Foundation, the Ford Foundation, and Syracuse University. Kim Chaek University bore the cost of constructing the library facility. The digital library opened in 2006. In 2008, journalists accompanying the New York Philharmonic Orchestra on its visit to Pyongyang said they visited the digital library and had accessed their Facebook accounts there. In 2005, as an offshoot of the digital library project, the partners agreed to develop twin integrated information technology laboratories (\"the Twin Labs project\") as well as support exchanges of Syracuse and Kim Chaek Universities' junior faculty. This program has met delays; no North Korean faculty members have enrolled at Syracuse yet.", "The U.S.-North Korea Science Engagement Consortium (officially known as the U.S.-DPRK Science Engagement Consortium) represents an effort to foster science cooperation between the U.S. and North Korean scientific communities, primarily between academic institutions. The U.S. consortium core members (the American Association for the Advancement of Science (AAAS), the Civilian Research & Development Foundation Global (CRDF Global), the Pacific Century Institute and Syracuse University) were inspired by the example of the bilateral collaboration between Syracuse University and Kim Chaek University of Technology in the development of the latter's digital library. The digital library project has been ongoing for almost ten years. In May 2007, several university and NGO representatives met to examine participants' experiences with respect to scientific collaboration with North Korea. This resulted in the formation of the Consortium, which has since sent a Nobel Laureate science delegation to Pyongyang in 2009 and hosted a DPRK State Academy of Sciences (SAOS) delegation in Atlanta in February 2011 where scientists from Emory, Georgia Institute of Technology, the University of Georgia, Stanford, Johns Hopkins, Syracuse University, and the University of Missouri attended. The Consortium, which maintains a secretariat at CRDF Global, has signed two agreements with the SAOS and plans to implement a few initiatives including English language training for scientists in 2011 and 2012 contingent upon receiving funding and securing legal approvals.", "In late October 2010, an American educator of South Korean origin, James Kim (Kim Chin-kyung), and a South Korean NGO, the Northeast Asia Foundation for Education and Culture (NAFEC), opened North Korea's first and only private university, the Pyongyang University of Science and Technology (PUST). PUST began as a North Korean proposal in 2000: North Korean officials approached James Kim eight years after he had founded one of China's first foreign university in Jilin province. PUST offers masters and doctorate degree programs in computing, electronics, and agricultural engineering, as well as a masters degree program in Business Administration.\nConstruction on the campus began in March 2001. North Korean education officials accepted Kim as PUST president, and acknowledged his right to hire faculty of any nationality. PUST intends to create an industrial park on the campus. Kim and NAFEC have raised funds from private and public sources. The South Korean Ministry of Unification contributed close to $1 million. NAFEC raised nearly $32 million, mostly from South Korean churches and foreign donors. Kim and NAFEC also obtained the advice of business investors and a former president of Rice University. PUST expects to spend about $4 million in its first year of operation. North Korea's education ministry selects the students. Since the university's opening,160 graduate students have enrolled. James Kim and the PUST faculty hope to add undergraduate programs later, and eventually enlarge the university to 250 faculty members, 600 graduate students, and 2,000 undergraduates.", "Several NGOs, in response to North Korean requests, have provided specific technical assistance, offering courses to candidates selected by the North Korean government in economics, agriculture, and capacity building. Some have advised North Koreans on water, sanitation, seed improvement, and soil erosion prevention projects. Others have offered North Koreans officials study-abroad opportunities, and/or classes in English language.\nThe Hanns-Seidel-Foundation Korea (HSS), for example, a German NGO associated with the Christian Social Union, a political party, promotes political dialogue, education, management training, and institution building. HSS is notable because, among other reasons, it is among the few Europeans involved in business/economic training. In 2006, HSS partnered with the Pyongyang International Information Center for New Technology and Economy and the EU-Korea Industrial Cooperation Agency. They sponsored the EU-NK Trade Capacity Project to introduce mid-level North Korean officials to business and trade practices. Its interlocutor was the Korean European Cooperation Coordinating Agency, created by the North Korean Ministry of Foreign Affairs to serve as its point of contact with European NGOs. Participants attended seminars on international business and trade, and on establishing chambers of commerce, food safety standards, textile associations, customs procedures, and export strategies. In 2008, HSS also offered courses in agriculture and forestry management. The North Korean government ended its participation in the EU-North Korea Trade Capacity Project in 2009. HSS Director Bernhard Seliger suggested that North Korea's decision to withdraw stemmed from an unwillingness to accept the notion of trade. In addition, North Korean officials selected participants; and those participants were rotated frequently so that in most cases, they were in their posts no longer than six months, which enfeebled the project as well.\nThe Friedrich Naumann Foundation (FNF), like HSS, is a non-profit organization with links to a political party, the German Free Democratic Party (FDP). The Naumann Foundation's goals include the promotion of democratic institutions, human rights, the rule of law and economic freedom. FNF provides policy consultation, educational programs working with local NGOs, civic organizations, and educational institutions. As recently as July 2010, FNF hosted a small delegation of North Korean senior officials of the ruling Worker's Party, as well as some senior bureaucrats to tour Munich, Dresden, and Berlin, to introduce them to German engineering practices and sustainable development.", "The U.S.-North Korean Tuberculosis (TB) Project established a national reference laboratory in North Korea for the identification of multi-drug resistant strains of tuberculosis. It seeks to improve North Korea's diagnostic capacity and thereby enhance the health security of the region. Successful treatment in North Korea would lower the risks of TB exposure to the populations of neighboring states. North Korea's rate of infection is high: 345 per 100,000 individuals. For comparison, the United States rate of infection in 2009 was 3.8 per 100,000. The U.S.-North Korean TB project began with meetings between Stanford University faculty and officials of North Korea's Ministry of Public Health (MoPH) in 2008. The Bay Area TB Consortium, and the Nuclear Threat Initiative (NTI), a Washington-based nonprofit organization devoted to strengthening global security, were the initial funders. In April 2008, NTI committed $300,000 to cover equipment and training for the national laboratory. Later in 2008, Christian Friends of Korea, an NGO based in North Carolina, joined the project. The project partners made three trips to Pyongyang from 2009-2010 to renovate a public health facility designated as the TB reference laboratory. They shipped laboratory materials and equipment via Beijing to Pyongyang to complete the laboratory's installation. According to Christian Friends, the cost of the equipment and supplies came to approximately $1.7 million. By fall 2010, they had completed laboratory renovations, including checks of the building facilities and equipment, and had held two workshops to train staff in TB culturing methods and laboratory practices. The TB reference laboratory is set to receive some support from funds administered by UNICEF. The Global Fund to Fight AIDS, Tuberculosis and Malaria is a public-private partnership created to respond to HIV/AIDS, tuberculosis (TB), and malaria. The Global Fund agreed to provide aid for medication supply and basic testing for multi-drug resistant TB for a two-year period (June 2010-2012) in North Korea.", "One of the fundamental problems in dealing with the North Korean regime is its deep isolation, which makes traditional diplomatic exchanges difficult. Some NGOs have sought to organize Track II exchanges—that is, sponsoring informal communications between North Korean scientists, academics, military officers and private citizens, and their counterparts in the United States or overseas.\nThe creation of the U.S.-North Korean TB project, the Kim Chaek-Syracuse digital library project and the U.S.-DPRK Scientific Engagement Consortium owe much to Track II diplomacy. Other NGOs seek to address political issues of the Korean Peninsula directly. Some NGOs that have sponsored Track II exchanges include the Korea Society, Stanford University, Syracuse University, the National Committee for American Foreign Policy, the University of California (the Northeast Asia Cooperation Dialogue (NEACD)), and the Asia Society.\nTrack II dialogues often rely on the participation and reputation of retired diplomats or government officials. For example, the Korea Society, the National Committee on American Foreign Policy, and the Asia Society played roles in engaging North Korean diplomats during moments when the Six-Party Talks appeared to be deadlocked. The Center for International Security and Cooperation at Stanford University and the University of California's Northeast Asia Conflict Dialogue (NEACD) have also held meetings with officials participating in Six-Party Talks. North Korean diplomats last attended a NEACD session in 2009. Diplomats from both the North Korean Permanent Mission to the United Nations and the Ministry of Foreign Affairs in Pyongyang, rather than academics or scientists, have attended. By virtue of their experience as either past negotiators with North Korea or their expertise, some U.S. representatives have also opened doors for diplomacy, for example former President Jimmy Carter, former New Mexico Governor Bill Richardson, and retired Director of Los Alamos National Laboratory Dr. Siegfried Hecker. Some observers oppose public exchanges that involve prominent figures, because the North Korean regime frequently uses such events for its own propaganda purposes. Others believe they are relatively \"low-cost\" tools of diplomacy, in which the North Korean regime sometimes is encouraged to make concessions in exchange for the opportunity to publicize a visit.", "Within the last decade, South Korean activists and North Koreans who successfully defected to South Korea have developed independent radio broadcast organizations. Some of these organizations have managed to smuggle cell phones to North Korean citizens as a means to gain information. NGOs have received some funding from the National Endowment for Democracy, as well as the U.S. Department of State. South Korean and North Korean defectors have been broadcasting via short- and medium-wave radio since 2004. The broadcasts include news briefs, particularly about the Korean Peninsula, interviews with North Korean defectors, and international commentary on events occurring in North Korea. Defectors interviewed in South Korea confirmed that they were able to listen to these broadcasts after doctoring radios that are locked onto official frequencies by North Korean authorities. The U.S. Broadcasting Board of Governors cited a recent survey in which defectors interviewed in China and South Korea indicated that they had listened to foreign media. One representative of Radio Free Chosun suggested that the transmissions offered hope, saying: \"Radios must let North Korean people know that, if personal farming, market[s] are legalized, [the] economy opened and cooperation with South Korea, China, and the United States start, the North Korean economy can revive, and their hunger can end.\"", "CRS Report R40095, Foreign Assistance to North Korea , by [author name scrubbed] and Mary Beth Nikitin\nCRS Report R41259, North Korea: U.S. Relations, Nuclear Diplomacy, and Internal Situation , by [author name scrubbed] and [author name scrubbed]\nCRS Report RS22973, Congress and U.S. Policy on North Korean Human Rights and Refugees: Recent Legislation and Implementation , by [author name scrubbed]\nCRS Report R41438, North Korea: Legislative Basis for U.S. Economic Sanctions , by [author name scrubbed]\nCRS Report R41481, U.S.-South Korea Relations , coordinated by [author name scrubbed]\nCRS Report R41363, The Global Fund to Fight AIDS, Tuberculosis, and Malaria: U.S. Contributions and Issues for Congress , by [author name scrubbed]" ], "depth": [ 0, 1, 1, 2, 3, 1, 2, 2, 2, 2, 2, 1, 1, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "h0_title h2_title h1_title", "h0_full h2_full h1_full", "", "", "", "", "", "", "", "h0_full", "h0_full", "" ] }

{ "question": [ "To what extent have NGOs been active in North Korea?", "Why is this work of interest to U.S. policy-makers?", "On what have these NGOs focused?", "How have these North Korea-focused NGOs changed recently?", "What has been the response to NGOs in South Korea?", "What are some arguments in favor of NGOs in North Korea?", "What are some arguments against NGOs in North Korea?", "Why may NGOS in North Korea re-emerge as a congressional interest?", "Have NGOs in North Korea been successful in the past?", "How did these NGOs compare to international organizations?", "Why did some of these organizations halt their operations?" ], "summary": [ "A number of non-governmental organizations (NGOs)—non-profit, charitable institutions—have been active in North Korea since the mid-1990s.", "Although their work is relatively limited in scope, it is of interest to U.S. policy-makers because of the deep isolation of the regime in Pyongyang.", "Several American and international NGOs have provided assistance to North Korea in humanitarian relief, development, health, informal diplomacy, science, communication and education.", "A relatively recent trend is that a growing number of NGOs, particularly in South Korea, are run by or have North Korean defectors on staff.", "Non-governmental organizations' activities in North Korea have stirred some controversy.", "Some observers believe that NGOs' projects represent one of the few ways to improve the lives of ordinary North Koreans, and that their work provides first-hand accounts about social conditions in North Korea. Some NGOs have a comparative advantage in dealing with North Korea, with over a decade's experience working with North Korean officials and institutions.", "However, others argue that NGOs' programs aid North Korea's regime, and that given the lack of transparency and tight restrictions imposed on them by the regime, their funds are vulnerable to diversion by North Korean officials.", "The role of NGOs in North Korea may re-emerge as a congressional interest, as the Obama Administration has expressed interest in restarting humanitarian assistance to North Korea.", "During the Bush Administration, five large U.S. NGOs were part of a food delivery program that enjoyed some success.", "Some believed they were more effective than international organizations at navigating the North Korean system to get aid where it was needed.", "But some organizations opted to cease their operations when North Korean restrictions became too onerous." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, -1, 0, 1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 3, 3, 3, 3 ] }

{ "title": [ "Background", "Challenges Affecting Cuba Democracy Assistance", "Roles and Responsibilities for Implementing Cuba Democracy Assistance", "USAID and State Focus on Promoting Cuban Civil Society and Access to Information; Most Funding Goes to Worldwide or Regional Partners and Their Subpartners", "Program Focuses on Promoting Civil Society and Access to Information", "USAID and State Have Provided Most Recent Awards and Contracts to Worldwide or Regional Organizations", "Agencies Exercise Discretion under Authorizing Legislation in Funding Cuba Program Activities", "USAID Has Improved Its Monitoring of Partners; State’s Monitoring Does Not Ensure Program Funds Are Used as Intended", "USAID and State Are Taking Steps to Improve Their Performance Monitoring to Address Weaknesses in Some Partners’ Performance Planning and Reporting", "USAID Continues to Take Steps to Improve Performance Monitoring; USAID’s Partners’ Had Some Weaknesses in Performance Planning", "USAID Has Improved Financial Monitoring of Partners; State Has Not Consistently Conducted Financial Internal Controls Reviews", "USAID Has Bolstered Financial Monitoring of Its Partners", "Agencies Have No Direct Relationships with Subpartners except to Approve Their Funding, and State Does Not Provide Clear Guidance on Subpartner Approval Requirements", "Agencies Have No Direct Relationships with Subpartners Other Than Approving Partner Requests for Their Funding", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Comments from the U.S. Agency for International Development", "Appendix III: Comments from the U.S. Department of State", "Appendix IV: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Conditions in Cuba continue to pose substantial challenges for U.S. assistance. Cuba is a Communist state that restricts nearly all political dissent on the island; tactics for suppressing dissent in Cuba include surveillance, arbitrary arrests, detentions, travel restrictions, exile, criminal prosecutions, and loss of employment. Furthermore, there is no free press in Cuba, and independent journalists and activists are harassed and imprisoned. The Cuban government substantially restricts and controls the flow of information, limiting access to the Internet, cell phones, radio antennas, and other items, and restricting their use through high costs, punitive laws, and the threat of confiscation. Moreover, the government routinely jams all external, non-Cuban broadcasts, including the U.S. government-supported Radio and TV Martí broadcasts.\nThe United States, which maintains an embargo on most trade with Cuba, does not have diplomatic relations with the Cuban government. Consequently, USAID does not work cooperatively or collaboratively with Cuban government agencies, as it does in most other countries receiving U.S. democracy assistance. USAID does not have staff in Cuba, and State does not have staff dedicated to the Cuba democracy program in Havana. USAID and State program staff have been unable to obtain visas to visit Cuba over the past decade, which poses challenges for program implementation, monitoring, and evaluation. In addition, Cuban law prohibits citizens from cooperating with U.S. democracy assistance activities. In December 2009, a subcontractor working for one of USAID’s partners was arrested in Cuba while delivering computer equipment to provide Internet access to Jewish communities on the island. He was subsequently sentenced to 15 years in prison for “acts against the independence or the territorial integrity of the state.”", "Several USAID and State bureaus and offices implement Cuba democracy assistance efforts, including soliciting proposals, competitively awarding funds, and monitoring program implementation.\nThe Latin American and Caribbean Bureau (LAC), Office of Cuban Affairs, is chiefly responsible for implementing Cuba democracy assistance efforts.\nThe Management Bureau has various offices that also assist in overseeing program awards and contracts.\nThe Office of Transition Initiatives (OTI) oversaw implementation of a single contract from fiscal years 2009 through 2012. OTI’s Cuba program efforts were envisioned from their inception to be temporary, as is typically the case with OTI’s programs, which generally aim to provide short-term assistance.\nThe Bureau of Democracy, Human Rights, and Labor (DRL) is responsible for managing and overseeing the majority of State’s Cuba democracy assistance program activities.\nThe Bureau of Western Hemisphere Affairs (WHA), including the U.S. Interests Section in Havana, Cuba, (USINT), also manages and oversees Cuba program activities.,\nThe Bureau of Administration assists DRL and WHA in the financial management and oversight of Cuba democracy assistance awards.\nReporting on Cuba democracy assistance in 2006, we found that USINT delivered some assistance to independent groups and individuals in Cuba, including assistance provided by USAID- and State-funded awardees. Because of heightened security concerns, USINT no longer has a role in implementing assistance for USAID and State/DRL partners. However, USINT continues to provide information on conditions in Cuba, facilitates and assists with State/WHA training courses, and supports civil society in Cuba.\nTable 1 outlines key USAID and State roles and responsibilities for providing U.S. democracy assistance for Cuba.\nIn addition, the National Endowment for Democracy (NED), an independent, nongovernmental organization, funds programs to promote democracy in Cuba through both direct congressional appropriations and with funding that it receives through State/DRL.\nProgram partners—such as nongovernmental organizations, universities, and development contractors—and subpartners also have roles and responsibilities for Cuba democracy program assistance. USAID and State provide funding for partners through various mechanisms, including grants and cooperative agreements (together referred to as “awards” in this report) and contracts. Partners may also award funding to subpartners to assist them in implementing program efforts. Subpartners may include consultants, subcontractors, subgrantees, and recipients of grants under contract.", "USAID and State support democracy for Cuba by providing awards and contracts to partners with objectives related to developing civil society and promoting freedom of information. USAID receives the majority of funding allocated for this assistance, although State has received 32 percent of funding since it started taking part in the program in 2004. Since 2008, USAID and State have awarded more funds to larger organizations with a worldwide or regional presence than to the other two categories of typical awardees: universities, and smaller organizations that focus only on Cuba. Under 21 of the 29 recent awards and contracts that we reviewed, partners used subpartners to implement program activities and obligated about 40 percent of the funding associated with these awards and contracts to subpartners. Worldwide or regional organizations provided more than 90 percent of the funding provided to subpartners.", "USAID’s and State’s democracy assistance efforts for Cuba generally focus on developing an independent civil society and promoting freedom of information in Cuba. The overall goal and guiding principle of U.S. democracy assistance for Cuba is to improve the effectiveness of citizens to participate in activities affecting their lives and to increase access to information. Efforts to develop Cuban civil society include training in organizational and community development, leadership, and advocacy. Related material assistance may include the provision of books, pamphlets, movies, music, and other materials that promote democratic values. In addition, efforts to promote freedom of information have included the following, among other activities: information technology training for Cuban nationals, ranging from basic computing to blogging; provision of material assistance. journalism training; support for independent publications; and USAID and State officials noted that in recent years, program efforts have included a greater focus on information technology, particularly on supporting independent bloggers and developing social networking platforms on the island.\nSeveral partners we reviewed received funding to support international solidarity activities, although agency and partner officials indicated that the program recently has reduced its focus on off-island activities to foster support for democracy in Cuba. Activities of this type that State/DRL funded in fiscal years 2009 through 2011 included the following: an essay contest for Latin American youths related to Cuba Solidarity exhibits and documentaries presented outside Cuba for the purpose of bringing awareness globally to Cuban human rights issues and civil society development.\nIn recent years, USAID and State had few awards or contracts focused solely on such humanitarian assistance as assistance for political prisoners and their families, according to agency officials. USINT officials noted that humanitarian assistance has declined along with a decrease in the number of political prisoners in Cuba. Officials added that USINT itself no longer provides any humanitarian assistance on the island.\nTo broaden reach and impact, Cuba democracy assistance efforts have expanded beyond a focus on traditional activists to include groups such as poor and rural communities, religious organizations, small businesses, and information technology enthusiasts. Typical program beneficiaries also include Cuban community leaders, independent journalists, independent bloggers, women, and youths.\nTable 2 summarizes information on recent program assistance and target beneficiaries.\nIn fiscal years 1996 through 2011, Congress appropriated $205 million for Cuba democracy assistance, appropriating 87 percent of these funds since 2004. Increased funding for Cuba democracy assistance was recommended by the interagency Commission for Assistance to a Free Cuba, which was established by President George W. Bush in 2003. Program funding, which peaked in 2008 with appropriations totaling $44.4 million, has ranged between $15 and $20 million per year during fiscal years 2009 through 2012. For fiscal year 2013, USAID and State reduced their combined funding request to $15 million, citing operational challenges to assistance efforts in Cuba.\nIn fiscal years 1996 through 2011, $138.2 million of Cuba democracy funds were allocated to USAID and $52.3 million were allocated to State (see fig. 1).\nWhen the Cuba democracy program began in 1996, USAID was the only agency involved and USAID/LAC was the only programming bureau.\nUSAID/LAC has received the largest total amount of program funding and has continued to receive the largest annual amount, averaging $12.1 million annually since fiscal year 2004.\nUSAID/OTI received program funding totaling $14.3 million from the appropriations for fiscal years 2007 through 2010.\nState has received 32 percent of Cuba democracy funding since fiscal year 2004.\nState/DRL has received an average of $5.8 million annually since fiscal year 2004.\nState/WHA has received an average of $1.4 million annually since fiscal year 2008.", "USAID and State have awarded funding for Cuba democracy assistance to three categories of partners: (1) Cuba-specific nongovernmental organizations (NGO), (2) worldwide or regional organizations, and (3) universities.\nUSAID’s and State’s awards and contracts tended to share certain characteristics, such as their broad objectives and amounts awarded, depending on the type of partner.\nObjectives. USAID and State awards and contracts to Cuba-specific NGOs and to worldwide or regional organizations have generally funded similar types of program activities, such as efforts to provide training and material assistance on the island. Awards to universities have tended to have different objectives. In the early years of the Cuba program, awards to universities funded activities such as research on how to promote a democratic transition in Cuba and scholarships to study at universities in the United States. Since the mid-2000s, after finding that the Cuban government would not provide exit visas for Cuban students to study in the United States, USAID and State have awarded funding to universities largely for programs to provide distance learning training to Cubans on the island or courses at universities in other Latin American countries.\nAmount of award or contract. USAID’s awards and contracts in fiscal years 1996 through 2012 averaged $1.9 million for Cuba-specific NGOs, and $2.1 million for worldwide or regional organizations. State’s awards and contracts averaged $0.8 million for Cuba-specific NGOs and $0.9 million for worldwide or regional organizations. Both USAID’s and State’s awards and contracts to universities averaged $0.8 million.\nIn fiscal years 1996 through 2012, USAID and State had a combined total of 111 awards and contracts to 51 partners representing all three types of organizations (see fig. 2). Many of the awards were concentrated among certain partners, with 25 of these partners receiving multiple awards from USAID, State, or both. For example, one partner received a combined 11 awards from USAID and State, more than any other partner, and 10 of the 51 partners received 67 percent of total funding to partners.\nSince fiscal year 2008, regional or worldwide organizations have had more active USAID and State awards and contracts each year, and have received more funding, than Cuba-specific NGOs or universities. Prior to 2008, Cuba-specific NGOs had more active USAID awards than the other categories of recipients in most years. However, the program’s partners have consistently included worldwide or regional organizations, some of which have a history of working on Cuba issues (see fig. 3). For example, for awards that began in fiscal years 1996 through 2007, Cuba-specific NGOs received 48 percent of award funding, worldwide or regional organizations received 43 percent, and universities received 9 percent. In contrast, for awards made since fiscal year 2008, worldwide or regional organizations received 74 percent of award and contract funding, while Cuba-specific NGOs received almost 17 percent, and universities received almost 10 percent. As we previously reported, this greater use of worldwide or regional organizations, which began in 2008, reflected more formal requirements for submitting proposals and USAID’s decision to fund awards and contracts that incorporate capacity building for subpartners as an important element.\nMany partners, and worldwide or regional organizations in particular, use subpartners to help carry out their Cuba democracy assistance work. We reviewed 29 recent awards and contracts to determine the extent to which partners use subpartners to implement program activities. We found that partners used subpartners under 21 of the 29 awards and contracts, obligating about 40 percent of the funding under these awards and contracts to subpartners. On average, partners that used subpartners under an award or contract had 12 subpartners.\nHowever, the numbers of subpartners under each of the 21 awards varied:\nFour awards had one subpartner.\nSeven awards had between two and nine subpartners.\nTen awards and contracts had more than 10 and up to 38 subpartners.\nThe purposes of subawards and subcontracts also varied greatly. Many subawards and subcontracts were for discrete activities, such as to conduct workshops. Other subawards and subcontracts covered an array of tasks, such as content development and instruction for a distance learning course or development, training, and support for civil society networks. Accordingly, subpartners included different types of non-profit and for-profit organizations as well as individuals who worked as consultants that provided the skills necessary to implement the varying activities.\nFurthermore, the amount of funding that went to subpartners ranged from less than $5,000 to several hundred thousand dollars. For six of the 21 awards and contracts with subpartners, the majority of program funding was obligated to subpartners. In such cases, subpartners generally performed all or most of the programmatic functions under the overall award or contract, while the partners’ main functions were to provide strategic direction of the overall award or contract and to perform management functions such as reporting to the agency and overseeing their subpartners.\nWorldwide or regional organizations were more likely to use subpartners than were the other categories of organizations. In total, 93 percent of the subawards and subcontracts were awarded by worldwide or regional organizations. Also, on average, worldwide or regional organizations had 12 subpartners for each of their awards or contracts, while Cuba-specific NGOs had three and universities had five. Correspondingly, five of the six partners that obligated the majority of their funding to subpartners were worldwide or regional organizations.", "USAID and State legal officials view the Cuba program’s authorizing legislation as providing the purposes for which foreign assistance funds may be used and allowing discretion to determine which program activities will be funded. The officials stated that they view the types of activities listed in section 109(a) of the Helms-Burton Act as illustrating, not limiting, the types of program assistance that the agencies can provide. Specific authority for Cuba democracy assistance activities was provided in section 1705 of the Cuban Democracy Act of 1992 and in section 109(a) of the Helms-Burton Act in 1996. Section 1705 authorizes the donation of food for NGOs and individuals in Cuba; exports of medicines and medical supplies, instruments, and equipment; and assistance to appropriate NGOs to support efforts by individuals and organizations to promote nonviolent democratic change in Cuba. Section 109(a) authorizes assistance and other support that may be provided, such as published informational matter for independent democratic groups, humanitarian assistance for victims of political repression and their families, and support for democratic and human rights groups.\nUSAID and State legal officials said that the agencies ensure that program activities directly relate to democracy promotion as broadly illustrated in related program legislation. For example, the officials noted that the types of activities that fit within the scope of “democracy promotion,” as that term has been broadly defined in various foreign assistance appropriations, would be the types of activities eligible for funding under section 109(a) of the Helms-Burton Act. They added that, while the agencies have not compiled a list of activities that will be approved or not approved for funding under the Cuba program, proposed or approved activities are set forth in agency congressional notifications and listed in individual requests for proposals or applications and in award agreements and contracts. In addition, they said that organizations are expected to work with agency program officers to determine what activities are permitted or appropriate, and whether Department of Treasury and Commerce authorizations, as required, already exist for delivery of various types of assistance or whether the organization must instead apply for a license. Furthermore, they noted that program partners and subpartners, including subpartners based in other countries, are expected to spend U.S. government funds consistent with U.S. laws and that requirements in primary award agreements and contracts generally flow down to any subpartners.", "Since 2008, USAID has worked to improve performance and financial monitoring of its Cuba program partners. However, we found gaps in State’s financial monitoring efforts. For performance monitoring, we found some deficiencies in the performance planning and reporting conducted by USAID’s and State’s partners in our nongeneralizable sample, but both agencies are taking steps to improve their performance monitoring. For financial monitoring, USAID has hired an external auditor to perform financial internal controls reviews of its partners, and has used a risk- based approach considering criteria such as award value and prior issues identified to determine the coverage and frequency of the 30 reviews the auditor has conducted. These reviews have identified financial management, procurement, and internal controls weaknesses that USAID has taken steps to address. While State conducted no financial internal controls reviews for at least two-thirds of its partners between fiscal year 2010 and 2012, State recently hired an external auditor to perform such reviews starting in fiscal year 2013 and has taken steps to implement a risk-based approach to prioritize the scheduling of its reviews. Specifically, State plans to complete reviews for three-quarters of State/DRL’s partners and none of State/WHA’s partners. In addition, in accordance with federal regulations, the agencies approve partner requests to award funding to specific subpartners. In June 2011, USAID provided specific written guidance to its partners on what USAID requires for approval of subpartners. State has provided limited written guidance on approval to some partners, which does not clearly inform partners of the specific types of information State requires for approval. As a result, State was not provided with the detailed information that officials told us would have been required for State to have approved 91 subawards and subcontracts that were obligated under eight of its recent awards.", "", "USAID has taken steps to improve its ability to monitor its Cuba program partners’ performance, by working with them to improve their performance planning and reporting. USAID has numerous requirements for partners’ performance planning and reporting, the key elements of which are summarized below.\nPerformance Planning: USAID directs its Cuba program partners to establish monitoring and evaluation (M/E) plans that include certain specific characteristics. USAID works with partners to include more detailed information on indicators in their M/E plans. USAID/LAC also required its one contractor to perform data quality assessments on its performance data.\nPerformance Reporting: USAID requires awardees to submit progress reports on a quarterly basis and requires contractors to submit monthly and annual progress reports, among others. USAID uses information in these performance reports to track the progress of individual awards and contracts and to track the progress of the overall Cuba program. According to USAID officials, USAID first reviews the reporting to compare it against targets set in partners’ M/E plans. In addition, USAID analyzes and aggregates the information reported by partners to track performance for USAID’s Cuba program and to report to State’s Office of U.S. Foreign Assistance Resources on government-wide performance.\nWe reviewed the M/E plans and progress reports for the five USAID awards or contracts in our nongeneralizable sample, which began in fiscal year 2008 or 2009 (see table 3). We found some weaknesses in the partners’ M/E plans but found detailed reporting against indicators in the progress reports we reviewed. For example, our analysis indicates that all M/E plans we reviewed included clearly defined indicators for program activities.\nHowever, not all partners specified targets and data collection methods for each indicator in their M/E plans. Establishing targets for indicators during the planning stage is important because targets form the standard against which actual results will be compared and assessed. Specifying data collection methods for each indicator enables the agency to determine whether it will be realistic for the partner to measure performance for that indicator in a timely manner. One partner included no information on data collection methods in their M/E plan, while another partner only included general information on their planned data collection methods, such as by stating that the data would be collected by subpartners.\nBased on review of the partners’ progress reports, we found that all partners in our sample reported to USAID on progress through quantitative updates against each indicator, allowing USAID to gauge the specific progress made during each reporting period. One partner also reported progress for each individual subpartner, including by reporting the number of each subpartner’s beneficiaries disaggregated by target group. Partners’ progress reports also provided narrative information describing program activities, challenges encountered, and planned activities for the next reporting period.\nAlthough we found some gaps in these partners’ performance planning, USAID/LAC has been working to improve the quality of performance information that it receives from its partners, with a particular emphasis since 2010 on improving their M/E plans. To improve M/E plans and partners’ reporting based on those plans, in 2010, according to USAID, USAID/LAC conducted in-depth assessments of each of its partners’ M/E plans to determine whether they included indicator tracking tables, definitions of indicators, data collection responsibilities, data quality limitations, and other key information. Also, in September 2010, USAID/LAC hired an M/E contractor to work with each of its partners to further improve and standardize their performance management systems. The M/E contractor has worked with partners to identify and track the most appropriate indicators, including any applicable standardized indicators that USAID/LAC can aggregate across the partners to determine its own overall progress. In 2011, this M/E contractor also provided training to each partner and helped them to improve their M/E plans, for example by specifying quarterly targets and data collection plans for each indicator. According to M/E contractor representatives, partners’ performance planning has improved, although additional improvement is needed in the quality of some partners’ data. In fiscal year 2013, the M/E contractor plans to perform data quality audits of the partners.\nState has also made some recent improvements to performance monitoring of its Cuba program, in the areas of both performance planning and reporting. State’s requirements for performance planning and reporting include:\nPerformance Planning: State/DRL and State/WHA have provided different requirements for prospective partners regarding elements of M/E plans.\nState/DRL. In 2010, State/DRL increased the level of requirements for prospective partners’ M/E plans through the request for proposal (RFP) it issued that year. Previously, State/DRL required that prospective partners submit an M/E plan but did not specify characteristics that the M/E plan should include. The RFP issued in 2010 specified that M/E plans should include a baseline and target for each indicator and data collection methods and sources, among other characteristics. In addition, the RFP referenced M/E guidance available on State/DRL’s website that included more details on how to develop an effective M/E plan.\nState/WHA. For the State/WHA award in our sample, the RFP issued in fiscal year 2010 required the prospective partner to submit an M/E plan outlining performance indicators, sources and means for verification, risks and assumptions for goals and objectives, and expected results and activities. For WHA’s most recent RFPs issued in fiscal year 2012, State/WHA also included additional guidance for prospective partners’ M/E plans, for example, including by defining indicators and providing a sample M/E plan. In addition, State/WHA further clarified that all indicators in M/E plans must include measurable, numerical targets.\nPerformance Reporting: Both State bureaus require their partners to submit quarterly progress reports. According to State/DRL and State/WHA officials, they review partners’ quarterly reports against the partners’ planned performance to confirm that the awards are making progress toward established targets and that activities align with the award’s objectives. State officials then analyze the quarterly progress reports to aggregate progress for each of its bureaus with USAID’s progress to be able to report government-wide performance for the Cuba democracy program to State’s Office of U.S. Foreign Assistance Resources.\nState’s partners that we reviewed ranged in the amount and kind of detail they included in their M/E plans as well as in their progress reports. For the State awards in our sample, we found that State/WHA’s partner had the most clearly defined M/E plan (see table 4). This partner’s M/E plan included specific and clearly defined indicators, targets against which the partner could measure its performance, and clear plans for data collection. For the four State/DRL awards, the partners included indicators in their M/E plans but did not define them.\nWe also found that one partner with three State/DRL awards did not set clear targets for a number of its indicators. In addition, two partners identified some data collection methods in their M/E plans, but did not clearly identify which methods would be used to collect data for each individual indicator.\nWe also found that, for State/WHA’s award, progress reports included detailed reporting against each indicator, as well as additional qualitative and quantitative information on overall progress including survey results and statistics. On the other hand, reporting for the State/DRL awards lacked such detail. For example, for one State/DRL award, the partner tracked its performance in quarterly reports for only 3 of the more than 10 indicators in its M/E plan. For three other awards, the partner did not aggregate or track performance against any specific indicators in their progress reports. While not reporting on progress against specific indicators, these partners generally reported anecdotally on the topics covered in the indicators or scattered some performance data throughout their reports.\nIn September 2012, State/DRL awarded a contract to a firm specializing in M/E, which could address such gaps in its partners’ performance planning and reporting. In the area of performance planning, State/DRL has directed the M/E contractor to provide training and technical assistance to its partners to improve their M/E plans, such as to ensure they include information on data collection methods. In addition, State/DRL directed the M/E contractor to develop indicators for all State/DRL partners to report on that meet or surpass data quality standards. This should allow State/DRL to more easily aggregate information on the overall performance of its Cuba program partners.\nThe partners in our sample had various policies, procedures, and mechanisms in place for monitoring subpartner performance, which they compiled information on to report to the agencies. We found that partners generally required subpartners to report on their activities quarterly or monthly, and at the end of a subaward or subcontract. Some partners also required subpartners to submit trip reports after any travel to Cuba. Other monitoring practices cited by partners included site visits to subpartners and frequent communication via phone, email, or in-person.\nBecause of security concerns and limited on-site monitoring in Cuba, partners and subpartners use a variety of methods to verify the delivery of assistance to Cuban beneficiaries. Representatives from USAID’s M/E contractor indicated that partners have had difficulty collecting and reporting data because of Cuban beneficiaries’ reluctance to maintain and provide specific information in writing (e.g., timesheets, attendance sheets, or other documents naming beneficiaries). However, the M/E contractor has found that partners and subpartners often communicate with beneficiaries though various means. Similarly, according to representatives of partners and subpartners we interviewed, some delivery verification methods they used included the following: having future travelers ask beneficiaries how they used assistance observing beneficiaries’ use of assistance through remote or indirect means—for example, through articles published online that demonstrate that beneficiaries received training.\nPartners generally aggregate information obtained from such methods in their progress reports to the agencies. However, in certain instances, the monitoring methods selected have limited subpartners’ ability to track and report detailed information. For example, one subpartner reported on an indicator, the number of signatures on petitions, by providing data that it obtained over the phone (instead of through document reviews that would prevent double counting of signatures and allow for other data quality checks). In addition, USAID’s M/E contractor has found cases in which data could not be transmitted in a timely manner, preventing reporting on activities in the quarter when they were implemented. As a result, both the partners and the agencies can have difficulty knowing the exact numbers and identities of beneficiaries in Cuba.", "", "Since 2008, USAID has made improvements to financial monitoring of its Cuba program partners. In April 2008, USAID/LAC hired an external auditor to perform financial internal controls reviews of its partners to ensure that they have appropriate internal controls and to review selected transactions under the program to ensure that they are allowable, allocable, and reasonable. Since 2008, this auditor has conducted 30 audits across 13 of the 16 partners USAID funded during fiscal years 2007 through 2010. These audits are in addition to audits performed by USAID’s Management Bureau and its Inspector General. Across its different auditing entities, USAID has a goal of reviewing each partner approximately once every 6 months. Other risk-based factors are considered in the scheduling and sequencing of reviews, such as preaward reviews, prior audit findings, and period of performance.\nThrough December 2011, the external auditor had found 50 instances of unsupported costs, such as insufficient documentation and lack of authorization, and 15 instances of excessive costs charged to an award or contract, such as charging incorrect rates or expenses not allocable to the award or contract. In sum, the external auditor questioned 11 percent of the charges made to USAID/LAC during the external auditor’s periods of review. In addition, the external auditor found inadequacies in the following three main areas: procurement standards at 8 partners, and the financial management systems at 11 partners, internal controls at 8 partners.\nTwo of the external auditor’s most common specific findings were that (1) partners did not properly complete their quarterly financial reports, and (2) partners did not perform a cost-price analysis before procuring a subpartner or equipment to ensure that it was procured at a fair price. Specifically, the external auditor found that four partners did not provide any documentation of a cost-price analysis. In addition, the auditor found that another four partners had insufficiently completed or documented cost-price analyses, either by performing them verbally but not documenting them or by having unorganized or unexplained documentation of the cost-price analysis, limiting the external auditor’s ability to confirm the reasonableness of the costs in question.\nAs a result of the external auditor’s findings, USAID/LAC has provided training to partners and, according to USAID/LAC’s external auditor, partners have made improvements. First, USAID/LAC asked the external auditor to provide briefings to the Cuba program partners at their December 2008 and March 2011 quarterly meetings on topics such as unallowable expenses, internal control standards, and procurement regulations. In addition, our review of audit reports issued from 2008 through 2011 showed that the external auditor found fewer inadequacies at some partners that had previously been audited. An official with USAID’s external auditor who is responsible for these audits noted that recent reviews have found that the partners have improved their financial management capacity.\nUSAID/OTI used other processes to regularly monitor the financial performance of its partner under the Cuba democracy program. According to USAID/OTI, USAID/OTI staff worked closely with their Cuba program partner to plan future expenditures and reviewed documentation related to individual subpartners to determine each subpartner’s real costs. In addition, USAID/OTI officials maintained a database that the partner updated on a weekly basis, allowing USAID/OTI to monitor all expenditures weekly.\nBased on our financial internal controls reviews of the five USAID awards and contracts in our nongeneralizable sample (see table 5 in appendix I), we found that partners’ internal controls included (1) policies to prevent the commingling of U.S. government funds, such as unique accounting codes to identify awards and separate bank accounts for U.S. government funds; (2) policy manuals to instruct employees on the proper use of U.S. government funds received through grants and contracts; and (3) procedures to segregate incompatible financial duties. We found that USAID/LAC was overcharged for some overhead and labor expenses by one of USAID/LAC’s partners in our sample.\nState has not consistently conducted ongoing, in-depth financial monitoring of its Cuba program partners. State’s Bureau of Administration is responsible for conducting financial internal controls reviews of State/DRL’s and State/WHA’s partners. However, the Bureau of Administration has conducted financial internal controls reviews of less than one-third of partners active since fiscal year 2010. For State/DRL awards, the Bureau of Administration conducted one review in each fiscal year for 2010 and 2011 and four in July 2012. It conducted no reviews of State/WHA partners. According to State officials, the Bureau of Administration attempts to conduct financial internal controls reviews at least once during the course of each DRL and WHA award but has not done so for many of its awards because of staffing turnover and constraints in the Bureau of Administration.\nIn September 2012, State/DRL awarded funding to an external auditor to perform financial internal controls reviews in fiscal year 2013. During this fiscal year, State intends for the auditor to perform one review of three- quarters of State/DRL’s partners and no reviews of State/WHA’s partners. State provided documentation to us showing that, in October 2012, State/DRL worked with the external auditor to develop a preliminary plan to select the ordering of its partners to be reviewed using a risk- based approach that considered criteria such as the value of awards, any prior financial compliance issues identified, and the partners’ internal administrative capacity.\nWe conducted financial internal controls reviews on three partners with five State awards in our nongeneralizable sample (see table 5 in appendix I). These three partners had been recently reviewed by USAID/LAC’s external auditor, because they have also been USAID/LAC awardees, and had made internal control improvements in response to the auditor’s findings. Similar to our review of USAID’s partners, we found that partners had internal control mechanisms in place, including (1) policies to prevent the commingling of U.S. government funds, (2) policy manuals to instruct employees on the proper use of U.S. government funds, and (3) procedures to segregate incompatible financial duties. However, State has had eight partners with nine State/DRL and State/WHA awards active in fiscal years 2011 or 2012 that have received no financial internal controls reviews during the course of their awards, through either State’s Bureau of Administration or USAID’s external auditor.\nOur review of the six partners in our nongeneralizable sample found that partners had written policies and procedures for financial monitoring of their subpartners’ use of program funding. For example, partners had risk assessment processes to determine the level of monitoring required for a certain subpartner, depending on that subpartner’s capacity and the type of subaward or subcontract. In addition, some of the partners required certain types of subpartners to provide receipts to document 100 percent of expenses.\nTo test the partners’ application of their financial monitoring policies and procedures, we conducted reviews of 11 subpartners under the six partners in our sample. Generally, all partners maintained the necessary documentation (i.e., receipts, timesheets, authorizations) to support expenses incurred at the subpartner level. We found that partners maintained varying levels of documentation on cost-price analyses performed and that one partner had incomplete documentation for one of its subpartner’s expenditures.\nFor three of the five subpartners with fixed-price subcontracts in our sample, documentation supporting the partners’ cost-price analyses included (1) the actual amounts paid for similar services to subpartners on previous awards, (2) price quotes to procure supplies and equipment from various vendors, or (3) surveys demonstrating the market value of labor paid for different labor categories to substantiate that the amounts were within industry standards. For two of the five subpartners with fixed-price subcontracts within our sample, the partners documented that they believed the price of the subcontract to be fair based on the partner’s prior experience.\nOne subpartner of a USAID/LAC partner submitted its receipts in a foreign language that staff at the partner could not read and provided little explanation of the receipts.", "", "USAID and State have no direct relationships with their partners’ subpartners. Partners are responsible for all oversight of their subpartners and for reporting to the agencies any updates and problems related to the subpartners’ work, such as through any quarterly reports and site visits. However, the agencies are generally required to approve any partner requests to award funding to subpartners.\nUSAID has provided guidance to its Cuba program partners on what is required for approval of subpartners, both during the preaward phase and during the course of the award.\nPreaward phase. According to USAID officials, subpartners can be considered pre-approved during the preaward phase if they are described in award proposals, in accordance with the standard provisions that are referenced in partners’ awards. USAID officials indicated that some of USAID’s partners in the past had interpreted the term “described” to include any reference in a proposal to a subpartner’s activities, even if the proposal did not specify that the work would be completed by a subpartner or provide specific information about the subpartner. As a result, USAID learned— through reviews conducted since May 2009 by its external auditor and its own subsequent reviews—that some partners had subcontracts and subawards USAID had not approved. In response, in June 2011, USAID added guidance to its requests for applications (RFA) on the type of information that partners must submit in order to receive prior approval for all types of subpartners. This information includes, for example, the name of the proposed subpartner, a description of the work to be performed by the subpartner under a detailed, line-item budget. the award, the total estimated cost to be paid to the subpartner, and In some cases, USAID accepts this information orally if the partner is concerned that the leaking of this information could compromise the security of individual consultants who travel to Cuba. To provide further clarity to partners on whether or not USAID considers subpartners as approved during the preaward phase, USAID stated in its RFAs issued in fiscal year 2011 that a subaward or subcontract is not considered approved until the USAID Agreement Officer in the Management Bureau signs a letter approving it.\nAward phase. For USAID approval during the award phase, the partner must submit all of the same information as required during the preaward phase, as well as a copy of the proposed agreement with the subpartner and documentation of the process through which the subaward or subcontract was procured. In May 2011, to further its understanding of the work to be performed by its subpartners, USAID/LAC set up a technical evaluation committee. For ongoing awards, partners submit proposed subpartners for approval to the committee. The committee may ask for information on proposed subpartner activities, among other things, to ensure that the programmatic content of the work to be performed by subpartners fits in the scope of the overall award.\nState’s Bureau of Administration is responsible for approving subawards and subcontracts under State/DRL and State/WHA awards, and has requirements similar to USAID’s. However, State does not clearly inform its Cuba program partners of these requirements in written guidance and, as a result, some partners have not provided the required information.\nAccording to language in State’s Standard Terms and Conditions, prior written approval is required for any subawards or subcontracts unless they are described in the application and funded in the approved award. Specifically, State officials told us that the Bureau of Administration requires certain information and documentation to approve subpartners, including a copy of the draft agreement with the subpartner, the amount of and budget for the agreement, the name of the subpartner organization, a description of the subpartner’s role. the period of performance, and According to State officials, State’s requirements are currently the same whether a partner obtains preapproval during the preaward phase or during the course of the award. They added that, for consultants under State/DRL awards, the Bureau of Administration does not require their names because of security and sensitivity concerns. Instead, according to officials, the Bureau of Administration requires information on the amount of the consultancy contract, the consultant’s budget, and a description of the consultant’s role and qualifications. Nevertheless, the detailed information that State told us is required to preapprove subawards, subcontracts, and consultants is not specified in written guidance to all partners. For example, in State’s handbook for grant recipients, State informs recipients to provide in award proposals details on any subpartners, but does not specify the type of information to provide. In addition, based on our review of fiscal year 2010 and 2011 award documents, we found that in cases when State/DRL is made aware of a prospective partner’s intention to have a subpartner through review of their proposal, State/DRL included a requirement in the partner’s award to provide a copy of the agreement with that specific subpartner to State within 10 days of its execution. However, State/DRL omitted this requirement from awards for which it was not clear the partner intended to use a subpartner. As a result, we found that many partners only received the broad written guidance in State’s Standard Terms and Conditions and recipient handbook.\nBased on our analysis of the use of subpartners under recent State awards, we found that State had sufficient information to preapprove the subawards and subcontracts under State/WHA’s awards. However, State did not have the detailed information that, according to State officials, would be required to approve 91 subawards and subcontracts to which partners obligated funding under 8 State/DRL awards.\nAccording to representatives of one of the State/DRL partners, they assumed that State was aware of their subawards and subcontracts and considered them preapproved because the partners’ proposals had referenced the types of work to be performed under the award by the subpartners. We found, however, that the partners’ proposals only provided general information for all proposed subpartners, such as an estimated total cost aggregated for all subawards and subcontracts. The proposals did not specify information about individual proposed subawards or subcontracts, such as proposed periods of performance, a description of the work to be performed, or copies of draft subpartner agreements. Officials said that State has provided training to grants officers over time to ensure greater consistency in the application of preapproval requirements. However, we interviewed two partners with ongoing State/DRL awards, and both were still unaware of the information required for subpartner approval.", "USAID has been implementing Cuba democracy assistance efforts since 1996, and State’s role in the program has increased since it began providing assistance several years later, in 2004. More than $200 million has been provided for these efforts over the past 15 years, with recent growth in the use of worldwide and regional organizations that often use subpartners to help implement program activities. Despite ongoing challenges stemming from the difficult operating environment in Cuba, since our 2006 and 2008 reports, USAID has taken steps to improve its performance and financial monitoring of Cuba democracy program awards. While State has also taken initial steps to improve performance monitoring of its Cuba program awards, we found that State’s financial monitoring was lacking in certain areas.\nFor performance monitoring of Cuba program partners, both USAID and State have required partners to submit program planning and reporting documents that the agencies use to monitor their partners’ implementation of program activities and progress toward program goals. Although we found some gaps in these efforts, such as instances in which partners did not identify targets in performance plans, lacked clearly defined indicators, or did not report on established indicators, both agencies are taking steps to improve performance monitoring of their partners. Specifically, since 2010, USAID has used an external contractor to enhance its Cuba program monitoring and evaluation efforts. In September 2012, State hired an organization for a similar purpose, with work on this effort slated to begin in fiscal year 2013.\nTo enhance financial monitoring, in 2008 USAID hired an external auditor to perform financial internal controls reviews of its Cuba program partners and used a risk-based approach to determine how often each partner should be reviewed to enable more efficient and effective reviews, with resources focused on areas of greater risk. Such an approach considers key factors such as the value of awards, coverage, previously identified deficiencies, award type, and the frequency of the reviews that will be needed. USAID’s auditor conducted 30 audits through fiscal year 2012, which identified questionable charges and weaknesses in partners’ financial management, procurement standards, and internal controls. State did not conduct financial internal controls reviews for more than two-thirds of its awards during fiscal years 2010 through 2012, although State recently awarded funding to an external auditor for this purpose and has taken steps toward implementing a risk-based approach for these reviews. However, because these actions were taken recently, State’s ability to ensure that funds are being spent as intended remains unknown until it has completed these reviews. Moreover, unlike USAID, State has not provided clear guidance to its partners regarding requirements for subpartner approval. As a result, State lacks complete and accurate information on its partners’ use of subpartners to implement program efforts. Without adequate information on program subpartners, State has limited ability to fully understand and assess its partners’ use of program funds.", "To strengthen State’s ability to monitor the use of Cuba democracy program funds, we recommend that the Secretary of State take the following two actions:\nTo enhance financial oversight, use a risk-based approach for program audits, including those conducted by an external auditor, that considers, among other factors, specific indicators—such as value of awards, prior deficiencies, oversight coverage, and frequency—for each of State’s Cuba program partners.\nTo obtain sufficient information to approve implementing partners’ use of subpartners, provide clear guidance to implementing partners regarding requirements for approval of the use of subpartners, and monitor implementing partners to ensure that they adhere to these requirements.", "We provided a draft of this report to USAID and State for review and comment. Their written comments are reproduced in appendixes II and III, respectively. USAID noted that it is a challenge to implement assistance programs in countries where USAID does not have dedicated staff in-country, and cited their ongoing commitment to ensuring that Cuba democracy assistance programs managed by USAID receive appropriate management and oversight to minimize waste and mismanagement and maximize impact on the ground in Cuba. USAID highlighted steps that the agency has taken to improve program management, such as dedicating additional resources to conduct financial audits and monitoring of awardees, and conducting pre-award audits on organizations with limited or no experience managing USAID- funded projects. USAID expressed appreciation for our recognition of the agency’s program improvements.\nState concurred with both of our recommendations and noted relevant actions it has taken or plans to take. Regarding our recommendation to enhance financial oversight through using a risk-based approach for Cuba program audits, State noted that the external auditor that State/DRL recently procured to audit some of its partners has taken steps to implement a risk-based approach. State further noted that the department is evaluating staffing in its Bureau of Administration and audit requirements to be able to address program oversight needs not covered by this external auditor. State also concurred with our recommendation to obtain sufficient information to approve implementing partners’ use of subpartners. State said that it plans to hold meetings with awardees to discuss award requirements and provide an orientation on resources and technical support available to Cuba program awardees.\nUSAID and State also provided technical comments that we have incorporated, as appropriate.\nWe are sending copies of this report to the Administrator of USAID, the Secretary of State, appropriate congressional committees, and other interested parties. In addition, the report will be available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202)512-3149 or gootnickd@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV.", "This report (1) identifies the types and amounts of democracy assistance that the United States Agency for International Development (USAID) and the Department of State (State) have provided to Cuba and characteristics of implementing partners, subpartners, and program beneficiaries; (2) reviews USAID’s and State’s efforts to implement the program in accordance with U.S. laws and regulations and to address program risks; and (3) examines USAID’s and State’s monitoring of the use of program funds. This report is a publicly releasable version of a prior GAO report, issued in December 2012, that USAID and State had designated Sensitive But Unclassified.\nTo identify types and amounts of democracy assistance, and characteristics of implementing partners (partners), subpartners, and beneficiaries, we reviewed congressional notifications, agency and partner documents and data on program awards and funding, copies of award agreements and contracts and any modifications, partner interim and final reports, and other key documents and data. We interviewed agency officials and partner representatives to corroborate information and data obtained. We also discussed Cuba democracy assistance with officials at the National Endowment for Democracy. We reviewed amounts of assistance and characteristics of partners that received program funding in fiscal years 1996 through 2012. To test the reliability of funding data, we compiled lists of all funding that went to each partner and sent these lists to USAID and State for verification. In addition, we reviewed the use of subpartners under all of USAID’s and State’s 29 awards and contracts that were active in fiscal year 2011, which were funded with appropriations from fiscal years 2007 through 2009. These awards and contracts were awarded to 22 partners. We obtained information and data from each of the partners on their use of subpartners under the respective awards and contracts. For the purposes of our review, we defined subpartners as recipients of subawards, including subgrants, grants under contract, subcontracts, or consultants. To test the reliability of subpartner data, we compared information obtained from partners to agency information, and interviewed agency and partner officials regarding any discrepancies. We determined data on program funding and on the use of subpartners were sufficiently reliable for the purposes of this report.\nTo review USAID’s and State’s efforts to ensure that program implementation is consistent with U.S. laws and regulations, and to provide guidance to partners and subpartners regarding program risks, we reviewed relevant U.S. laws and regulations and agency and departmental policies and procedures. We also interviewed USAID and State legal and program officials regarding program implementation and related risks. For selected partners and subpartners, we reviewed award agreements; contracts; and partner guidance, policies, and procedures regarding program security risks and travel security and safety. We also interviewed representatives of partners and subpartners regarding program security risks and traveler safety and security measures.\nWe analyzed reported activities and assistance delivered, and management and internal controls for a nonprobability, nongeneralizable sample of six USAID and State partners and 11 of their subpartners, in order to assess performance and financial monitoring and oversight of their awards and contracts. While the results of our analysis of these six partners are not generalizable to the population, we selected this nonprobability sample to be generally reflective of other partners in the population and to cover a large proportion of the overall dollar value of aid. We selected at least one partner from each of the four USAID and State bureaus and offices implementing program assistance—USAID’s Bureau of Latin American and Caribbean Affairs (LAC); the Office of Transition Initiatives (OTI) within USAID’s Bureau for Democracy, Conflict, and Humanitarian Assistance; State’s Bureau of Democracy, Human Rights, and Labor (DRL); and State’s Bureau of Western Hemisphere Affairs (WHA). While there were in total 29 partners from which we selected, the six selected partners were among the top 15 recipients of program funding awarded in fiscal years 2007 through 2010, and represented about 60 percent of funding for awards active in fiscal year 2011. Other factors that we considered in selecting partners included the timing of the awards and contracts—we selected partners with awards or contracts active in fiscal year 2011—and other strategic factors, such as the type of activity planned under the award or contract and whether the partner had ongoing or new program activities planned for fiscal year 2012 and beyond. We judgmentally selected two subpartners for further review under each of the partners, except for the one partner that only used one subpartner. To select subpartners, we considered factors such as funding received, whether the subpartner had recent activity in fiscal year 2011, the type of activity implemented, and other strategic factors. These subpartners are not generalizable to the population, but provided additional program context and examples for the purposes of our review. Table 5 provides additional information on the partners in our sample.\nTo examine USAID’s and State’s monitoring of the use of program funds, we reviewed and analyzed performance and financial documentation and data and conducted interviews with USAID and State officials, as well as representatives of partners and subpartners in our sample. In addition, we conducted fieldwork in Miami, Florida—where we interviewed representatives and reviewed documentation at local partners and subpartners—and at the U.S. Interests Section (USINT) in Havana, Cuba—where we interviewed U.S. officials and partner representatives, and observed WHA-funded democracy assistance activities at post. We examined USAID’s and State’s program operational plans and performance progress reports; agency and partner policy and procedure manuals and program guidance; agendas and information presented at quarterly partner meetings; partner and subpartner award agreements and contracts; partner implementation, monitoring and evaluation (M/E) plans; partner and subpartner interim and final performance and financial reports; and audits of partner activities, among other documents and data.\nTo review partners’ M/E plans, we assessed whether each plan had three of the basic elements of M/E plans, as described in USAID and State guidance: (1) clearly defined indicators, (2) targets set for each indicator, and (3) data collection methods specified for each indicator. We selected these criteria since they were common elements that M/E plans should have, according to USAID and State guidance. Because we focus on assessing the agencies’ and partners’ abilities to monitor, not to evaluate, the Cuba democracy program, we did not select criteria for assessing any portions of the M/E plans related to evaluation. We analyzed each M/E plan to determine the extent to which the plan incorporated each element. For example, we determined that an M/E plan partially met the criterion for clearly defined indicators if the plan had indicators but did not provide definitions for the indicators. For targets, we assessed a partner’s M/E plan as having partially met the criterion if there were relevant targets specified for some but not all indicators. For data collection methods, we assessed the partner’s M/E plan as having partially met the criterion if data collection methods were only described for some indicators or if the plan generally described data collection methods, but did specify which methods pertained to each indicator.\nTo review partners’ progress reports, we assessed whether progress was clearly reported against each indicator identified in the M/E plans. We determined that a partner’s progress report met this criterion if the report included specific updates on progress for each indicator, with any progress for quantitative indicators (e.g., number of beneficiaries) reported in numeric form. We assessed a partner’s progress report as partially having met the criterion if it reported progress in this specific way on some but not all indicators. We assessed a partner’s progress report as not having met the criterion if the partner did not clearly report progress on any of its indicators.\nAdditionally, we interviewed officials from the two organizations contracted by USAID/LAC to conduct performance and financial reviews of partners. We reviewed partner and subpartner internal controls and related residual fiscal accountability risk, and also performed walk- throughs of their disbursement processes and reviewed invoices and other supporting documentation. We primarily focused our review on compliance with internal controls standards relating to monitoring of program funds and to reviewing certain control activities. We performed selected expenditure testing at each partner and subpartner in our sample, when applicable, to identify potential internal controls or financial management issues. We also reviewed our previous reports and interviewed experts to identify lessons learned and to better understand challenges related to providing democracy assistance for Cuba.\nWe conducted this performance audit from September 2011 to January 2013 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "", "", "", "", "In addition to the contact named above, Leslie Holen, Assistant Director; Elisabeth Helmer, Heather Latta, Joshua Akery, Laura Bednar, Beryl Davis, David Dayton, David Dornisch, Ernie Jackson, Crystal Lazcano, John Lopez, Reid Lowe, and Kim McGatlin provided significant contributions to the work. Etana Finkler and Jeremy Sebest provided technical assistance." ], "depth": [ 1, 2, 2, 1, 2, 2, 1, 1, 2, 3, 2, 3, 2, 3, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "h0_full", "h0_full", "h0_full", "h1_full", "h2_full", "", "", "h2_title", "h2_full", "h2_title", "h2_full", "h2_full", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What is the role of USAID and the State Department in Cuba?", "Who are the beneficiaries for these programs?", "What is the funding breakdown between USAID and State?", "How does USAID and State funding compare to that of other groups?", "How do these organizations use subpartners?", "What kinds of funding discretion do agencies in Cuba get?", "What is the responsibility of these agencies?", "How must the agencies determine which activities are permitted?", "How are the agencies expected to spend U.S. government funds?", "What did GAO discover in its review of USAID and State?", "What kinds of progress are these agencies making?", "What kinds of financial review does USAID undergo?", "What kind of financial review does State undergo?", "What kind of review is necessary for subpartner use?", "How did USAID perform on its subpartner metrics?", "How did State require on its subpartner metrics?" ], "summary": [ "The U.S. Agency for International Development (USAID) and Department of State (State) provide democracy assistance for Cuba aimed at developing civil society and promoting freedom of information.", "Typical program beneficiaries include Cuban community leaders, independent journalists, women, youths, and marginalized groups.", "USAID receives the majority of funding allocated for this assistance, although State has received 32 percent of funding since 2004.", "In recent years, both USAID and State have provided more funding for program implementation to for-profit and nongovernmental organizations (NGO) with a worldwide or regional focus than to universities and to NGOs that focus only on Cuba.", "All types of implementing partners, but worldwide or regional organizations in particular, used subpartners to implement program activities under 21 of the 29 awards and contracts that GAO reviewed.", "USAID and State legal officials view the Cuba democracy program’s authorizing legislation as allowing the agencies discretion in determining the types of activities that can be funded with program assistance.", "Agency officials added that the agencies ensure that program activities directly relate to democracy promotion as broadly illustrated in related program legislation.", "The officials stated that organizations are expected to work with agency program officers to determine what activities are permitted or appropriate.", "In addition, they said that program partners and subpartners are expected to spend U.S. government funds consistent with U.S. laws, and that requirements in primary award agreements generally flow down to any subpartners.", "USAID has improved its performance and financial monitoring of implementing partners’ use of program funds by implementing new policies and hiring contractors to improve monitoring and evaluation and to conduct financial internal controls reviews, but GAO found gaps in State’s financial monitoring.", "While GAO found some gaps in implementing partners’ performance planning and reporting, both agencies are taking steps to improve performance monitoring.", "For financial monitoring, USAID performs financial internal controls reviews of its implementing partners with the assistance of an external auditor. Since 2008, USAID has used a risk-based approach to determine the coverage and frequency of the 30 reviews the auditor has conducted, which have identified weaknesses in implementing partners’ financial management, procurement, and internal controls.", "However, because of resource constraints, State did not perform financial internal controls reviews for more than two-thirds of its implementing partners during fiscal years 2010 through 2012. State procured an external financial auditor in September 2012 that plans to review more than half of State’s implementing partners, and has taken steps toward implementing a risk-based approach for scheduling these reviews.", "Federal regulations generally require agencies to approve the use of subpartners.", "GAO found that USAID issued specific guidance in 2011 to its implementing partners on requirements for subpartner approval.", "While State told GAO it has similar requirements, State’s requirements are not clearly specified in its written guidance. As a result, State was not provided with the information it would have needed to approve at least 91 subawards and subcontracts that were obligated under eight awards." ], "parent_pair_index": [ -1, 0, 0, 0, 0, -1, 0, 1, 0, -1, 0, 0, 0, -1, 4, 4 ], "summary_paragraph_index": [ 2, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 4 ] }

{ "title": [ "Background", "Detailed Data Are Limited on School Bus Crashes, but Fatal School-Bus Crashes Are a Very Low Percentage of All Fatal Motor Vehicle Crashes", "While Little Federal Data Exist beyond School Bus Fatalities, State Data May Contain More Detailed Information", "Federal Crash Data", "State Crash Data", "Fatal Crashes Involving School Buses Constitute a Very Low Percentage of All Fatal Motor Vehicle Crashes", "Federal Laws and Regulations Set a Baseline for School Bus Safety, upon which State Laws and Regulations Build", "Federal Regulations Lay the Groundwork for School Bus Safety and Can Differ Based on the Type of Operator", "School Bus Inspections", "Driver Training", "Vehicle Standards for Maximum Age and Capacity", "Building on Federal Requirements, States Set Requirements for School Bus Safety That Vary by State but Generally Not by Type of Operator", "School Bus Inspections", "Vehicle Standards for Maximum Age and Capacity", "Stakeholders Identified Voluntary Industry Standards as a Primary Source of Leading Practices, and Work Is Under Way in Areas Where Stakeholders Most Often Said Additional Federal Guidance Would Be Useful", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Description of Eight Selected States’ Requirements on School Bus Safety", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "School buses are used to transport students to and from home and school and extracurricular activities like field trips and athletic events. The industry defines four basic types of school buses. Types A and B are comparatively small in size, while types C and D are comparatively large in size, as shown in figure 1. In general, the capacity of a school bus increases from type A to type D buses, and type D school buses can have a capacity up to 90 students. Type C school buses are most common, representing 70 percent of school bus sales in 2014 (23,715 of 34,021 buses) according to figures reported by School Bus Fleet.\nSchool districts or private contractors can operate school buses transporting public school students. School districts have a spectrum of contracting options from which to choose school bus transportation. When a school district contracts with a private company, the contractor could manage and provide all or some aspects of student transportation, depending on the school district’s needs and preferences. In full-service or “turnkey” contracts, the contractor takes on all aspects of pupil transportation services, such as hiring and training drivers and managing school bus routes. In other contracts, the district may retain ownership of school buses but have the contractor operate the buses, or the district may only have the contractor provide particular operations, such as special needs transportation.\nWhether district-operated or contracted, oversight of school bus transportation occurs across all levels of government and can involve multiple agencies at each level of government.\nAt the federal level, NHTSA sets vehicle safety standards for new motor vehicles and administers grant programs as part of its mission to reduce deaths, injuries, and economic losses resulting from motor vehicle crashes. NHTSA also collects and analyzes crash data for a variety of purposes, such as to determine the extent of a safety problem and steps it should take to develop countermeasures. Two data sets are used to generate national statistics: FARS is a census of fatal crashes, and the General Estimates System (GES) is a sample of fatal, injury, and property-damage crashes. In addition to these activities that apply broadly to motor vehicle safety, including school buses, NHTSA provides guidance and holds workshops specific to school bus safety. For example, in December 2016 NHTSA hosted a day-long meeting on school transportation safety that included panels on school transportation risks and school bus vehicle technology, among other topics.\nAlso at the federal level, FMCSA’s mission is to reduce crashes and fatalities involving commercial motor vehicles. FMCSA is responsible for setting and enforcing federal safety regulations that apply to large commercial truck and bus operators. For school bus transportation, FMCSA’s safety regulations for commercial motor vehicle operations do not apply to home-to-school and school-to-home transportation. These regulations apply in very limited circumstances such as for contractors hired by schools who provide transportation for extracurricular activities across state lines. The primary exception to this, however, is commercial driver’s licensing; school bus drivers must have a commercial driver’s license with a school bus endorsement, which requires a driver to pass additional knowledge and skills tests specific to operating a school bus, and are subject to drug and alcohol testing. FMSCA collects data on motor vehicle crashes but focuses on crashes involving large trucks and commercial buses, given its mission and jurisdiction. This crash data is collected in the Motor Carrier Management Information System.\nAt the state level, multiple agencies are often responsible for setting or enforcing state-specific requirements for school-bus driver qualifications and training, vehicles, inspections, and other operational aspects. Some states require school districts to provide students with transportation to and from home and school, while other states allow school districts to decide whether to provide such transportation.\nFinally, local school districts are responsible for implementing and supervising school bus operations. This includes managing and establishing routes and policies, operating and maintaining school buses, and training and assigning staff, sometimes in conjunction with contractors.", "", "At the federal level, both NHTSA and FMCSA collect data on motor vehicle crashes that include crashes involving school buses. Since these data cover crashes involving a range of vehicles, information that is specific to school buses, like the specific type of school bus or whether it was operated by a school district or contractor, is not included in these national data. States may have richer data on school bus crashes, and we found that a small number of states collect some school-bus-specific information in their crash data, such as the type of operator. However, state data on school bus crashes vary because states determine what specific data elements to collect in crash data.", "NHTSA collects basic data on motor vehicle crashes, including school- bus-related crashes, but not any in-depth data specific to school buses, such as whether a school bus was district or contractor operated or the type of school bus. NHTSA’s FARS and GES crash data both include a variable to identify school-bus-related crashes. Therefore, NHTSA uses this variable to isolate school-bus-related crashes in FARS data and generates an annual report describing the number and some characteristics of fatal school-bus-related crashes. For example, the report describes characteristics of fatal school-bus crashes such as the time of day and whether the fatality(ies) was an occupant or non- occupant of the school bus or other involved vehicles. NHTSA can also isolate school bus crashes from GES data; however, because GES is a sample of crashes and school bus crashes are such rare events, GES data cannot be used to reliably examine year-to-year trends, according to NHTSA. NHTSA’s crash data aim to cover all types of traffic accidents, and as such, FARS and GES do not include additional variables tailored to accidents involving school buses. Moreover, the source for FARS and GES—police accident reports—vary from state to state and may not contain such school-bus-specific information, such as type of bus and type of operator, for NHTSA to aggregate across states.\nFMCSA’s crash data for large truck and bus crashes do not include a variable to identify school-bus-related crashes. FMCSA’s crash data, which come from police accident reports, identify the vehicle involved as a bus or truck but does not further delineate the type of bus (e.g., transit bus or school bus). In addition, it does not define or collect data on the type of school bus operator.", "States collect crash data to help implement and evaluate highway safety policies, but the specific crash data that states collect vary. Some states have richer data on all types of school bus crashes, including fatal, injury, and property-damage-only crashes than NHTSA and FMCSA, based on our review of federal and select state’s crash data collection processes. However, since states have discretion in determining what specific data elements to collect, state data on school bus crashes vary. Each state has its own crash data system, and police accidents reports—a key source of crash data—are unique to each state. For example, on California’s police accident report, officers enter codes to identify the involved vehicles, and specific codes classify the type of school bus and operator (e.g., public or contractor). Other states’ police accident reports may not collect as detailed information on a school bus involved in a crash. For example, our review of police accident reports in our selected states found that one state’s police accident report had a field to indicate whether a crash involved a school bus, and another state’s report used the narrative section to note a school bus’s involvement.\nWe surveyed states to determine whether they track the type of school bus operator in crash data, or other state data such as inspection or funding data, since information states collect on school bus crashes and operations differs. In our survey of states, about half of states that responded (22/47) reported that they track whether school buses are district operated or contracted, though least often in crash data. States most commonly reported tracking the type of operator in funding or reimbursement data (15), followed by inspection data (10), and statewide crash data (7). We asked these states why they tracked the type of operator, and states reported doing so most often for funding purposes (18), followed by compliance with state contracting laws (10), and educational or training purposes (7). For example, in its inspection data, New York state officials said they track the type of school bus operator along with several other variables that allow the state to analyze data on inspection outcomes, such as the number of buses passing inspection or being placed out of service, to see if there are different outcomes across these variables. For the 25 states that reported they do not track whether school buses are school-district or contractor operated, states nearly always indicated there was no need or requirement to track such data. For example, 17 states said there is no distinction made in state law or regulation on the type of operator. Three states also reported that there are no contractors operating school buses in the state because school districts choose not to use them, so there is no need to track such information.\nThe Transportation Research Board noted in 2002 that fatalities and injuries involving students make up a relatively small proportion of all fatalities and injuries, so the benefits of additional data collection efforts that focus solely on school travel should be carefully considered before being recommended or implemented. Stakeholders we interviewed had mixed views on whether data improvements should be a priority for the federal government. For example, one stakeholder said that the federal government could create a repository for national school-bus data that would require standardized methods of data collection by the states and that the resultant data would help illuminate key areas of school bus safety, such as illegal passing of stopped school buses, that are not currently being highlighted. However, another stakeholder we interviewed, who believes national data is lacking, said examining and collecting additional crash data for other modes of transportation may be more revealing than it would be for school buses, given the safety record of school buses. School buses continue to have a strong safety record relative to other types of motor vehicles based on more recent fatal crash data, which we discuss in more detail below. According to NHTSA, only 8 percent of fatalities in crashes involving a school bus from 2005 to 2014 were school bus occupants (i.e., drivers or passengers). We also found that school bus crashes constituted less than 1 percent of all crashes in 6 of our selected states for which annual crash reports included a section on school bus crashes.\nNHTSA and FMCSA officials we interviewed said the agencies have no plans to change their data collection processes specific to school bus crashes, but both have efforts under way to improve the overall quality of crash data. For example, FMCSA is in the process of establishing a working group, as required in the FAST Act, to examine the information collected in police accident reports on commercial motor vehicles, a process that could lead to improvements in the data collected on crashes involving large trucks and buses. Also, if funding is available, NHTSA officials said the agency plans to analyze states’ reporting requirements for school bus crashes in fiscal year 2017. This analysis would identify sources of crash data and whether these sources provide reliable information that could be used to determine causative factors and examine potential countermeasures for all reported school bus crashes.\nAdditionally, states play a primary role in overseeing school bus safety, as described later in this report, and states have their own mechanisms to use state crash data to identify and use federal grant programs to address highway safety issues in their state. NHTSA and FMCSA have grant programs whereby each state identifies its priorities for highway and motor carrier safety, respectively. For example, for NHTSA’s Highway Safety Grant Program, each state must develop a Highway Safety Plan based on an evaluation of highway safety data, including crash data, to identify safety problems within the state. Therefore, if a state identifies a need for initiatives to improve school bus safety and has jurisdiction, the state could include it as a priority in its grant application and target federal and state spending for related initiatives. NHTSA and FMCSA said that, at present, no states identified school bus safety as a priority area in applications for the State and Community Highway Safety Grant Program or Motor Carrier Safety Assistance Program.", "While national data on school bus crashes are limited, from 1999 to 2010 UMTRI collected BIFA data, with support from FMCSA; however, these data are no longer collected. BIFA data supplemented FARS data with detailed information collected through interviews and from police accident reports about the physical configuration and operating authority of each bus involved in a fatal crash, including the type of operator. For this report, we analyzed BIFA data for 2000 to 2010 to describe characteristics of fatal crashes involving school buses during that time period. However, for variables included in BIFA data that originated in FARS data, we also analyzed data from FARS for fatal crashes involving school buses for 2011 to 2014 to provide more recent information as BIFA data were only collected through 2010. Since this analysis examined data on fatal crashes involving school buses, it is not generalizable to all types of crashes involving school buses. Further, we did not have exposure data (e.g., vehicle miles traveled by school buses of different types or used for different types of trips) to allow us to report rates of crashes for the characteristics we examined.\nWe found that from 2000 to 2010, an average of 118 fatal crashes involving a school bus occurred each year. The total number per year ranged from 93 (2009) to 128 (2008). When we extended our analysis to include 2011 to 2014, the average fell slightly to 115 fatal crashes each year, which is 0.3 percent of the 34,835 fatal motor-vehicle crashes that occurred on average each year during this time. Most fatal crashes involved local travel and occurred during times that would indicate the buses were traveling to and from school, according to our analysis. For 2000 to 2010, most fatal crashes (89 percent) were considered local, meaning the total trip distance was less than 50 miles. Seventy-four percent of fatal crashes from 2000 to 2010 occurred during home-to- school and school-to-home travel times. From 2011 to 2014, this percentage fell to 65 percent of fatal crashes, with the remainder of fatal crashes occurring during other times (see fig. 2).\nOur analysis of BIFA and FARS data also examined driver and vehicle factors that may have contributed to the fatal school bus crashes and found such factors were not prevalent.\nDriver-related factors: The data on fatal school bus crashes from 2000 to 2014 identified a driver-related factor involving the school bus driver for 27 percent of these crashes (see fig. 3). The most common type of driver-related factor was miscellaneous (e.g., leaving vehicle unattended with engine running, failing to keep in the proper lane), at 68 percent of all driver-related factors. The next most common category, identified for 12 percent of driver-related factors, was physical or mental condition (e.g., careless driving, reaction to or failure to take drugs or medications). In 8 percent of fatal crashes from both 2000 to 2010 and 2011 to 2014, the school bus driver was charged with a violation. The most common type of violation fell under either the “rules of the road” turning, yielding, and signaling category (e.g., failure to signal for a turn or stop) or the reckless/careless/hit- and-run category (e.g., inattentive, careless, improper driving), representing 36 and 32 percent of all violations, respectively.\nVehicle-related factors: Vehicle-related factors involving the school bus were rarely cited in fatal crashes involving school buses. Of the 1,731 total fatal crashes from 2000 to 2014, only 5 crashes had an identified vehicle factor for the school bus—3 for brakes, 1 for tires and wheels, and 1 for other components.\nExamining other vehicle and crash characteristics, we found that about 80 percent of fatal crashes involved large school buses (type C or D)—which account for most bus sales, according to in recent sales data—and 6 percent involved small school buses (type A or B), with the remainder unknown or of another body type. Seven percent of buses involved in fatal crashes during this time were classified as special needs school buses. In addition, the average age of the school buses in fatal crashes from 2000 to 2010 was 7 years; the average age for school buses in fatal crashes rose slightly to 8 years for 2011 to 2014. Most of these crashes occurred on dry roads (81 percent) and in clear weather conditions (85 percent) for both the 2000 to 2010 and 2011 to 2014 time period.\nWe found that school districts operated 67 percent of school buses involved in fatal crashes from 2000 to 2010, and contractors working for school districts operated 25 percent of school buses involved in these fatal crashes, which is roughly proportional to the operations conducted by districts and contractors. We found no definitive national data on the number of each type of operator or the miles driven by each type of operator, so we cannot directly compare the rates of fatal crashes for each type of operator. However, the percentage of fatal crashes involving buses operated by school districts and contractors roughly aligns with industry association estimates of operations conducted by each type of operator. One association estimates that contractors provide one-third of pupil transportation services in the United States. An official from another association estimated the extent of contracting in two ways: first, by number of buses (contractors operate about one-third of school buses); second, by the number of operations (contractors conduct about one- fourth of school bus operations). We also examined the share of fatal school bus crashes with driver- or vehicle-related factors, by type of operator, and did not find any major deviations from the overall percentage of fatal crashes involving school-district and contractor- operated school buses.", "Federal laws and regulations establish minimum requirements for school bus safety. Building on federal requirements, states establish more comprehensive safety requirements for school bus vehicles and operations. We found that all 50 states require school bus inspections, and most states also require driver training. However, fewer states require a specific maximum vehicle age or seating capacity for school buses. While state requirements build on federal laws and regulations, the specific requirements states set for school bus safety vary.", "The same two federal agencies that collect crash data set minimum safety regulations for school bus vehicles and operations.\nNHTSA sets Federal Motor Vehicle Safety Standards (vehicle safety standards) that create a baseline for school bus standards. Forty-eight out of 62 vehicle safety standards apply to new school buses, according to NHTSA. For example, Federal Motor Vehicle Safety Standard No. 217 establishes standards for emergency exits and window retention and release, and Federal Motor Vehicle Safety Standard No. 221 specifies requirements for the strength of the body panel joints in the bodies of school buses. NHTSA has reported that new school buses have to meet more vehicle safety standards than any other type of new motor vehicle. All manufacturers of new motor vehicles and equipment must certify compliance with vehicle safety standards; therefore, school buses operated by school districts and contractors all must meet these federal standards.\nFMCSA is responsible for setting and enforcing Federal Motor Carrier Safety Regulations that apply to large commercial truck and bus operations. However, FMCSA’s safety oversight of school bus operations is limited because most school bus transportation is exempt from its safety regulations. In particular, all school bus transportation to and from home and school is exempt. Beyond home-to-school and school-to-home transportation, the type of operator—whether it is a private contractor or a school district or other governmental entity—and the type of trip—including whether the trip will cross state lines—determine whether all Federal Motor Carrier Safety Regulations apply. For example, contractors hired to provide interstate transportation for extracurricular activities, such as field trips or sporting competitions, are required to comply with other Federal Motor Carrier Safety Regulations such as limits on driving and on-duty time. School district employees are exempt from these requirements. However, even with these exemptions, federal regulations for commercial drivers’ licenses and drug and alcohol testing for commercial driver’s license holders apply to all school bus drivers and operators. Figure 4 provides examples of federal regulations for school bus safety.\nWithin federal laws and regulations for school bus operations and vehicles, we specifically examined what federal requirements exist for school bus inspections, driver training, and maximum vehicle age and seating capacity. While many federal requirements, like vehicle standards for school buses, apply to both school districts and contractors, some federal requirements apply to only certain types of school transportation.", "FMCSA’s safety regulations require inspections of commercial motor vehicles. However, most school bus operations are exempt from this requirement, as noted above. Federal Motor Carrier Safety Regulations require other types of commercial operators to systematically inspect, repair, and maintain vehicles under their control, requirements that include inspecting service brakes, the steering mechanism, lighting, and tires, among other components. For inspections, commercial operators must conduct periodic (at least annual) vehicle inspections, which could be conducted in-house, at a commercial business, or through a state-run inspection program. Therefore, a contractor’s school-bus operations may be subject to this federal inspection requirement if, for instance, the contractor is hired by the school district to transport students across state lines for school-sponsored extracurricular activities; a school district’s school-bus operations would not be subject to the federal inspection requirement if the district provides the transportation for this type of trip. Representatives of contractors we spoke with stated that in practice, most contractors usually comply with Federal Motor Carrier Safety Regulations, even when they are not using the school buses for interstate activities, as contractors want the flexibility and maximum ability to operate buses under different circumstances, such as chartered services on the weekend. NHTSA does not have an oversight role in school bus operations but recommends that states establish procedures for regularly scheduled inspections of school buses in accordance with FMCSA’s requirements, as described above.", "FMCSA recently established minimum training regulations for entry-level school bus drivers. In December 2016, FMCSA issued a final rule requiring all drivers—employed by school districts and contractors—to complete entry-level driver training when applying for a commercial driver’s license, including those seeking a school bus endorsement. As part of this final rule, FMCSA established a training curriculum to address the specific training needs of school bus drivers. Training providers are required to cover all topics in the curriculum, including loading and unloading, railroad-highway grade crossings, and emergency exit and evacuation, but FMCSA set no minimum hours for the knowledge and behind-the-wheel training for the school bus endorsement. Additionally, NHTSA developed a series of refresher (i.e., in-service) training modules for school bus drivers in 2011. NHTSA officials told us they developed this training module because school bus stakeholders often asked NHTSA for guidance and assistance on training experienced school-bus drivers. Stakeholders we interviewed, including selected state officials, told us that they widely use NHTSA’s refresher training materials for school bus drivers.", "As previously noted, 48 federal vehicle safety standards apply to school buses. However, federal vehicle safety standards do not stipulate a maximum vehicle age or maximum seating capacity for school buses because, according to NHTSA, it does not have regulatory authority regarding how school buses are used. Nevertheless, NHTSA has made recommendations and issued guidance related to both of these items. In its pupil transportation guideline, issued in March 2009, NHTSA recommended replacing school buses manufactured before April 1, 1977, with school buses that meet current vehicle safety standards for buses and recommended prohibiting schools from purchasing school buses built prior to April 1, 1977, for school transportation. For capacity, NHTSA has reported in information posted on its website that school bus manufacturers determine the maximum number of persons who can sit on a school bus seat, which is based on sitting three small elementary age school children or two high school age persons into a typical 39-inch school-bus seat. In this same posting, NHTSA also reported that states and school bus operators are responsible for determining the number of persons who can safely fit into a school bus seat, and NHTSA recommended that all passengers be seated entirely within the confines of the school bus seats while the bus is in operation. NHTSA sets vehicle safety standards, and FMCSA does not have a role setting vehicle standards for school buses.", "States build upon federal laws and regulations and usually set additional, state-specific requirements for school bus safety that generally apply to both school districts and contractors, according to stakeholders we spoke with. We found that multiple state agencies often play a role overseeing school bus vehicles and drivers. For example, in Illinois, the State Board of Education and Secretary of State oversee school bus driver training, and the Department of Transportation oversees school bus inspections, while in Pennsylvania the Department of Transportation oversees school bus driver training and the State Police oversees school bus inspections. In addition, state laws and regulations vary widely across states. For example, three school bus manufacturers we spoke with told us that no two states have the same vehicle standards for school buses, with varying requirements for eight-way flashing signal lights, content and location of first aid kits, and location of switch panels, among other things. Figure 5 describes examples of state requirements for school bus transportation.\nUpon examination of state laws and regulations, we found that states set requirements for inspections, driver training, and vehicle standards that supplement the baseline federal requirements. States’ school-bus safety requirements vary widely across states but tend not to differ based on the type of operator, according to all eight selected state officials we spoke with, as described below. Four other stakeholders we interviewed affirmed that there are no differences in state requirements for school bus transportation for different types of operators. However, for state requirements for commercial motor vehicles, which can apply to but are not specific to school buses, six stakeholders we interviewed, including manufacturers and contractors, said there are some differences in requirements for contractors and school districts. For example, two stakeholders commented that states vary in the extent to which they exempt school bus operations from state requirements for commercial motor vehicles, requirements that are not school-bus-specific but apply to a wider range of vehicles and that are similar to Federal Motor Carrier Safety Regulations. See appendix II for additional descriptions of state requirements for school bus inspection, driver training, and maximum vehicle age and seating capacity in the eight selected states.", "Based on our review of laws and regulations in the 50 states, we found that all 50 states require school bus inspections to check for defects and safety compliance with state rules at the state or local level. We also found that the frequency of these inspections and agency conducting or overseeing inspections varies across states. For 41 states, we found that the state required periodic inspections of school buses to be conducted by state inspectors or third-party inspectors. For example, California requires its state highway patrol to inspect school buses at least once every year, while the Illinois state transportation agency requires certified, private inspection stations to inspect school buses at least twice a year. In the other nine states, we found the state requires local school districts to conduct inspections and/or authorizes the state to conduct spot check inspections of school buses without any set frequency. For example, Nebraska requires local school districts to conduct an inspection of each school bus before the start of the school year and then every 80 days during the school year. According to a Nebraska state official, the state discontinued its state school bus inspection program due to resource constraints and delegated responsibility for inspections to local school districts. State officials in all eight selected states told us that all school bus operators, including contractors, are subject to the state’s school-bus inspection requirements.\nStates may also require additional inspections to supplement the periodic inspections, including conducting random or unannounced inspections. Officials from four of the eight states we interviewed—Illinois, Washington, Tennessee, and Pennsylvania—stated that they complement annual or biannual inspections with unannounced or random school-bus inspections. For example, a Tennessee state official told us that the state conducts random inspections of school buses for at least 10 percent of the statewide school-bus fleet annually to ensure that all operators maintain their buses safely and appropriately. States may also require even more frequent inspections, sometimes on a daily basis. For example, California requires all school bus operators to inspect their school buses regularly—every 45 days or 3,000 miles, whichever occurs first—as part of a preventive maintenance program.\nTo provide context to understand how states implement these requirements and the results of inspections, we asked the selected states about the data they collect on inspection outcomes. The selected states vary in how they collect and maintain inspection data and the extent to which results are accessible to the public, as was the case with the frequency of inspections. Officials from selected states told us there are different methods of collecting and compiling inspection results. For example, a Tennessee state official told us that the state uses electronic devices (e.g., tablets, laptops) to collect data during inspections and maintain results in a central database. Illinois state officials told us that private, certified inspection stations can use an electronic or paper form to document inspection results, and all completed forms are maintained by the state. Given these differences, states vary in their ability to easily search and summarize inspection results for school buses in the state. We found school bus inspection results are generally accessible to the public, but how the public can access results varies. For instance, Washington posts the number of school buses inspected and the number and percentage of buses placed out of service by school district each school year on its state agency website, while Pennsylvania and Tennessee state officials told us that school bus inspection results are accessible only through a formal request.\nAdditionally, in our review of selected states’ school-bus inspection results, we found that a relatively small number of school buses were placed out of service after an inspection because they were determined to be unsafe to operate without repairs. Specifically, 3 to 5 percent of inspected school buses in a given year were put out of service for violations, based on data from four of our selected states, as shown in table 1 below. By contrast, the out-of-service rate for all types of buses nationwide is about 7 percent, according to FMCSA. Problems that could put a school bus out of service in one state we interviewed include any leaks on the exhaust system, an exterior brake or stop-arm light that doesn’t work, or a bus alarm not sounding when the emergency door is opened. In three states, the most common problems identified during inspection involved brakes, lights or signals, and exhaust systems. Officials we spoke with in the six selected states that had state inspection programs stated that out-of-service school buses cannot be operated until the identified problem has been fixed and the bus passes another inspection.\nWe found that a majority of states require training for all school bus drivers. Specifically, we found that 44 states require entry-level (i.e., pre-service) training and 44 states require refresher training for all school bus drivers. However, as with inspection requirements, we found that the frequency, length, and other attributes of the required training vary across states. For example, Pennsylvania requires a minimum of 20 hours of school-bus-specific training for all entry-level drivers and a minimum of 10 hours of refresher training for drivers every 4 years. Tennessee requires all school bus drivers to receive at least 4 hours of annual refresher training on various topics, including operational safety of school buses, loading and unloading of students, and managing student behavior, but the state does not require entry-level school-bus driver training, according to a Tennessee state official. While the training requirements vary across states, officials from all eight of our selected states stated that all school bus drivers must meet state training requirements, whether they are employed by a school district or contractor.\nStates administer school bus driver training in different ways, and additional training requirements may exist at the local level. For example, in Virginia and New York, the state departments of education oversee school bus driver training programs and train and certify instructors, who can be school district or contractor employees, to provide training to drivers. In Nebraska, the state department of education contracts with the Nebraska Safety Center at the University of Nebraska to develop training curriculum and train instructors to provide training. Beyond state requirements, local school districts and contractors may have additional training programs and requirements for school bus drivers. Contractors we spoke with told us that they also require entry-level and refresher training for their drivers that meets or exceeds state requirements. State officials in California, Pennsylvania, and Tennessee also told us that local school districts may require additional, supplemental training for drivers. For example, a state official told us that one large school district requires drivers to complete a minimum of 40 hours of gang awareness training.\nAdditionally, all eight selected states require school bus drivers to receive training on transporting students with special needs. Drivers in these states typically receive training on transporting special needs students as part of the training curriculum for entry-level or refresher training for school bus drivers. For example, in New York, under state law, entry-level school bus drivers are required to take a minimum of two hours of instruction related to transporting special needs students during the first year of employment, and all school bus drivers are required to take one hour of annual training related to transporting special needs students.\nState officials in a few of our selected states said additional training on special needs transportation is provided to drivers at the local level. A Washington state official told us that the state trains all instructors on special needs transportation topics so the instructors can in turn provide more targeted training to drivers, such as how to secure wheelchairs on a particular bus model.", "In our search of state laws and regulations, we found six states that set a requirement for the maximum vehicle age for when a school bus must be replaced or no longer used. The requirements in these six states varied. For example, Tennessee sets a maximum age for school buses that applies to school districts and contractors; specifically, type A and B buses can be used for up to 15 years, and type C and D buses can be used for up to 18 years with unlimited miles, or up to 19 years for buses with less than 200,000 miles that have passed inspections twice a year. According to a state official, Tennessee has a maximum vehicle age requirement because older school buses may not be cost-effective to maintain, as older vehicles have more mechanical and maintenance issues. In other states, all types of school buses were subject to the same maximum age, such as stating that school buses used to transport students cannot be more than 20 or 25 years old.\nIn addition to these six states with specific requirements, we also found instances where states provide funding or set a school bus depreciation schedule to replace school buses. Although these programs do not necessarily prohibit school bus operators from operating school buses that exceed the parameters of a state’s funding program, they encourage school districts to regularly replace school buses. For example, according to a state official, Washington provides replacement funding for school buses to school districts and contractors, and the state established a useful life cycle for each type of school bus, but the state does not require school districts and contractors to retire or stop using a bus at the end of the established life cycle. Washington sets an 8-year life cycle for type A buses and a 13-year life cycle for type C and D buses owned by the school district. In Virginia, the state has a 15-year life cycle for all school bus types, but according to state officials, a school bus older than 15 years can continue to be used as long as it passes inspections.\nWhile states do not typically set maximum school bus age requirements, local school bus operators usually make decisions on when to replace a school bus, according to stakeholders we interviewed. In particular, according to seven stakeholders we interviewed—3 manufacturers, 3 state agencies that conduct inspections, and 1 contractor—local operators make these decisions based on a business case that includes factors such as maintenance costs and environmental conditions. Representatives from two school bus manufacturers we interviewed told us that most states do not have a maximum vehicle age requirement and that many school districts will continue to use buses as long as they pass inspections and maintenance costs are not too high. State officials from Washington and Virginia said school bus operators need to maintain any school buses that are used for longer than the state-established life cycle and that these buses must pass the state inspection.\nWith regard to school bus seating capacity, we found eight states that have a specific requirement for maximum seating capacity on school buses. Eight states set a specific maximum capacity or parameter that would yield a specific maximum capacity. For example, New York has a maximum seating capacity of 84 student passengers in type C and D school buses. We also found that about half of the states (23) had other types of seating capacity requirements, such as explicitly restricting school buses from transporting more student passengers than the manufacturer’s rated seating capacity. For example, Illinois does not allow a school bus to be operated with more passengers than recommended by the manufacturer’s rated seating capacity.", "Stakeholders from the school bus industry most commonly cited the National Congress on School Transportation (NCST) and its National School Transportation Specifications and Procedures as a source of leading practices for safe school bus transportation. Seventeen of the 30 stakeholders we interviewed, including state directors of student transportation and manufacturers, identified NCST and the voluntary document as a national standard for school bus safety. An NCST official told us that the National School Transportation Specifications and Procedures is meant to build on federal laws and regulations and for states to consider when establishing their standards, specifications, regulations, and guidelines for school transportation.\nNCST holds a congress roughly every 5 years. The primary purpose and product of the congresses is the specifications and procedures document that contains recommendations across different aspects of student transportation, including school-bus body and chassis specifications, procedures for conducting school bus inspections, and selecting and training drivers. As the congress meets regularly, NCST has discussed new safety concerns or needed guidance and amended its specifications and procedures document accordingly. For example, one stakeholder we spoke with said a relatively recent change in the document was the inclusion of criteria, based largely on federal regulations, to use in a school-bus inspection program to determine when a school bus should be placed out of service.\nStakeholders also cited federal and state requirements and industry associations and experts as sources of leading practices. Eleven of 30 stakeholders we spoke with identified state laws and regulations, while 10 stakeholders identified federal laws and regulations and industry associations as sources they turn to for leading practices. Eight stakeholders also mentioned federal guidance as sources of best practices for school bus operations and inspections. For federal guidance, two stakeholders mentioned they look to NHTSA’s Highway Safety Program Guideline No. 17, Pupil Transportation Safety, which recommends strategies for a school bus safety program at the state level. For example, this guideline recommends developing a training plan for drivers and establishing a systematic preventive-maintenance program for school buses that includes periodic vehicle inspections.\nOur literature review identified these same sources and also provided general practices for states and local school districts and contractors to follow. For example, we found NCST’s specifications and procedures document, NHTSA’s Highway Safety Program Guideline No. 17, and textbooks that often cited federal vehicle safety standards and FMCSA’s safety regulations in our literature research. In our review of these sources, including NCST’s specifications and procedures document, we found recommended practices for maintaining school buses, including establishing an inspection program with uniform criteria for placing school buses out of service and analyzing the intended life cycle of school buses with ongoing efficiencies associated with vehicle replacement.\nA few stakeholders we spoke with indicated that specific, national leading practices for certain aspects of school bus transportation may not always be appropriate, as school bus operations are driven by local or regional factors such as available funding and environmental and geographic conditions. For example, stakeholders we spoke with said that different factors, like weather and road conditions, can contribute to how long a school bus should remain in use. Three stakeholders, including a manufacturer, noted that school buses operating in adverse road and weather conditions in some states may need to be replaced more frequently due to higher maintenance costs. A 2002 National Association of State Directors of Pupil Transportation Services (NASDPTS) report noted that accurate and thorough records on operating and maintenance costs of a school bus fleet provide data needed to analyze and understand costs and said that establishing school bus replacement policies are important. As noted earlier, states and local districts largely oversee school bus safety, and as such, school bus transportation is subject to local district decisions, practices, and differences in operations.\nWhen we asked stakeholders what additional federal research and guidance would benefit the school bus industry, there was no consensus among the stakeholders. Seven of thirty stakeholders said current federal research and guidance is sufficient and did not cite a need for additional guidance. For the two areas stakeholders mentioned most often, federal agencies have related efforts under way.\nFive stakeholders said data on or guidance to combat illegal passing of school buses would be useful. NASDPTS conducts an annual survey on illegal passing, whereby school bus drivers voluntarily count the number of vehicles that pass them when they stop to load and unload students. For each of the 5 years NASDPTS has collected this data, participating school bus drivers have observed more than 74,000 instances of illegal passing on a single day. In 2000, NHTSA issued a best practices guide on reducing the illegal passing of school buses. Further, NHTSA officials told us that research on the effectiveness of using cameras to enforce laws on passing school buses is currently under way with data collected at multiple locations, to be completed in early 2018. Based on the results of this research, NHTSA officials said they may update the content of the best practices guide on reducing the illegal passing of school buses.\nFour stakeholders said that additional federal guidance on school bus driver training on various topics, including loading and unloading students and technology distraction, would be helpful. As previously mentioned, FMCSA recently established minimum training regulations for entry-level training for school bus drivers when applying for commercial driver’s license, and two school bus associations— NASDPTS and the National School Transportation Association—were part of the negotiated rulemaking committee that helped develop the training regulations. Additionally, NHTSA’s 2011 refresher training for school bus drivers covers several topics, including loading and unloading students. NHTSA officials said they plan to update the content, if needed, after consulting with school-bus industry stakeholders in fiscal year 2017.\nFinally, NHTSA officials and stakeholders commented that the school bus industry is a close-knit community that keeps one another informed with conferences and networks across all levels of government. Stakeholders we spoke with said that much of the school bus industry’s awareness comes from annual forums and conferences at the state and national level. For example, the annual NASDPTS conference held in November 2015 included sessions on incidents of dragging students in bus doors and FMCSA’s then proposed rule on entry-level driver training. Another stakeholder told us that they confer with state school transportation associations—state organizations of school bus drivers and transportation managers—to identify and address any school-bus safety issues in the state. In addition, NHTSA and FMCSA officials and one stakeholder told us that three of the national school bus associations meet annually with FMCSA and NHTSA to discuss various school-bus safety issues.", "We provided a draft of this product to the Department of Transportation for comment. The Department of Transportation provided technical comments, which we incorporated as appropriate.\nWe are sending copies of this report to the appropriate congressional committees, the Secretary of the Department of Transportation, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-2834 or flemings@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix III.", "The Fixing America’s Surface Transportation Act included a provision for GAO to conduct a review of school bus safety, including examining any differences in the safety performance of different types of school bus operators—that is, school districts and contractors—and what safety requirements apply to them. We examined: (1) data federal and state agencies collect on school bus crashes and the number and characteristics of fatal school-bus crashes that have occurred since 2000; (2) federal and state laws and regulations pertaining to school bus inspections, vehicles, and drivers, as well as state data on inspections’ outcomes; and (3) sources for leading practices for safe school-bus transportation, as identified by stakeholders and literature, as well as any areas where further federal guidance could be useful. As part of our work, we also examined whether there were differences for school-district and contractor-operated school buses in any of the above areas. Overall, we focused our review on the transportation of public K-12 students traveling to and from home and school and for extracurricular activities and not transportation of private school students.\nTo describe what data federal and state agencies collect on school bus crashes, we reviewed agency documents that describe or use National Highway Traffic Safety Administration (NHTSA) and Federal Motor Carrier Safety Administration (FMCSA) crash datasets, including the 2014 FARS/NASS GES Coding and Validation Manual and Large Truck and Bus Crash Facts 2014. We interviewed NHTSA and FMCSA officials to understand what data each agency collects on school bus crashes and whether they track the type of operator involved in school bus crashes. We also asked about any planned or ongoing efforts to change or improve the data collected on school bus crashes. To understand crash data collected by states, we reviewed NHTSA guidance on crash data systems, primarily the Traffic Records Program Assessment Advisory. We also interviewed school-bus industry associations, the Association of Transportation Safety Information Professionals, and other stakeholders to identify national and state data on school bus crashes and to discuss the strengths and limitations of existing datasets.\nWe also administered an e-mail survey to the 50 state pupil-transportation directors to gather information on school bus data. Specifically, the survey asked whether states systematically collect data on the type of school bus operator—that is, school district or contractor—in crash or other data, and the reasons why these data were or were not collected. We obtained contact information for the survey recipients from the National Association of State Directors of Pupil Transportation Services (NASDPTS) and administered the survey between June 20, 2016, and August 8, 2016. Because this was not a sample survey, there are no sampling errors. However, the practical difficulties of conducting any survey may introduce errors, commonly referred to as nonsampling errors. For example, difficulties in how a particular question is interpreted can introduce unwanted variability into the survey results. We took steps in the development of the questionnaire, the data collection, and the data analysis to minimize these nonsampling errors. For example, we pretested the survey with the pupil transportation directors in three states and NASDPTS to ensure that questions were clear and unbiased and to minimize the burden the survey placed on respondents. Based on feedback from the pretests, we made minor changes to the content and format of survey questions. We received completed surveys from 47 respondents for an overall response rate of 94 percent.\nTo describe the number and characteristics of fatal school-bus crashes since 2000, we analyzed data from two data sets. First, we analyzed Buses Involved in Fatal Accidents (BIFA) data from the University of Michigan Transportation Research Institute (UMTRI) for calendar years 2000 to 2010 to describe the attributes of crashes involving school buses. BIFA includes data on fatal traffic crashes in the United States involving a bus. We used BIFA data as they were the only source of national crash data we identified that included bus-specific variables like type of operator and bus, and 2010 was the last year for which BIFA data were collected. Cases for BIFA are selected from NHTSA’s Fatality Analysis Reporting System (FARS) file. BIFA supplements the FARS data; UMTRI collected police reports for each crash and trained interviewers to contact owners, operators, or drivers of the buses to collect detailed information on the bus, operator, and driver. Our analysis of BIFA data included variables collected by UMTRI, such as the type of bus, type of operator (school district or contractor), and length of trip, as well as FARS variables, such as driver- and vehicle-related factors, model year of the vehicle, and road and atmospheric conditions. Since the BIFA data were last collected for calendar year 2010, we reviewed NHTSA’s school-transportation-related analysis for 2000 through 2014 to compare the overall number of fatal school-bus crashes during and after BIFA data collection and examine whether there were any trends or changes after 2010. We also examined whether there were any changes to federal rules for school bus vehicles and operators that would substantially change the regulatory landscape for school bus operations after 2010. In reviewing the data and federal rule changes, we found no substantial changes that would raise concerns about using the BIFA data from 2000 to 2010 for our review. For BIFA, we identified crashes using the included variable for “school-bus-related crashes.” Second, we analyzed FARS data for calendar years 2011 to 2014, the latest year for which data were available, to examine this more recent FARS data to extend our analysis for certain variables like atmospheric and road conditions and time of day of the crash. For FARS, we implemented guidance NHTSA provided to use four variables from the accident and vehicle data files to identify school-bus-related crashes. Based on interviews with NHTSA and UMTRI officials, as well as reviewing system documentation and electronic data testing, we determined that the data were sufficiently reliable for the purpose of describing the number and type of fatal school-bus crashes. While these data sets allow us to describe the attributes of fatal crashes, the descriptive information is not generalizable to crashes with non-fatal injuries or with property damage only. Moreover, we did not have exposure data, such as the total miles traveled by different types of buses or operators, so we could not calculate crash rates that would allow for directly comparing different types of crashes.\nTo describe federal school bus safety requirements, we reviewed federal laws and regulations on school bus inspections, driver training, and vehicle standards—specifically, vehicle age and seating capacity of school buses. We primarily focused our review on these three areas based on our initial research into school bus safety requirements and the content of the mandate. We reviewed inspection requirements in the Federal Motor Carrier Safety Regulations that would apply to school bus operators, but the scope of our review did not include all other aspects of these regulations, such as hours-of-service requirements for drivers and driver qualifications. We did not examine seat belts as part of our review due in part to NHTSA’s current effort to further research seat belts on all school buses. We also reviewed and analyzed guidance and reports from NHTSA, FMCSA, and the National Transportation Safety Board, including NHTSA’s Highway Safety Program Guideline No. 17, Pupil Transportation Safety; National Transportation Safety Board’s accident investigation reports involving school buses; and FMCSA’s March 2016 Notice of Proposed Rulemaking and December 2016 Final Rule on entry- level driver training. We also interviewed officials from those agencies to understand the scope and applicability of federal laws and regulations for school bus vehicles and operators.\nTo describe state laws and regulations, we systematically searched laws and regulations for all 50 states to determine the extent to which states set requirements for school bus inspections, driver training, and vehicle standards. Specifically, we searched for state requirements for: (1) school bus inspections; (2) entry-level or refresher training for school bus drivers; (3) maximum age, mileage, or use that require retiring or no longer using school buses; and (4) maximum seating capacity for school buses. We conducted this search on state statutes and administrative codes in a legal database. In consultation with GAO’s Office of General Counsel and our librarian, we developed search terms and protocols and used a data collection instrument for each of the requirements to ensure consistent collection of information. For example, for our searches on state requirements for school bus inspections, we used the search term “school bus w/10 inspect!” and increased the proximity of the key words from within 10 words to within 15 and 20 words. When our search returned no results for a state, we then searched the websites of the state’s education, transportation, motor vehicle, and/or police agencies and used any information found from these searches, such as a legal citation or terminology, to direct additional searches in a legal database.\nWe also consulted with our Office of General Counsel on coding the results of our searches in the data collection instrument. After completing our searches, we compared the results of our search on states’ school- bus inspection requirements with the 2011 survey results from South Carolina and NASDPTS on school bus inspection practices to verify our research. We also compared the results of our research on vehicle age with a list provided by the National Conference of State Legislatures and the results of our research on vehicle age and seating capacity with a stakeholder’s compiled list of state requirements and practices on school bus vehicle age/life cycle use and seating capacity. We took steps to reconcile any identified differences, including conducting further research in a legal database and state agency websites and contacting state officials to clarify and verify the information we found in our legal search. We also validated our search results with eight selected states as part of our in-depth review on how selected states implement school-bus safety requirements, as further described below. Finally, our Office of General Counsel reviewed and verified the search results for all 50 states. The scope of our research did not include local requirements, and thus we did not include any local requirements for school bus inspections, driver training, or maximum vehicle age or seating capacity that may be applicable to school bus operators. In addition, our search terms and protocols aimed to identify states with requirements, but due to the nature of keyword searches, we may not have identified all relevant school bus requirements. Further, for states for which we didn’t identify requirements, we attempted several types of searches to try to find state inspection, driver training, or maximum age or capacity requirements. However, we cannot definitively conclude that there are no requirements in the mentioned categories for these states.\nTo better understand implementation of federal and state rules and whether public and private bus operators face different safety requirements, we performed additional research on and conducted in- depth interviews with state officials from eight selected states. Using School Bus Fleet’s 2013–2014 school year school transportation data, we selected states to include those with the highest number of students transported daily by school bus, the highest annual route miles traveled per student, and variation in the number of school buses owned by states/school districts and contractors. We also selected states that vary geographically and maintained data available on school bus involved accidents and school bus inspections. We selected eight states: California, Illinois, Nebraska, New York, Pennsylvania, Tennessee, Virginia, and Washington. These eight states account for about 28 percent of public K-12 students transported daily on school buses. We conducted semi-structured interviews with state officials from the selected eight states and, when available, collected data on the outcomes of school bus inspections and the age of school buses. These eight selected states are a non-probability sample of states, and thus, the information we obtained is used for illustrative purposes and is not generalizable.\nTo identify sources of leading practices, we conducted a literature search to identify leading practices on school bus inspections, driver training, and maximum vehicle age and seating capacity. We reviewed literature for the last 15 years for pertinent studies in peer-reviewed journals, trade publications, and conferences, among others, to identify sources and leading practices. We also interviewed school bus industry stakeholders, including officials from school-bus industry associations, federal agencies, select state agencies, school bus manufacturers, and school bus contractors, to identify sources of leading practices. We selected stakeholders to represent a range of roles in the school bus industry and the federal and state levels of government. A full list of stakeholders interviewed for this review is provided in table 2 below. In these interviews, we asked stakeholders an open-ended question for them to generate sources of leading practices, rather than offering a list of possible sources. Therefore, not every stakeholder we interviewed commented on whether a particular document or organization represented a source of leading practices; we can only report counts of stakeholders that identified a particular document or organization. We also asked school bus industry stakeholders what areas of additional federal guidance and research, if any, are needed. In identifying sources of leading practices and areas of further federal guidance and research, our questions did not apply to 4 of the 30 stakeholders in both cases. For example, we did not ask federal agencies about what additional federal research or guidance would be useful as we instead asked them about current or future research on school bus safety. The views of these school bus stakeholders are not generalizable to the entire school bus community, but they provide us with valuable insights. We analyzed the content of interviews with stakeholders and identified sources of leading practices from our literature review in the areas of inspections, driver training, and vehicle standards.", "In our review of eight selected states, we found variation in state requirements for and implementation of school bus inspection, driver training, and vehicles standards for maximum age and seating capacity, as shown in table 3 below.", "", "", "In addition to the contact named above, Susan Zimmerman (Assistant Director), Joanie Lofgren (Analyst in Charge), Carl Barden, Pamela Daum, Leia Dickerson, H. Brandon Haller, David Hooper, Jennifer Kim, Avani Locke, Grant Mallie, Janet Mascia, SaraAnn Moessbauer, Malika Rice, Amy Rosewarne, and Carter Stevens made key contributions to this report." ], "depth": [ 1, 1, 2, 3, 3, 2, 1, 2, 3, 3, 3, 2, 3, 3, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full h1_full", "h0_title h2_title", "h0_full h2_title", "", "h2_full", "h0_full", "h2_title h1_title", "h1_full", "", "", "", "h2_full h1_full", "h1_full", "h1_full", "h3_full h2_full", "", "h3_full", "", "", "", "" ] }

{ "question": [ "How many fatal crashes involved a school bus, on averaged, each year between 2000 and 2014?", "How frequently are the driver and the vehicle factors in these crashes?", "When did the majority of these crashes occur?", "What are the limitations of national data on bus crashes?", "What is the influence of federal regulations for school bus safety?", "How does this compare to other motor vehicles?", "When do regulations for commercial vehicles apply?", "What is the current status of bus inspections and driver trainings?", "What are state requirements for age and seating capacity like?", "In what ways do states' regulations differ?", "How many students are transported via school bus?", "How safe are school buses?", "Who oversees school bus safety?", "What guided GAO to review school bus safety?", "What did GAO examine?", "What was GAO's methodology?" ], "summary": [ "Based on GAO's analysis of data for 2000 to 2014, 115 fatal crashes involved a school bus on average each year—which is 0.3 percent of the 34,835 total fatal motor-vehicle crashes on average each year.", "The school-bus driver and school-bus vehicle (e.g., a defect) were cited as contributing factors in 27 percent and less than 1 percent of fatal school-bus crashes, respectively.", "Seventy-two percent of fatal crashes occurred during home-to-school and school-to-home travel times.", "Limited national data on school bus crashes exist beyond data on fatal school-bus crashes, but some states have richer data—for example, on the type of bus or whether the operator was a school district or private contractor.", "Federal laws and regulations set requirements for certain aspects of school bus safety, and state laws and regulations in many cases go beyond the federal requirements. Federal regulations for school-bus vehicle standards and driver licensing apply to both school districts and contractors.", "DOT has reported that new school buses must meet more Federal Motor Vehicle Safety Standards than any other type of new motor vehicle.", "Federal safety regulations for commercial motor-vehicle operations apply in certain cases, such as for contractors hired by schools to provide transportation for extracurricular activities across state lines.", "Based on a systematic search of state laws and regulations, GAO found that all 50 states require school bus inspections while most states—GAO found 44—require refresher training for school bus drivers.", "However, GAO found that less than a quarter of states set specific requirements for the maximum age and seating capacity of school buses.", "Overall, according to stakeholders GAO interviewed, states' requirements vary by state for school bus inspections, driver training, and vehicles but tend not to differ based on the type of operator.", "School buses transport over 26 million students to school and other activities every day.", "While school buses have a strong safety record, crashes with fatalities and injuries do occur. Since school buses transport precious cargo—our children—government and industry strive to further improve their safety.", "Federal and state agencies both oversee school bus safety, and locally, school buses can be operated by school districts or private contractors, working on behalf of school districts.", "The Fixing America's Surface Transportation Act included a provision for GAO to review school bus safety.", "GAO examined (1) fatal crashes involving school buses for 2000 to 2014 and (2) federal and state school-bus-related laws and regulations, among other objectives.", "GAO analyzed two sets of data from the National Highway Traffic Safety Administration and the University of Michigan Transportation Research Institute on fatal school bus crashes for 2000 to 2014, the latest year for which data were available; reviewed federal laws and regulations; and systematically searched state laws and regulations on school-bus inspections, driver training, and maximum vehicle age and capacity in all 50 states. GAO also interviewed federal officials from the Department of Transportation (DOT), school bus industry associations and manufacturers, and other stakeholders." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, -1, -1, -1, -1, 0, 1, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 4, 4, 4, 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "Background", "Law Enforcement Interaction with Individuals with Mental Illness", "Relevant Legislation and Departmental Efforts", "Discussion Groups Identified Several Challenges that Officers and Agents Encounter When Responding to Incidents Involving Individuals with Mental Illness", "Components Have Some Type of Training, Policies, and Guidance Related to Mental Illness, and Reviews to Enhance Practices are Underway", "DHS and DOJ Components Offer, Receive, or Are Developing Some Type of Training Related to Mental Illness", "DHS and DOJ Components Have Existing Policies or Guidance That Addresses Responding to Individuals with Mental Illness", "All DHS and DOJ Components Are Reviewing Policies, Guidance, and Training to Align with Departmental Guidance", "Stakeholders Cited Leading Practices and Tools for Effective Law Enforcement Responses, and Components Have Generally Leveraged Information from Other Knowledgeable Parties", "Two Leading Practices and Four Tools Can Enhance Officer Responses to Individuals with Mental Illness", "Components Have Generally Leveraged Information from Other Knowledgeable Parties, and BJA Is Standing Up a Training and Technical Assistance Center", "Agency Comments", "Appendix I: Objectives, Scope and Methodology", "Appendix II: Description of the Federal Law Enforcement Training Centers (FLETC) Basic Training Programs", "Appendix III: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "Since the 1960s, the percentage of individuals with mental illness being treated in a hospitalized setting has decreased dramatically in an effort to move care away from institutional settings into a wider range of community-based treatment. This process, known as “deinstitutionalization,” has been driven in part by limited funding available for mental health services, changes in treatment philosophy, and medical advancements. According to a 2015 Federal Bureau of Investigation (FBI) publication, one result from this shift is that local police departments have had to meet the growing needs of individuals suffering mental health emergencies (e.g., a schizophrenic episode), and are often the first source of assistance in helping to arrange treatment for these individuals.\nSimilarly, the IACP reports that police officers often have to “manage situations that result from a history of mental health policy and legislative decisions made by federal and state governments.” According to the IACP, law enforcement officers—generally local police—may then find themselves serving in a role similar to that of a social worker in attempting to locate treatment services for such individuals. The IACP also reports that such increasing interactions may result in individuals with mental illness being arrested and placed in jail, rather than receiving treatment from mental health facilities. This can result in a cycle of arrest, imprisonment, and recidivism for such individuals. In addition, interactions between law enforcement officers and individuals with mental illness have the potential to escalate into violence.\nIn recent years, a number of professional organizations and advocacy groups such as IACP, the Police Executive Research Forum (PERF), the National Alliance on Mental Illness, and Council of State Governments Justice Center (CSG JC) have researched and advocated for different approaches that may reduce the likelihood of violent encounters or help officers connect the individuals they encounter with proper treatment services. In addition, DOJ’s Bureau of Justice Assistance (BJA), within its Office of Justice Programs, has created a compendium of existing information and research in the field of state and local law enforcement responses to individuals with mental illness.\nFederal law enforcement officers and agents may interact with individuals displaying signs of mental illness in a number of different types of incidents while performing their various missions, such as protecting federal property or officials or when apprehending subjects of an investigation. Figure 1 provides one example of a possible incident an officer or agent might experience and the response options available. Generally, when federal officers and agents encounter individuals displaying signs of mental illness—and there is no evidence of a federal crime—they may refer them to local law enforcement or health care providers to assess their mental health and determine whether they need further health care. If local providers determine that such care is needed, it is generally provided through a voluntary or involuntary commitment to a local mental health services provider. One exception to this is for correctional officers and other staff within BOP, as these staff interact with individuals with a diagnosed mental illness as part of their daily duties in ensuring a secure prison environment. BOP pre- designates all inmates entering its institutions and assigns initial mental health and medical screen assignments. Throughout an inmate’s incarceration, BOP’s psychologists, psychiatrists, and qualified mid-level practitioners can determine a new mental health care level following a review of records and a face-to-face clinical interview.", "Under section 504 of the Rehabilitation Act of 1973, as amended, discrimination on the basis of disability in federally funded and federally conducted programs and activities is prohibited. A person with a disability includes anyone who has a physical or mental impairment that substantially limits one or more major life activities, has a record of such impairment, or is regarded as having such an impairment.\nDHS and DOJ both currently have efforts underway, in various stages of development, to have their components review their existing policies, guidance, and training in response to departmental guidance on addressing individuals with disabilities and obligations under section 504. Pursuant to departmental guidance, after completing their reviews, components are to determine areas that could be enhanced. Within DHS, components have been asked to report on the status of their efforts to DHS’ Office for Civil Rights and Civil Liberties (CRCL). Within DOJ, the Office of the Deputy Attorney General (ODAG) is overseeing components’ efforts.\nIn addition, the 21st Century Cures Act requires the Attorney General to provide direction and guidance for the following by December 13, 2017: “Programs that offer specialized and comprehensive training, in procedures to identify and appropriately respond to incidents in which the unique needs of individuals who have a mental illness are involved, to first responders and tactical units of—(A) Federal law enforcement agencies; and (B) other Federal criminal justice agencies, such as and the Administrative Office of the United States Courts, and other agencies that the Attorney General determines appropriate.” “The establishment of, or improvement of existing, computerized information systems to provide timely information to employees of Federal law enforcement agencies, and Federal criminal justice agencies to improve the response of such employees to situations involving individuals who have a mental illness.”", "According to the DHS and DOJ law enforcement officers and agents we interviewed, they are not positioned to diagnose any specific mental health condition that an individual might have, as they are not trained mental health professionals. However, responding to incidents involving individuals with mental illness can be challenging for multiple reasons, including determining whether the person is suffering from a mental illness or from another issue, such as drug addiction, and communicating with the person, for example, when a person may be suffering from delusions. These officers and agents face these challenges while also being responsible for ensuring their own safety and that of others in the area. Some of the common challenges officers and agents identified during our discussion groups follow.\nIdentifying Whether an Individual Has a Mental Illness Some officers and agents in our group discussions stated that when encountering individuals displaying erratic behavior (e.g., rapid or nonsensical speech, paranoid or delusional statements), it can be difficult to determine if that behavior is attributable to a mental illness or the influence of drugs. Specifically, Border Patrol agents—who are broadly responsible for preventing the illegal entry or exit of people and goods at places other than ports of entry—stated that determining whether someone has a mental illness or is experiencing other issues is challenging and may be complicated by language barriers. Border Patrol agents may at times encounter large groups of people attempting to cross the border at one time and thus have limited time to make that determination. ATF officers—who may encounter individuals with a mental illness who are targets of an investigation—commented that incidents may involve an individual who could suffer a mental illness (treated or untreated), or be under the influence of alcohol or drugs. Unless the individual discloses his or her condition, or family or friends are there to explain the condition, officers would not know the cause of the individual’s behavior. They explained that if mental health information about a suspect is known in advance of an operation, officers can adjust their approach; however, they told us that most of the time they do not know if someone has a mental health condition and how it might present itself.\nSimilarly, an FBI police officer—who may encounter individuals displaying signs of mental illness if those individuals enter an FBI office—told us that it can be challenging to deal with an individual who is acting erratically, not knowing precisely whether the behavior is attributable to a mental illness, and there may be limited time available to address an individual posing a safety risk. BOP corrections officers also echoed this challenge. They said that despite having back-up mental health staff on call, their initial reaction to an inmate exhibiting some type of erratic behavior has to be fairly quick to secure the safety of the staff and other inmates. Officers and agents across components and departments made clear that they are not mental health professionals or psychologists and, as such, are charged with responding to the behaviors that are exhibited to secure the scene.\nCommunicating with Individuals with a Mental Illness Some of the officers and agents in our discussion groups stated that communicating effectively with someone exhibiting signs of a mental illness and understanding what he or she may be going through or how he or she sees reality can be challenging. One officer told us that trying to make individuals who may have a mental illness understand that their reality is not everyone else’s reality is particularly challenging. This was very difficult, for example, for Secret Service Uniformed Division officers who explained that they encounter individuals when providing security along the White House fence and for FPS officers, who often encounter individuals displaying signs of mental illness near or in federal buildings that they are assigned to protect. As the Secret Service officers explained, even if individuals exhibit delusional behavior, so long as they have not broken any laws, then they are free to be near protected federal venues and the officers are limited in any actions they can take.\nOne officer, discussing the challenges in speaking with someone with a mental illness who may be experiencing delusions, stated that the person is “wholeheartedly convinced that what he or she perceives is the true reality.”\nOfficers and agents who we met with in CBP reported that they rely on common sense to dictate appropriate action and use reasonable efforts to protect themselves and others. They noted that additional training on communicating effectively with individuals suffering from mental illness could be beneficial.\nThe challenges noted above in identifying causes of erratic behavior or effectively communicating with individuals with a mental illness can make it difficult for officers to resolve a tense situation or apprehend an individual (if necessary) as securely or peacefully as possible. For example, Border Patrol agents stated that ensuring that such encounters are resolved safely for the individuals involved and other members of the public is their biggest challenge. It might require removing someone in distress from a group of individuals that he or she may be traveling with or keeping him or her calm. When someone is in an extreme state of panic, emotional distress, or anger, officers try to remove the person from the group to prevent a potential incident from escalating quickly.\nOperating with Limited Access to Mental Health Resources Officers and agents also stated that a limited number of mental health professionals available within their components or through local agencies can pose a challenge in helping persons with mental illness receive necessary treatment. As such, they must rely on state and local entities in the area (e.g., law enforcement, hospitals) to provide assistance for individuals. Federal Air Marshals—who provide protection at airports and other transportation modes—we spoke with explained that since they do not have holding facilities to secure individuals with mental illness, they are reliant on local law enforcement and mental health professionals to manage an incident. Officers and agents highlighted the importance of maintaining close relationships with state and local partners and added that trained mental health professionals provide an excellent resource.\nIn addition, officers and agents in some discussion groups noted there may be training offered by state or local agencies related to understanding and responding to individuals with mental illness that could be leveraged by federal agencies. Officers and agents reported, however, that it can be difficult for the components to find the time and resources to send officers to the trainings. According to USMS officers— who provide security at federal courthouses and oversee transport of federal prisoners—this is particularly challenging in small offices where there may be very few staff.\nFrequently Encountering the Same Individuals Another common challenge noted in discussion groups was that officers and agents repeatedly encounter the same individuals with mental illness. Officers and agents explained that they can sometimes apprehend individuals who are creating a disturbance, but these individuals often cannot be charged with a federal crime. As such, following the apprehension, the officers and agents release these individuals to local or state authorities who may transport them to local providers for a mental health evaluation. Typically, if the local providers determine a commitment is necessary, they will hold these individuals at a hospital or clinic for up to 72 hours. According to the officers and agents in our discussion groups, many of these individuals return after they are released and the officers and agents encounter them time and again, with very little that they can do to provide these individuals with assistance. According to the officers and agents, incidents involving frequent encounters with the same individuals can take time away from performing other important activities.\nSecret Service Uniformed Division officers told us they repeatedly encounter the same individuals with mental illness and know some of these individuals very well. For example, Secret Service officers stated that when performing their duties in patrolling the grounds of the White House, they have had frequent encounters with a woman who believes she has family members living in the White House. The officers have turned her away from the scene on multiple occasions, but she continues to return.", "", "All of the law enforcement components in our scope offer training directly, receive training through FLETC, or are developing some training on responding to incidents involving individuals with mental illness. Agency and FLETC training includes courses on communication, de-escalation, and suicide prevention (related to federal inmates). Since these components have varying missions and operational needs and interact with the public in different capacities, the nature and scope of this training, as well as the number of courses and the duration of courses offered varies. For example, BOP’s staff—including food service workers and nurses, as well as correctional officers—have daily contact with inmates with mental illness and can act as “first responders” when situations merit. According to BOP officials, training is offered to all staff in all of its institutions on mental health and working with the mentally ill, along with courses on communication, de-escalation, suicide prevention, and use of force. As another example, ATF’s agents told us they have less routine contact with individuals with mental illness, but ATF offers a course to its agents on de-escalation concepts and tactics, which addresses responding to incidents involving individuals with mental illness, as well as crisis intervention training to its cadre of crisis negotiators. Further, some of the components’ training is mandatory and offered annually through class instruction or online portals. These courses may be offered to new hires or available to tenured officers. In addition, some components’ training courses are delivered as stand-alone sessions, while others may be modules within a larger course exploring other law enforcement topics.\nThree DHS operational components in our scope, in addition to FLETC, offered some type of training specifically for their officers and agents.\nAnother one (TSA) has training in development as of October 2017, on topics related to responding to incidents involving individuals with mental illness.\nFLETC explained that it provides basic training to all DHS law enforcement officers through one of three basic program categories— Center Basic, Center Integrated Basic, and Agency Specific Basic—which vary in length. Two Center Basic training programs include a 2-hour module titled Managing Abnormal Behavior, which covers how to identify common signs of mental disorders (among other things) and how to handle people exhibiting abnormal behavior. Specifically, this module examines basic human behavior that may be classified as abnormal, differentiates between mental disorders, and also covers physical and organic causes that may be related to abnormal behavior with the appropriate officer responses. In addition, FLETC informed us that it has developed scenario-based training in these programs, allowing the officers or agents to develop decision-making skills in situations involving people exhibiting abnormal behavior. See appendix II for more information on FLETC’s training programs.\nU.S. Secret Service Training We observed Secret Service training on Protective Intelligence Questioning for First Line Officers, which is offered to Uniformed Division Officers. The course instructor played the role of three different individuals with schizophrenia, bipolar disorder, and sociopathic personality disorder and trained agents on interacting and interviewing subjects who attempt to breach the White House fence.\nIn addition to this module provided to all DHS agents and officers, the components in our review also offer or are preparing component-specific training courses. Table 2 lists illustrative examples of DHS training.\nIn addition, TSA has developed a mandatory course entitled Awareness Training on Mental Health Conditions to be delivered in the classroom and through scenarios and exercises during fiscal year 2018. This course is designed to introduce Federal Air Marshals to the fundamentals of predominant mental disorders, such as schizophrenia or psychosis.\nAll of the DOJ components in our review provide some type of training to their officers on topics related to responding to incidents involving individuals with mental illness—as illustrated in Table 3.", "The law enforcement components within our scope at DHS and DOJ have policies or guidance in place that addresses responding to incidents involving individuals with mental illness. Some components’ policies or guidance specifically addresses mental illness, while others touch on the issue as part of larger policies on other topics (such as use of force)—as illustrated in Table 4.", "DHS Efforts to Review Policies, Guidance, and Training DHS has guidance in place to help ensure that its components have policies and training that ensure their alignment with section 504 of the Rehabilitation Act. In 2013 and 2015, respectively, DHS issued a directive and implementing instruction to its components intended to strengthen compliance with section 504. These documents required DHS components to conduct a self-evaluation and prepare a component plan identifying any policies or practices that may result in a qualified individual with a disability being excluded from participation in, or being denied the benefits of, a program or activity.\nDepartment of Homeland Security (DHS) Component Self-Evaluation Tool The self-evaluation tool that DHS’s Office of Civil Rights and Civil Liberties developed requires components to—among other things—describe whether there is an established policy ensuring equal treatment for individuals with disabilities, how the component’s personnel and procedures ensure that individuals with disabilities are treated in a nondiscriminatory manner, and the component’s process for providing auxiliary aids and services to ensure effective communication. The tool also provides examples of interactions in the areas of customer service, security, and custody activities that would likely be compliant, or possibly noncompliant, with section 504 of the Rehabilitation Act.\nIn 2016, DHS’s CRCL office issued guidance and a self-evaluation tool to DHS components on the steps to take in performing the self-evaluation of their facilities, programs, policies, and practices (to include training). The guidance also addresses the development and execution of the components’ plans intended to remedy any areas deemed insufficient in permitting individuals with disabilities—including mental illness—to participate fully in the components’ programs and activities.\nDisability Access Coordinators, who are representatives from each component charged with overseeing their components’ responses to DHS Rehabilitation Act guidance, are leading the components’ efforts in conducting the self-evaluations. CRCL set a deadline for components to submit all self-evaluations to CRCL for review by the end of August 2017. As of September 2017, all five components had submitted self- evaluations. CRCL officials explained that as they review self- evaluations, they are looking to see if policies or training for law enforcement officers’ and agents’ responses to individuals with mental illness have been identified or otherwise addressed. If not, the officials indicated that they will request the components identify and address this topic in their plans for aligning with Rehabilitation Act guidance. The remaining steps in CRCL’s effort to review and comment on component plans as of September follow:\nDecember 31, 2017: CRCL provides comments to components on the content of their self-evaluations.\nFebruary 28, 2018: the components develop and submit their draft plans for aligning with the Rehabilitation Act guidance.\nApril 30, 2018: CRCL reviews and provides comments on the components’ draft plans.\nMay 31, 2018: the components address CRCL’s comments and submit their final plans for alignment with Rehabilitation Act guidance for approval.\nDOJ Efforts to Review Policies, Guidance, and Training DOJ has directed components to review and implement guidance on addressing individuals with disabilities—including mental illness—and obligations under section 504. Specifically, in January 2017, DOJ’s then- Deputy Attorney General issued a memo with attached guidance directing components to review their policies and training and, where necessary, modify or develop policies and training to implement legal requirements and principles related to section 504. This guidance identified, among other things, DOJ’s law enforcement components’ legal obligations under section 504 as well as the policies and procedures that components must have so that officers and agents can anticipate and plan for encounters with members of the public with disabilities. For example, the guidance states that law enforcement components must train officers and agents on different types of commonly encountered disabilities; how to identify, without medical or psychological training, analysis, or diagnosis, common characteristics and behaviors most often associated with disabilities; and appropriate responses to the challenges that an encounter with a member of the public with a disability may present. Training for officers and agents in effective communication with members of the public with a mental illness is explicitly referenced in the guidance as well.\nTo date, officials from DOJ’s Office of the Deputy Attorney General (ODAG)—who are overseeing the components’ efforts—have maintained communication with the components to confirm that they have begun reviewing their policies and training to identify any deficiencies or necessary enhancements pursuant to the January 2017 guidance. During the course of our review and in part due to our inquiries, in the fall of 2017, ODAG notified the components that they should complete their reviews by December 2017. ODAG also notified the components that they should begin implementing any new policies or training identified by September 2018.\nIn addition, a provision of the 21st Century Cures Act—section 14025— requires DOJ to provide direction and guidance to federal law enforcement agencies and federal criminal justice agencies on training programs and improved technologies related to responding to individuals with mental illness, by December 13, 2017. ODAG officials told us that the January 2017 guidance addresses the requirement to provide direction and guidance on training for the DOJ components, but acknowledged that it does not respond to all of the requirements for the Attorney General under section 14025 of the 21st Century Cures Act. In particular, section 14025 requires the Attorney General to provide direction and guidance to federal law enforcement agencies and federal criminal justice agencies beyond DOJ in the areas of specialized and comprehensive training programs to identify and respond to individuals with mental illness. Section 14025 also calls for direction and guidance on the establishment and improvement of computerized information systems to provide timely information related to situations involving individuals with mental illness.\nAs a result of our questions about whether such efforts would be developed, on December 7, 2017, DOJ sent a letter from the Principal Deputy Assistant Attorney General for the Office of Justice Programs to federal law enforcement partners outlining resources available for federal law enforcement when considering training or procedures appropriate for their missions. Specifically, DOJ sent the letter to executive officers within DOJ, DHS, the Administrative Office of the United States Courts, and other executive departments that DOJ deemed appropriate. Some examples of resources that the letter highlights include (1) the Police- Mental Health Collaboration Toolkit, which provides resources to assist law enforcement agencies in partnering with mental health providers (and is discussed later in this report) and (2) a forthcoming “roadmap” planned for release in 2018 that the Office of Justice Programs and BJA are developing that will help law enforcement agencies as they plan for engagement with mental health entities.", "", "Of the six stakeholders in the field of law enforcement-mental health we interviewed, all six considered the Crisis Intervention Team Model to be a leading practice and five considered the Co-responder Model to be a leading practice—see Figure 2. These practices are typically implemented at local and state law enforcement agencies. Nevertheless, certain aspects and associated benefits could be considered in other settings, such as federal law enforcement operations.\nIn addition, stakeholders cited four key tools that may assist law enforcement agencies in responding to individuals with mental illness. These tools can include training guides, summary reports, or model policies, among other things, as shown in table 5.", "DHS and DOJ law enforcement components generally leveraged information from knowledgeable parties within their departments on efforts to respond to incidents involving individuals with mental illness. To enhance information sharing among DHS components, CRCL has implemented an interagency collaboration mechanism. Specifically, CRCL officials reported that since June 2016 they have led monthly coordination conference calls with component Disability Access Coordinators to collaborate on their respective efforts to complete their self-evaluations. According to the Disability Access Coordinators, these sessions have provided a forum to share ideas and lessons learned across the DHS components. In addition, according to CRCL officials, once their office receives the components’ self-evaluations and plans, it aims to disseminate information on lessons learned and effective practices to all the components.\nCoordination efforts to leverage information also exist within DOJ. Specifically, through the efforts to review policies and training under the January 2017 guidance and provisions of the 21st Century Cures Act discussed earlier, DOJ’s components have reported taking efforts to collaborate with one another and share information on training, best practices and lessons learned. For example, officials from ATF reported holding meetings with other components to discuss their efforts to implement the January 2017 guidance.\nAdditionally, BJA officials told us they took part in the ODAG’s working group in early 2016 when the then-Deputy Attorney General’s January 2017 guidance was in development. Along with BJA, this ODAG working group included DOJ’s law enforcement components and other offices within the department. The working group provided a forum to advise ODAG in developing the January 2017 guidance and discuss issues surrounding disabilities, which involved responses to individuals with mental illness. BJA officials told us that they provided to components a compendium of all its resources available to assist law enforcement’s response to incidents involving individuals with mental illness. BJA officials said they later took the most promising of these and folded them into its Police-Mental Health Collaboration Toolkit. Further, BJA officials told us that they make all of the resources it develops, including the Toolkit, publicly available on the BJA website. According to the officials, these resources are available for all law enforcement agencies, including federal entities, to review and consider implementing as they deem appropriate.\nIn addition to these online resources, which facilitate information sharing, BJA is also planning to release a national CIT curriculum in 2018 that will serve as a resource that can be tailored to reflect mental health training and collaboration under development or underway at the local level. The Office of Justice Programs is supporting a partnership between the IACP and a research organization to deliver the curriculum to law enforcement agencies. In addition, BJA—as one of DOJ’s grant-making entities—is standing up the National Training and Technical Assistance Center to Improve Law Enforcement Responses to Individuals with Mental Health Disorders and Intellectual and Developmental Disabilities. BJA officials reported that in September 2017, BJA selected the awardee to design and operate the center. Once the center is operational, it will benefit state, local, and tribal law enforcement entities. In addition, BJA envisions that the center will facilitate better collaboration between law enforcement agencies and their mental health partners. A BJA official also acknowledged that the center could serve as an additional resource for federal law enforcement agencies to consult as they review their trainings, policies, and guidance relevant to responding to incidents involving individuals with mental illness.", "We provided a draft of this report to DOJ and DHS for their review and comment. The departments did not provide us with formal written comments, but did provide technical comments, which we incorporated as appropriate.\nWe are also sending this report to the appropriate congressional committees and members. In addition, this report is available at no charge on GAO’s website at http://www.gao.gov.\nIf you or your staff have any questions, please contact Diana Maurer at (202) 512-8777 or maurerd@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff that made significant contributions to this report are listed in appendix III.", "This report addresses the following key questions: (1) What challenges, if any, do federal law enforcement officers at selected Department of Homeland Security (DHS) and Department of Justice (DOJ) components face when responding to incidents involving individuals with mental illness? (2) What type of training, policies, and guidance, if any, are in place at selected DHS and DOJ components to prepare federal law enforcement officers for responding to incidents involving individuals with mental illness? (3) What leading practices or tools have relevant stakeholders cited for effective responses to incidents involving individuals with mental illness, and how have DHS and DOJ components leveraged information from other knowledgeable parties?\nWe focused our review on the training, policies, and guidance put forth by the DHS and DOJ components listed in table 6 below because they comprise nearly all of the federal law enforcement officers in these agencies.\nTo identify challenges that federal law enforcement officers and agents at our selected DHS and DOJ components face when responding to incidents involving individuals with mental illness, we held discussion groups of six to eleven agents or officers within each component in our scope. We worked with officials at each component to identify officers and agents with varied tenures and experiences. We held semi-structured in- person and telephone discussion groups using a script and set of questions. Discussion groups are not designed to provide generalizable or statistically reliable results; they are instead intended to generate in- depth information about the reasons for the discussion group participants’ attitudes on specific topics and to offer insight into their concerns. During the discussion groups, we asked officers and agents what challenges they face when responding to incidents involving individuals with mental illness, among other topics. We moderated each discussion to keep participants focused on the specified issues within discussion time frames. Participants identified challenges when we explicitly asked them to do so, or during the course of the discussion. We took detailed notes on each discussion and documented the perspectives participants raised in each discussion group. We then summarized the information collected and identified common themes. Because our questions were open-ended and designed to allow participants to discuss any challenges they may have experienced, we cannot determine whether the absence of a particular concern or challenge by a group of officers or agents is an indication that they did not experience the concern or that they did not raise it when asked broadly about the topic.\nWhile these participants’ perspectives cannot be generalized to their entire component or all law enforcement components, their views provided insights into the challenges federal law enforcement officers and agents face when responding to incidents involving individuals with mental illness. We have relied on the observations gathered during these discussion groups to answer this reporting objective as the officers and agents are uniquely positioned to speak to their experiences, and any challenges they face, responding to incidents involving individuals with mental illness.\nTo identify the training, policies, and guidance in place, we reviewed documents from each of our selected law enforcement components, when available, to examine their nature and scope. We further reviewed information on the duration, requirements, and delivery mechanism of the training. We then summarized and verified this training information with each component through email documentation. For the policies, we reviewed the documentation to determine whether it was specific to responding to incidents involving individuals with mental illness or whether mental illness was contained within a larger directive. We also reviewed 2018 budget justification documents for each component in order to identify changes in staffing levels or training plans that might be related to officers’ and agents’ response to incidents involving individuals with mental illness. We also interviewed officials responsible for the development or delivery of training, policies, or guidance from the components in our scope to gather additional information that could help prepare federal law enforcement officers and agents to respond to incidents involving individuals with mental illness. In addition, since section 504 of the Rehabilitation Act of 1973, as amended, prohibits discrimination on the basis of disability, which includes mental illness, in federally funded and federally conducted programs and activities, we took steps to understand the section’s applicability to federal law enforcement operations. Specifically, we reviewed departmental guidance related to section 504 and reviewed the selected components’ documentation of efforts to review their training, policies, and procedures in accordance with that guidance. We also interviewed officials from the departmental offices overseeing these component efforts—DHS’s Office of Civil Rights and Civil Liberties (CRCL) and DOJ’s Office of the Deputy Attorney General (ODAG).\nTo identify leading practices or tools stakeholders cited for effective law enforcement responses to incidents involving individuals with mental illness, we used a multi-stage process Specifically, we: 1. conducted a search of databases, such as ProQuest and Scopus, and organizational websites, such as those from the Council of State Governments, Justice Center (CSG JC) and Police Executive Research Forum (PERF), to identify published work related to law enforcement responses to individuals with mental illness that had been published on or after January 1, 2007 (the last 10 years). 2. reviewed the 96 published research papers and articles that our initial search yielded and then refined our selection criteria to include only those that were literature reviews, meta-analyses, or summary papers published by academics, think tanks and advocacy groups, or government agencies. We reviewed summary articles rather than all the primary research articles to balance breadth, depth, and efficiency. After refining our search, there were 16 documents that met our selection criteria. 3. reviewed the 16 to identify any potential leading practices. We determined that a practice was potentially leading if it was found in at least one of the remaining 16 articles and was a law enforcement – mental health program. Using these criteria, we identified two potential leading practices. 4. asked individual and organizational stakeholders to validate whether these were leading practices and to identify any additional leading practices that we might have missed. In order for us to consider an independent researcher as a stakeholder, the individual needed to have (a) authored or co-authored at least 2 of the 16 documents that met our search criteria as outlined earlier and (b) been recommended by another stakeholder. These criteria yielded two independent researchers from whom to solicit views. In order for us to consider an organization as a stakeholder, the organizations needed to have either (a) conducted research on law enforcement responses to individuals with mental illness; (b) administered law enforcement- mental health collaborative programs; or (c) launched a national campaign on law enforcement responses to individuals with mental illness. After reviewing the websites of organizations that potentially met these criteria, we selected four organizations from which to solicit views. In addition, we selected individuals within the organizations as knowledgeable stakeholders if they were either (1) recommended by another stakeholder; or (2) managed a law enforcement-mental health program or national campaign. As a result of these steps, we identified and interviewed six stakeholders (two independent researchers and four organizations) to gather their broad views of the dynamic between law enforcement and individuals with mental illness; to obtain their observations of any practices or tools, such as training guides or reports that have been used to enhance officer response; and to provide feedback on leading practices. The six selected stakeholders were: Amy Watson, Ph.D.: Professor at the Jane Addams College of Social Work, University of Illinois at Chicago.\nMelissa Reuland, M.S.: Research Fellow at the Police Foundation and Senior Research Program Manager at Johns Hopkins School of Medicine, Department of Psychiatry.\nCouncil of State Governments, Justice Center (CSG JC): a national nonprofit organization that serves policymakers at the local, state, and federal levels from all branches of government. It aims to provide practical, nonpartisan advice and consensus- driven strategies, informed by available evidence, to increase public safety and strengthen communities.\nInternational Association of Chiefs of Police (IACP): a professional association for law enforcement, representing more than 30,000 members in more than 150 countries. IACP aims to advance the law enforcement profession through advocacy, outreach, education, and programs.\nNational Alliance on Mental Illness: a national grassroots mental health organization dedicated to building better lives for the millions of Americans affected by mental illness.\nPolice Executive Research Forum (PERF): an independent research organization that seeks to identify best practices on issues such as reducing police use of force; developing community and problem-oriented policing; and evaluating crime reduction strategies.\nAfter reaching out to each researcher and organization, we then sent a follow up written request to each of them to attempt to achieve consensus on whether or not the two practices we identified through our search—the Crisis Intervention Team (CIT) Model and the Co-responder Model— should be considered leading. We also took note of any tools they mentioned and probed further to understand their origins and intent. We confirmed with all six of the selected stakeholders that the CIT Model met our definition of leading practice and confirmed with five out of the six stakeholders that the Co-responder Model met our definition. Some stakeholders also identified other practices as leading; however, none of those practices had at least two other stakeholders confirm it as a leading practice.\nIn addition, to determine how DOJ and DHS components leverage information from other knowledgeable parties, such as experts, associations, or colleagues in other components, we reviewed relevant documentation on these efforts, as available. We also interviewed agency officials from the components in our scope who are responsible for the development or delivery of training or policies.\nWe conducted this performance audit from February 2017 through February 2018 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform an audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "FLETC provides basic training to all Department of Homeland Security (DHS) law enforcement officers through one of three basic program categories, which vary in length, described as follows:\nCenter Basic is a FLETC training program category in which personnel from various agencies are provided with the critical competencies of a specific job, job series, or a group of closely related job series. FLETC provides all instruction. Training is offered in three basic training programs: Criminal Investigator Training Program, Uniformed Police Training Program and the Land Management Police Training Program.\nCenter Integrated Basic is a FLETC training program category that provides entry-level law enforcement officers or direct law enforcement support personnel from a single partner organization with the core competencies of a specific job series or a group of closely related job series. FLETC provides all common and basic core foundational instruction (i.e., firearms, physical techniques, etc.). This category of training includes eight specific programs.\nAgency-Specific Basic is a training program category designed to provide entry-level law enforcement officers or direct law enforcement support personnel with instruction necessary to meet a single agency’s mission-specific basic training needs. Generally, Agency- Specific Basic courses precede or follow a Center Basic training program, with partner organizations providing the majority of the instruction. Agency-Specific Basic covers an additional 59 training programs.", "", "", "In addition to the contact named above, Joy A. Booth (Assistant Director) and Adam Couvillion (Analyst-in-Charge) managed this assignment. Kisha Clark, Eric Hauswirth, Gina Hoover, Susan Hsu, Candace Silva- Martin, Michael Silver, Janet Temko-Blinder, and Adam Vogt made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "h0_title", "h0_full", "h0_full", "h0_full", "h1_title", "h1_full", "h1_full", "", "h2_full h1_full", "", "", "", "" ] }

{ "question": [ "How does federal law enforcement address mental illness response?", "How successfully is this training being developed?", "How does this training vary?", "Are DHS and DOJ planning to review their training policies?", "Who and what guides DHS and DOJ's mental health response strategies?", "How do the agencies get such knowledge?", "What kinds of law enforcement agencies typically use such models?", "What programs has DOJ's Bureau of Justice Assistance pioneered?", "Who is the intended recipient of such resources?", "Which law enforcement components did GAO select?", "What was GAO's methodology?", "How did GAO take diverse perspectives into account?", "How did GAO utilize studies on law enforcement response?" ], "summary": [ "All of the federal law enforcement components in GAO's review either offer, receive, or are developing some form of training to their law enforcement officers and agents that addresses responding to incidents involving individuals with a mental illness.", "Further, all components have relevant policies or guidance in place, and all are undertaking efforts to enhance their practices in accordance with departmental guidance.", "Since DHS and DOJ components have varying missions and operational needs and interact with the public in different capacities, the nature and scope of training, as well as the number and duration of courses offered in response to individuals with mental illness varies; however, they generally include elements focusing on de-escalation and communication.", "In addition, DHS and DOJ both have efforts underway to have components review their training and policies under departmental guidance and plan to begin implementing any changes by 2018.", "Stakeholders cited leading practices and tools for effective law enforcement responses, and DHS and DOJ components have generally leveraged information from other knowledgeable parties. For example, the Crisis Intervention Team approach involves training selected law enforcement officers on mental health topics and dispatching those officers on mental-health related calls.", "DHS and DOJ officials are also using collaborative mechanisms within their departments, such as conference calls and working groups with officials, that have helped them leverage information from knowledgeable parties.", "While models like this are typically used by state and local law enforcement agencies, their benefits could be considered in other settings such as federal law enforcement.", "In addition, DOJ's Bureau of Justice Assistance (BJA), which supports programs and initiatives in the areas of law enforcement, among other activities, has developed and makes publicly available resources such as its Police-Mental Health Collaboration Toolkit. BJA also is working to stand up a national training and technical assistance center to improve law enforcement responses to people with mental illness.", "While aimed at state, local, and tribal law enforcement, a BJA official also acknowledged that the center could serve as an additional resource for federal law enforcement agencies to consult as they review relevant trainings, policies, and guidance on this topic.", "GAO selected the five DHS and five DOJ law enforcement components (e.g., Secret Service, Federal Bureau of Investigation) that represent the largest concentration of law enforcement officers within the two departments.", "GAO reviewed the training, policies, and guidance in place, as well as efforts to enhance them, and discussed these matters with knowledgeable officials.", "In addition, GAO held discussion groups with a nongeneralizable sample of law enforcement officers and agents, selected through component contacts, to discuss their perspectives.", "GAO also reviewed studies on law enforcement responses to individuals with mental illness to help identify leading practices and tools and interviewed stakeholders, selected through a structured process, to obtain their perspectives." ], "parent_pair_index": [ -1, 0, 0, 0, -1, 0, 0, 0, 3, -1, -1, 1, 1 ], "summary_paragraph_index": [ 4, 4, 4, 4, 5, 5, 5, 5, 5, 2, 2, 2, 2 ] }

{ "title": [ "Background", "IPAWS Capabilities Have Improved, but Barriers to Implementation Exist", "FEMA has Increased Federal, State, and Local Alerting Capabilities Since 2009", "Barriers Remain to Fully Implementing and Using IPAWS", "Most Reporting EAS Participants Received and Retransmitted the Test Alert, but Federal Efforts to Address Identified Weaknesses Are Limited", "Results of the Nationwide EAS Test", "Limited Federal Efforts to Address Identified Issues", "Conclusions", "Recommendations for Executive Action", "Agency Comments", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: FEMA’s Progress Addressing Responsibilities of the Secretary of Homeland Security under Executive Order No. 13407", "Appendix III: Comments from the Department of Homeland Security", "Appendix IV: Comments from the Federal Communications Commission", "Appendix V: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "EAS serves as the nation’s primary alerting system. It provides the President the capability to issue alerts and communicate to the public in response to emergencies. It was built on a structure conceived in the 1950s when over-the-air broadcasting was the best-available technology for widely disseminating emergency alerts. EAS has been upgraded numerous times since then, including in 2005 to include digital broadcast television as well as satellite radio and television. EAS was further expanded to include Internet-protocol-based television in 2007.\nFEMA, in partnership with FCC and NOAA, is responsible for operating and maintaining EAS at the federal level. NOAA’s National Weather Service and state and local alerting authorities, in conjunction with local radio and television stations, can also use EAS to disseminate emergency messages, including weather warnings, America’s Missing: Broadcast Emergency Response (AMBER) Alerts, and other public emergency communications, targeted to specific regional and local areas and independent from a presidential alert.\nPEP stations are usually private or commercial radio stations, but FEMA also designated some satellite providers as PEP stations, such as SiriusXM Satellite and National Public Radio’s Satellite System News Advisory Channel. the country to radio and television stations that rebroadcast the audio and visual message to other broadcast stations, cable systems, and other EAS participants until all participants have been alerted. This retransmission of alerts from EAS participant to EAS participant is commonly referred to as a “daisy chain” distribution system.\nWhile FEMA is responsible for administering EAS at the national-level, FCC adopts, administers, and enforces rules governing EAS and the EAS participants. FCC rules require EAS participants to install FCC-certified equipment and transmit all national-level alerts; EAS participants can also voluntarily transmit alerts generated by the National Weather Service or state and local alerting authorities. EAS participants, through their State Emergency Communications Committee, may maintain state EAS plans that contain procedures for the distribution of national-level alerts as well as other voluntary alerts generated by state and local alerting authorities and the National Weather Service.relay network of each state, including the monitoring assignments of EAS participants for all national-level and other alerts.\nState EAS plans describe the EAS On November 9, 2011, FEMA conducted the first-ever nationwide test of the national-level EAS in response to our prior reports noting the lack of EAS testing. FEMA conducted the test in conjunction with FCC. In conducting the test, FEMA initiated a national-level alert to be distributed through the EAS daisy chain to EAS participants, which include about 26,000 broadcasters, cable operators, and other EAS participants. To obtain information on the results of the test, FCC directed all EAS participants to report either electronically or via paper report by December 27, 2011, on whether they received and retransmitted the alert. Although December 27, 2011, was the deadline, FCC continued to accept paper reports from EAS participants past the deadline.\nIn addition to EAS, state and local alerting authorities may own and operate other warning systems, such as emergency telephone notification systems, sirens, and electronic highway billboards, to provide public emergency information. Additionally, NOAA provides alerts through the NOAA Weather Radio All Hazards system, which is a network of radio stations broadcasting continuous weather information, including warnings, watches, and forecasts directly from the nearest National Weather Service office.\nIn 2004, FEMA initiated IPAWS to integrate EAS and other public-alerting systems into a larger, more comprehensive public-alerting system. In June 2006, the President issued Executive Order No. 13407, entitled Public Alert and Warning System, adopting a policy that the United States have a comprehensive, integrated alerting system. The order directs the Secretary of Homeland Security to “ensure an orderly and effective transition” from current capabilities to a more coordinated and integrated system and details the responsibilities of the Secretary in meeting the President’s directive. As shown in table 1, the executive order established 10 responsibilities for the Secretary of Homeland Security. It is FEMA’s intention that IPAWS be the programmatic mechanism to carry out the executive order.\nIn addition, in 2006, the Warning, Alert, Response Network Act (WARN Act) was enacted, which required FCC to adopt relevant technical standards, protocols, procedures, and other technical requirements to enable commercial mobile service providers (e.g., wireless providers) to issue emergency alerts. The act required FCC to establish an advisory panel called the Commercial Mobile Service Alert Advisory Committee to recommend technical specifications and protocols to govern wireless service providers participation in emergency alerting. In 2008, following public notice and opportunity for public comment as required by the Administrative Procedure Act, FCC adopted many of the committee’s recommendations for wireless providers to transmit alerts and began developing the Commercial Mobile Alert System (CMAS), in conjunction with FEMA.\nWe previously reported several factors that limited EAS effectiveness and delayed IPAWS implementation. For example, in 2009, we reported that a lack of redundancy and testing and gaps in coverage, including capabilities to reach individuals with disabilities and non-English speakers, significantly limited EAS reliability and efficiency. We also reported in 2009 that IPAWS program implementation had stalled, as state and local governments were forging ahead with their own alerting systems. We made several recommendations to FEMA to improve program management and enhance transparency about the progress toward achieving an integrated public-alerting system. FEMA implemented all our recommendations, including periodically reporting on the status of implementing IPAWS to congressional committees and subcommittees.", "", "Since we reported on these issues in 2009, FEMA has taken actions to improve IPAWS capabilities. In particular, FEMA implemented a federal alert aggregator in 2010, called the IPAWS Open Platform for Emergency Networks, which has increased alerting capabilities for authorities at the federal, state, and local level. The alert aggregator is capable of receiving and authenticating alerts from public-alerting authorities and routing them to various public-alerting systems. As of January 2013, 93 public-alerting authorities, including those in at least 35 states, have gone through the necessary authentication steps with FEMA to use IPAWS and an additional 110 alerting authorities have applications in process.compatible software to compose and transmit alerts via the Internet to the Authorized public-alerting authorities may use IPAWS- alert aggregator using a common standard, called the Common Alerting Protocol (CAP). According to FEMA, once the alert aggregator verifies the credentials of the message, an alert may be distributed to the public through multiple alerting systems, which make up the components of IPAWS, as follows:\nEAS. As of January 2012, public-alerting authorities can disseminate CAP-formatted EAS alerts through the alert aggregator to television and radio stations. As of June 30, 2012, FCC required EAS participants (i.e., radio and television broadcasters, cable operators) to have in place CAP-compatible equipment and monitor the IPAWS EAS feed so they can retrieve and retransmit Internet-based EAS alerts. State and local alerting authorities’ use of IPAWS to send EAS alerts is voluntary and as of January 2013, no public-alerting authorities had used IPAWS to send an EAS alert. However, according to FEMA, state and local alerting authorities had sent 81 EAS test messages via the alert aggregator between January 2012 and January 2013.\nAll-Hazards Emergency Message Collection System (HazCollect).\nNOAA’s HazCollect system connected to IPAWS in September 2012, and enables federal, state, and local alerting authorities to send non- weather emergency messages through IPAWS to the National Weather Service’s alerting systems, including NOAA Weather Radio’s nationwide network of radio stations. Examples of non-weather emergency message events can include wildfires, hazardous materials releases, terrorist incidents, AMBER alerts, and public health emergencies. According to FEMA, EAS participants generally monitor the NOAA Weather Radio directly for emergency alerts. As a result, IPAWS with HazCollect provides an alternate means for EAS participants to receive non-weather alerts from local alerting authorities, increasing the number of alerting channels and enhancing the likelihood that the public will receive timely alerts. According to FEMA, 22 NOAA Weather Radio messages had been sent via the alert aggregator as of January 2013.\nCMAS. Starting in April 2012, public-alerting authorities can use IPAWS to transmit alerts via the CMAS interface to disseminate mobile alerts, which are geo-targeted, text-like messages to mobile phones. These alerts are limited to 90 characters and emit a unique ring tone and vibration cadence, which is intended to, among other things, improve capabilities for notifying individuals with disabilities during an emergency. This new capability is designed to relay presidential (or national-level), AMBER, and imminent threat alerts to mobile phones using cell technology that is not subject to the congestion typically experienced on wireless networks during times of emergency. Most imminent threat alerts are issued by the National Weather Service, which began sending severe weather-related alerts to all regions of the country in June 2012. According to FEMA, as of January 2013, the National Weather Service had sent 2,667 weather alerts via CMAS. An additional 3 imminent threat alerts had been sent from one state related to Hurricane Sandy and 17 AMBER alerts had been sent from the National Center for Missing and Exploited Children. While CMAS became operational in April 2012, participation by wireless carriers is optional under the WARN Act.\nNevertheless, according to CTIA—The Wireless Association, all of the major wireless carriers have agreed to participate. Some carriers may still be rolling out CMAS capabilities and not all cell phones are yet capable of receiving alerts, according to CTIA. Some state and local alerting authorities we contacted raised concerns about the degree of granularity for geo-targeting these alerts, which we discuss later in this report.\nInternet services. As of September 2012, Internet web services (e.g., Google Public Alerts) and software application developers can retrieve and redistribute IPAWS alerts to the public through their own services, such as websites, mobile phone applications, email, and text messaging. To do so, an alert redistribution service must complete a memorandum of agreement with FEMA, which then grants them access to the IPAWS Public Alerts Feed from the alert aggregator.\nState and local alerting systems. According to FEMA, existing state or locally owned and operated public-alerting systems—such as sirens and emergency telephone notification systems—may also be configured to receive alerts from IPAWS.\nFEMA views the new capabilities for public-alerting authorities to distribute CAP-formatted messages through the federal alert aggregator as an added capability, not a replacement, to the traditional national-level alert (i.e., EAS daisy chain relay distribution system). As a result, FEMA officials said they anticipate maintaining both systems into the foreseeable future as parallel alerting systems, as shown in figure 2. FEMA officials also told us that discussions with the White House are ongoing to determine use of IPAWS during a presidential alert; however, at the time of our report, FEMA officials said a national-level alert would not be disseminated through the federal alert aggregator.\nIn addition to creating the alert aggregator, FEMA has taken other actions to implement the IPAWS program and address directives in Executive Order No. 13407. Specific examples include:\nExpanded and modernized PEP stations. To increase direct coverage of a presidential alert and address executive order directives to augment infrastructure for the public alert and warning system, FEMA has expanded the number of PEP stations from 34 in 2009 (directly covering about 67 percent of the American population) to 65 in 2012 (directly covering about 85 percent of the American population), according to FEMA officials. FEMA plans to further expand and modernize this network, with the goal of having a total of 77 PEP stations operational by fall 2013, providing direct coverage to over 90 percent of the American population.they have also added satellite connectivity in 50 PEP stations, with the goal of a fully operational, dedicated PEP satellite network to all 77 stations by fall 2013. According to FEMA officials, once operational, this network will be the primary connection between FEMA and the PEP stations in the event of a presidential alert; the traditional telephone-based distribution network will provide a redundant backup connection.\nAdopted CAP standard. To address directives in the executive order that DHS develop alert standards and protocols, FEMA formally adopted CAP in September 2010. CAP can be used as a single input to activate multiple warning systems, and is capable of geographic targeting and multilingual messaging. According to a survey FEMA conducted of more than 3,300 public-alerting authorities in the United States from January 2010 through December 2011, 64 percent of the sites responding used CAP and had IPAWS-compatible Products in place at the time of the survey. Most public-alerting authorities we contacted are moving toward adoption of CAP; however, some are still in the process of implementing new software to interface with IPAWS or are waiting for vendors to provide upgrades to their existing systems. In addition, representatives from the broadcast industry told us, based on experience, that the vast majority of broadcasters are able to receive CAP-formatted alerts, as required by FCC rules.\nDeveloped IPAWS training and webinars. Executive Order No. 13407 directs DHS to conduct training for the public alert and warning system. To address this directive, FEMA developed an independent training course for alerting authorities on IPAWS capabilities, which has been available online since December 2011. The goal of the course is to provide public-alerting authorities with increased awareness of the benefits of using IPAWS for public warnings; skills to draft more appropriate, effective, and accessible warning messages; and best practices in the effective use of CAP to reach all members of their communities. In addition, the IPAWS program office conducts monthly webinars for developers and alerting practitioners.\nConducted outreach to partners. Since 2009, the IPAWS program office has made efforts to improve communication and outreach to stakeholders at all levels, according to FEMA officials. Executive Order No. 13407 directs FEMA to consult, coordinate, and cooperate with the private sector, as well as provide public education on IPAWS. Some government and private stakeholders told us that FEMA’s communication and coordination efforts have improved significantly since 2009, although improvements could still be made, especially in educating the public, as discussed below. According to FEMA officials, the IPAWS program office works to engage federal entities; state, local, tribal, and territorial alerting authorities; private sector industry; non-profit and advocacy groups; and the American people through working groups and roundtables, conferences, demonstrations, trainings and webinars, Congressional briefings, and the IPAWS Web site, among other mechanisms.\nFor a complete list of actions FEMA has taken to address Executive Order No. 13407, see appendix II.", "Although FEMA has taken important steps to advance an integrated alerting system, barriers exist that may impede IPAWS implementation at the state and local level. Specifically, public-alerting authorities we contacted, as well as representatives from national trade industry groups, identified five main barriers at the state and local level. These barriers include (1) insufficient guidance on how states should fully implement IPAWS; (2) inability of state and local alerting authorities to test all IPAWS components; (3) CMAS geo-targeting and character limitations; (4) inadequate public outreach on IPAWS capabilities; and (5) limited resources at the federal, state, and local level to fully implement IPAWS.\nInsufficient guidance to fully implement IPAWS. While most state and local alerting authorities we contacted, including representatives from the National Emergency Management Association, said they are moving toward implementing IPAWS, some are reluctant to fully implement the system, citing a need for more information and additional guidance from FEMA. Specifically, while current IPAWS training exists to instruct public-alerting authorities on, among other things, how to draft an appropriate IPAWS alert, state and local alerting authorities we contacted said additional guidance is needed on integrating and operating IPAWS with existing state and local public-alerting systems in their states. For example, officials in one state said that while they are prepared to use IPAWS, they have not yet integrated their state and local alerting systems with IPAWS, citing a need for additional guidance from FEMA and communication within the state to determine what systems and policies should be put in place to integrate IPAWS with public-alerting systems in the state’s 128 counties and cities. Although Executive Order No. 13407 directs DHS to ensure interoperability and the delivery of coordinated public messages through multiple communication pathways, we found that none of our selected states had yet integrated their alerting systems with IPAWS for state or local level alerting, although according to FEMA, the alerting authorities had gone through the necessary steps to become authenticated IPAWS originators. Since IPAWS is still in the early stages of its deployment, officials said that there are no examples of how to effectively implement IPAWS at the state and local level. In commenting on a draft of this report, FEMA officials noted that they are involved in efforts to conduct case studies with public-alerting authorities in Nebraska and Nevada to provide examples of effectively implementing IPAWS at the state level. FEMA officials said they are working with state and local alerting authorities as well as system developers and vendors, to address some notable challenges related to implementing IPAWS, including how states can manage IPAWS capabilities within their respective states. Nevertheless, in the absence of additional FEMA guidance, some states are reluctant to fully implement IPAWS, a reluctance that decreases the capability for an integrated, interoperable, and nationwide alerting system.\nCMAS enables government officials to target emergency alerts to specific geographic areas through cell towers (e.g., lower Manhattan), which pushes the information to dedicated receivers in CMAS-enabled mobile devices. and local alerting authorities we spoke with raised concerns about the possibility of over alerting the public with mobile alerts since the alerts may not geo-target the specific area affected. The 90-character message limitations of these alerts were also raised as a challenge by FEMA and other alerting authorities to sending out clear and accurate alerts, as alerts may not contain enough information to be useful. For example, according to officials in one state, the National Weather Service issued a flash flood warning via CMAS that was distributed throughout a large county, which is roughly the size of the state of Connecticut, when only one small area of the county was affected. According to state officials, some citizens were confused when they received this alert as they were not located in the affected area, and there was very little information contained in the 90-character alert to clarify the specific area affected. In addition, an evacuation notice accompanied the flash flood warning, and the local emergency management authority was unprepared when citizens called them for additional information. Officials stated that some citizens might ignore or opt out of future mobile alerts if they received previous alerts that were not applicable to them. The Commercial Mobile Service Alert Advisory Committee, which recommended technical standards and protocols for CMAS in 2007, recommended reviewing and updating its recommendations periodically based on advances in technology and experiences in deployment, especially related to geo- targeting. As previously mentioned, FCC plans to have a federal advisory committee review the CMAS rules, including those related to geo-targeting and character limits. Technological advancements and experiences in using the system since 2008 may warrant a review on a more specific level of geo-targeting and expanded character limits for mobile alerts than was previously possible. Such changes to CMAS could make state and local authorities more likely to use these alerts and the public less likely to opt out of the service.\nInsufficient public outreach. According to federal, state, and local officials we contacted, the public is generally unaware of IPAWS capabilities, especially alerts sent to mobile phones. Although FEMA officials told us that a training course to educate the public is under development, FEMA has conducted limited outreach to date to inform the general public about IPAWS alerts and capabilities beyond information on the FEMA website. Executive Order No. 13407 directs DHS to provide public education on using, accessing, and responding to the public alert and warning system. Because of limited public outreach, some state and local alerting authorities expressed concern that the public may ignore or opt out of receiving IPAWS alerts, even though these alerts may provide important, life-saving information. While FEMA has made efforts to improve outreach efforts with IPAWS stakeholders since 2009, FEMA officials said they have limited resources and experience in educating the general public on IPAWS. In previous work, we identified key practices for planning a consumer education campaign, including (1) defining goals and objectives; (2) analyzing the situation; (3) identifying stakeholders; (4) identifying resources; (5) researching target audiences; (6) developing consistent, clear messages; (7) identifying credible messenger(s); (8) designing media mix; and (9) establishing metrics to measure success. Public outreach that includes these key practices could help ensure that the public is better informed about IPAWS capabilities.\nLimited resources to implement IPAWS. While there is no charge to send messages through IPAWS, there are underlying costs to purchasing the software and equipment needed to integrate with IPAWS, costs that state and local public alerting authorities said can act as a barrier to implementation in difficult financial times. According to the FEMA survey of public alerting authorities, decreased revenues and a lack of grant funding at all levels of government were reported as primary reasons for authorities’ inability to purchase and sustain alerting systems. In addition, the FEMA survey found that while most state-level alerting authorities reported having full-time staff, many local authorities might only have part-time or volunteer staff and very limited budgets.\nIn addition to these barriers, there are some long-standing weaknesses that continue to limit the effectiveness of the national-level EAS since we last reported on this topic in 2009, including a lack of redundancy in how national-level EAS messages are disseminated to the public. FEMA is making progress in increasing redundancy between the FEMA operations center and designated PEP stations through its deployment of a PEP satellite network. However, FEMA continues to rely solely on radio and television broadcast for a national-level EAS alert because the national- level EAS is not currently integrated with IPAWS capabilities. As a result, FEMA lacks alternative means of reaching EAS participants should a point in the daisy chain distribution system fail. Moreover, large portions of the population would likely not be reached by a national-level alert— specifically all those who are not watching television or listening to the radio at the time of the alert. Executive Order No. 13407 directs DHS to ensure presidential alerting capabilities under all conditions and enable delivery of coordinated messages to the American people through as many communication pathways as practicable. In addition, while Executive Order No. 13407 specifies that the public-alerting system should provide warnings to non-English speakers and individuals with disabilities, it remains difficult for a national-level alert to reach these distinct segments of the population. While the President has never initiated a national-level alert, according to FEMA, such an alert would be provided in English and only through radio and television broadcasts, which may not be accessible to individuals with disabilities.example, according to the National Council on Disability, most disaster warnings broadcast via radio and television may not be accessible to For people with hearing or vision disabilities.CAP-formatted messages to specialized alerting devices for individuals with disabilities and in non-English languages, could help address some of these limitations if it were integrated with the national-level EAS.", "", "Our analysis of FCC data found that approximately 82 percent of reporting broadcasters (radio and television) and cable operators received the November 2011 nationwide test alert. Although FEMA has been working to implement IPAWS, the November 2011 nationwide EAS test used the traditional national-level alert system (i.e., EAS daisy-chain relay distribution system) and did not include new IPAWS capabilities.Broadcasters’ and cable operators’ reception of the test alert varied widely by state. As shown in figure 3, the reception of the alert ranged from approximately 6 percent (in Oregon) to 100 percent (in Delaware) among the states. FCC, FEMA, broadcasters, and state alerting authorities in Oregon attributed the low reception rate to the absence of a PEP station in the state at the time of the test. Without a PEP station, broadcasters and cable operators in Oregon were directed to monitor a Portland-based public radio station, which reported receiving poor audio quality of the alert from its designated monitoring source—the National Public Radio satellite network.\nOnce EAS participants received the national-level test alert, they were required to retransmit the audio signal to other EAS participants, as designated in state EAS plans, for the daisy chain distribution system to work. Our analysis of FCC data found that 61 percent of reporting broadcasters and cable operators were able to retransmit the alert to stations that were designated to monitor the retransmitting station. The retransmission rate of the test alert by broadcasters and cable operators also varied widely among the states ranging from approximately 4 percent (in Oregon) to 88 percent (in New Jersey). FCC does not know the potential percentage of the American people who did not receive the alert because, officials noted, the nationwide EAS test was designed to assess EAS performance rather than to determine the percentage of public receipt of the test. Therefore, it is unknown what percentage of the American people failed to receive the test.\nKey reasons for EAS participants’ failure to receive and retransmit the national-level test alert included (1) PEP station reception failure, (2) poor audio quality, (3) shortened test length, (4) outdated monitoring assignments, and (5) equipment failure.\nPEP station reception failure. FEMA reported that 3 of the 63 PEP stations were unable to receive and retransmit the alert due to technical reasons. These PEP stations were located in New Mexico, Alabama, and American Samoa. Failures at those stations significantly contributed to low national-level alert reception rates in those states and that territory. In particular, our analysis of FCC data found that nearly 90 percent of broadcasters in New Mexico, almost 70 percent of broadcasters in Alabama, and 100 percent of broadcasters in American Samoa failed to receive the national-level alert. According to FEMA, connectivity issues with the specialized EAS equipment used at the PEP stations were the reasons for the failure. As previously mentioned, FEMA plans to modernize PEP stations with a dedicated satellite network, and officials expect this dedicated network to provide more reliable connection to the PEP stations when fully operational by fall 2013.\nPoor audio quality. FCC also reported that poor audio quality of the national-level alert signal resulted in problems ranging from some broadcasters’ receiving a garbled and degraded audio message to others’ receiving a duplicate alert tone that caused equipment to malfunction. These audio problems resulted in some stations’ being unable to retransmit the test alert. According to FEMA, the reported poor audio quality was due, in part, to a feedback loop that occurred when equipment at a single PEP station rebroadcasted the original message back to FEMA. This audio message was then transmitted by FEMA over the original audio message, degrading the audio. Therefore, fewer stations were able to receive, and thus retransmit, the alert to their designated station(s). EAS participants we met with consistently stated that the poor audio quality during the nationwide EAS test was a significant problem. For example, state and local alerting authorities, broadcaster associations, and individual broadcast stations we contacted stated that connectivity and audio problems occurred during the nationwide test. Officials from one state broadcasters association said that broadcasters in their state only received 10 seconds of the national-level alert signal with only five or six words of the message and then 20 seconds of dead air for the remainder of the test. They also stated that problems with the audio resulted in the alerts not being retransmitted to other stations in their state.\nShortened test length. The nationwide EAS test was originally scheduled to last 3 minutes, but was shortened to 30 seconds. According to an industry trade association, the announcement to change the test length came about 2 weeks prior to the test. Because of the shortened test length, some broadcasters and cable operators were unable to receive or retransmit the national-level alert. According to FEMA, the test was shortened to mitigate concerns from the cable industry that the public who could not hear the audio portion of the test would be unable to tell if the alert was a test or a real alert solely from the television screen display. More specifically, FCC instructed broadcasters to use an on-screen slide just before the test to announce that the following message would be a test and not an actual alert. However, according to officials from an industry trade association, some EAS participants, namely some cable operators, were unable to provide this background screen during the nationwide test. In these cases, since FCC chose to use a live alert code to resemble an actual nationwide test, there was no visual cue that a test was taking place. There was concern that this could adversely affect some segments of the public, especially individuals who were unable to hear the audio portion indicating a test was taking place. According to representatives from industry trade associations, use of a test code for future nationwide EAS tests could help ensure that all segments of the population understand that a nationwide test, rather than an actual national emergency, is taking place.\nOutdated monitoring assignments. FCC noted that some state EAS plans that designate the monitoring assignments are outdated and its review of the EAS test results revealed some confusion among some EAS participants of monitoring assignments. We found that as of February 2013, out of 33 state and District of Columbia EAS plans available on FCC’s website, 16 state plans were dated 2009 or earlier, with 3 of these plans dated in the 1990s. Additionally, 18 state plans were not available on FCC’s website with the link to one website leading to information completely unrelated to the state. FEMA reported that if monitoring assignments in the state EAS plans are not followed or the state EAS plans are not up-to-date, EAS participants may not receive and relay the messages. According to FEMA, several EAS participants reported not being able to receive the national-level alert from their assigned sources, and as a result, they were unable to relay the alert.\nEquipment failures. Because of specific equipment failures, some broadcasters could not receive or retransmit the national-level alert. FCC reported that approximately 5 percent of EAS participants responding to its data collection effort reported that hardware, equipment, or configuration problems precluded them from receiving the national-level alert.", "At the time of our review, FCC and FEMA had taken limited steps to address problems identified in the nationwide EAS test. According to FEMA officials, the poor audio quality that was experienced during the test is being addressed, in part, with the deployment of a dedicated PEP satellite network, but the remaining issues have yet to be resolved. FEMA officials told us that it will take a combination of FCC rulemaking, developing best practices, and correcting technical issues to address the problems that were identified during the nationwide test, but implementing some of these actions could likely take years. According to FCC officials, a working group, in coordination with FEMA, has been examining these issues, but neither agency could identify progress made by the group more than a year after the test. In commenting on a draft of this report, FCC told us it issued its final report on the results of the nationwide EAS test on April 12, 2013. According to FCC officials, one of the reasons for the delay in issuing a final report on the test result was their effort to collect more data from EAS participants. FCC continued to accept paper reports on the test results from EAS participants for about a year after the test was conducted, despite the December 27, 2011 deadline for electronically submitting the test results. EAS participants and state and local alerting authorities we contacted said that they were not aware of FCC taking any actions to address identified issues, and as a result, their ability to make improvements and prepare for future tests is limited. Concerning future tests, FCC rules require a nationwide EAS test to be conducted periodically, but it is uncertain when the next test will occur. FEMA officials told us that they are continuing to work with FCC in determining corrective actions from the test results and will not hold another test until corrective actions are complete. As we have previously reported, regular nationwide EAS testing is essential to ensure that the system will work as intended during an emergency.\nFCC recognizes that outdated state EAS plans contributed to some of the reception and retransmission problems during the EAS test, and is being more proactive in requesting states to submit updated plans. FCC officials stated that updating state EAS plans would be valuable to ensure that the monitoring assignments for the broadcast stations remain accurate when a national-level alert is activated. However, as of October 2012, FCC has received 7 of 50 updated state EAS plans. Officials stated that they would continue to ask state emergency communications committees to submit updated EAS plans to review, but that FCC has no authority to require the filing of EAS plans. As a result, FCC is unable to fully verify that states are keeping EAS monitoring assignments up to date. In addition, some EAS participants we spoke with are waiting for more guidance from FCC, including anticipated changes in rules governing EAS. For example, FCC officials told us that they plan to issue a notice of proposed rulemaking sometime in 2013 seeking comment on issues identified from the nationwide EAS test.\nEAS participants and state and local alerting authorities we spoke with stated that there are several actions that FCC, in conjunction with FEMA, could take that would assist EAS participants in preparing, conducting, and reporting on future nationwide EAS test alerts. These actions include (1) issuing an after-action plan to help identify and address problems that occurred during the test, (2) conducting regular and frequent testing of EAS to ensure the system works as intended, and (3) providing guidance to update state EAS plans to incorporate IPAWS (e.g., guidance could be EAS plan templates, best practices, good examples).", "FEMA has made progress since 2009 in developing a more comprehensive, integrated nationwide public-alerting system. FEMA has improved the capabilities of IPAWS by bringing the IPAWS alert aggregator online and integrating it with multiple alerting systems, including HazCollect and CMAS. However, for IPAWS to become fully operational, several areas of concern need to be addressed. In particular, additional guidance for state and local alerting authorities on specific steps to integrate and test their public-alerting systems with IPAWS components would help to provide assurance on the interoperability and effectiveness of IPAWS and facilitate its implementation. Furthermore, according to public-alerting authorities we contacted, without additional guidance on IPAWS implementation and consideration of CMAS rules, state and local alerting authorities we contacted were reluctant to fully integrate their systems with IPAWS and rely on IPAWS as a comprehensive public-alerting system. In addition, a concerted effort to educate state and local governments, the private sector, and the American people on the functions of the public-alerting system is necessary to inform them on how to access, use, and respond to emergency alert messages. Using key practices for conducting a public education campaign—such as defining goals and objectives, identifying stakeholders and resources, and developing clear and consistent messages—could enable FEMA, which has limited experience educating the general public on IPAWS, to more effectively and efficiently inform the American people on how to access and respond to potentially life-saving emergency alerts.\nFEMA has also expanded the number of PEP stations and enhanced satellite connectivity to improve direct coverage and dependability of the national-level EAS. However, as long as the national-level EAS remains independent from IPAWS, portions of the population, including individuals with disabilities and non-English speakers, will be less likely to receive or fully understand presidential alerts disseminated only through the EAS daisy chain. If integrated, CMAS, in particular, is capable of providing alerts in different formats, including emitting unique ring tone and vibration cadences for those who have hearing or visual impairments, which would increase the likelihood that individuals with disabilities could be informed that a national-level alert is being issued. Furthermore, integrating EAS into IPAWS would provide system redundancy for national-level alerts.\nFEMA and FCC held the first-ever test of the national-level EAS in November 2011, an important step. However, the results of the nationwide EAS test—which a number of EAS participants could not effectively receive or retransmit—show that the reliability of the traditional EAS system remains questionable. At the time of our review, we found that FEMA and FCC had taken limited steps to address problems identified by EAS participants. In addition, some state EAS plans and monitoring assignments are outdated, in part, because state emergency communications committees are waiting for more guidance from FCC, including changes in rules governing EAS. Although states are not required to update and submit state EAS plans, FCC could help facilitate the process by providing additional guidance. Finally, while FCC rules call for periodic nationwide EAS testing, FCC and FEMA currently have not scheduled another nationwide test. Without ongoing, regular nationwide testing of the relay distribution system, there is no assurance the EAS would work should the President need to activate it to communicate with the American people.", "To ensure that IPAWS is fully functional and capable of distributing alerts through multiple pathways as intended, we recommend that the Secretary of Homeland Security direct the Administrator of FEMA to take the following four actions: In conjunction with FCC, establish guidance (e.g., procedures, best practices) that will assist participating state and local alerting authorities to fully implement and test IPAWS components and ensure integration and interoperability.\nIn conjunction with FCC and NOAA, conduct coordinated outreach to educate the American public on IPAWS capabilities, especially CMAS.\nDevelop a plan to disseminate a national-level alert via IPAWS to increase redundancy and communicate presidential alerts through multiple pathways.\nIn conjunction with FCC, develop and implement a strategy for regularly testing the national-level EAS, including examining the need for a national test code, developing milestones and time frames, improving data collection efforts, and reporting on after-action plans.\nTo ensure that CMAS is effectively used and that the EAS relay distribution network is capable of reliably communicating national-level alerts, we recommend that the Chairman of FCC, in conjunction with FEMA, take the following two actions:\nReview and update rules governing CMAS, including those related to geo-targeting, character limitations, and testing procedures.\nProvide states with additional guidance (e.g., templates of EAS plan) to facilitate completion of updated state EAS plans that include IPAWS-compatible equipment.", "We provided a draft of this report to DHS, FCC, and the Department of Commerce for their review and comment. In response, DHS concurred with all of the report’s recommendations to improve IPAWS capabilities. In its written comments, DHS provided examples of actions FEMA will undertake to address the recommendations. For example, DHS noted that FEMA intends to create toolkits for state and local alerting authorities that will include alerting and governance best practices, technology requirements, and operation and usage information on IPAWS. Regarding efforts to improve nationwide EAS testing, DHS indicated that FEMA plans to work with federal partners, including FCC, to create a national test code, develop milestones and timeframes for future testing, improve data collection efforts, and report on after-action plans. See appendix III for written comments from DHS.\nIn commenting on the draft report, FCC did not state whether it agreed or disagreed with the report’s recommendations. FCC noted that it issued a final report on the results of the nationwide EAS test on April 12, 2013, and we believe the report includes potential actions that could address our recommendations in the future. For example, the April 2013 report includes recommendations for FCC to commence a rulemaking proceeding on state EAS plans and to encourage the groups that typically develop state EAS plans to ensure that the plans contain accurate EAS monitoring assignments. Other recommendations in FCC’s April 2013 report include commencing a rulemaking proceeding to examine equipment-performance issues during activation of a test, and developing a new Nationwide EAS Test Reporting System database to improve filing electronic data from EAS participants. FCC stated that it will conduct a review of CMAS rules, as we recommended in this report, and also noted that it will work with FEMA to develop a strategy for regular testing of EAS. See appendix IV for written comments from FCC.\nThe Department of Commerce provided technical comments from its component agency NOAA, and we incorporated them as appropriated. In the comments, NOAA stated that it believes our report does an accurate job in assessing the nationwide EAS test results and the current state of IPAWS. With respect to our recommendation on conducting outreach, NOAA believes the outreach should be conducted in conjunction with FCC and NOAA, and we made the suggested revision.\nIn addition to written comments, DHS and FCC provided technical comments on the draft report, which we incorporated as appropriate.\nAs agreed upon with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date. At that time, we will send copies of this report to appropriate congressional committees, the Secretary of Homeland Security, and the Chairman of FCC. In addition, the report is available at no charge on our website at http://www.gao.gov.\nIf you or your staff have any questions concerning this report, please contact me at (202) 512-2834 or goldsteinm@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix V.", "This report provides information on federal efforts to integrate various public-alerting systems and modernize the Emergency Alert System (EAS). Specifically, the report examines (1) how the capabilities of the Integrated Public Alert and Warning System (IPAWS) have changed since 2009 and what barriers, if any, are affecting its implementation and (2) the results of the nationwide EAS test and federal efforts under way to address identified weaknesses.\nTo obtain information on both objectives of this report, we interviewed officials from the Federal Emergency Management Agency (FEMA), Federal Communications Commission (FCC), Department of Homeland Security, and National Oceanic and Atmospheric Administration (NOAA). We spoke with representatives from national trade industry groups, including the National Emergency Management Association, National Association of Broadcasters, National Cable and Telecommunications Association, CTIA-The Wireless Association, and National Alliance of State Broadcasters Associations, to obtain stakeholders’ perspective on the results of the first nationwide EAS test and federal efforts to implement IPAWS. We also spoke with representatives from the satellite industry (DIRECTV), an EAS equipment manufacturer (Monroe Electronics), and the National Council on Disability to gather their views on IPAWS implementation and the nationwide EAS test. We conducted interviews with selected state and local alerting authorities, state emergency-communication-committee chairs, state broadcasting associations, and selected local broadcasters. We nonstatistically selected a sample of six locations—California, Kentucky, Oklahoma, Oregon, Wisconsin, and the District of Columbia—to obtain information from state and local officials on any barriers to implementing IPAWS and potential remedies for addressing any identified barriers, as well as to determine any problems associated with the nationwide EAS test. We selected these states and locality because some had (1) other public- alerting systems, in addition to the EAS; (2) alerting systems that are capable of providing alerts for individuals with disabilities and limited English; and (3) experienced a breakdown of test alert dissemination during the nationwide EAS test. We also selected these states and localities because some had been authenticated to be an IPAWS-alerting authority and they were geographically diverse. To obtain a regional perspective on implementing IPAWS and testing the EAS, we also spoke with officials from FEMA regional offices. Because we conducted targeted interviews, our results are not generalizable to all states and localities. Table 1 provides more detailed information on the state and localities we selected and the entities we interviewed.\nTo obtain information on how the capabilities of IPAWS have changed since 2009 and what barriers, if any, affect its implementation, we also reviewed and analyzed agency documents and literature since 2009. We reviewed documents on IPAWS program planning, including the 2010 IPAWS program management plan, and assessed actions that have been taken to determine if systems and standards are operational. We also attended a number of IPAWS webinars to obtain training and information that are provided to public-alerting authorities. We reviewed FEMA’s IPAWS Inventory and Evaluation Assessment Report, which surveyed 3,314 state, territorial, tribal, and local emergency management agencies to analyze gaps between existing public-alerting capabilities and IPAWS and includes recommendations for IPAWS integration. The survey was conducted mostly by telephone with structured questionnaires over a 2- year period from January 2010 through December 2011 and specific procedures were followed to identify emergency management personnel for the sites at each level. We assessed the survey’s methodology and determined that the estimates from it that we cite are sufficiently valid for use in our report. Specifically, we assessed the survey methodology against the Office of Management and Budget’s Standards and Guidelines for Statistical Surveys. We did not otherwise verify, however, the findings and conclusions from the report.\nTo obtain information on the results of the nationwide EAS test and federal efforts to address any identified weaknesses, we reviewed and analyzed agency data and documents. Specifically, we examined FCC’s and FEMA’s preliminary reports on the nationwide EAS test results; FCC orders and rules on EAS; FCC’s website on the nationwide EAS test; FEMA’s EAS Best Practices Guide; and briefing documents from FEMA and NOAA. We analyzed FCC’s data from EAS participants to determine the percentage of radio and television broadcasters and cable operators that received and retransmitted the national-level alert on a statewide basis. We analyzed FCC’s data for 49 states; we did not include Alaska since it was excused from the nationwide test because of severe weather conditions. To determine the reliability of the data used in this report, we reviewed relevant documentation and interviewed agency officials about their processes for reviewing the data and ensuring their accuracy. We also ensured that FCC data were sufficiently reliable for our review. We reviewed and analyzed state EAS plans that were posted on FCC’s website to determine if the state’s EAS plans were current. We interviewed FCC officials to confirm that the information on FCC’s website is current.\nWe conducted this performance audit from June 2012 through April 2013, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "Appendix II: FEMA’s Progress Addressing Responsibilities of the Secretary of Homeland Security under Executive Order No. 13407 Status/progress/timeline Issued the IPAWS Inventory and Evaluation Assessment Report in January 2012. This report surveyed and assessed public-alerting authorities in the United States between 2009 and 2011.\nFormally adopted the Commercial Mobile Alerting System (CMAS) Specification in December 2009. Formally adopted the Common Alerting Protocol (CAP) standard for IPAWS in September 2010.\nImplemented CMAS. Wireless carriers began issuing geo-targeted CMAS alerts in April 2012; NOAA started sending geo-targeted CMAS messages in June 2012.\nHosted biannual roundtables for industry experts, federal agencies, and advocacy organizations representing Americans with access and functional needs to discuss emergency alerting. Shared lessons learned and best practices for communicating to Americans with access and functional needs through the EAS to FCC. For example, encouraged FCC to consider EAS rule changes or clarifications for broadcasters with regard to: (1) display size, color, background contrast, and speed of text crawl during EAS alert and (2) use of a test code for future nationwide testing of EAS.\nExpanded the number of primary entry point (PEP) stations to 65 total—31 PEP stations were either modernized or built since 2009. Anticipates a total of 77 PEP stations by fall 2013 directly covering 90 percent of the American people. Added satellite connectivity in 50 PEP stations. Integrated NOAA alerting systems to allow public-alerting authorities to send non- weather emergency messages through HazCollect; allowed NOAA to send mobile alerts beginning 2012.\nReleased IPAWS online training for public-alerting authorities in December 2011. Hosts monthly webinars for developers and alerting practitioners. Conducted two statewide EAS tests in Alaska in January 2010 and 2011; conducted the first nationwide EAS test on November 9, 2011. Conducted CMAS test in New York City in December 2011. Conducts a required monthly test of CMAS on the third Wednesday of each month.\nMaintains a public website on IPAWS.\nHosts monthly webinars for developers and alerting practitioners. Participated in federal working groups and roundtables. Participates in industry conferences, demonstrations, and panels.\nActs as executive agent for EAS, maintaining the PEP stations.\nMaintains EAS and PEP stations. Deploying a dedicated PEP satellite network.\nEnsure the capability to distribute alerts on the basis of geographic location, risks, or personal user preferences.", "", "", "", "", "In addition to the individual named above, Sally Moino, Assistant Director; Andy Clinton; Jean Cook; Bert Japikse; Delwen Jones; Jennifer Kim; Josh Ormond; Carl Ramirez; Jerry Sandau; and Andrew Stavisky made key contributions to this report." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "h2_full", "h0_title h2_title", "h0_full", "h0_full h2_full", "h1_title", "h1_full", "h1_full", "h2_full h1_full", "h3_full", "h3_full h2_full", "h2_full", "", "", "", "", "", "" ] }

{ "question": [ "What is the goal of the FEMA?", "Why has IPAWS not been adopted?", "What steps need to be taken to implement IPAWS?", "How is IPAWS meant to be used?", "Why did alert reception vary by state?", "What specific issues occurred?", "How is FEMA addressing the transmission issues?", "What steps need to be taken to legitimize the goals of the FEMA?", "What are benefits of a public alert system?", "Why did FEMA initiate IPAWS?", "What did GAO review regarding the first nationwide test of IPAWS?", "How did GOA assess the IPAWS test?", "Why did GAO recommend they work with FEMA?", "How did the DHS respond to GAO's recommendation?", "How else have the DHS, FCC, and the Department of Commerce supported these integration of IPAWS?" ], "summary": [ "Since 2009, the Federal Emergency Management Agency (FEMA) has taken actions to improve the capabilities of the Integrated Public Alert and Warning System (IPAWS) and to increase federal, state, and local capabilities to alert the public, but barriers remain to fully implementing an integrated system.", "Although FEMA has taken important steps to advance an integrated system, state and local alerting authorities we contacted cited a need for more guidance from FEMA on how to integrate and test IPAWS capabilities with their existing alerting systems.", "For example, an official with a state alerting authority said that additional guidance from FEMA is needed to determine what systems and policies should be put in place before integrating and testing IPAWS with other public alerting systems in the state's 128 counties and cities.", "Specifically, IPAWS has the capability to receive and authenticate Internet-based alerts from federal, state, and local public authorities and disseminate them to the public through multiple systems.", "Key reasons for reception or retransmission difficulties included poor audio quality, outdated broadcaster-monitoring assignments, and equipment failure.", "For example, poor audio quality of the test alert resulted in some broadcasters' receiving a garbled and degraded audio message and others' receiving a duplicate alert that caused equipment to malfunction.", "According to FEMA officials, the poor audio quality is being addressed, in part, with the deployment of a dedicated satellite network that will become fully operational by fall 2013.", "Without a strategy for regular nationwide testing of the relay distribution system, including developing milestones and timeframes and reporting on after-action plans, there is no assurance that EAS would work as intended should the President need to activate it to communicate with the American people.", "An effective system to alert the public during emergencies can help reduce property damage and save lives.", "In 2009, GAO reported on long-standing weaknesses with EAS and FEMA's limited progress in implementing IPAWS.", "GAO examined: (1) how IPAWS capabilities have changed since 2009 and what barriers, if any, affect its implementation and (2) results of the nationwide EAS test and federal efforts to address identified weaknesses.", "GAO reviewed FEMA, FCC, and other documentation, and interviewed industry stakeholders and alerting authorities from six locations that were selected because they have public-alerting systems in addition to EAS and experienced problems during the nationwide EAS test.", "GAO recommends that FEMA work in conjunction with FCC to establish guidance for states to fully implement and test IPAWS components and implement a strategy for regular nationwide EAS testing.", "In response, the Department of Homeland Security (DHS) concurred with GAO's recommendations and provided examples of actions aimed at addressing the recommendations.", "DHS, FCC, and the Department of Commerce also provided technical comments, which have been incorporated as appropriate." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, -1, -1, -1, -1, -1, 2, -1, 0, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 0, 0, 0, 0, 3, 3, 3 ] }

{ "title": [ "", "How CRP Works", "Enrollment", "General Sign-Up", "Continuous Sign-Up", "Eligibility", "Producer/Landowner", "Land", "Payments", "Practices", "Current Issues", "Farm Bill Reauthorization", "Harvesting and Grazing", "Enrollment", "Expiration and Reenrollment", "Contract Termination and Early Release", "Rental Rates", "Economic Research Service Study", "Office of the Inspector General Report", "Increases in Enrollment", "Tax Status of Payments", "Environmental Benefits", "Conclusion" ], "paragraphs": [ "The Conservation Reserve Program (CRP) is the largest federal, private-land retirement program in the United States. The program provides financial compensation for landowners to voluntarily remove land from agricultural production for an extended period (typically 10 to 15 years) for the benefit of soil and water quality improvement and wildlife habitat.\nThe program was first authorized in the Food Security Act of 1985 (1985 farm bill, P.L. 99-198 ), initially as both a supply management tool for removing land from agricultural production, thus lowering commodity supply and potentially raising prices, and for providing environmental benefits. Currently, close to 25.6 million acres are enrolled in the program with total funding of approximately $2 billion annually.\nAcres enrolled in CRP have shown a number of positive environmental benefits including reduced soil erosion; water quality improvements through vegetative cover, buffer strips, and reduced fertilizer application; and wildlife population improvement from increased habitat. While a number of natural resource improvements are attributed to the program, the program contains a number of controversial elements as well, including the economic and environmental effect of permitted activities, such as haying and grazing on CRP acres and the reduction of enrolled acres due to high crop prices and farm bill reauthorization. Program and funding authority for CRP was reauthorized and extended through FY2018 by the Agricultural Act of 2014 (2014 farm bill, P.L. 113-79 ).", "The program is administered by the Farm Service Agency (FSA) at the U.S. Department of Agriculture (USDA), with technical support from the Natural Resources Conservation Service (NRCS) and other USDA agencies.", "Enrollment is limited to no more than 27.5 million acres at any given time in FY2014. There are two main types of enrollment into CRP: general sign-up and continuous sign-up. Several continuous sign-up \"initiatives\" focus enrollment on specific resource concerns or conservation practices.", "CRP is a competitive program, in which landowners offer eligible land for enrollment into the program. A general sign-up is a specific period of time during which FSA accepts these offers. Offers are ranked according to an Environmental Benefits Index (EBI, see text box) to determine the relative environmental benefits for the land offered.\nFor each general sign-up, FSA collects data on each of the EBI factors and ranks all eligible offers across the country. After the sign-up ends, USDA determines an EBI threshold. Acceptance for enrollment into CRP is extended to offers that scored above the EBI threshold. This threshold varies by sign-up depending on the offers received. Producers generally try to maximize EBI points and increase the likelihood that their offer will be accepted for enrollment.\nAs of July 2014, 19.7 million acres were enrolled in CRP under general sign-up contracts, or 77% of total CRP acres. This includes 262,417 contracts on 177,983 farms. During the most recent general sign-up (#45), USDA accepted 1.68 million acres offered for enrollment starting October 1, 2013.\nOn June 4, 2014, USDA announced that contract holders of eligible FY2014 expiring contracts will qualify for a one-year extension. A general sign-up is not scheduled for FY2014.", "Continuous sign-up is designed to enroll the most environmentally desirable land into CRP through specific conservation practices or resource needs. Unlike the general sign-up process, land offered under continuous sign-up may be enrolled at any time and is not subject to competitive bidding. If offers meet certain eligibility requirements then they are automatically accepted. Contracts are effective the first day of the month following the month of approval and typically include additional financial incentives.\nContinuous sign-up includes a number of initiatives that target acres with specific resource concerns or support additional conservation practices. These are described in Appendix A . As of July 2014, 5.75 million acres were enrolled in CRP under continuous sign-up, or 23% of total CRP acres. This includes 1.6 million enrolled through the two statutorily created sub-programs—the Conservation Reserve Enhancement Program (CREP, 1.3 million acres) and Farmable Wetland Program (FWP, 339,673 acres). The remaining 4.2 million acres were enrolled in other continuous sign-up initiatives.", "", "To be eligible for CRP enrollment, a producer must be an owner, operator, or tenant of the land for at least 12 months prior to the close of the CRP sign-up period, and show control of the land for the duration of the contract. The land may be eligible if owned for less than 12 months and if (1) the land was acquired due to the previous owner's death; (2) the ownership change occurred due to foreclosure where the owner exercised a timely right of redemption in accordance with state law; or (3) adequate assurances are made that the new owner did not acquire the land for the purpose of placing it in CRP.", "For land to be eligible for CRP, USDA may consider the following land types for enrollment:\nhighly erodible cropland that (1) if untreated could substantially reduce the land's future agricultural production capability or (2) cannot be farmed in accordance with a conservation plan; and has a cropping history or was considered to be planted for four of the six years preceding February 7, 2014 (except for land previously enrolled in CRP); marginal pasture land devoted to appropriate vegetation for water quality purposes; grasslands that (1) contain forbs or shrubland on which grazing is the predominant use; (2) are located in an area historically dominated by grasslands; and (3) could provide habitat for ecologically significant animal and plant populations if restored or retained in its current condition. cropland that is otherwise ineligible, if it is determined that (1) if permitted to remain in agricultural production, it would contribute to the degradation of soil, water, or air quality; (2) the land is a newly created, permanent grass sod waterway, or a contour grass sod strip; (3) the land will be devoted to newly established living snow fences, permanent wildlife habitat, windbreaks, shelterbelts, or filterstrips or riparian buffers devoted to trees or shrubs; (4) the land poses an off-farm environmental threat; or (5) enrollment of the land would facilitate a net savings in groundwater or surface water resources; or certain land enrolled as a riparian buffer or for similar water quality purposes.", "In exchange for enrollment into CRP, participants receive payments from USDA. These payments offset the cost of temporarily retiring the land from production and implementing resource-conserving and wildlife-promoting practices. A number of payment types under CRP are highlighted in Table 1 .\nThe authorizing statute establishes the maximum number of acres that can be enrolled in the program at any one time. The program is authorized to spend such sums as necessary to enroll up to the maximum level of allowable acres. This funding is mandatory (i.e., not subject to annual appropriations) and is provided through the borrowing authority of the USDA's Commodity Credit Corporation (CCC). In total, the average annual federal cost for CRP is close to $2 billion. The majority of this cost is annual rental payments, which average $63.65 per acre, but can vary greatly by location.", "Producers have a number of conservation practices to consider for installation on their land when enrolling in CRP. The selection of practices is part of the voluntary enrollment process and is determined by the landowner, with assistance from USDA, while developing a CRP offer. Once an offer is accepted for enrollment, the participant must develop a conservation plan of operation, which serves as a guide for which practices will be used, where, and for how long. Once the plan is approved and the contract signed by the participant, the land is considered enrolled in CRP. Certain continuous sign-up initiatives require specific conservation practices for enrollment. The most widely applied conservation practices are described in Table 2 .", "", "The 2014 farm bill reauthorized CRP and reduced the enrollment cap from 32 million acres to 24 million acres by FY2018. While CRP enrollment has fluctuated since its creation in the 1985 farm bill, recent enrollment has declined from its peak in FY2007 of 36.8 million acres to 25.6 million acres in FY2013. Reduced enrollment is thought to be a product of high commodity prices, low rental rates, and declining interest in retiring land from production. Further reduction in the farm bill was viewed as inevitable given the fiscal challenges. Conservation and wildlife groups, however, remain concerned that reduced enrollment will impact critical species habitat and soil and water quality. The 2014 farm bill enrollment reduction created an estimated savings of $3.3 billion over 10 years.\nA number of programmatic changes centered around permitted activities. Emergency harvesting, grazing, and other use of forage are permitted, in some cases, without a reduction in rental rate, as well as livestock grazing for a beginning farmer or rancher. Other approved activities, such as annual or routine grazing, may continue to require a reduction in rental rate (discussed further in the \" Harvesting and Grazing \" section below). The Grassland Reserve Program (GRP) was repealed in the 2014 farm bill. Grassland contracts, similar to what was repealed under GRP, are now eligible under CRP. The 2014 farm bill also allows CRP participants the opportunity to terminate their contract early if the land has been enrolled longer than five years and it does not contain environmentally sensitive practices. A detailed analysis of the programmatic changes may be found in Appendix B . An analysis of the full farm bill reauthorization debate may be found in CRS Report R43504, Conservation Provisions in the 2014 Farm Bill (P.L. 113-79) .", "Harvesting and grazing became a major concern beginning in the summer of 2012. A prolonged drought and flooding in parts of the Midwest had livestock owners requesting access to land enrolled in CRP for forage harvesting and grazing. While USDA did allow emergency harvesting and grazing under CRP, annual rental rates were reduced due to the statutory requirement that payments be reduced commensurate with the economic value of the authorized activity. Historically, this reduction ranged between 10% and 25% of the annual rental payment.\nFollowing amendments made in the 2014 farm bill, harvesting and grazing are still permitted on CRP land under certain conditions. The amendments expand these opportunities by reducing or eliminating payment penalties and incorporating elements of the repealed Grassland Reserve Program (GRP) into grassland contracts. In some cases, environmentally sensitive land is ineligible for harvesting and grazing and most have restrictions during primary nesting season ( Figure 1 ). Now rate reductions for permitted activities are as follows:\nForage in response to drought, flooding, or other emergency— no reduction in rental rates. Authorized activities consistent with soil conservation, water quality , and wildlife habitat; managed harvesting; and commercial use (including biomass harvesting) 11 — not less than a 25% reduction in annual rental rates for acres covered by the activity. To occur at least every five years but not more than once every three years. Annual prescribed grazing for invasive species control— not less than a 25% reduction in annual rental rate, subject to nesting season restrictions. Routine grazing— not less than a 25% reduction in annual rental rate, subject to nesting season restrictions, vegetation management requirements and stocking rates, and limited to not more than once every two years (accounting for regional differences). Wind turbine installation— not less than a 25% reduction in annual rental rate, subject to nesting restrictions and limitations on the number and location or the turbines. Seasonal use of vegetative buffer practices— no reduction in rental rates assuming the permitted use does not damage the permanent vegetation. Livestock grazing by a beginning farmer or rancher— no reduction in rental rates, providing the grazing is consistent with soil conservation, water quality, and wildlife habitat; nesting season; control of invasive species; or routine grazing.\nThe 2014 farm bill repealed GRP and incorporated elements of the program into CRP. GRP included two enrollment types—contracts and easements. GRP contracts limited future development and cropping uses of the land and retained the right to conduct common grazing practices and operations related to the production of forage and seeding. A number of similar activities associated with grasslands are now permitted under CRP. These include common grazing and maintenance practices; haying, mowing, or harvesting for seed production (subject to nesting season); fire presuppression, rehabilitation, and breaks; and fencing and livestock watering. Grassland enrollment is limited to no more than 2 million acres between FY2014 and FY2018 as part of the overall program.\nRecent droughts have fueled questions about the reduction of CRP acres. It is unclear what level of relief to livestock is achieved through the emergency harvesting and grazing during drought or if there is any long-term impact on wildlife habitat. Other questions remain, including, if fewer acres are enrolled in CRP for conserving uses, or if enrollment were limited to more sensitive land that would not support harvesting and grazing, what impact would this have on livestock times of prolonged drought? Is the role of CRP to provide drought relief or is that beyond the scope of the program? What are the positive and negative effects of harvesting and grazing, whether managed or in the event of emergency, that might impact wildlife, plant quality, and erosion control?", "The nature of CRP enrollment has changed since the program's inception in the 1985 farm bill. Program priorities have shifted, total acres enrolled have fluctuated (see Figure 2 and Figure 3 ), farming technologies have advanced, and producer preferences have changed. Many of these changes are cited as the reason for further reducing the level of CRP acres enrolled in the 2014 farm bill.", "CRP contracts vary in length, though most are 10 years in duration. At the end of a contract, the participant may either seek reenrollment into the program (via a general or continuous sign-up, if eligible) or let the contract expire. This 10-year cycle resulted in more than 16 million acres enrolled in 1997 potentially expiring all at once in 2007. To stagger this expiration process, USDA offered two- to five-year reenrollment and extension contracts in 2006 to contacts expiring between 2007 and 2010 (27 million acres). While approximately 83% of those offered accepted these extensions (23 million acres), over 8.5 million acres expired from the program during that time.\nThe 45 th general sign-up in 2013 recorded 1.57 million acres of the 1.68 million acres deemed acceptable. Acceptable acres had an EBI score of 209 and above and an average rental rate of $64/acre. Approximately 3.3 million acres under CRP contract (both general and continuous) were scheduled to expire on September 30, 2013. Following the FY2013 general sign-up and continuous sign-ups, 1.7 million acres left CRP on October 1, 2013, either through contract expiration or attrition. An estimated 2 million acres are scheduled to expire at the end of FY2014. Between FY2007 and FY2014, over 17.1 million CRP acres under contact have expired and were not reenrolled in the program ( Figure 3 ). The majority of these acres in FY2013 are located in the central part of the United States, which also has the largest number of acres enrolled ( Figure 5 and Figure 3 ). The number and location of these acres concerns some program advocates because of the potential loss of environmental benefits, particularly migratory and grassland bird habitat.\nUnder the 1985 farm bill, CRP was initially authorized to enroll up to 45 million acres between crop years 1986 and 1990. USDA did not reach this enrollment cap and subsequent farm bills reduced the authorized level of enrollment. CRP enrollment reached its peak in 2007 with 36.8 million acres. The 2008 farm bill reduced the enrollment cap to 32 million acres and the 2014 farm bill continues this reduction to 24 million acres by FY2018. This reduction in enrollable acres will further reduce the opportunity for reenrollment of expiring acres under contact and any new general sign-up would be relatively small.", "Under current law, a producer wishing to terminate a CRP contract early faces a penalty of full repayment, with interest, of all the funds already paid to the producer, including any cost-share payments and other financial incentives, plus a fee of 25% of rental payments received. Although the Secretary of Agriculture always has the authority to release land from CRP without penalty, this option has not been commonly used. In program history, this option has been exercised twice—in 1995 and 1996—when acres were allowed a voluntary, penalty-free early release in order to enroll more environmentally sensitive cropland. In both cases, environmentally sensitive acres were not released and certain restrictions applied to acres returning to production or harvesting and grazing. In addition to the Secretary's discretion, an early-out provision has been in statute since the 1996 farm bill, but only applied to CRP contracts in effect before January 1, 1995. The 2014 farm bill amended this provision to allow for a one-time early release in FY2015, but requirements of the old provision remain, including:\nland cannot be devoted to filterstrips, waterways, strips adjacent to riparian areas, windbreaks, and shelterbelts, land cannot have an erodibility index of 15, rental payments must be prorated for the year of termination, land is still eligible for future CRP contracts, and land is still subject to conservation compliance requirements.\nSection 2006 of the 2014 farm bill expands this provision to allow CRP contract holders to terminate prior to the contract's expiration in FY2015 if the contract has been in effect for at least five years and meets additional eligibility requirements. Specifically, in addition to the existing requirements above, the land is considered ineligible if it is\ndevoted to hardwood trees, wildlife habitat, duck nesting habitat, pollinator habitat, upland bird habitat buffer, wildlife food plots, State acres for wildlife enhancement, shallow water areas for wildlife, and rare and declining habitat, a farmable wetland and restored wetland, land that contains diversions, erosion control structures, flood control structures, contour grass strips, living snow fences, salinity reducing vegetation, cross wind trap strips, and sediment retention structures located within a federally designated wellhead protection area, covered by an easement under CRP, located within an average width, according to the applicable NRCS field office technical guide, of a perennial stream or permanent water body, and enrolled under CREP.\nGenerally, most conservation and wildlife organizations are opposed to this penalty-free early-out option, however, they believe the additional restrictions on ineligible land could minimize the overall impact.", "CRP rental payments are based on two main factors: the county average rental rate and soil productivity. The county average rental rate uses the National Agricultural Statistics Service's (NASS's) survey of county average rental rates for cropland and pastureland. Soil productivity is based on a Natural Resources Conservation Service (NRCS) calculation that uses data of the local soil, landscape, and climate to determine the ability of the land to produce crops on non-irrigated soil. The average CRP rental payment rates are as follows: $51.09 per acre for general sign-up, $97.25 per acre for non-CREP continuous sign-up, $136.70 per acre for CREP continuous sign-up, and $111.70 per acre for farmable wetlands.\nRental rates for CRP contracts became an important issue to some producers when commodity prices began to rise in 2008. Commodity prices have remained high, causing producers to claim that CRP rental rates are significantly lower than the producers could get by renting their land out for production. On the other hand, contracts are for 10 or more years and could be viewed as long-term investments rather than reactions to short-term commodity price fluctuation.", "If rental rates are set too low, producers might decline to enroll their land, or, if already enrolled, they might decline to renew their contracts at expiration. A 2011 study by the Economic Research Service (ERS) at USDA modeled the effect of increasing commodity prices on CRP enrollment. The study suggested that maintaining CRP under its current configuration could lead to program cost increases. When constraints were placed on increasing rental rates, the study suggested that enrollment goals could be met with moderate increases in the CRP rental rates. The latter scenario might mean that enrollment goals could be met, but at the cost of applying a lower EBI, as producers with profitable, but environmentally sensitive, acreage choose not to enroll.\nIf crop prices remain high and enrolling environmentally sensitive land continues to be a program priority, then finding the level of rental payments that encourages enrollment and keeps the cost of the program acceptable to policy makers might continue to be an issue.", "In July 2012, the USDA Office of Inspector General (OIG) issued a report on the use of CRP rental rates. The report concluded that for the 39 th general sign-up in 2010, FSA (1) did not use the most recent NRCS soil productivity factors; and (2) allowed states and counties to propose alternate rates that did not adhere to its own policies for reviewing and approving the alternate rates. OIG accepted two of the four agency responses to its recommendations. The two responses that it found unacceptable concerned the use of the most recent NRCS productivity data and establishing procedures for approving alternate county average rental rates. It is unclear what follow-up action, if any, will be taken by FSA to address the remaining concerns.", "Despite the potential limiting factors affecting CRP enrollment, the number of acres enrolled under continuous sign-ups, including for the Conservation Reserve Enhancement Program (CREP, see Appendix A ), has increased. Continuous sign-ups allow landowners to enroll land in certain high priority practices in exchange for additional financial incentive. As of July 2014, almost 5.8 million acres (23%) were enrolled through continuous sign-up, an increase of 2.2 million acres since 2007. The additional financial incentive under continuous sign-up could offset the potential gap between CRP rental payments and local rental rates to enroll more environmentally sensitive acres. More contracts and farms are enrolled under continuous sign-ups (409,713 and 239,033, respectively) than for general sign-ups (262,417 and 177,983, respectively). Continuous sign-up enrollment represents a fraction of the total CRP acreage because, in general, these enrollments involve only a small portion of a farmer's total acreage.", "Since the inception of CRP, the Internal Revenue Service (IRS) has issued a number of rulings, notices, and opinions on whether CRP rental payments are regarded as income from the \"trade or business\" of farming and therefore subject to self-employment taxes of 15.3%. For years, the IRS generally treated CRP payments as farming income (subject to the self-employment tax) when received by someone who was engaged in the trade or business of farming, or as rental income (not subject to self-employment tax) when received by others (e.g., investors, heirs, and absentee landowners).\nThe IRS recently changed its position, stating that by entering into a CRP contract the participant is in the trade or business of farming and therefore CRP payments are subject to the self-employment tax. This was upheld in the courts in the 2013 U.S. Tax Court ruling of Morehouse v. Commissioner . In the Morehouse decision, the Tax Court ruled in favor of the IRS, stating that the CRP participant (Morehouse) was in the business of maintaining \"an environmentally friendly farming operation,\" making CRP payments subject to self-employment taxes. The decision is currently on appeal in the Eighth Circuit U.S. Court of Appeals.\nThe Morehouse decision concerns many producers and conservation advocates. Conservation groups fear that the tax will discourage CRP participation and possibly encourage contract cancellations. Others fear that the 15.3% tax will lower the value of CRP land. Some also argue that Morehouse could have broader implications for investor income, including cash rent landowners or possibly stock investors.", "The greatest concern over a reduced level of CRP acres is a reduced level of environmental benefits. Since its inception, research has shown that CRP has contributed to reduced levels of soil erosion, water quality improvement, and wildlife habitat development. While these benefits vary across the country, some conclude that without CRP there could be additional environmental degradation from agricultural production. Table 3 includes a list of conservation practices applied on CRP land that is set to expire from the program between FY2015 and FY2017. It is unknown how many of the practices would expire as a result of acres not reenrolling in CRP due to the reduced number of authorized acres. It is also unknown whether these practices would be maintained without a CRP contract. Landowners may choose to continue these practices voluntarily or through other federal, state, or local assistance. In large part, the majority of practices that could be lost if allowed to expire would be grasslands, both native and introduced species, new and existing plantings.\nAccording to FSA, since 2002, CRP has reduced soil erosion by 325 million tons from pre-CRP levels each year. Since the program's inception in 1986, CRP has reduced more than 8 billion tons of soil erosion. Through FY2010, CRP has enrolled more than 2 million acres in wetlands and over 2 million in buffers. Other annual conservation benefits include an equivalent of approximately 52 million metric ton net reduction in carbon dioxide (CO 2 ) from sequestration, reduced fuel use and nitrous oxide emissions avoided from no fertilizer use; more than 2 million acres of wildlife habitat established; and a reduction of about 607 million pounds of nitrogen and 122 million pounds of phosphorus. From a wildlife perspective, it is estimated that CRP land produces over 13.5 million pheasants and 2.2 million ducks each year through habitat availability.", "The 113 th Congress reauthorized CRP as part of the farm bill, but reduced the acreage cap to achieve a cost savings. Other pressures from high crop prices, increased demand for land, and the potentially low rental rates could also impact the program's ability to enroll the most desirable acres in the future. Despite these challenges, supporters encourage maintaining CRP enrollment because of the numerous environmental gains achieved by the program, including improved water quality, soil health, and wildlife species habitat. Balancing the cost of maintaining such benefits with the cost of the program could continue to be a challenge for Congress.\nAppendix A. Continuous Sign-Up Initiatives\nContinuous sign-up is designed to enroll the most environmentally sensitive land into CRP through specific conservation practices or resource needs. Continuous sign-up includes a number of initiatives that target acres with specific resource concerns or support additional conservation practices. These are described below.\nConservation Reserve Enhancement Program (CREP)\nInitially implemented in 1997, CREP is a joint federal-state continuous sign-up program under CRP. CREP targets geographic regions with agricultural-related environmental concerns, such as Maryland's Chesapeake Bay and Florida's Everglades. Some states (e.g., New York and Ohio) have multiple CREP projects, each targeting a different area of the state. Projects are designed to address specific environmental objectives through targeted CRP enrollments. Sign-ups are continuous, non-competitive, and typically provide additional financial incentives beyond annual rental payments and cost-share assistance. There are currently 45 CREP agreements in 33 states.\nFarmable Wetland Program (FWP)\nThe Farmable Wetland Program (FWP) enrolls farmable or prior converted wetlands into CRP. In exchange for additional financial incentives, landowners agree to restore the hydrology of the wetland, establish vegetative cover, and prohibit development. For land to be considered eligible it must meet one of the following criteria:\na wetland or converted wetland cropped at least 3 of the immediately preceding 10 crop years; a constructed wetland that receives flow (surface and subsurface) from a row crop agriculture drainage system and is designed to provide nitrogen removal in addition to other wetland functions; land in a commercial pond-raised aquaculture in any year between 2002 through 2007; or cropland that was cropped at least 3 of 10 crop years between 1990 and 2002, and is subject to the natural overflow of a prairie wetland.\nThe enrollment of buffer acreage is also permitted to enhance wildlife benefits. No more than 100,000 acres may be enrolled in FWP in any state and no more than 750,000 acres nationally. The enrollment of wetlands (described under the first and second bullets above) is limited to 40 contiguous acres. \"Flooded farmland,\" or that defined in the fourth bullet above, is limited to 20 contiguous acres, and has a 20-acre limit.\nTransition Incentive Program (TIP)\nThe 2014 farm bill reauthorized the Transition Incentive Program (TIP) option for expiring CRP contracts. Under TIP land from expiring CRP contracts may be transitioned back into sustainable grazing or crop production by a beginning, veteran, or socially disadvantaged farmer or rancher. The land must be from a retired or retiring owner or operator (not a family member) in exchange for up to two additional years of annual CRP rental payments following the expiration of the CRP contract. The program was authorized to spend up to $33 million between FY2014 and FY2018. This is an increase over the previously authorized $25 million in the 2008 farm bill.\nOther Initiatives\nSeveral other initiatives under CRP have been developed over time, mostly in response to Administration priorities. Table A-1 includes a list of recent initiatives and their enrollment size.\nAppendix B. CRP Provisions in the 2014 Farm Bill\nTable B-1 compares CRP provisions in the Agricultural Act of 2014 ( P.L. 113-79 ) and prior law. U.S. Code citations are included in brackets in the 'Prior Law' column. Corresponding section numbers in P.L. 113-79 are included in brackets in the 'Enacted 2014 Farm Bill' column." ], "depth": [ 0, 1, 2, 3, 3, 2, 3, 3, 2, 2, 1, 2, 2, 2, 3, 3, 3, 4, 4, 3, 2, 2, 1 ], "alignment": [ "h0_title h1_title", "h0_full", "h0_full", "h0_full", "h0_full", "", "", "", "h0_full", "", "h0_title h1_title", "", "", "h0_title h1_title", "", "", "h1_title", "h1_full", "", "h0_full h1_full", "", "h1_full", "h0_full h1_full" ] }

{ "question": [ "What does the Conservation Reserve Program (CRP) do?", "How did the CRP develop?", "How does the CRP function?", "What are two types of sign ups?", "What does the CREP do?", "What has mainly impacted CRP enrollment?", "How will crop prices influence potential reenrollment of CRP participants?", "What have CRP participants identified as being a reason for decreased enrollment?", "How have these factors effected overall enrollment quantities?" ], "summary": [ "The Conservation Reserve Program (CRP) provides payments to agricultural producers to take highly erodible and environmentally sensitive land out of production and install resource conserving practices for 10 or more years.", "CRP was first authorized in the Food Security Act of 1985 (P.L. 99-198, 1985 farm bill) and is administered by the U.S. Department of Agriculture's (USDA's) Farm Service Agency (FSA) with technical support from other USDA agencies.", "CRP was first authorized in the Food Security Act of 1985 (P.L. 99-198, 1985 farm bill) and is administered by the U.S. Department of Agriculture's (USDA's) Farm Service Agency (FSA) with technical support from other USDA agencies. Participants offer land for enrollment through two types of sign-up: general and continuous.", "General sign-ups are competitive and only open during select times. Continuous sign-ups are not competitive, always open for enrollment, and offer additional financial incentives to those who qualify. Continuous sign-ups are targeted to specific environmental and resource concerns and operate through a number of initiatives.", "The largest and most well-known is the Conservation Reserve Enhancement Program (CREP), which partners with states to address agricultural-related environmental concerns in specific geographic regions.", "A number of factors have impacted CRP enrollment recently, mainly high commodity crop prices. These strong prices have encouraged farmers to put CRP acres, even marginal acres, back into production.", "These strong prices have encouraged farmers to put CRP acres, even marginal acres, back into production. This pressure could potentially reduce the number of CRP acres offered for reenrollment once they have expired or cause existing current CRP participants to seek an early release from their CRP contract.", "Some participants also have cited a potentially low CRP rental rate compared to the market rental rate as a reason for decreased enrollment interest.", "Despite these factors, enrollment has increased under continuous sign-ups and demand for the program, in general, still exceeds the current enrollment level." ], "parent_pair_index": [ -1, -1, -1, 2, -1, -1, 0, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 0, 0, 2, 2, 2, 2 ] }

{ "title": [ "", "Overview", "Federal R&D Funding Perspectives", "Agency Perspective", "Character of Work, Facilities, and Equipment Perspective", "Combined Perspective", "Multiagency R&D Initiatives Perspective", "FY2010 Supplemental Funding for Research and Development", "Multiagency R&D Initiatives", "National Nanotechnology Initiative", "Networking and Information Technology Research and Development Program", "U.S. Global Change Research Program", "FY2011 Appropriations Status", "Department of Defense22", "Department of Homeland Security23", "National Institutes of Health33", "Department of Energy40", "National Science Foundation49", "Department of Commerce", "National Institute of Standards and Technology74", "National Oceanic and Atmospheric Administration77", "National Aeronautics and Space Administration80", "Department of Agriculture85", "Department of the Interior87", "Environmental Protection Agency88", "Department of Transportation98" ], "paragraphs": [ "", "The 111 th Congress took continuing interest in the health of the U.S. research and development (R&D) enterprise and in providing sustained support for federal R&D activities. However, the 111 th Congress was unable to enact any of the regular appropriations bills. Two of the 12 regular appropriations bills passed the House (the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2011, and the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2011); none passed the Senate.\nTo provide for continuity of government operations into FY2011, the 111 th and 112 th Congress passed a series of continuing resolutions that provided funding for all agencies until enactment of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ) by the 112 th Congress on April 15, 2011. Division A of the act provides FY2011 appropriations for the Department of Defense; Division B provides full-year continuing funding for FY2011 for all other agencies at their FY2010 levels unless other provisions in the act specify otherwise.\nThe U.S. government supports a broad range of scientific and engineering research and development. Its purposes include addressing specific concerns, such as national defense, health, safety, the environment, and energy security; advancing knowledge generally; developing the scientific and engineering workforce; and strengthening U.S. innovation and competitiveness in the global economy. Most of the R&D funded by the federal government is performed in support of the unique missions of the funding agencies. The federal government has played an important role in supporting R&D efforts that have led to scientific breakthroughs and new technologies, from jet aircraft and the Internet to communications satellites and defenses against disease.\nOn February 1, 2010, President Obama requested $147.696 billion for R&D in FY2011, a 0.2% increase over the enacted FY2010 R&D funding level of $147.353 billion. The President's proposed FY2011 R&D funding included an emphasis on increasing funding for the physical sciences and engineering, an effort consistent with the intent of the America COMPETES Act ( P.L. 110-69 ) and President Bush's American Competitiveness Initiative (ACI). President Obama sought to achieve this objective largely through a 6.6% increase in aggregate funding for the Department of Energy Office of Science, the National Science Foundation, and the Department of Commerce National Institute of Standards and Technology's core laboratory research.\nMore broadly, in a 2009 speech before members of the National Academy of Sciences, President Obama put forth a goal of increasing the national investment in R&D to more than 3% of the U.S. gross domestic product (GDP). President Obama did not provide details on how this goal might be achieved (e.g., how much would be funded through increases in direct federal R&D funding or through indirect mechanisms such as the research and experimentation tax credit ); however doing so likely would require a substantial increase in public and private investment. In 2007, total U.S. R&D expenditures were $397.629 billion, or approximately 2.75% of GDP. Based on 2008 figures, reaching President Obama's 3% goal would have required a 8.96% real (above inflation) increase in national R&D funding. Increasing direct federal R&D funding by 8.96% in FY2011 would have required an increase of $12.9 billion above President Obama's request.\nIn addition, advocates for increased federal R&D funding—including President Obama's science advisor, John Holdren—have raised concerns about the potential harm of a \"boom-bust\" approach to federal R&D funding (i.e., rapid growth in federal R&D funding followed by much slower growth, flat funding, or even decline). The biomedical research community experienced a variety of challenges resulting from such a circumstance following the five-year doubling of the NIH budget that was completed in FY2003. With the NIH doubling came a rapid expansion of the nation's biomedical research infrastructure (e.g., buildings, laboratories, equipment), as well as rapid growth in university faculty hiring, students pursuing biomedical degrees, and grant applications to NIH. After the doubling, however, the agency's budget fell each year in real terms from FY2004 to FY2009. Critics assert a variety of damages of this boom-bust cycle, including interruptions and cancellations of promising research, declining share in the number of NIH grant proposals funded, decreased student interest in pursuing graduate studies, and reduced employment prospects for the large number of biomedical researchers with advanced degrees. According to then-NIH Director Elias Zerhouni, the damages have been particularly acute for early- and mid-career scientists seeking a first or second grant.\nAnalysis of federal R&D funding is complicated by several factors, including the Obama Administration's omission of congressionally directed spending from the FY2011 budget request and inconsistency among agencies in the reporting of R&D. Another complicating factor for FY2009 and FY2010 is the inclusion of funding for R&D, facilities, and equipment, and related activities in the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). ARRA funds supplement funding provided to agencies in P.L. 110-329 and P.L. 111-8 . Some ARRA funding was spent in FY2009 and in FY2010, and the balance of these funds will be spent in subsequent years. For purposes of this report, unless otherwise noted, comparisons of FY2009 and FY2010 R&D funding do not incorporate funding provided under P.L. 111-5 . As a result of these and other factors, the R&D agency figures reported by the White House Office of Management and Budget (OMB) and White House Office of Science and Technology Policy (OSTP), and shown in Table 1 , may differ somewhat from the agency budget analyses that appear later in this report.", "Federal R&D funding can be analyzed from a variety of perspectives that provide unique insights.", "The authorization and appropriations process views federal R&D funding primarily from agency and program perspectives. Table 1 provides data on R&D by agency for FY2009 (actual), FY2010 (estimate), ARRA, and FY2011 (request) as reported by OMB. Under President Obama's FY2011 budget request, six federal agencies would have received 94.8% of total federal R&D funding: the Department of Defense (DOD), 52.5%; the Department of Health and Human Services (HHS) (primarily the National Institutes of Health (NIH)), 21.8%; the National Aeronautics and Space Administration (NASA), 7.4%; the Department of Energy (DOE), 7.6%; the National Science Foundation (NSF), 3.8%; and the Department of Agriculture (USDA), 1.7%. This report provides an analysis of the R&D budget requests for these agencies, as well as for the Departments of Commerce (DOC), Homeland Security (DHS), the Interior (DOI), and Transportation (DOT), as well as the Environmental Protection Agency (EPA). In total, these departments and agencies accounted for more than 98% of FY2010 federal R&D funding.\nIn his FY2011 budget request, President Obama reiterated his intention to double the federal investment in three key science agencies over a decade from their FY2006 levels: DOE's Office of Science (up 4.6% above the estimated FY2010 level), NSF (up 8.0%), and DOC's National Institute of Standards and Technology (NIST) laboratories and construction funds (up 6.9%). This request essentially continued the American Competitiveness Initiative (ACI) initiated by President Bush to double physical sciences and engineering research in these agencies over 10 years (FY2007-FY2016). In 2007, Congress authorized substantial R&D increases for these agencies under the America COMPETES Act ( P.L. 110-69 ), setting a more aggressive seven-year doubling course.\nThe largest agency R&D increases in the President's FY2011 request were for NASA, $1.700 billion; the Department of Health and Human Services, $979 million (due primarily to a $956 million increase in R&D funding for NIH); the Department of Energy, $526 million; and the National Science Foundation, $479 million. Under President Obama's FY2011 budget request, DOD R&D funding would have been reduced by $3.542 billion, USDA R&D funding would have been cut by $143 million, and DHS R&D would have fallen by $104 million.", "Federal R&D funding can also be examined by the character of work it supports—basic research, applied research, and development—and funding provided for facilities and acquisition of major R&D equipment. (See Table 2 .) President Obama's FY2011 request included $31.341 billion for basic research, up $1.339 billion (4.5%) from FY2010; $30.276 billion for applied research, up $1.949 billion (6.9%); $81.455 billion for development, down $2.918 billion (3.5%); and $4.624 billion for facilities and equipment, down $27 million (0.6%).", "Combining these perspectives, federal R&D funding can be viewed in terms of each agency's contribution to basic research, applied research, development, and facilities and equipment. (See Table 3 .) The federal government is the nation's largest supporter of basic research, funding an estimated 57% of U.S. basic research in 2008, primarily because the private sector asserts it cannot capture an adequate return on long-term fundamental research investments. In contrast, industry funded only 17.7% of U.S. basic research in 2008. In FY2010, the Department of Health and Human Services, primarily the National Institutes of Health (NIH), accounts for more than half of all federal funding for basic research.\nIn contrast to basic research, industry is the primary funder of applied research in the United States, accounting for an estimated 60.8% in 2008, while the federal government accounted for an estimated 32.4%. Among federal agencies, HHS is the largest funder of applied research, accounting for nearly half of all federally funded applied research in FY2010.\nIndustry also provides the vast majority of funding for development, accounting for an estimated 84.1% in 2008, while the federal government provided an estimated 14.9%. DOD is the primary federal agency funder of development, accounting for 88.5% of total federal development funding in FY2010.", "Federal R&D funding can also be viewed in terms of multiagency efforts, such as the National Nanotechnology Initiative (see \" Multiagency R&D Initiatives \" below), and presidential initiatives.\nIn FY2010 supporting budget documents, President Obama stated that he would seek to double funding for basic research over 10 years (FY2006-FY2016) at the the NSF, NIST laboratories and construction accounts, and the DOE Office of Science (collectively, the \"target accounts\")—continuing the goal of President George W. Bush's American Competitiveness Initiative (ACI). In 2007 Congress established authorization levels for FY2008-FY2010 in the America COMPETES Act ( P.L. 110-69 ) that would put funding for research at these agencies on track to double in approximately seven years. Three years later, with enacted funding levels for FY2008-FY2010 below those authorized in P.L. 110-69 , Congress passed the America COMPETES Reauthorization Act of 2010 establishing authorization levels for FY2011-FY2013 for the target accounts at a growth rate consistent with a 10-year doubling path. In FY2011 supporting budget documents, President Obama extended his target for doubling to 11 years (FY2006-FY2017). However, FY2011 enacted funding for the target accounts was below both authorized and requested levels, setting a pace for a 15-year doubling—more than twice the length of time originally envisioned in the America COMPETES Act and about a third longer than the pace set by the 2010 reauthorization.\nFurther, it is unclear whether the Obama Administration still intends to support doubling of the target accounts. Following enactment of the 2011 budget, White House Communications Director Dan Pfeiffer stated on The White House Blog,\nEven though we will no longer double the funding of key research and development agencies, you will still see strong investments in National Institute of Standards and Technology, National Science Foundation and the [DOE] Office of Science.\nFigure 1 illustrates how requested, actual, and enacted appropriations (for FY2006 through FY2011) for the target accounts, in aggregate, compare to 7- and 10-year doubling rates.\nFor FY2011, President Obama proposed $13.255 billion in funding for NSF, DOE's Office of Science, and NIST's core research and facilities, an increase of $824 million (6.6%) above the FY2010 estimated funding level of $12.598 billion; Congress appropriated $12.311 billion for FY2011. The American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) also provided funding for each of the three ACI agencies totaling approximately $5.202 billion (in addition to the enacted levels in P.L. 110-329 ). (See Table 4 .)", "On February 12, President Obama submitted to Congress a request for FY2010 supplemental funding for disaster relief related to Hurricane Katrina and the Midwest floods, as well as for funds to implement settlement of certain legal cases. The request did not appear to contain any funding for R&D or related activities.\nOn March 21, 2010, the Disaster Relief and Summer Jobs Act of 2010 ( H.R. 4899 ), a FY2010 supplemental funding bill, was introduced in the House and was subsequently passed. The House-passed version of H.R. 4899 did not appear to contain any funding for R&D or related activities. On May 14, 2010, the Senate Committee on Appropriations adopted an amendment in the form of a substitute and reported the bill, accompanied by S.Rept. 111-188 . On May 27, 2010, the Senate passed H.R. 4899 , as amended. The Senate version of H.R. 4899 was named the Supplemental Appropriations Act, 2010, and includes funding for a variety of agencies and purposes, including funding for R&D and related activities. On July 1, 2010, the House passed an amended version of the bill that would, among other things, rescind funds for research and development accounts at the Departments of Commerce, Defense, Energy, Homeland Security, and Interior. Subsequently, the Senate considered the House-amended version of the bill. A cloture vote failed and the amended bill was sent back to the House. On July 27, 2010, the House passed the Senate's May 27 version of the bill; President Obama signed the bill ( P.L. 111-212 ) into law on July 29, 2010.", "", "President Obama's FY2011 budget request sought funding for three multiagency R&D initiatives. Funding for the National Nanotechnology Initiative (NNI) was requested in the amount of $1.776 billion for FY2011, $5 million (0.3%) below the estimated FY2010 level of $1.781 billion. The overall decrease in the FY2011 NNI funding request was due primarily to reductions of $87 million (20.0%) in funding for DOD nanotechnology R&D compared to its estimated FY2010 funding level, a decrease of $17 million (4.1%) in funding for NSF, and a decrease of $6 million (5.3%) in funding for NIST. These decreases were offset, in part, by requested increases in funding for other agencies, primarily DOE (up $65 million, 17.4%) and HHS (up $36 million, 9.5%).", "President Obama requested $4.281 billion in FY2011 funding for the Networking and Information Technology Research and Development (NITRD) program, $9 million (0.2%) below the estimated FY2010 level of $4.290 billion. The NITRD request included a reduction of $171 million (13.4%) in DOD funding, and increases of $80 million (7.3%) for NSF, $38 million (3.1%) for HHS, $29 million (5.9%) for DOE, and $15 million (14.4%) for DOC.", "President Obama proposed $2.561 billion for the U.S. Global Change Research Program (USGCRP) in FY2010, $439 million (20.7%) above the estimated FY2010 level of $2.122 billion. Four agencies were to receive the bulk of the FY2010 USGCRP funding increase: NASA (up $214 million, 20.0%); DOC, including the National Oceanic and Atmospheric Administration and NIST (up $77 million, 21.4%); NSF (up $51 million, 16.0%); and USDA (up $48 million, 44.0%).", "As of the end of the 111 th Congress, no regular appropriations bill had been enacted. Two of the 12 regular appropriations bills had passed the House (the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2011, and the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2011); none had passed the Senate.\nTo provide for continuity of government operations into FY2011, the 111 th and 112 th Congress passed a series of continuing resolutions that provided funding for all agencies until enactment of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ) by the 112 th Congress on April 15, 2011. Division A of the act provides FY2011 appropriations for the Department of Defense; Division B provides full-year continuing funding for FY2011 for all other agencies at their FY2010 levels unless other provisions in the act specify otherwise.\nThe remainder of this report provides a more in-depth analysis of research and development in 12 federal departments and agencies that receive more than 98% of federal R&D funding. Annual appropriations for these agencies are provided through 8 of the 12 regular appropriations bills. For each agency covered below, Table 5 shows the corresponding regular appropriations bill that provides funding for the agency, including its R&D activities.", "Congress supports research and development in the Department of Defense (DOD) through its Research, Development, Test, and Evaluation (RDT&E) appropriation. The appropriation primarily supports the development of the nation's future military hardware and software and the technology base upon which those products rely.\nNearly all of what DOD spends on RDT&E is appropriated in Title IV of the defense appropriation bill. (See Table 6 .) However, RDT&E funds are also appropriated in other parts of the bill. For example, RDT&E funds are appropriated as part of the Defense Health Program and the Chemical Agents and Munitions Destruction Program. The Defense Health Program supports the delivery of health care to DOD personnel and their families. Program funds are requested through the Operations and Maintenance appropriation. The program's RDT&E funds support congressionally directed research in such areas as breast, prostate, and ovarian cancer and other medical conditions. The Chemical Agents and Munitions Destruction Program supports activities to destroy the U.S. inventory of lethal chemical agents and munitions to avoid future risks and costs associated with storage. Funds for this program have been requested through the Procurement appropriation. The Joint Improvised Explosive Device Defeat Fund (JIEDDF) also contains RDT&E monies. However, the fund does not contain an RDT&E line item as do the two programs mentioned above. The Joint Improvised Explosive Device Defeat Office, which now administers the fund, tracks (but does not report) the amount of funding allocated to RDT&E. The JIEDDF funding is not included in the table below. Typically, Congress has funded each of these programs in Title VI (Other Department of Defense Programs) of the defense appropriations bill.\nRDT&E funds also have been requested and appropriated as part of DOD's separate funding to support efforts in what the Bush Administration had termed the Global War on Terror (GWOT), and what the Obama Administration refers to as Overseas Contingency Operations (OCO). Typically, the RDT&E funds appropriated for GWOT/OCO activities go to specified Program Elements (PEs) in Title IV. However, they are requested and accounted for separately. The Bush Administration requested these funds in separate GWOT emergency supplemental requests. The Obama Administration, while continuing to identify these funds uniquely as OCO requests, has included these funds as part of the regular budget, not in emergency supplementals. However, the Obama Administration will ask for additional OCO funds in supplemental requests, if the initial OCO funding is not enough to get through the fiscal year.\nIn addition, GWOT/OCO-related requests/appropriations often include money for a number of transfer funds. These include the Iraqi Freedom Fund (IFF), the Iraqi Security Forces Fund, the Afghanistan Security Forces Fund, the Mine Resistant and Ambush Protected Vehicle Fund (MRAPVF), and, beginning in FY2010, the Pakistan Counterinsurgency Capability Fund. Congress typically makes a single appropriation into each of these funds, and authorizes the Secretary to make transfers to other accounts, including RDT&E, at his discretion.\nFor FY2011, the Obama Administration requested $76.131 billion for DOD's baseline Title IV RDT&E, roughly $4.5 billion (between 5% and 6%) less than the funding available for baseline Title IV RDT&E in FY2010. The FY2011 requests for RDT&E in the Defense Health Program and the Chemical Agents and Munitions Destruction program were $500 million and $401 million, respectively. In addition, the Obama Administration requested $635 million in FY2011 OCO-related RDT&E. It also submitted a supplemental request for additional FY2010 OCO funding, which included $277 million for RDT&E.\nIn the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ), Congress provided $74.957 billion in Title IV RDT&E funding. This was $1.174 billion below the request and $5.698 billion below what was available in FY2010. A large share of the reductions were taken from the Systems Development and Demonstration activities of the departments, including reductions due to program adjustments in the Army's manned ground vehicle program, the Navy's Joint Strike Fighter program, terminations of the Air Forces HH-60 search and rescue helicopter program and the Marines Expeditionary Fighting Vehicle, and reductions in the Chemical/Biological Defense Program due in part to schedule delays. Congress also provided $1.176 billion in RDT&E through the Defense Health Program and $393 million in RDT&E through the Chemical Agents and Munitions Destruction Program. Congress also provided $979 billion in OCO RDT&E funding, including $24 billion for the Defense Health Program.\nRDT&E funding can be broken out in a couple of ways. Each of the military departments request and receive their own RDT&E funding. So, too, do various DOD agencies (e.g., the Missile Defense Agency and the Defense Advanced Research Projects Agency), collectively aggregated within the Defensewide account. RDT&E funding also can be characterized by budget activity (i.e., the type of RDT&E supported). Those budget activities designated as 6.1, 6.2, and 6.3 (basic research, applied research, and advanced technology development, respectively) constitute what is called DOD's Science and Technology Program (S&T) and represent the more research-oriented part of the RDT&E program. Budget activities 6.4 and 6.5 focus on the development of specific weapon systems or components (e.g., the Joint Strike Fighter or missile defense systems), for which an operational need has been determined and an acquisition program established. Budget activity 6.7 supports system improvements in existing operational systems. Budget activity 6.6 provides management support, including support for test and evaluation facilities.\nCongress is particularly interested in S&T funding since these funds support the development of new technologies and the underlying science. Ensuring adequate support for S&T activities is seen by some in the defense community as imperative to maintaining U.S. military superiority. This was of particular concern at a time when defense budgets and RDT&E funding were falling at the end of the Cold War. As part of its 2001 Quadrennial Review, DOD established a goal of stabilizing its baseline S&T funding (i.e., Title IV) at 3% of DOD's overall funding. Congress has embraced this goal.\nThe FY2011 baseline S&T funding request in Title IV is $11.819 billion, about $1.928 billion (14%) less than the funding available for baseline S&T in Title IV in FY2010. Furthermore, the S&T request for baseline Title IV is approximately 2.2% of the overall baseline DOD budget request ($549 billion, not counting funds for the Overseas Contingency Operations), short of the 3% goal. The S&T funding provided in the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ) totaled $11.982 billion, $163 million more than requested. Basic research was less than requested, but more that what was available in FY2010.\nWithin the S&T program, basic research (6.1) receives special attention, particularly by the nation's universities. DOD is not a large supporter of basic research, when compared to NIH or NSF. However, over half of DOD's basic research budget is spent at universities and represents the major contribution of funds in some areas of science and technology (such as electrical engineering and material science). The FY2011 request for basic research ($1.999 billion) is roughly $166 million (8%) less than what was available for Title IV basic research in FY2010.\nWhile the FY2011 request for RDT&E is below the funding provided in FY2010, Congress provided more funding than requested in FY2010, as it has for a number of years. Even so, the FY2011 request is roughly $2.5 billion below the Administration's FY2010 request. The Administration requested more in FY2011 than FY2010 for basic research and applied research.\nThe Senate Appropriations Committee added the Obama Administration's FY2010 OCO Supplemental request to H.R. 4899 ; see Table 7 . The Administration requested $277 million in supplemental RDT&E. The committee recommended $274 million, eliminating funds for the Army request, reducing funds for classified programs, providing a net decrease in funds for the Air Force, and providing a net increase in funds for the Navy and Defensewide accounts. The House resolved to concur with the Senate's action on RDT&E.", "The Department of Homeland Security (DHS) requested $1.344 billion for R&D and related programs in FY2011, a 4% decrease from $1.407 billion in FY2010. This total included $1.018 billion for the Directorate of Science and Technology (S&T), $306 million for the Domestic Nuclear Detection Office (DNDO), and $20 million for Research, Development, Test, and Evaluation (RDT&E) in the U.S. Coast Guard. The final appropriation for these activities was $1.122 billion, including $767 million for S&T, $331 million for DNDO, and $24 million for Coast Guard RDT&E. (See Table 8 .)\nThe S&T Directorate is the primary DHS R&D organization. Headed by the Under Secretary for Science and Technology, it performs R&D in several laboratories of its own and funds R&D performed by the DOE national laboratories, industry, universities, and others. The Administration requested a total of $1.018 billion for the S&T Directorate for FY2011. This was 2% more than the FY2010 appropriation, but it included $109 million for radiological and nuclear countermeasures R&D, an activity formerly funded in DNDO. The request proposed reducing funding for the directorate's other activities by 9%. A proposed reduction of $39 million for the Infrastructure and Geophysical Division included the termination of local and regional initiatives previously established or funded at congressional direction. The request for Laboratory Facilities included no funds for the planned National Bio and Agro-Defense Facility (NBAF), which received $32 million in FY2010, but DHS stated that it planned to request a reprogramming of unobligated prior-year funds to support construction of a utility plant at the NBAF site. The final appropriation was $767 million: $828 million in new funds and a rescission of $60 million remaining unobligated from prior years. For the most part, Congress did not specify how the final appropriation should be allocated to particular programs.\nThe construction of NBAF will likely require significant increases in Laboratory Facilities funding over the next several years. It may also result in increased congressional oversight. For construction of NBAF and decommissioning of the Plum Island Animal Disease Center (PIADC), which NBAF is intended to replace, DHS expects to need further appropriations of $691 million between FY2012 and FY2017. The estimated total federal cost of the NBAF project increased from $451 million in December 2006 to $615 million in May 2009. Additional site-specific infrastructure and utility upgrade costs of $110 million are to be contributed in-kind by Kansas State University and its partners. Decommissioning PIADC is expected to cost another $190 million. These estimated costs have not changed since May 2009, but the completion schedule has been extended by one year because the process of selling Plum Island is taking longer than DHS had planned. In the Department of Homeland Security Appropriations Act, 2009 ( P.L. 110-329 , Div. D, §540) and the Department of Homeland Security Appropriations Act, 2010 ( P.L. 111-83 , §540), Congress authorized DHS to use receipts from the sale of Plum Island, subject to appropriation, to offset NBAF construction and PIADC decommissioning costs. The final FY2011 appropriation continued this authorization from the FY2010 act.\nCongress has been interested for several years in DHS policies and procedures for testing and evaluation (T&E) of large acquisition projects. This interest has especially focused on the T&E role of the S&T Directorate in acquisitions by other DHS components. The Homeland Security Act of 2002 ( P.L. 107-296 , §306) authorizes the Secretary of Homeland Security, acting through the Under Secretary for Science and Technology, to \"issue necessary regulations with respect to ... testing and evaluation activities of the Department.\" Under current DHS policy, in establishing T&E policies and procedures for DHS acquisitions, the Under Secretary acts through the Director of the S&T Directorate's Test and Evaluation and Standards Division (TSD) and a special assistant in the TSD known as the Director of Operational Testing and Evaluation (DOT&E). Congressional oversight of DHS acquisition and T&E may therefore focus attention on the S&T Directorate's funding for Test and Evaluation and Standards.\nStatutory authority for the Homeland Security Institute (HSI) expired in April 2009. Under its general authority to establish federally funded R&D centers, the S&T Directorate has replaced HSI with the Homeland Security Studies and Analysis Institute (HSSAI). It has also established a new Homeland Security Systems Engineering and Development Institute (HSSEDI). Both institutes are funded mostly on a cost-reimbursement basis by other S&T programs and other DHS and non-DHS agencies. The institutes attracted outside users in FY2009 at only about one-third the level that DHS had anticipated. Nevertheless, DHS expects them to grow rapidly in FY2010 and continue growing in FY2011. The FY2011 budget justification projected reimbursable obligations of $187 million in FY2011, more than four times the FY2009 level of $42 million.\nThe Domestic Nuclear Detection Office (DNDO) is the primary DHS organization for combating the threat of nuclear attack. It is responsible for all DHS nuclear detection development, testing, evaluation, acquisition, and operational support. Under the Administration's FY2011 budget, DNDO's research role was to be transferred to the S&T Directorate. The Administration requested a total of $306 million for DNDO for FY2011. This was a 20% decrease from the FY2010 appropriation. Excluding the proposed transfer of the Transformational R&D program, the request for the remaining DNDO activities was a 12% increase. In some cases, however, the request proposed substantial shifts in emphasis. The request for Systems Acquisition included $53 million for human-portable radiation detection systems, versus none in FY2010. The request for Systems Development was reduced by $31 million. The final appropriation provided $331 million for DNDO: $342 million in new funds and a rescission of $11 million remaining unobligated from prior years. Congress did not specify how the final appropriation should be allocated to programs below the account level.\nCongressional attention has focused in recent years on the testing and analysis DNDO has conducted to support its planned purchase and deployment of Advanced Spectroscopic Portals (ASPs), a type of next-generation radiation portal monitor. Congress has included a requirement for secretarial certification before full-scale ASP procurement in each homeland security appropriations act from FY2007 through FY2010. The expected date for certification has been postponed several times. In February 2010, DHS decided that it would no longer pursue the use of ASPs for primary screening, although it will continue developing and testing them for use in secondary screening. The final FY2011 appropriation continued the certification requirement from the FY2010 act.\nThe global nuclear detection architecture overseen by DNDO remains an issue of congressional interest. According to the FY2011 budget justification, the proposed reduction in funding for Systems Development reflected \"a shift in DNDO priorities to developing a wider range of potential solutions to enduring vulnerabilities in the global nuclear detection architecture\" and would result in increased funding for \"systems studies, as well as testing and piloting existing technologies in new operational environments.\" Congress may wish to consider the basis for and implications of these changes in priorities, including how they may affect other elements of the global architecture. Other agencies with a role in the architecture, in addition to DHS, include the DOD, DOE, Department of Justice, Department of State, and the intelligence community.\nThe mission of DNDO, as established by Congress in the SAFE Port Act ( P.L. 109-347 , Title V), includes serving as the primary federal entity \"to further develop, acquire, and support the deployment of an enhanced domestic system\" for detection of nuclear and radiological devices and material (6 U.S.C. 592). The act also eliminated any explicit mention of radiological and nuclear countermeasures from the statutory duties and responsibilities of the Under Secretary for S&T. Congress may consider whether the proposed transfer of DNDO's research activities to the S&T Directorate is consistent with congressional intent in the SAFE Port Act. Congress may also choose to consider the acquisition portion of DNDO's mission. Most of DNDO's funding for Systems Acquisition was eliminated in FY2010, and that year's budget stated that \"funding requests for radiation detection equipment will now be sought by the end users that will operate them.\" In contrast, the FY2011 request for Systems Acquisition included more funding than ever before for DNDO's procurement of human-portable radiation detectors on behalf of the Coast Guard, Customs and Border Protection, and the Transportation Security Administration. The reasons for this apparent reversal of policy were not explained in the FY2011 budget justification for DNDO.", "President Obama's FY2011 budget requested a total of $31.8 billion for NIH at the program level, almost a $1 billion (2.9%) increase over the FY2010 level of $30.9 billion. FY2010 funding was provided in Division D of the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ). The Department of Defense and Full-Year Continuing Appropriations Act, P.L. 112-10 , provided $30.6 billion at the program level for the agency in FY2011, $317 million less than FY2010, about a 1% reduction. The FY2011 appropriation was $1.217 billion less than the FY2011 request, a 3.8% reduction from the request level. See Table 9 .\nFunding for NIH comes primarily from the annual appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies (Labor/HHS), with an additional amount for Superfund-related activities from the appropriations bill for the Department of the Interior, Environment, and Related Agencies (Interior/Environment). Those two bills provide NIH's discretionary budget authority. In addition, NIH receives mandatory funding of $150 million annually that is provided in the Public Health Service (PHS) Act for a special program on diabetes research, and $8.2 million annually for the National Library of Medicine from a transfer within PHS. Each year since FY2002, Congress has provided that a portion of NIH's Labor/HHS appropriation be transferred to the Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria. The transfer, usually $300 million annually, is part of the U.S. contribution to the Global Fund. The total funding available for NIH activities, taking account of add-ons and transfers, is the program level. The \"NIH program level\" cited in the Administration's FY2011 budget documents does not reflect the Global Fund transfer; Table 9 shows the program level both before and after the transfer. Discussions in this section refer to the program level after the transfer.\nThe agency's organization consists of the Office of the NIH Director (OD) and 27 institutes and centers (ICs). OD sets overall policy for NIH and coordinates the programs and activities of all NIH components, particularly in areas of research that involve multiple institutes. The ICs focus on particular diseases, areas of human health and development, or aspects of research support. Each IC plans and manages its own research programs in coordination with OD. Congress provides a separate appropriation to 24 of the 27 ICs, to OD, and to a Buildings and Facilities account. (Three centers, not listed in Table 9 , are funded through the NIH Management Fund.)\nFor FY2011, NIH identified five areas of \"exceptional scientific opportunity\" in which it planned to target resources. Specific programmatic increases in the request are described below. Where available, information is also given on final FY2011 funding.\nGenomics and Other High Throughput Technologies. Technologies such as DNA sequencing, microarrays, small molecule screening, new imaging methods, and computational biology have enabled basic science research on a much more comprehensive scale than in the past. NIH planned to continue work on The Cancer Genome Atlas, cataloging the characteristics of 20 common malignancies, and to undertake complete genome sequencing and analysis of 300 autism spectrum disorder cases. In support of the National Nanotechnology Initiative, NIH requested an increase of $22 million (6.0%) to a total of $382 million for nanotechnology research.\nTranslational Medicine. NIH continues to emphasize the movement of basic science discoveries into development of improved treatments. The request sought to double support for a trans-NIH initiative launched in FY2009, the Therapeutics for Rare and Neglected Diseases (TRND) program, from $24 million to $50 million. The program focuses on the pre-clinical stage of drug development in partnership with the private sector. The Clinical and Translational Science Awards (CTSA) program would have increased to a total of $500 million in support of a consortium of 60 academic health centers doing collaborative research and training. Cancer researchers planned the initiation of 30 new drug trials in FY2011 and a doubling of the number of novel compounds in Phase 1-3 clinical trials by 2016. NIH's HIV/AIDS research portfolio would have increased 3.2% to about $3.2 billion. Funding for stem cell research was requested for a $30 million increase to $1.1 billion.\nScience to Enable Health Reform. In recent years, NIH has expanded its support of projects in fields that could improve the quality and cost-effectiveness of treatments. Examples include comparative effectiveness research, health disparities research, the identification of prevention approaches, personalized medicine, pharmacogenomics, health economics research, and social and behavioral research. A trans-NIH initiative called the Basic Behavioral and Social Sciences Opportunity Network (OppNet) was started in FY2010 with ARRA funds. It aims to enhance the understanding of fundamental mechanisms of behavioral and social functioning to develop new approaches for reducing risky behaviors and improving health. The FY2011 request proposed a $20 million investment in OppNet, shared 50/50 between OD and support from all the ICs.\nGlobal Health. In addition to the Global Fund transfer (discussed above), NIH has long supported research on worldwide health threats. As part of the Obama Administration's Global Health Initiative, the FY2011 budget proposed increased emphasis on researching prevention, diagnostics, and therapeutics for neglected diseases in the developing world. NIH works in partnership with other funding organizations such as the Bill and Melinda Gates Foundation. Although the request detailed no specific funding amounts for overall NIH work on global health, the Fogarty International Center's budget would have increased by 4.3% from $70 million to $73 million. In the enacted appropriation, Fogarty received $69 million.\nReinvigorating the Biomedical Research Community. The FY2011 budget requested a 6.0% increase in stipends for pre- and post-doctoral trainees supported by the Ruth L. Kirschstein National Research Service Awards program. The increase of $42 million (to a total of $824 million) was part of the Administration's emphasis on supporting science, technology, engineering, and mathematics (STEM) education programs. In FY2010 NIH contributed $12 million in ARRA funds to DOE for the construction of a promising research tool, the National Synchrotron Light Source-II. NIH planned to provide an additional $33 million in FY2011. The high-performance light source is expected to become operational in 2015.\nResearch Project Grants . Of the funds appropriated to NIH each year, about 84% goes to extramural research as grants, contracts, and other awards. The funding supports research performed by more than 300,000 scientists and technical personnel who work at over 3,100 universities, hospitals, medical schools, and other research institutions around the country and abroad. The primary funding mechanism for supporting investigator-initiated research is the competitive, peer-reviewed research project grant (RPG). In the FY2011 request, funding for RPGs, at $17.1 billion, represented about 53% of NIH's budget. The request would have supported about 37,000 awards, 195 RPGs more than the projection for FY2010 (excluding ARRA). Within that total, 9,052 competing RPG awards were expected to receive support, 199 fewer than in FY2010. (\"Competing\" awards means new grants plus competing renewals of existing grants.) For noncompeting continuation awards the request provided a 2% increase (for inflation) and a 2.0% increase in the average cost of competing RPGs (raising that cost to about $443,000 per award). Estimated support for RPGs under the final FY2011 appropriation was $16.4 billion, including 8,717 competing grants and about 36,600 total RPG awards.\nOther Funding Mechanisms . Changes proposed in the request for other funding mechanisms within the NIH budget included increased support for research centers, up $56 million (1.9%) to $3.090 billion. Support for grants in the Other Research category would have increased by $47 million (2.6%) to a total of $1.854 billion. The requested level for training would have provided a stipend increase and support 17,164 Full-Time Training Positions, 92 (0.5%) fewer than in FY2010. R&D contracts were proposed to increase by $86 million (2.5%) to $3.546 billion, including $300 million for the Global HIV/AIDS Fund. The NIH intramural research program, representing about 10% of the NIH budget, would have increased by $109 million (3.2%) to a total of $3.394 billion. The request included a proposed increase of $73 million (5.0%) to a total of $1.525 billion for research management and support. As has been the case for the past five years, no new funding was requested for extramural research facilities construction and renovation (ARRA provided $1.0 billion for this purpose). The original request amount of $126 million for Buildings and Facilities was reduced by $103 million to $23 million on August 20, 2010. The final FY2011 funding levels provided through P.L. 112-10 included $2.994 billion for research centers, $1.813 billion for other research grants, support for 16,802 training positions, $3.391 billion for R&D contracts (including the Global Fund), $3.287 billion for the intramural research program, and $1.519 billion for research management and support.\nThe OD appropriation covers its own leadership and management operations and a variety of cross-cutting programs. The request would have provided $1.220 billion for OD in FY2011, an increase of $43 million (3.7%) over FY2010. The President requested funding of $194 million for continuation of the National Children's Study, a 0.3% increase. The request included $100 million (up $3 million) for research on medical countermeasures against nuclear, radiological, and chemical threats. A total of $196 million (up $15 million and 8.3%) was requested for several program coordination offices that work with the ICs, including $10 million in the Office of Behavioral and Social Sciences Research for the OppNet initiative described earlier. The final appropriation provided $1.167 billion for OD, including $191 million for the National Children's Study.\nAlso funded through the OD account is the NIH Common Fund, which supports NIH Roadmap initiatives and other trans-institute research. The NIH Roadmap for Medical Research is a set of trans-NIH research activities designed to support high-risk/high-impact research in emerging areas of science or public health priorities. For FY2011, the President requested $562 million for the Common Fund/Roadmap, up $18 million (3.2%) from FY2010. The final appropriation provided $543 million, about level with FY2010 funding. Some Roadmap programs that have been supported for five years would transition to the ICs for continued support. The Common Fund supported a number of initiatives with ARRA money.\nNIH and three of the other Public Health Service agencies within HHS are subject to a budget tap called the PHS Program Evaluation Set-Aside. Section 241 of the PHS Act (42 U.S.C. § 238j) authorizes the Secretary to use a portion of eligible appropriations to assess the effectiveness of federal health programs and to identify ways to improve them. The set-aside has the effect of redistributing appropriated funds for specific purposes among PHS and other HHS agencies. Section 205 of the FY2010 Labor/HHS appropriations act capped the set-aside at 2.5%, instead of the 2.4% maximum that had been in place for several years. The FY2011 budget proposed to increase the set-aside to 2.9%, but the final appropriation retained the 2.5% level. NIH, with the largest budget among the PHS agencies, becomes the largest \"donor\" of program evaluation funds, and is a relatively minor recipient. By convention, budget tables such as Table 9 do not subtract the amount of the evaluation tap, or of other taps within HHS, from the agencies' appropriations.", "The Administration requested $12.797 billion for Department of Energy (DOE) R&D and related programs in FY2011, including activities in three major categories: science, national security, and energy. This request was 7.2% more than the FY2010 appropriation of $11.941 billion. The enacted FY2011 appropriation was $11.590 billion. (See Table 10 for details.)\nThe request for the DOE Office of Science was $5.121 billion, an increase of 4.4% from the FY2010 appropriation of $4.904 billion. The Administration's stated goal is to double the funding of the Office of Science. This continues a plan initiated by the Bush Administration in January 2006. The original target under both Administrations was to achieve the doubling goal in the decade from FY2006 to FY2016. The current policy no longer specifies a completion date. The 4.4% increase requested for FY2011 was less than the 7.2% annual growth rate required to achieve a doubling in 10 years. The America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) authorized $5.247 billion for the Office of Science in FY2011. The enacted FY2011 appropriation was $4.843 billion.\nThe Administration's budget request proposed increases for most of the research programs of the Office of Science. The largest was for basic energy sciences. Among other changes, the request for this program included $34 million for a new energy innovation hub on materials for batteries and energy storage and $24 million for the existing hub on fuels from sunlight. The Administration proposed to initiate eight energy innovation hubs in FY2010, but Congress funded only three. The aim of the hubs is \"to address basic science and technology hindering the nation's secure and sustainable energy future\" by assembling multidisciplinary teams of researchers \"spanning science, engineering, and other disciplines, but focused on a single critical national need identified by the Department.\" The request tripled funding for Office of Science graduate fellowships to $15 million. In fusion energy sciences, it proposed decreasing the U.S. contribution to International Thermonuclear Experimental Reactor (ITER) from $135 million in FY2010 to $80 million in FY2011 because of delays in the construction schedule. The current estimate for ITER's total project cost remains between $1.45 billion and $2.2 billion. Despite a slip of several years in the expected start-up date for ITER, DOE stated in February 2011 that \"the costs associated with the schedule delays to date ... are manageable within the existing ... cost range.\" Damage to component test facilities in Japan, however, caused by the Fukushima earthquake and tsunami in March 2011, may result in additional delays. The enacted FY2011 appropriation provided less than the request for each of the six major research programs of the Office of Science. For details, see Table 10 .\nThe request for DOE national security R&D was $3.850 billion, a 10.6% increase from $3.481 billion in FY2010. The request included a proposed increase of $58 million in funding for experiments and analysis in support of advanced certification of nuclear weapons. It proposed an increase of $125 million for the naval reactors program, to accelerate the continuing design of reactors for the Ohio-class ballistic missile submarine, modernization of the land-based prototype reactor, and recapitalization of program infrastructure. It included an increase of $34 million for nonproliferation and verification R&D to support testing and evaluation of new technologies for treaty monitoring. The enacted FY2011 appropriation provided $3.697 billion, including more than the request for nonproliferation and verification R&D and less than the request in the other major categories. For details, see Table 10 .\nThe request for DOE energy R&D was $3.825 billion, up 7.6% from $3.556 billion in FY2010. In the energy efficiency and renewable energy program, requested changes included a $98 million increase for solar and wind energy; a $37 million increase for energy efficiency; a $37 million decrease for hydrogen and fuel cell technologies; and $50 million for the RE-ENERGYSE program on education and workforce development in energy science and engineering, for which Congress appropriated no funds in FY2010. The request included an increase of $37 million for nuclear energy and proposed to restructure the program to focus more on long-term R&D rather than short-term demonstration projects. In fossil energy R&D, the request provided no funds for natural gas technologies or unconventional fossil energy technologies; DOE budget documents described this proposal as \"consistent with Administration policy to phase out fossil fuel subsidies.\" The enacted FY2011 appropriation included $376 million less than the request for energy efficiency and renewable energy and smaller reductions in each of the other major categories. For details, see Table 10 .\nThe Administration requested $300 million for the Advanced Research Projects Agency–Energy (ARPA-E). This agency received no appropriation for FY2010. The bulk of its prior funding was provided by the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). In recommending no funds for ARPA-E in FY2010, the House Committee on Appropriations explained that ARRA funds remained available and that \"the decision not to provide any additional funding ... [did] not in any way suggest a lack of commitment to this program by the Committee.\" The enacted FY2011 appropriation for ARPA-E was $180 million.", "The National Science Foundation (NSF) supports basic research and education in the non-medical sciences and engineering. Congress established the Foundation as an independent federal agency in 1950 and directed it to \"promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense; and for other purposes.\" The NSF is a primary source of federal support for U.S. university research. It is also responsible for significant shares of the federal science, technology, engineering, and mathematics (STEM) education program portfolio and federal STEM student aid and support.\nNSF's FY2011 Current Plan includes a total of $6.806 billion for activities at the Foundation. This amount is $166.3 million (-2.4%) less than the FY2010 actual level of $6.972 billion and $618.5 million (-8.3%) less than the President's FY2011 request for $7.424 billion. (See Table 11 .)\nAt the time it was released, the President's FY2011 budget request sought to continue an ongoing effort to double funding for the NSF, NIST laboratories and construction accounts, and the DOE Office of Science (collectively, the \"targeted accounts\"). The status of the so-called \"doubling path\" policy for the targeted accounts is now uncertain. FY2011 enacted funding for the targeted accounts was below authorized levels and set a pace for a 15-year doubling—more than twice the length of time envisioned in the 2007 America COMPETES Act ( P.L. 110-69 ) and about a third longer than the pace set by the 2010 reauthorization ( P.L. 111-358 ). Further, although the FY2011 version of the President's Plan for Science and Innovation set an 11-year doubling path, following enactment of the 2011 budget, White House Communications Director Dan Pfeiffer stated on The White House Blog,\nEven though we will no longer double the funding of key research and development agencies, you will still see strong investments in National Institute of Standards and Technology, National Science Foundation and the [DOE] Office of Science.\nThe NSF organizes its budget into six major accounts: Research and Related Activities (RRA), Education and Human Resources (EHR), Major Research Equipment and Facilities Construction (MREFC), Agency Operations and Award Management (AOAM), Office of the Inspector General (OIG), and the National Science Board (NSB). The RRA, EHR, and MREFC accounts represent the core of the NSF's research and education program activities and funding.\nThe FY2011 Current Plan for RRA is $5.510 billion, $105.5 million (-1.9%) below the FY2010 actual level of $5.615 billion and $509.0 million (-8.5%) below the President's FY2011 budget request for $6.019 billion. RRA primarily supports basic research. Typically the Mathematics and Physical Sciences Directorate receives the most RRA funding—about a quarter ($1.308 billion or 23.7%) of the RRA FY2011 portfolio goes to this directorate (down from $1.368 billion or 24.4% in FY2010). The RRA directorate with the largest annual percentage increase—FY2011 Current Plan levels over FY2010 actual—is the Computer and Information Science and Engineering (CISE) Directorate, with an increase of $16.4 million (2.6%, $635.1 million total) over the FY2010 actual level of $618.7 million. All other RRA directorates and offices experienced reductions or were held constant between FY2010 and FY2011. Three directorates' proportional shares of RRA funding increased in FY2011 (CISE, Biological Sciences (BIO), and Geosciences (GEO)), while the proportional shares of three directorates (Mathematical and Physical Sciences (MPS), and Social, Behavioral, and Economic Sciences (SBE)) and the offices of Polar Programs (OPP) and Integrative Activities (IA) fell.\nMost RRA funds are distributed through a merit-based, peer review system to U.S. colleges and universities. Questions about NSF's research-related activities include whether NSF-supported research is sufficiently high-risk, whether the peer review process favors certain institutions or investigators, whether the Foundation receives enough funding to support the number of competitive proposals it receives, and whether there is appropriate balance between basic and applied research in the NSF portfolio. Congress has responded to these questions in a variety of ways. These include directing NSF to pursue high-risk, high-reward basic research and research in particular fields, such as climate change. Similarly, Congress established the Experimental Program to Stimulate Competitive Research program (EPSCoR, $154.4 million in FY2011 request) in response to concerns about the geographic distribution of NSF's research grants.\nThe NSF asserts that international research partnerships are critical to maintaining a competitive advantage, addressing global issues, and capitalizing on global economic opportunities. For FY2011, the Administration requested $53.3 million for the Office of International Science and Engineering (OISE). OISE serves as a liaison with research institutes and foreign agencies, and facilitates coordination and implementation of NSF research and education efforts.\nThe FY2011 request for NSF also supported several interagency R&D priorities, including the National Nanotechnology Initiative ($401.3 million), U.S. Global Change Research Program ($369.9 million), Homeland Security activities ($405.4 million), and Networking and Information Technology R&D ($1.170 billion).\nThe FY2011 Current Plan funding level for EHR is $861.0 million. This amount is $11.7 million (-1.3%) less than the FY2010 actual level of $872.8 million and $31.0 million (-3.5%) less than the President's FY2011 request for $892.0 million. The President's FY2011 EHR budget request included $107.6 million in support of its goal of tripling the number of new Graduate Research Fellowship program awardees by FY2013. Other FY2011 requests for EHR programs included Discovery Research K-12 ($118.7 million), Mathematics and Science Partnership ($58.2 million), Robert Noyce Scholarship Program ($55.0 million), Integrative Graduate Education and Research Traineeship ($29.5 million), and Informal Science Education ($64.4 million). Program-level information for EHR in FY2011 is unavailable. The Division of Human Resource Development (HRD)—which hosts many of NSF's broadening participation programs for underrepresented populations—increased its proportional share of the EHR portfolio in FY2011 and received the only year-over-year increase in EHR funding. Funding for all other EHR divisions—including those focused on undergraduates, graduates, and STEM education R&D—decreased in both proportional and absolute terms between FY2010 and FY2011.\nNSF's FY2011 budget request proposed a realignment of the Foundation's minority-serving institution (MSIs) programs (e.g., Historically Black Colleges and Universities—Undergraduate Program). NSF's MSI programs include both educational and R&D components. Under the Administration's proposal, NSF's different MSI programs would have been consolidated into the Comprehensive Broadening Participation of Undergraduates (CBPU) in STEM program. Hispanic-Serving Institutions (HSIs) would have been eligible for CBPU funds. The FY2011 request for the consolidated program was $103.1 million, $13.0 million more than combined funding for NSF's MSI programs in FY2010 (estimated). Some analysts objected to this change and argued for keeping NSF's MSI programs as separate programs, noting that MSIs serve different populations with different needs. However, keeping the programs separate might result in less availability of funds for HSIs because NSF has not established, and Congress has not specifically appropriated funds for, a separate HSI program at the Foundation. Congressional appropriators and authorizers rejected the Administration's FY2011 request to consolidate NSF's MSI programs.\nThe FY2011 Current Plan funding level for MREFC is $117.1 million. This amount is $48.8 million (-29.4%) less than the FY2010 actual level of $165.9 and $48.1 million (-29.1%) less than the President's FY2011 request for $165.2 million. In its FY2011 budget request, NSF anticipated construction of the National Ecological Observatory Network (NEON, $20.0 million) and sought continued support for four ongoing construction projects: Advanced Laser Interferometer Gravitational Wave Observatory ($23.6 million); Atacama Large Millimeter Array ($13.9 million); Advanced Technology Star Telescope ($17.0 million); and Ocean Observatories Initiative ($90.7 million).\nMREFC funds the acquisition and construction of major research facilities and equipment that support research intended to extend the boundaries of science, engineering, and technology. NSF gives highest priority to ongoing projects and second highest priority to projects that have been approved by the National Science Board for new starts. To qualify for support, NSF requires MREFC projects to have \"the potential to shift the paradigm in scientific understanding and/or infrastructure technology.\" There has been considerable debate in the academic and scientific communities and in Congress about the management and oversight of major MREFC projects and the prioritization of potential projects. One continuing question has focused on the process for including major projects in the upcoming budget cycle. In a management report on major projects, NSF contended that because of the changing nature of science and technology, it is necessary to have the flexibility to reconsider facilities at the various stages of development. In addition, NSF asserts that it must be able to respond effectively to possible changes in interagency participation, international and cooperative agreements, or co-funding for major facilities. NSF maintains that while some concepts may evolve into major research projects, others may prove infeasible for project support.\nFY2011 Current Plan funding for the AOAM, NSB, and OIG accounts are $299.4 million, $4.5 million, and $14.0 million, respectively. These amounts are similar to FY2010 actual levels and are $29.8, $0.3, and $0.4 million less than the Administration's FY2011 request, respectively.", "", "The National Institute of Standards and Technology (NIST) is a laboratory of the Department of Commerce with a mandate to increase the competitiveness of U.S. companies through appropriate support for industrial development of precompetitive, generic technologies and the diffusion of government-developed technological advances to users in all segments of the American economy. NIST research also provides the measurement, calibration, and quality assurance techniques that underpin U.S. commerce, technological progress, improved product reliability, manufacturing processes, and public safety.\nThe final FY2011 appropriations legislation, P.L. 112-10 , funds NIST at $750.1 million, 12.4% below the FY2010 appropriation of $856.6 million and 18.4% below the President's budget request of $918.9 million. Support for primarily in-house R&D under the Scientific and Technical Research and Services (STRS) account (including the Baldrige National Quality Program) totals $507.0 million, 1.6% less than the FY2010 figure of $515.0 million and 13.3% less than the $584.5 million the Administration proposed. The Manufacturing Extension Partnership (MEP) program receives $128.4 million, 3.0% more than the FY2010 appropriation of $124.7 million and 1.0% below the Administration's budget proposal figure of $129.7 million. The $44.8 million for the Technology Innovation Program (TIP) represents a decrease of 35.9% from the $69.9 million appropriated in FY2010 and is 43.9% less than the $79.9 million the President requested. The construction budget declines 52.4% from FY2010 funding of $147.0 million to $69.9 million and is 44.0% below the Administration's proposal of $124.8 million. (See Table 12 .)\nContinued support for NIST extramural programs—currently the Manufacturing Extension Partnership and the Technology Investment Program—directed toward increased private sector commercialization has been a major issue. Some Members of Congress have expressed skepticism over a \"technology policy\" based on providing federal funds to industry to develop pre-competitive generic technologies. This approach, coupled with pressures to balance the federal budget, led to significant reductions in appropriations for several of these NIST activities. The Advanced Technology Program (ATP) and the MEP, which accounted for more than 50% of the FY1995 NIST budget, were proposed for elimination. In 2007, ATP was terminated and replaced by the Technology Innovation Program.\nWhile much of the legislative debate has focused on extramural efforts, increases in spending for the NIST laboratories that perform the research essential to the mission responsibilities of the agency have tended to remain small. As part of the American Competitiveness Initiative, announced by former President Bush in the 2006 State of the Union address, the Bush Administration stated its intention to double funding over 10 years for \"innovation-enabling research\" done at NIST through its \"core\" programs (defined as internal research in the STRS account and the construction budget). In April 2009, President Obama stated his decision to double the budget of key science agencies, including NIST, over the next 10 years. While additional funding has been forthcoming, it remains to be seen how support for internal R&D at NIST will evolve and how this might affect financing of extramural programs such as TIP and MEP.", "The National Oceanic and Atmospheric Administration (NOAA) conducts scientific research in areas such as ecosystems, climate, global climate change, weather, and oceans; supplies information on the oceans and atmosphere; and conserves coastal and marine organisms and environments. NOAA was created in 1970 by Reorganization Plan No. 4. The reorganization was intended to unify the nation's environmental activities and to provide a systematic approach for monitoring, analyzing, and protecting the environment.\nNOAA's R&D efforts focus on three areas: climate; weather and air quality; and ocean, coastal, and Great Lakes resources. For FY2011, President Obama requested $734.0 million in R&D funding for NOAA, a 7.2% increase in funding from the FY2010 level of $684.7 million. R&D accounted for 13.2% of NOAA's total FY2011 discretionary budget request of $5.543.5 billion.\nNOAA's administrative structure has evolved into five line offices that reflect its diverse mission, including the National Ocean Service (NOS); the National Marine Fisheries Service (NMFS); the National Environmental Satellite, Data, and Information Service (NESDIS); the National Weather Service (NWS); and the Office of Oceanic and Atmospheric Research (OAR). In addition to NOAA's five line offices, Program Support (PS), a cross-cutting budget activity, includes the Office of Marine and Aviation Operations (OMAO).\nOAR is the primary center for R&D within NOAA. The FY2011 request would have provided OAR with $430.1 million for R&D, 58.6% of the total NOAA FY2011 R&D request and 92.5% of the total OAR request. The OAR request would have been a 6.1% increase from the FY2010 appropriation of $405.5 million. The OAR R&D FY2011 request included $77.1 million for R&D equipment. Table 13 provides FY2010 enacted and FY2011 requested R&D funding levels for other NOAA line offices. At this time NOAA R&D funding in the FY2011 enacted ( P.L. 112-10 ) NOAA budget are not available. NOAA funding for FY2011 has only been identified at the account level while NOAA R&D funding is for specific activities or programs. NOAA budget totals for FY2010 enacted, FY2011 requested, and FY2011 enacted are included in Table 13 to provide context in lieu of R&D FY2011 enacted funding levels.\nR&D activities highlighted by NOAA included developing a dedicated program to produce climate assessments at national and regional scales; sustaining a carbon observation and analysis system; supporting the Earth Observing System to provide climate change data; monitoring of ocean acidification; improving water forecasting services for extreme events such as floods; demonstrating the advantages of using multi-function phased array radar for weather forecasting; and supporting creation of integrated ecosystem assessments.", "The Administration requested $16.190 billion for NASA R&D in FY2011. This amount was 18.3% more than the $13.687 billion appropriated for FY2010. The NASA Authorization Act of 2010 ( P.L. 111-267 ) authorized FY2011 R&D funding of $15.429 billion. The final FY2011 appropriation was $14.863 billion. (See Table 14 .) The greater share of NASA's budget devoted to R&D in FY2011, relative to FY2010, results primarily from the retirement of the space shuttle, which is considered an operational program, not R&D.\nFor several years, budget priorities throughout NASA were driven by the Vision for Space Exploration. The Vision was announced by President Bush in January 2004 and endorsed by Congress in the NASA Authorization Act of 2005 ( P.L. 109-155 ) and the NASA Authorization Act of 2008 ( P.L. 110-422 ). Under the Vision, NASA's primary goal was to return humans to the Moon by 2020. To implement this goal, NASA's Constellation Systems program initiated development of the Orion crew vehicle and the Ares I rocket for carrying humans into low Earth orbit, as well as the heavy-lift Ares V rocket, the Altair lunar lander, and lunar surface systems for the planned Moon mission. In 2009, the Augustine committee conducted an independent review of NASA's human spaceflight activities. The committee found that the program outlined by the Vision would require additional NASA funding of $3 billion per year, even if a return to the Moon were delayed by a few years.\nThe Administration's FY2011 request for Exploration, the account that funded Constellation Systems, was $4.263 billion, a 12.8% increase from $3.780 billion in FY2010. But the request proposed to end Constellation Systems and cancel the goal of returning humans to the Moon. Instead of Orion and Ares I, the Administration proposed $812 million to spur development of commercial crew transport services to low Earth orbit. Instead of Ares V and the lunar systems, it proposed $1.551 billion to enable future human exploration by conducting robotic precursor missions and R&D on technologies such as advanced in-space propulsion and in-situ resource production. In the 2010 authorization act, Congress agreed to support commercial services for crew access to low Earth orbit, but it directed NASA to develop spacecraft for human exploration beyond Earth orbit—a Multipurpose Crew Vehicle (MPCV) and a heavy-lift launch vehicle called the Space Launch System (SLS)—not just technology to enable such missions. The final FY2011 appropriation for Exploration was $3.801 billion, including funds for the MPCV and SLS; the act did not specify whether this total also included funds for commercial crew development.\nThe Consolidated Appropriations Act, 2010 ( P.L. 111-117 ) prohibited NASA from using FY2010 or prior-year funds to terminate or eliminate \"any program, project, or activity of the architecture for the Constellation program\" or to create or initiate any new program, project, or activity. Some analysts and policy makers expressed concern that NASA contracting decisions and other actions during FY2010 were in violation of the appropriations provision. NASA officials replied that they were continuing the Constellation program during FY2010 in full compliance with the law, even though they intended to terminate the program in FY2011. During the first half of FY2011, the restriction on terminating Constellation remained, as NASA operated under a series of continuing resolutions. The restriction was lifted in the final appropriation.\nThe requested $5.006 billion for Science in FY2011 was 11.4% more than the FY2010 funding of $4.493 billion. The largest proposed increase was for Earth science. This included $171 million to fund a replacement for the Orbital Carbon Observatory (OCO), which was launched in February 2009 but failed to reach orbit, and $150 million as the first year of a five-year, $2.1 billion global climate initiative. The climate initiative and other increases would accelerate the development and launch of several Earth science missions recommended in 2007 by a National Academies decadal survey. The authorization act matched the Administration's request. The final appropriation was $4.935 billion; it did not specify how that amount should be allocated among Earth science and other activities.\nThe Administration proposed $572 million in FY2011 for a new Space Technology program. This program's focus would be technologies that are applicable to multiple missions in the long term, as opposed to components needed for specific systems in the short term. It would seek to advance technologies from the point of early-stage innovation to the demonstration of flight readiness. The authorization act authorized $350 million for Space Technology. The final appropriation did not include a new account for Space Technology, but because some of the activities to be included in the program were previously funded by other accounts, it is possible that they may continue to be funded by those accounts in FY2011.\nThe Administration's budget proposed extending operation of the International Space Station (ISS) to at least 2020 and requested increased funding to promote utilization of the existing ISS national laboratory by paying the launch costs of non-NASA users. The authorization act supported the extension of operations and authorized funding at the requested level. The final appropriation did not specify how much of the Space Operations account should be devoted to the ISS, but its funding for Space Operations overall was nearly the same as the Administration's request. The first commercial cargo flights to resupply the ISS are scheduled during FY2011.", "The FY2011 appropriation for research and education activities in the U.S. Department of Agriculture (USDA) is $2.592 billion, a decrease of $403.5 million (-13.5%) from the FY2010 level of $2.995 billion and $384.7 million (-12.9%) below the President's request. (See Table 15 .) The Agricultural Research Service (ARS) is USDA's in-house basic and applied research agency, and operates approximately 100 laboratories nationwide. The ARS laboratories focus on efficient food and fiber production, development of new products and uses for agricultural commodities, development of effective biocontrols for pest management, and support of USDA regulatory and technical assistance programs. Included in the total support for USDA in FY2011 is $1.135 billion for ARS, $58.5 million (-4.9%) below the FY2010 level and $88.5 million (-7.2%) below the President's request. In ARS, the Administration had proposed a reduction of $40.0 million in funding add-ons designated by Congress for research at specific locations. The amounts from the discontinued projects are to be redirected to critical research priorities of the Administration that include genetic and genomic databases, domestic and global market opportunities, new varieties and hybrids of feedstocks, animal health and feed efficiency, and new healthier foods with decreased caloric density. The Administration had proposed an increase of $3.0 million for improved animal protection to enhance food and production security and an increase of $6.4 million for research on children's nutrition and health. In addition, an increase of $5.0 million has been targeted for research to safeguard food supply by developing and validating sensing technologies for pathogens, toxins, and chemical residues. Neither the Administration nor committee action designated any amounts for buildings and facilities in FY2011 for the ARS. However, $1.8 million has been set aside for a review of USDA research facilities. It is anticipated that such a review would serve as a framework for developing a service-wide capital improvement strategy for future investments that parallel program goals.\nThe National Institute of Food and Agriculture (NIFA), formerly the Cooperative State Research, Education, and Extension Service (CSREES), was established in Title VII, §7511 of the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 , also known as the 2008 farm bill). In FY2011, NIFA will be focused on larger and longer research efforts that will \"... create substantial impacts in addressing critical issues facing the long-term viability of agriculture.\" NIFA is responsible for developing linkages between the federal and state \"components of a broad-based, national agricultural research, extension, and higher education system.\" NIFA distributes funds to State Agricultural Experiment Stations, State Cooperative Extension Systems, land-grant universities, and other institutions and organizations that conduct agricultural research, education, and outreach. Included in these partnerships is funding for research at 1862 land-grant institutions, 1890 historically black colleges and universities, 1994 tribal land-grant colleges, and Hispanic-serving institutions. Funding is distributed to the states through competitive awards, statutory formula funding, and special grants. The FY2011 appropriation provides $1.217 billion for NIFA, $268.8 million (-18.1%) below the FY2010 level and $283.1 million (-18.9%) below the President's request. The NIFA FY2011 appropriation includes the proposed elimination of $141.0 million in congressional add-ons. Funding for formula distribution in FY2011 to the state Agricultural Experiment Stations (denoted as the \"Hatch Act Formula\" in Table 15 ) is $236.8 million, $21.8 million (10.1%) above the FY2010 level and the President's request. One of the primary goals of the President's FY2011 NIFA appropriation has been to emphasize and prioritize competitive, peer-reviewed allocation of research funding. Programs are to be designed that are more responsive to critical national issues such as agricultural security, local and regional emergencies, zoonotic diseases, climate change, childhood obesity, pest risk management, and development of biofuels that assure agricultural productivity and sustainability. Support has been given for a competitive program directed at developing training and expanding use of web-based and other technology applications. Funding has been provided for programs that improve the quality of rural life and provide stress assistance programs to individuals engaged in agriculture-related occupations. Another focus in FY2011 has been on programs that support minority-serving institutions and their recipients.\nNIFA is also responsible for administering the agency's primary competitive research grants program, the Agriculture and Food Research Initiative (AFRI). The FY2011 appropriation provides $265.0 million for AFRI, $3.0 million (1.1%) above the FY2010 level and $163.8 million (-38.2%) below the President's request. In addition to supporting fundamental and applied science in agriculture, USDA has maintained that the AFRI makes a significant contribution to developing the next generation of agricultural scientists by providing graduate students with opportunities to work on research projects. A focus of these efforts has been to provide increased opportunities for minority and under-served communities in agricultural science. AFRI funding has been directed at research involved in developing alternative methods of biological and chemical conversion of biomass, and research on the impact of a renewable fuels industry on the economic and social dynamics of rural communities. The Administration had proposed support for initiatives in agricultural genomics, emerging issues in food and agricultural security, the ecology and economics of biological invasions, and plant biotechnology. Research has also been designed that extends beyond water quality issues to include water availability, reuse, and conservation.\nThe FY2011 appropriation for USDA provides $82.0 million for the Economic Research Service (ERS), level with FY2010 and $5.2 million (-6.0%) less than the President's request. ERS supports both economic and social science information analysis on agriculture, rural development, food, and the environment. ERS collects and disseminates data concerning USDA programs and policies to various stakeholders. Funding for the National Agricultural Statistics Service (NASS), at $156.8 million in FY2011, is $5.2 million (-3.2%) below the FY2010 level and $7.9 million (-4.8%) below the President's request. The appropriation has provided support to improve research efforts in analyzing the impacts of bioenergy production, and to examine concerns pertaining to feedstock storage, transportation networks, and the vagaries in commodity production. Additional research areas include production and utilization of biomass materials; stocks and prices of distillers' grains; and current and proposed ethanol production plants. Funding for NASS has allowed for the restoration of the chemical use data series on major row crops; post harvest chemical use; and alternating annual fruit, nuts, and vegetable chemical use. Also, funding has been provided to support the second year of the 2012 Census of Agriculture's five year cycle. Data from the Census of Agriculture are to be used to measure trends and new developments in the agricultural community.", "President Obama requested $812.8 million for Department of the Interior (DOI) R&D in FY2011, an increase of $27.5 million (2.3%) above FY2010 funding of $785.3 million. (See Table 16 .) The FY2011 appropriations process was completed with enactment of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ), which included the Department of the Interior and its agencies. The act provided a total of $802.1 million in R&D funding for DOI, $4.1 million (0.5%) more than in FY2010, and $27.1 million (-3.3%) less than the amount requested by the President.\nThe U.S. Geological Survey (USGS) is the primary supporter of R&D within DOI, accounting for approximately 84% of the department's total FY2010 R&D appropriations. President Obama proposed $679.2 million for USGS R&D in FY2011, an increase of $18.6 million (2.8%) above the estimated FY2010 level. USGS R&D is conducted under several activity/program areas: global change, geographic research, geological resources, water resources, biological research, and enterprise information. The act provided a total of $640.0 million in R&D funding for USGS, $21.1 million (-3.2%) less than in FY2010 and $39.2 million (-5.8%) less than the request.\nIn past years, the Department of the Interior had not reported R&D funded through the Fish and Wildlife Service (FWS). For FY2011, DOI added FWS to its R&D calculations and asked the FWS to count their R&D activities for previous years. According to DOI, this was prompted by the addition of $10 million for global change research funding for FWS in FY2009, and the President's request for $15 million in FY2011. The R&D funding data for FWS is included, together with other DOI agencies, in Table 16 . In FY2011, FWS received $47.0 million for R&D.\nOn March 21, 2010, the Disaster Relief and Summer Jobs Act of 2010 ( H.R. 4899 ), a FY2010 supplemental funding bill, was introduced in the House and was subsequently passed. The House-passed version of H.R. 4899 did not appear to contain any funding for R&D or related activities. On May 14, 2010, the Senate Committee on Appropriations adopted an amendment in the form of a substitute and reported the bill, accompanied by S.Rept. 111-188 . As reported, the Senate version of H.R. 4899 was named the Supplemental Appropriations Act, 2010, and included funding for a variety of agencies and purposes, including funding for R&D and related activities. These additional funds included $29.0 million for the Department of the Interior for \"increased inspections, enforcement, investigations, environmental and engineering studies, and other activities related to emergency offshore oil spill incidents in the Gulf of Mexico.\" Neither the bill nor S.Rept. 111-188 specified how much of these funds were to be used to fund R&D.", "The U.S. Environmental Protection Agency (EPA), the regulatory agency responsible for carrying out a number of environmental pollution control laws, funds a broad portfolio of R&D activities to provide the necessary scientific tools and knowledge to support decisions relating to preventing, regulating, and abating environmental pollution. Beginning in FY2006, EPA has been funded within the Interior, Environment, and Related Agencies appropriations bill. Most of EPA's scientific research activities are funded within the agency's Science and Technology (S&T) appropriations account. This account is funded by a \"base\" appropriation and a transfer from the Hazardous Substance Superfund (Superfund) account. These transferred funds are dedicated to research on more effective methods to clean up contaminated sites.\nTitle VII of Division B under P.L. 112-10 , the Department of Defense and Full-Year Continuing Appropriations Act, 2011, provided $840.3 million (includes the 0.2% across-the-board rescission ), including transfers from the Hazardous Substance Superfund account for FY2011. The total FY2011 enacted appropriations for the S&T account was $34.6 million (39.5%) below the FY2010 appropriations of $874.9 million included in P.L. 111-88 and supplemental funding in P.L. 111-212 . The President's FY2011 budget request included $871.2 million for the EPA S&T account (including transfers). The FY2011 appropriations included in P.L. 112-10 for the EPA's S&T account represented 9.7% of the total $8.68 billion provided for the agency overall for FY2011. As indicated in Table 17 below, the $26.8 million transferred from the Superfund account into the S&T account for FY2011 is the same as FY2010, and $2.3 million more than the $24.5 million proposed in the FY2011 request. FY2011 funding for EPA's S&T program activities were not specified at the sub-account level in P.L. 112-10 , however, subsequent information regarding FY2011 funding below the account level has been reported in EPA's FY2011 Operating Plan and in the House Appropriations Committee Report ( H.Rept. 112-151 ) accompanying its FY2012 Interior and Environment Appropriations bill ( H.R. 2584 ).\nAs indicated in Table 17 , the total FY2011 enacted base appropriations for the S&T account reflected decreases of varying levels when compared with the enacted FY2010 appropriations and the President's FY2011 budget request for nearly all of the individual EPA research program and activity line items identified within the account. There are a few exceptions where the amount enacted for FY2011 remained relatively flat compared to the prior year appropriation. The largest decrease for FY2011 within the S&T account was for EPA's homeland security activities. As indicated in the table, the $46.2 million FY2011 enacted amount was nearly $19.1 million (29.2%) below the FY2010 appropriation of $65.3 million, and $5.1 million (10%) less than the FY2011 $51.3 million request.\nThe activities typically funded within the S&T account include research conducted by universities, foundations, and other non-federal entities with EPA grants, and research conducted by the agency at its own laboratories and facilities. R&D at EPA headquarters and laboratories around the country, as well as external R&D, is managed primarily by EPA's Office of Research and Development (ORD). A large portion of the S&T account funds EPA's R&D activities managed by ORD, including the agency's research laboratories and research grants. The account also provides funding for the agency's applied science and technology activities conducted through its program offices (e.g., the Office of Water). Many of the programs implemented by other offices within EPA have a research component, but the research is not necessarily the primary focus of the program.\nThe EPA S&T account incorporates elements of the former EPA Research and Development (R&D) account, as well as a portion of the former Salaries and Expenses, and Program Operations accounts, which had been in place until FY1996. Because of the differences in the scope of the activities included in these accounts, apt comparisons before and after FY1996 are difficult. Although the Office of Management and Budget (OMB) reports historical and projected budget authority (BA) amounts for R&D at EPA (and other federal agencies), OMB documents do not describe how these amounts explicitly relate to the requested and appropriated funding amounts for the many specific EPA program activities. The R&D BA amounts reported by OMB are typically significantly less than amounts appropriated/requested for the S&T account. (BA as reported by OMB is included in Table 17 below for purpose of comparison.) This is an indication that not all of the EPA S&T account funding is allocated to R&D.\nThe operation and administration of the agency's laboratories and facilities necessitate significant expenditures for rent, utilities, and security. Funding for these expenses ranged from 8% to 11% of the total S&T account for the FY2008-FY2011 enacted appropriations. Prior to FY2007, a significant portion of the funding for these expenses had been requested and appropriated within EPA's Environmental Programs and Management (EPM) appropriations account. This change affects comparisons of the S&T appropriations over time. For example, the majority of operation and administrative expenses were funded within the EPM account in FY2006 and prior fiscal year appropriations. Funding provided within the S&T account for these expenses represented less than 1% of the total S&T appropriation for FY2006 and prior fiscal years.\nSome Members of Congress and an array of stakeholders have continually raised concerns about the adequacy of funding for scientific research at EPA. The adequacy of funding for EPA's scientific research activities has been part of a broader question about the adequacy of overall federal funding for a broad range of scientific research activities administered by multiple federal agencies. Some Members of Congress, scientists, and environmental organizations have expressed concern about the downward trend in federal resources for scientific research over time. The debate continues to center around the question of whether the regulatory actions of federal agencies are based on \"sound science,\" and how scientific research is applied in developing federal policy.", "President Obama requested $1.022 billion for Department of Transportation (DOT) R&D in FY2011, an increase of 0.5% above the FY2010 enacted level. (See Table 18 .) Two DOT agencies—the Federal Highway Administration (FHWA) and the Federal Aviation Administration (FAA)—account for most of the department's R&D funding (approximately 84% in FY2010).\nThe President requested $400.4 million for FAA R&D and R&D facilities, a decrease of $11.3 million (2.7%) from the FY2010 enacted level. Most of the substantial proposed changes in FAA R&D funding were related to the agency's Next Generation Air Transportation System (NextGen) program which seeks to address challenges posed by air traffic growth by increasing the nation's airspace capacity and efficiency and by reducing emissions and noise. Changes requested for NextGen R&D funding included elimination of funding for demonstrations and infrastructure ($33.8 million); a reduction of $5.9 million for environmental research on aircraft technologies, fuels and metrics; and increases of $28.9 million for system development, $4.9 million for air-ground integration, $2.4 million for alternative fuels for general aviation, and $1.7 million for self-separation. In addition, the agency's proposed budget included a reduction of $13.0 million for advanced technology development and prototyping.\nPresident Obama requested no increase in R&D funding for the FHWA, proposing $442.0 million for FY2011, identical to the agency's funding for FY2010, both in aggregate and for each specific activity area. According to the agency's budget request:\nThe Administration is developing a comprehensive approach for surface transportation reauthorization, which includes [research, development, test, and evaluation (RDT&E)]. Consequently, the Budget contains no policy recommendations for programs subject to reauthorization [which includes R&D], including Federal-aid highways.\nInstead, the Budget displays baseline funding levels for all surface programs. Future authorizations for RDT&E with the Federal-aid highway program may include activities associated with deployment of safety initiatives, a restructured infrastructure program, and a variety of activities associated with environmental improvement and streamlining, security improvements, and outreach and dissemination.\nOn July 29, 2010, the House passed H.R. 5850 , the Transportation, Housing, and Urban Development, and Related Agencies Appropriations Act, 2011. The act would have provided R&D funding for DOT agencies of approximately $1,013.1 million, roughly equal to the FY2010 and request levels.\nThe 111 th Congress did not complete action on the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2011, or any of the other FY2011 appropriations bills. In April 2011, the 112 th Congress passed the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ) providing FY2011 funding for all federal agencies, including the Department of Transportation. In general, the law appropriates funds to the agencies at the FY2010 level unless otherwise specified. In particular, the law reduces the FAA's RE&D account by $20.5 million to $170 million in FY2011. This would reduce total FAA funding from $412 million in FY2010 to approximately $391 million in FY2011. The bill also reduces DOT's Planning, Research and Development account by $6 million from its FY2010 funding level. The level of detail in the law, however, does not allow for a complete assessment of how the specified changes will affect overall agency and departmental R&D funding for FY2011. This report will be updated as more information becomes available from the department, agencies, or Congressional committees. (See Table 18 .)" ], "depth": [ 0, 1, 1, 2, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 1, 1, 1, 1, 1, 2, 2, 1, 1, 1, 1, 1 ], "alignment": [ "h0_title h2_title h1_title", "h0_full h2_full h1_full", "h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "h1_full", "", "", "", "", "", "", "", "", "", "h1_full" ] }

{ "question": [ "How do the actions of President Obama influence the nations priorities?", "How does Congress define the nation's research and development priorities?", "How does low funding impact research and development?", "What motivated President Obama to request increases in the R&D budgets of three agencies?", "What budget increases would have been seen, as a result?", "What policy inconsistencies were observed in regards to President Obama's requests?", "What prevented President Obama's requests from being fulfilled?", "What has affected te mechanisms used to complete the annual appropriations process?", "How has R&D funding affected annual appropriations processes?", "What may cause delays or cancellations for planned R&D equipment acquisition?" ], "summary": [ "President Obama requested $147.696 billion for research and development (R&D) in FY2011, a $343 million (0.2%) increase from the estimated FY2010 R&D funding level of $147.353 billion. Congress plays a central role in defining the nation's R&D priorities, especially with respect to two overarching issues: the extent to which the federal R&D investment can grow in the context of increased pressure on discretionary spending and how available funding will be prioritized and allocated.", "Congress plays a central role in defining the nation's R&D priorities, especially with respect to two overarching issues: the extent to which the federal R&D investment can grow in the context of increased pressure on discretionary spending and how available funding will be prioritized and allocated. Low or negative growth in the overall R&D investment may require movement of resources across disciplines, programs, or agencies to address priorities.", "Low or negative growth in the overall R&D investment may require movement of resources across disciplines, programs, or agencies to address priorities.", "President Obama requested increases in the R&D budgets of the three agencies that were targeted for doubling in the America COMPETES Act and its reauthorization, and by President Bush under his American Competitiveness Initiative using FY2006 R&D funding as the baseline.", "The Department of Energy's Office of Science would have received an increase of $226 million (4.6%), the National Science Foundation an increase of $551 million (8.0%), and the National Institute of Standards and Technology's core research and facilities an increase of $48 million (7.3%).", "P.L. 112-10 provided less than the FY2010 level and less than the President's request for each of these accounts.", "P.L. 112-10 provided less than the FY2010 level and less than the President's request for each of these accounts. In aggregate, funding for these accounts under P.L. 112-10 is less than in FY2010 and less than the President's request.", "For the past five years, federal R&D funding and execution has been affected by mechanisms used to complete the annual appropriations process—the year-long continuing resolution for FY2007 (P.L. 110-5) and the combining of multiple regular appropriations bills into the Consolidated Appropriations Act, 2008 for FY2008 (P.L. 110-161), the Omnibus Appropriations Act, 2009 (P.L. 111-8), the Consolidated Appropriations Act, 2010 (P.L. 111-117), and P.L. 112-10.", "For the past five years, federal R&D funding and execution has been affected by mechanisms used to complete the annual appropriations process—the year-long continuing resolution for FY2007 (P.L. 110-5) and the combining of multiple regular appropriations bills into the Consolidated Appropriations Act, 2008 for FY2008 (P.L. 110-161), the Omnibus Appropriations Act, 2009 (P.L. 111-8), the Consolidated Appropriations Act, 2010 (P.L. 111-117), and P.L. 112-10. Completion of appropriations after the beginning of each fiscal year may cause agencies to delay or cancel some planned R&D and equipment acquisition.", "Completion of appropriations after the beginning of each fiscal year may cause agencies to delay or cancel some planned R&D and equipment acquisition." ], "parent_pair_index": [ -1, -1, 1, -1, 0, 0, -1, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 3, 3, 3, 3, 4, 4, 4 ] }

{ "title": [ "", "Funding Overview", "Recent Developments", "", "Funding for Elementary and Secondary Education", "ESEA Programs Included in the ARRA", "Title I-A Grant to LEAs", "P.L. 111-5", "Title I-A School Improvement Grants", "P.L. 111-5", "Education Technology", "P.L. 111-5", "Credit Enhancement Initiatives to Assist Charter School Facility Acquisition, Construction, and Renovation", "P.L. 111-5", "Fund for the Improvement of Education", "P.L. 111-5", "Impact Aid Section 8007", "P.L. 111-5", "IDEA Programs Included in the ARRA", "P.L. 111-5", "Funding for McKinney-Vento Homeless Assistance in the ARRA", "P.L. 111-5", "School Modernization, Renovation, and Repair", "P.L. 111-5", "Funding for Higher Education", "Federal Pell Grant Program", "P.L. 111-5", "Federal Work-Study Program", "P.L. 111-5", "Federal Perkins Loan Program", "P.L. 111-5", "Student Aid Administration", "P.L. 111-5", "Teacher Quality Partnership Grant Programs", "P.L. 111-5", "Higher Education Modernization, Renovation, and Repair", "P.L. 111-5", "Federal Student Loans", "P.L. 111-5", "FFEL Program Special Allowance Payments", "P.L. 111-5", "Funding for the Institute of Education Sciences", "P.L. 111-5", "State Fiscal Stabilization Fund", "P.L. 111-5", "Fiscal Accountability", "P.L. 111-5", "State Funding Estimates", "Appendix. Appropriations for Education Programs under the House-Passed and Senate-Passed Versions of H.R. 1 and under P.L. 111-5" ], "paragraphs": [ "On February 13, 2009, both the House and Senate passed the conference version of H.R. 1 , the American Recovery and Reinvestment Act of 2009 (ARRA). Subsequently, the ARRA was signed into law by President Obama on February 17, 2009 ( P.L. 111-5 ). The primary purposes of the ARRA focus on promoting economic recovery, assisting those most affected by the recession, improving economic efficiency by \"spurring technological advances in science and health,\" investing in infrastructure, and stabilizing state and local government budgets. The House had previously passed its version of H.R. 1 on January 28, 2009, while the Senate passed S.Amdt. 570 , an amendment in the nature of a substitute to H.R. 1 , on February 10, 2009.\nThe ARRA provides funds to several existing education programs administered by the U.S. Department of Education (ED), including programs authorized by the Elementary and Secondary Education Act (ESEA), the Individuals with Disabilities Education Act (IDEA), and the Higher Education Act (HEA). It also provides general state fiscal stabilization grants to support education at the elementary, secondary, and postsecondary levels, as well as \"public safety and other government services.\" Funds made available through the State Fiscal Stabilization Fund may be used for modernization, renovation, or repair of public school or higher education facilities.\nUnder the House and Senate versions of H.R. 1 (hereafter referred to the House bill and the Senate bill, respectively), funds also would have been provided to several existing education programs administered by the U.S. Department of Education (ED), including programs authorized by the ESEA, IDEA, and HEA. The House bill, but not the Senate bill, would have created new programs to support school modernization, renovation, and repair at the elementary, secondary, and postsecondary education levels. Both the House bill and the Senate bill would have provided general funds for education to support state fiscal stabilization.\nThis report provides a brief overview of the key provisions related to education programs that are or will be administered by ED that were included in the ARRA under Division A, Title VIII, Department of Education and under Title XIV, State Fiscal Stabilization Fund. It also includes a discussion of relevant provisions that were included in the House and Senate versions of H.R. 1 . Education-related tax provisions, as well as Vocational Rehabilitation programs administered by ED, are beyond the scope of this report.\nThe report begins with a discussion of provisions related to elementary and secondary education. The next section of the report examines provisions related to higher education, followed by a discussion of provisions related to the Institute for Education Sciences. The report concludes with an examination of the State Fiscal Stabilization Fund and a discussion of fiscal accountability issues.", "The ARRA provides $96.764 billion in discretionary appropriations for education programs that are or will be administered by the U.S. Department of Education (ED). Funds provided for education are considered FY2009 appropriations, and generally, all funds are available for obligation until September 30, 2010. Appropriations provided under the ARRA are in addition to funds provided under regular FY2009 appropriations legislation for ED, enacted subsequent to the ARRA under P.L. 111-8 , the Omnibus Appropriations Act, 2009.\nSection 807 of the ARRA includes a provision allowing the Secretary to award FY2009 funds appropriated in Title VIII of the bill on the basis of state and LEA eligibility for FY2008 awards and to require states to make \"prompt\" allocations to LEAs. Of these funds, about $43.164 billion were appropriated for existing education programs, including Title I-A, Education for the Disadvantaged, authorized by the Elementary and Secondary Education Act (ESEA) and the Individuals with Disabilities Education Act (IDEA), Part B Grants to States. Most of the funds for existing elementary education programs have been appropriated for programs that provide formula grants directly to states or local educational agencies (LEAs), while most funds at the postsecondary level were appropriated for Pell Grants, which go directly to students. For some programs, these appropriations provide a substantial increase over the amount of funding provided through the regular appropriations process in recent years. For example, the ARRA provides $10.000 billion for Title I-A Grants to LEAs, authorized by the ESEA, while this program received $13.899 billion in FY2008 and $14.492 billion in regular appropriations for FY2009. Thus, the total appropriation for this program in FY2009 is $24.492 billion, a 76.2% increase over its FY2008 appropriation level.\nSimilarly, the ARRA provides $11.300 billion for IDEA, Part B Grants to States, while the program received $10.948 billion in FY2008 and $11.505 in FY2009 through the regular appropriations process. Thus, the total appropriation for this program in FY2009 is $22.805 billion, a 108.3% increase over its FY2008 appropriation level. At the postsecondary level, the ARRA provides $15.640 billion for Pell Grants, while the program received $14.215 billion in FY2008 and $17.288 billion in FY2009. Thus, the total discretionary appropriation for this program in FY2009 is $32.928 billion, a 131.6% increase over its FY2008 appropriation level. Overall, discretionary programs that existed prior to the enactment of the ARRA received $43.164 billion through the ARRA. These programs received $42.746 billion in FY2008 and $47.134 billion in FY2009. Thus, total FY2009 appropriations for these programs are $90.298 billion, a 111.2% increase over their FY2008 appropriation levels.\nThe remaining $53.600 billion in discretionary funding provided for education programs was appropriated for the State Fiscal Stabilization Fund. This is a new program that is being administered by ED. After making reservations from the appropriation, including a $5 billion reservation for the Secretary of Education to provide State Incentive Grants and establish an Innovation Fund, $48.318 billion will be provided to governors through formula grants to each state that chooses to apply for funding through this program.\nTable 1 , below, provides appropriations for FY2008, FY2009, and the ARRA for all ED programs that received funding through the ARRA. Note in particular that Table 1 includes Vocational Rehabilitation programs administered by ED, although these programs are not discussed further in this report.\nThe ARRA specifies that the funding provided through the act is considered emergency funding (Section 5). Further, appropriations provided through the ARRA have no effect on the availability of the amount provided under the Continuing Appropriations Resolution, 2009 (Division A of P.L. 110-329 ), and the amounts appropriated or made available under the ARRA are in addition to amounts otherwise appropriated for the fiscal year involved (Section 1601).", "On April 1, 2009, ED simultaneously released the first round of ARRA funding and issued guidance for several programs receiving funding under the ARRA, including Title I-A; IDEA, Part B; and the State Fiscal Stabilization Fund. Of the $44 billion released, ED provided 50% of the total funds available under Title I-A; IDEA, Part B Grants to States; IDEA, Part B Preschool Grants; IDEA, Part C Grants to Infants and Toddlers; Vocational Rehabilitation State Grants; Independent Living; and Services for Older Individuals who are Blind. The funds were released to states without requiring states to submit applications to receive funds. Remaining funds available under these programs will be released prior to the end of the FY2009, but, in some cases, may only be released contingent upon receiving additional information from states.\nED also released 67% ($32.6 billion) of the total funds available under the State Fiscal Stabilization Funds. States are required to submit an application (also made available on April 1) to receive these funds. ED has indicated that it will release funds to states within two weeks of receiving an \"approvable application.\" Generally, states are eligible to receive 67% of their estimated total allocation, but states may apply for up to 90% of their grants under this program if they demonstrate that the amount of funds they would otherwise receive in phase one is \"insufficient to prevent the immediate layoff of personnel by LEAs, state educational agencies, or public institutions of higher education.\" The remainder of states' SFSF grants will be distributed after July 1, 2009, after states submit applications detailing their strategies for meeting performance requirements for the SFSF (discussed below).\nOn April 10, 2009, ED released funding and guidance for the McKinney-Vento Homeless Assistance Program and Impact Aid Construction grants. ED distributed all of the funds for McKinney-Vento that were provided under the ARRA, and distributed $39.6 million of the funds available under Impact Aid. The latter funds were used to make 180 grants by formula. The remaining Impact Aid funds will be distributed through a competitive grant process later this year.", "", "The ARRA provides funding for a number of existing education programs, including the two federal education programs that provide the largest amounts of funding for elementary and secondary education—Title I-A Grants to Local Educational Agencies (ESEA) and IDEA, Part B Grants to States. It also provides funding for School Improvement Grants (ESEA Title I-A); Education Technology (ESEA Title II-D); IDEA, Part C (Grants for Infants and Toddlers); IDEA, Part B (Preschool Grants); and the McKinney-Vento Homeless Assistance Act. Both the House and Senate bills would have provided funds for all of these purposes, except that the House bill would not have provided funding for IDEA, Part B (Preschool Grants). The ARRA includes funding for the Fund for the Improvement of Education (FIE, ESEA Title V-D-1) and Impact Aid Section 8007 (Grants for Construction, ESEA Title VIII). Funds for these programs would have been provided only under the House bill. The House bill only also would have provided funding for Credit Enhancement Initiatives to Assist Charter Schools (ESEA Title V-B-2) and a new program to provide school construction funds to LEAs. The ARRA does not provide funds for these specific programs, although funds under the State Fiscal Stabilization Fund (see subsequent discussion) could be used for school modernization, renovation, and repair, and possibly construction as well. Provisions applicable to each of these programs are discussed below.", "The primary source of federal aid to K-12 education is the Elementary and Secondary Education Act, particularly its Title I, Part A program of Education for the Disadvantaged. The ESEA was initially enacted in 1965 (P.L. 89-10), and was most recently amended and reauthorized by the No Child Left Behind Act of 2001 (NCLB, P.L. 107-110 ). Other major ESEA programs provide grants to support the education of migrant students; recruitment of and professional development for teachers; language instruction for limited English proficient (LEP) students; drug abuse prevention programs; after-school instruction and care; expansion of charter schools and other forms of public school choice; education services for Native American, Native Hawaiian, and Alaska Native students; Impact Aid to compensate local educational agencies for taxes foregone due to certain federal activities; and a wide variety of innovative educational approaches or instruction to meet particular student needs. This section discusses ESEA programs that would receive additional funding through the House and Senate bills and, where appropriate, provides estimates of the amounts that states would receive.", "Title I, Part A, of the ESEA authorizes federal aid to local educational agencies (LEAs) for the education of disadvantaged children. Title I-A grants provide supplementary educational and related services to low-achieving and other pupils attending pre-kindergarten through grade 12 schools with relatively high concentrations of pupils from low-income families. For FY2008, the program received an annual appropriation of $13.9 billion. Portions of each annual appropriation for Title I-A are allocated under four different formulas—Basic, Concentration, Targeted, and Education Finance Incentive Grants (EFIG)—although funds allocated under all of these formulas are combined and used for the same purposes by recipient LEAs. Although the allocation formulas have several distinctive elements, the primary factors used in all four formulas are estimated numbers of children aged 5-17 in poor families plus a state expenditure factor based on average expenditures per pupil for public K-12 education. Other factors included in one or more formulas include weighting schemes designed to increase aid to LEAs with the highest concentrations of poverty, and a factor to increase grants to states with high levels of expenditure equity among their LEAs.\nUnder three of the formulas—Basic, Concentration, and Targeted Grants—funds are calculated initially at the LEA level, and state total grants are the total of allocations for LEAs in the state, adjusted to apply state minimum grant provisions. Under the fourth formula, Education Finance Incentive Grants, grants are first calculated for each state overall, with state totals subsequently suballocated by LEA using a different formula. A primary rationale for using four different formulas to allocate shares of the funds for a single program is that the formulas have distinct allocation patterns, providing varying shares of allocated funds to different types of LEAs or states (e.g., LEAs with high poverty rates or states with comparatively equal levels of spending per pupil among their LEAs).\nThe House and Senate bills would have provided $11 billion in supplemental appropriations for Title I-A Grants to LEAs. The House bill would have made $5.5 billion available on July 1, 2009, and $5.5 billion available on July 1, 2010. The Senate bill would have made the entire $11 billion available in FY2009. Under both bills, funds would have been allocated through the Targeted Grant and EFIG formulas only. Half of the available funds for a given fiscal year would have been appropriated through each formula. For example, for funds made available under the House bill on July 1, 2009, $2.75 billion would have been appropriated through the Targeted grant formula and $2.75 billion would have been appropriated through the EFIG formula.\nWhile both bills would have required funds to be used for the purposes authorized in Title I-A of the ESEA, the Senate bill would also have added requirements for LEAs receiving these funds. First, LEAs would have been required to use at least 15% of the funds received for activities serving children who are not yet at a grade level at which the LEA provides a free public education and to support preschool programs for children. Second, the Senate bill would have required each LEA to file a school-by-school listing of per pupil expenditures from state and local sources for the 2008-2009 school year with the state educational agency (SEA) by December 1, 2009.", "The ARRA provides $10 billion in supplemental FY2009 appropriations for Title I-A. As with both the House and Senate bills, the funds will be provided equally through the Targeted Grant and EFIG formulas only (i.e., $5 billion through each formula). One feature of these formulas is that LEAs with an estimated school-age child poverty rate of less than 5.0% are not eligible for grants. According to H.Rept. 111-16 , these funds should be available to LEAs during school year 2009-2010 and 2010-2011 to help LEAs \"mitigate the effect of the recent reduction in local revenues and state support for education.\" While the ARRA did not retain the Senate provision that at least 15% of funds received by LEAs had to be used for preschool programs, the ARRA does retain the Senate provision requiring reporting on per-pupil expenditures. More specifically, each LEA is required to file a school-by-school listing of per-pupil expenditures from state and local sources during the 2008-2009 school year by December 1, 2009. Further, the ARRA requires the SEA to report these data to the Secretary of Education (hereafter referred to as the Secretary) by March 31, 2010.", "School Improvement Grants (authorized under ESEA, Section 1003(g)) provide supplementary funds to states and LEAs for school improvement purposes. States are eligible to apply for these grants, which are allocated in proportion to each state's share of funds received under ESEA Title I, Parts A, C (Migrant Education Program), and D (Neglected and Delinquent Children and Youth). States must use at least 95% of the funds received to make subgrants to LEAs. Subgrants made to LEAs must be between $50,000 and $500,000 for each school, and must be renewable for up to two additional years if schools meet the goals of their school improvement plans. Subgrants must be used by LEAs to support school improvement (ESEA, Sections 1116 and 1117). LEAs with the lowest-achieving schools and the greatest commitment to ensuring that such funds are used to provide \"adequate resources\" to enable the lowest-achieving schools to meet the goals under school and LEA improvement plans must be given priority in the awarding of subgrants. In FY2008, this program received an annual appropriation of $491 million. In addition to separately appropriated funds, states are generally required to reserve 4% of their Title I-A grants to LEAs for school improvement activities.\nThe House bill would have appropriated $2 billion in supplemental appropriations for School Improvement Grants with $1 billion becoming available on July 1, 2009, and the remaining funds becoming available on July 1, 2010. The Senate bill would have appropriated $1.4 billion in supplemental appropriations for this program and made all funds available in FY2009. In addition, the Senate, but not the House bill, would have required ED to encourage states to use 40% of their allocations for middle and high schools.", "The ARRA provides $3 billion in supplemental FY2009 appropriations for School Improvement Grants. According to H.Rept. 111-16 , these funds should be available to LEAs during school year 2009-2010 and 2010-2011 to help LEAs \"mitigate the effect of the recent reduction in local revenues and state support for education.\" The ARRA requires each LEA to file a school-by-school listing of per-pupil expenditures from state and local sources during the 2008-2009 school year by December 1, 2009. SEAs are then required to report these data to the Secretary by March 31, 2010. In addition, according to H.Rept. 111-16 , ED is required to encourage states to use 40% of their School Improvement Grants for middle and high schools.", "The EdTech program provides grants to SEAs and LEAs to increase access to educational technology, support the integration of technology into instruction, enhance technological literacy, and support technology-related professional development of teachers. Funds are allocated to states in proportion to Title I-A grants, with a state minimum grant amount of 0.5% of total funding for state grants. At least 95% of state grants must be allocated to LEAs (and consortia of LEAs and other entities)—50% by formula, in proportion to Title I-A grants, and 50% competitively. In FY2008, this program received an annual appropriation of $267 million.\nBoth the House and Senate bills would have appropriated $1 billion in supplemental appropriations for EdTech. The House bill would have made $500 million available on July 1, 2009, and the remaining funds available on July 1, 2010, while the Senate would have made all funds available in FY2009.", "The ARRA provides $650 million in supplemental FY2009 appropriations for EdTech. According to H.Rept. 111-16 , these funds should be available to LEAs during school year 2009-2010 and 2010-2011 to help LEAs \"mitigate the effect of the recent reduction in local revenues and state support for education.\"", "Under the Credit Enhancement program, competitive grants are awarded to enhance the availability of financing for the acquisition, construction, or renovation of public charter school facilities. Grants are made to at least three entities that have been approved by the Secretary as having demonstrated innovative methods of assisting charter schools in addressing the costs of acquiring, constructing, and renovating facilities by enhancing the availability of loans or bond financing. The House bill would have provided a one-time grant of $25 million in supplemental appropriations for this program. The Senate bill would not have appropriated additional funds for this program.", "The ARRA does not provide funds for the Credit Enhancement program.", "ESEA Title V-D authorizes a series of competitive grant programs intended to support a variety of innovative K-12 educational activities. It includes both a broad authority for innovative activities selected at the discretion of the Secretary of Education, and a series of required studies, in Subpart 1. It also authorizes a number of specific activities (e.g., Elementary and Secondary School Counseling Programs, Partnerships in Character Education, Smaller Learning Communities) in Subparts 2 through 21. In FY2008, Title V-D-1 received an annual appropriation of $122 million.\nThe House bill, but not the Senate bill, would have provided $200 million in supplemental FY2009 appropriations specifically for Subpart 1 activities to be used for purposes specified in FY2008 appropriations. These funds had to be used to provide competitive grants to LEAs, states, or partnerships of an LEA, state, or both and at least one non-profit organization to develop and implement performance-based teacher and principal compensation systems in high-need schools under the Teacher Incentive Fund (TIF) program. These systems would have had to consider gains in student academic achievement as well as classroom evaluations conducted at multiple times during the school year among other factors and provide educators with incentives to take on leadership roles and additional responsibilities. Up to 5% of the $200 million would have been available for technical assistance, training, peer review of applications, program outreach, and evaluation activities. Further, the House bill specified that a portion of these funds had to be used by the Institute of Education Sciences (IES) to conduct an evaluation of the impact of performance-based teacher and principal compensation systems supported by the competitive grants on teacher and principal recruitment in high-need schools and subjects.", "The ARRA provides $200 million in supplemental FY2009 appropriations for the same purposes required in the House bill. The ARRA, however, permits the Secretary to reserve up to 1% of the $200 million for management and oversight of the activities supported with the funds appropriated.", "The Impact Aid program compensates LEAs for \"substantial and continuing financial burden\" resulting from federal activities. These activities include federal ownership of certain lands, as well as the enrollments in LEAs of children of parents who work or live on federal land (e.g., children of parents in the military and children living on Indian lands). Section 8007 specifically provides funds for construction and facilities upgrading to certain LEAs with high percentages of children living on Indian lands or children of military parents. These funds are used to make formula and competitive grants. In FY2008, $18 million was appropriated for Section 8007 payments.\nUnder the statute, 40% of the funds appropriated under Section 8007 are used to make construction payments by formula to LEAs receiving Impact Aid Section 8003 payments and in which students living on Indian land constitute at least 50% of the LEA's total student enrollment or military students living on or off base constitute at least 50% of the LEA's total student enrollment. The funds available for construction payments are divided equally between these two groups of LEAs (20% of the total Section 8007 appropriation going to each group). The remaining 60% of Section 8007 appropriations are used to make school facility emergency and modernization competitive grants. Emergency repair grants must be used to repair, renovate, or alter a K-12 public school facility to ensure the health and safety of students and staff. Modernization grants may be used to relieve overcrowding or upgrade facilities to support a \"contemporary educational program.\"\nThe House bill would have provided $100 million in supplemental appropriations for Section 8007 in FY2009. The Senate bill would not have appropriated funds for this purpose.", "The ARRA provides $100 million supplemental FY2009 appropriations for Impact Aid Section 8007. While 40% of the Section 8007 funds will be made available by formula and 60% of the Section 8007 funds will be made available by competitive grant (as is done in current law), the ARRA modifies some of the eligibility and priority criteria for receiving funds. For example, the 40% of funds provided through formula grants will be based on each LEA's proportion of military children and children living on Indian lands. In addition, the ARRA drops the requirements that at least 50% of an LEA's student enrollment must be composed of military children or children living on Indian lands to receive a grant, and that the 40% of funds available be divided equally between LEAs enrolling at least 50% military children and those enrolling at least 50% children living on Indian lands. According to H.Rept. 111-16 , modifications to the current statutory provisions were made to allow for the greater participation of LEAs serving both military students and students living on Indian lands and to allow funding to be better targeted to LEAs with \"shovel ready\" projects.", "IDEA is the major federal statute that supports special education and related services for children with disabilities. As a condition of accepting IDEA funding, the act requires that states and LEAs provide a free appropriate public education (FAPE) to each eligible child with a disability. The IDEA is divided into four parts. Part A contains the general provisions, including the purposes of the act and definitions. Part B, the most often discussed part of the act, contains provisions relating to the education of school aged children (grants to states) and a state grant program for preschool children with disabilities (Section 619). Part C authorizes state grants for programs serving infants and toddlers with disabilities, while Part D contains the requirements for various national activities designed to improve the education of children with disabilities. In FY2008, IDEA, Part B Grants to States received an annual appropriation of $10.9 billion; IDEA, Part C received an annual appropriation of $436 million; and IDEA, Part D received an annual appropriation of $225 million.\nBoth the House and Senate bills would have provided supplemental FY2009 appropriations for IDEA, Part B (grants to states) and Part C. For Part B, the House bill would have provided a total of $13 billion with $6 billion made available on July 1, 2009, and $7 billion made available on July 1, 2010. The Senate bill, as detailed in its report ( S.Rept. 111-3 ) would have provided $13 billion for FY2009.\nActual and proposed Part B grants to states are often discussed in terms of the percent of the \"excess\" cost of educating children with disabilities that the federal government will pay. The metric for determining this excess cost is based on the national average per-pupil expenditure (APPE). In 1975, with the enactment of the Education for All Handicapped Children Act ( P.L. 94-142 ), it was determined that the federal government would pay up to 40% of this excess cost. For FY2008, the estimated percentage of APPE provided by the federal government under IDEA, Part B was 17.2%. The estimated percentage for FY2009 based on regular appropriations and funding provided through the House bill would have been 26.3%. For FY2010, based on regular appropriations and funding provided through the House bill, the estimated percentage would have been 26.8%. The estimated percentage based on the Senate bill and regular appropriations for FY2009 would have been 37.6%.\nFor Part C, the House bill would have provided a total of $600 million for Part C with $300 million becoming available on July 1, 2009, and the remaining funds becoming available on July 1, 2010. The Senate bill, as detailed in its report ( S.Rept. 111-3 ), would have provided $500 million for FY2009. Under Part C, the Secretary is required to reserve 15% of any funds appropriated in excess of $460 million for incentive grants to states to continue early intervention services until kindergarten as described in Section 635(c).\nThe Senate bill would have required that each LEA receiving funds for Part B use not less than 15% of the funds for special education and related services for preschool children (Section 619.) The House bill had no comparable provision.", "The ARRA provides $11.3 billion in supplemental FY2009 appropriations for IDEA Part B, which will be available during school years 2009-2010 and 2010-2011. The estimated percentage of the \"excess\" cost of educating children with disabilities that the federal government will pay based on the ARRA and regular appropriations for FY2009 is 34.2%.\nThe ARRA also provides $500 million in FY2009 funds for IDEA Part C, which will be available during school years 2009-2010 and 2010-2011. Like both the House and Senate bills, the ARRA specifies that any funds remaining after the incentive grants are awarded are to be allocated to states by formula in accordance with section 643(e).\nFinally, the ARRA provides $400 million for the IDEA preschool program (Section 619). Special issues have arisen with respect to the share of IDEA funds provided under H.R. 1 that might be allocated to outlying areas or the Bureau of Indian Affairs.", "This program, also known as the Education for Homeless Children and Youth program, provides assistance to SEAs to ensure that all homeless children and youth have equal access to the same free, appropriate public education, including public preschool education, that is provided to other children and youth. Funds are allocated to states in proportion to ESEA Title I-A grants, with a state minimum of $150,000 or 0.25% of total grants, whichever is greater. In FY2008, $64 million was appropriated for this program.\nCompetitive grants made by SEAs to LEAs under this program must be used to facilitate the enrollment, attendance, and success in school of homeless children and youth. The LEAs may use the funds for activities such as tutoring, supplemental instruction, and referral services for homeless children and youth, as well as providing them with medical, dental, mental, and other health services. In order to receive funds, each state must submit a plan indicating how homeless children and youth will be identified, how assurances will be put in place that homeless children will participate in federal, state, and local food programs if eligible, and how the state will address such problems as transportation, immunization, residency requirements, and the lack of birth certificates or school records.\nThe House bill would have provided a total of $66 million for this program in supplemental FY2009 appropriations, with $33 million becoming available on July 1, 2009, and $33 million becoming available on July 1, 2010. These funds would have been allocated to states using the formula authorized in current statute. States would have made subgrants to LEAs on a competitive basis as is done under current law. The Senate bill would have provided $70 million for this program in supplemental FY2009 appropriations. These funds would not have been allocated to states using the current formula. Rather, funds would have been allocated in proportion to the number of homeless students identified by the state during the 2007-2008 school year relative to the number of homeless students identified nationally during the 2007-2008 school year. States would have made subgrants to LEAs on a competitive basis or using a formula based on the number of homeless students identified by LEAs in the state.", "The ARRA provides $70 million in supplemental FY2009 appropriations for this program. According to H.Rept. 111-16 , these funds should be available to LEAs during school year 2009-2010 and 2010-2011 to help LEAs \"mitigate the effect of the recent reduction in local revenues and state support for education.\" Grants will be allocated to states in proportion to the number of homeless students identified by the state during the 2007-2008 school year relative to the number of homeless students identified nationally during the 2007-2008 school year, rather than under existing statutory provisions. SEAs will make subgrants to LEAs on a competitive basis or using a formula based on the number of homeless students identified by LEAs in the state. The Secretary is required to make grants to states not later than 60 days after the data of enactment. Subsequently, SEAs must make subgrants to LEAs not later than 120 days after receiving funds from the Secretary.", "Currently, there are no federal education programs dedicated specifically to providing grants for the modernization, renovation, or repair of elementary and secondary schools (hereafter referred to as funds for school renovation). The House bill, but not the Senate bill, would have provided a dedicated source of funding in FY2009 for these purposes.\nThe House bill would have provided $14 billion in supplemental FY2009 appropriations for school renovation. After a reservation of 1% for the outlying areas and the Secretary of the Interior to provide assistance to Bureau of Indian Affairs schools, and a reservation of $6 million for the Secretary of Education for administration and oversight, the remaining funds would have been allocated to each state in proportion to the amount of FY2008 Title I-A funding received by all the LEAs in the state relative to the total amount received by all the LEAs in every state. States would have been permitted to reserve up to 1% of their allocations for providing technical assistance; developing a database that includes an inventory of public school facilities in the state and their modernization, renovation, and repair needs; and developing a school energy efficiency quality plan. The remaining funds would have been allocated to LEAs in proportion to the amount of FY2008 Title I-A funding received by the LEA relative to the total amount of funding received by all LEAs in the state. The minimum grant amount for LEAs would have been $5,000. Under general provisions (Sec. 1109), the House bill would have prohibited any funds from being used for an aquarium, zoo, golf course, or swimming pool.", "The ARRA does not include a dedicated source of federal funds for school modernization. However, school modernization, renovation, and repair, and possibly construction as well, are allowable uses of funds under the State Fiscal Stabilization Fund (see subsequent discussion).", "The ARRA provides supplemental appropriations for several programs authorized under the Higher Education Act (HEA). It provides $16 billion in discretionary appropriations for the Federal Pell Grant program, the Federal Work-Study (FWS) program, and the Teacher Quality Partnership Grant program, and for the administration of federal student aid programs authorized under Title IV of the HEA. The ARRA also provides $1.474 billion in mandatory appropriations for the Federal Pell Grant program.\nThe House bill would have provided $16.276 billion in discretionary funding for the Federal Pell Grant program, the FWS program, and the Teacher Quality Partnership Grant program, and for the administration of federal student aid programs. It would also have provided $1.474 billion in mandatory funding for the Federal Pell Grant program. The House bill would have amended the federal student loan programs by increasing borrowing limits on Stafford Loans made to undergraduate students. In addition, the House bill would have provided $6 billion in discretionary funding for a new program of grants to state higher education agencies (SEAs) for higher education facility modernization, renovation and repair.\nThe Senate bill would have provided $13.980 in discretionary funding for the three HEA programs (the Federal Pell Grant program, the Federal Perkins Loan program, the Teacher Quality Enhancement Grant program), but would not have provided any funding for higher education modernization, renovation, and repair. Funding for higher education as proposed under the House and Senate bills, and as enacted under the ARRA, is briefly discussed below.", "Under the Federal Pell Grant program, grants are made available to low-income undergraduate students to help offset their costs associated with obtaining a postsecondary education. The Pell Grant program is the largest source of federal grant aid to postsecondary students. Pell Grants are portable, in that the grant aid follows students to the eligible postsecondary education institutions in which they enroll. The Pell Grant award amount is primarily based on the financial resources that a student and the student's family are expected to contribute toward postsecondary education expenses—the student's expected family contribution (EFC). The Pell Grant award is considered to be the foundation of a student's financial aid package because all other forms of federal student aid (e.g., federal student loans) are awarded after the Pell Grant award amount has been determined.\nBoth discretionary and mandatory appropriations fund the Federal Pell Grant program; and in general, annual appropriations measures specify maximum individual Pell Grant award amounts. A mandatory Pell Grant add-on has the effect of increasing the individual Pell Grant award amount above the amount available from funds provided in discretionary appropriation measures. For FY2008, $14.215 billion in discretionary funding, and $2.030 billion in mandatory funding was provided for the Pell Grant program. For the 2008-2009 award year, the maximum appropriated Pell Grant award amount was $4,731. This was comprised of a discretionary maximum award amount of $4,241, and a mandatory add-on of $490.\nThe House bill would have provided $15.636 billion for the Federal Pell Grant program, to be made available through September 30, 2011. These funds would have been in addition to discretionary funds anticipated to be appropriated for the Federal Pell Grant program as part of a separate FY2009 discretionary appropriations measure under which the appropriated maximum Pell Grant award amount would be $4,360. As a result of both appropriations measures, the discretionary maximum Pell Grant award amount for the 2009-2010 award year would have been increased to $4,860. Combined with the mandatory add-on of $490, under the House bill, the maximum Pell Grant award amount for the 2009-2010 award year would have been increased to $5,350.\nThe House bill also would have increased the mandatory appropriations provided for the Federal Pell Grant program for FY2009 by $643 million, from $2.090 billion to $2.733 billion; and for FY2010 by $831 million, from $3.030 billion to $3.861 billion.\nThe Senate bill would have provided $13.869 billion for the Federal Pell Grant program, to be made available through September 30, 2011. These funds would be provided in addition to amounts anticipated to be separately appropriated for FY2009. Funding provided under the Senate bill would have increased the maximum Pell Grant award amount by $281 above the maximum award amount to be provided for the 2009-2010 award year. For the 2010-2011 award year, the Senate bill would have also increased the maximum Pell Grant award amount by $400 above the 2008-2009 award year maximum Pell Grant award amount ($4,731). Finally, the Senate bill specified that funds would have been provided to reduce or eliminate the Pell Grant shortfall.", "The ARRA provides $15.64 billion in supplemental discretionary appropriations for the Federal Pell Grant program for FY2009. The ARRA also provides $1.474 billion in mandatory appropriations for the Federal Pell Grant program, with $643 million provided for FY2009, and $831 million provided for FY2010. For the 2009-2010 award year, the maximum Pell Grant award will be $5,350. This will consist of a discretionary maximum award amount of $4,860 (funded by the combination of appropriations provided under the ARRA and appropriations anticipated to be provided under a separate FY2009 appropriations measure) and an add-on of $490 (funded by mandatory appropriations). The mandatory appropriations provided for FY2010 are to assure sufficient funding for the statutorily specified mandatory add-on of $690 for the 2010-2011 award year.", "The FWS program is a need-based federal student aid program that provides undergraduate, graduate, and professional students the opportunity for paid employment in a field related to their course of study or in community service. Students receive FWS aid as compensation for the hours they have worked. FWS aid may be provided to any student demonstrating financial need. Awards typically are based on factors such as each student's financial need, the availability of FWS funds, and whether a student requests FWS employment and is willing to work.\nFederal funding for the FWS program is provided to institutions of higher education (IHEs) for the purpose of making available need-based federal student aid to students enrolled at those IHEs. Funds are awarded to IHEs according to a complex two-stage procedure, with a portion of funds allocated based on what the IHE received in prior years, and a portion based on an institutional need-based allocation formula. Under the FWS program, students are compensated with a combination of federal funding and a matching amount provided by the student's employer, which may be the IHE or another entity. In most instances, the maximum federal share of compensation is 75%. For FY2008, $980.5 million was provided for the FWS program.\nThe House bill would have provided $490 million in supplemental FY2009 appropriations for the FWS program, with funding to remain through September 30, 2011. Of this amount, $245 million would have been made available on October 1, 2009. The Senate bill would not have provided any supplemental funding for the FWS program.", "The ARRA provides $200 million in supplemental discretionary appropriations for the FWS program for FY2009. This funding is in addition to any amount that may be provided for the FWS program under a separate FY2009 appropriations measure.", "The Federal Perkins Loan program operates as an institutional revolving loan fund under which IHEs make available low-interest (5%) federal student loans to undergraduate, graduate, and professional students enrolled in participating institutions. Undergraduate students may borrow up to $5,000 per year; and graduate and professional students may borrow up to $8,000 per year. Borrowers of Perkins Loans who are employed in certain public service jobs may qualify for loan cancellation benefits.\nUnder the Federal Perkins Loan program, federal funding is authorized to be provided for federal capital contributions to the revolving loan funds of participating IHEs. Federal funding for Perkins Loan federal capital contributions is provided to IHEs according to a two-stage formula similar to that used for the FWS program—IHEs are first allocated funds based on what they received in prior years, and any funds remaining from the annual appropriation are subsequently allocated to IHEs according to an institutional need-based allocation formula. (Separately, federal funding is also provided to IHEs to reimburse them for the cost of cancelling loans made to students who become employed in public service jobs.) For FY2008, no funding was provided for Federal Perkins Loan program federal capital contributions, and $64.3 million was provided to reimburse IHEs for Federal Perkins Loan cancellations.\nThe Senate bill would have provided $61 million for the Federal Perkins Loan program to be allocated to participating institutions as federal capital contributions to their revolving loan funds. The House bill would not have provided any funding for the Federal Perkins Loan program.", "No funding is provided for the Federal Perkins Loan program under the ARRA.", "The House bill would have provided $50 million in FY2009 supplemental appropriations to the Department of Education for student aid administration of the Federal Pell Grant program, the Academic Competitiveness (AC) grant and National Science and Mathematics Access to Retain Talent (SMART) grant program, the Federal Supplemental Educational Opportunity Grant (FSEOG) program, the Federal Family Education Loan (FFEL) program, the FWS program, the William D. Ford Federal Direct Loan (DL) program, and the Federal Perkins Loan program. (For FY2008, $695.8 million was provided for student aid administration.) The House bill also would have required funds from the supplemental appropriation to be available for an independent audit of the federal student loan purchase programs enacted under the Ensuring Continued Access to Student Loans Act of 2008 (ECASLA; P.L. 110-227 ), and authorized under HEA, § 459A. The Senate bill would not have provided any supplemental funding specifically for student aid administration.", "The ARRA provides $60 million in FY2009 supplemental appropriations to the Department of Education for student aid administration of the Federal Pell Grant program, the AC/SMART grant program, the FSEOG program, FFEL program, the FWS program, the DL program, and the Federal Perkins Loan program.", "Title II, Part A of the HEA authorizes Teacher Quality Partnership Grants for improving teacher education programs, strengthening teacher recruitment efforts, and providing training for prospective teachers. For FY2008, $33.7 million was provided for the Title II-A program. The House bill would have provided $100 million in supplemental FY2009 appropriations for Teacher Quality Partnership Grants; and the Senate bill would have provided $50 million.", "The ARRA provides $100 million in supplemental FY2009 appropriations for Teacher Quality Partnership Grants.", "For FY2009, the House bill would have provided $6 billion for a new grant program to support higher education facility modernization, renovation, and repair, with $6 million to be reserved for the Secretary of Education for administration and oversight. Grants would have been allocated to SEAs in the 50 states, the District of Columbia, and each of the outlying areas in proportion to the number of full-time equivalent (FTE) undergraduate students enrolled in public and private not-for-profit postsecondary education schools in each jurisdiction.\nAccording to the House bill, SEAs would have used grant funds to make subgrants to public and private not-for-profit postsecondary schools to modernize, renovate, or repair facilities that are primarily used for instruction, research, or student housing. SEAs would have been required to give priority in the awarding of subgrants to minority serving institutions (e.g., those eligible for assistance under Title III or Title V of the HEA), to IHEs that have been impacted by a major disaster or emergency declared by the President, and to IHEs that would carry out projects to increase their energy efficiency and that would comply with the United States Green Building Council Leadership in Energy and Environmental Design (LEED) green building rating system.", "The ARRA does not include a dedicated source of federal funds for higher education facilities modernization. Facilities modernization, however, is an allowable use of funds under the State Fiscal Stabilization Fund (see subsequent discussion).", "The federal government operates two major student loan programs: the FFEL program, authorized under Title IV, Part B of the Higher Education Act (HEA), and the DL program, authorized under Title IV, Part D of the HEA. These programs make available loans to undergraduate, graduate and professional students, and the parents of undergraduate dependent students, to help them finance the costs of postsecondary education. The loans made through the FFEL and DL programs are low-interest loans, with maximum interest rates for each type of loan established by statute. Subsidized Stafford Loans are need-based loans and are only available to students demonstrating financial need. The Secretary pays the interest that accrues on Subsidized Stafford Loans while borrowers are in school, during a six-month grace period, and during authorized periods of deferment. Unsubsidized Stafford Loans and PLUS Loans are non-need-based loans and are available to borrowers without regard to their financial need. Borrowers are fully responsible for paying the interest that accrues on these loans.\nThe amounts students may borrow in need-based Subsidized Stafford Loans and non-need-based Unsubsidized Stafford Loans are constrained by statutory loan limits. One set of limits applies to the annual and aggregate amounts students may borrow in Subsidized Stafford Loans. Another set of limits applies to the total annual and aggregate amounts students may borrow in combined Subsidized Stafford Loans and Unsubsidized Stafford Loans (hereafter, referred to as total Stafford Loans). The terms and conditions for Subsidized Stafford Loans are more favorable to students than for Unsubsidized Stafford Loans.\nUntil the enactment of the ECASLA, the same annual Subsidized Stafford Loan limits and total Stafford Loan limits applied to dependent undergraduate students for each comparable educational level. However, annual total Stafford Loan limits that were higher than annual Subsidized Stafford Loan limits applied to independent undergraduate students, graduate and professional students, and dependent undergraduate students whose parents are unable to obtain PLUS Loans, for each comparable educational level.\nThe ECASLA increased annual and aggregate borrowing limits for total Stafford Loans for dependent undergraduate students, independent undergraduate students, and dependent undergraduate students whose parents are unable to obtain a PLUS Loan, effective for loans first disbursed on or after July 1, 2008. Technical changes to these amended loan limits were made under the Higher Education Opportunity Act (HEOA; P.L. 110-315 ). In general, the ECASLA increased annual total Stafford Loan limits by $2,000 for most undergraduate student borrowers. The ECASLA also increased aggregate borrowing limits by $8,000 for dependent undergraduate students; and by $11,500 for independent undergraduate students.\nThe House bill would have further increased annual and aggregate total Stafford Loan limits for undergraduate student borrowers for loans first disbursed on or after January 1, 2009. In general, annual total Stafford Loan limits would have been increased by an additional $2,000 for most undergraduate student borrowers. Also, aggregate total Stafford Loan borrowing limits would have been increased by an additional $8,000 for all undergraduate student borrowers. The Senate bill would not have made any changes to loan limits.", "Under the ARRA, no changes are made to Stafford Loan limits.", "Under the FFEL program, lenders receive a federal subsidy on the loans they make when the interest rate paid by borrowers does not provide them a statutorily specified level of return. This is called the special allowance payment (SAP). The SAP amount is determined quarterly under a statutory formula. The special allowance paid for each loan is dependent on the formula in effect when the loan was disbursed. The federal government pays any special allowance due lenders from the time the loan is disbursed through the entire repayment period. On loans for which the first disbursement was made on or after January 1, 2000, the SAP is determined through the use of a series of special allowance payment formulas indexed to three-month Commercial Paper (CP) rates.\nThe House bill would have made a technical amendment to the SAP formula by temporarily changing the index used from the three-month CP rate to the three-month London Inter-Bank Offered Rate (LIBOR) for United States dollars. This change would have been applicable to loans first disbursed on or after January 1, 2000 and would have been effective for the quarter beginning October 1, 2008, and ending December 31, 2008. The Senate bill would not have made any changes to the SAP formula.", "Under the ARRA, no changes are made to the SAP formula.", "IES is charged with conducting research, evaluation, and dissemination activities in areas of demonstrated national need. Its activities are designed to inform education practice and policy. Only the House bill would have provided $250 million in FY2009 to carry out Section 208 of the Educational Technical Assistance Act (ETTA; P.L. 107-279 ). Section 208 authorizes a competitive grant program for SEAs to support the design, development, and implementation of statewide longitudinal data systems to enable states to use, manage, and analyze individual student data in ways consistent with the ESEA. The House bill specified that these statewide data systems could include data systems that contain postsecondary and workforce information. Up to $5 million of the funds could have been used for state data coordinators or for awards to public or private organizations to improve data collection.", "The ARRA includes $250 million for IES to carry out Section 208 of the ETTA. Similar to the House bill, the ARRA allows statewide data systems to include postsecondary education and workforce information and allows up to $5 million of the funds appropriated to be used for state data coordinators and for awards to public or private organizations to improve data collection.", "Both the House and Senate bills would have provided supplemental FY2009 appropriations for a State Fiscal Stabilization Fund. The total amount provided would have been $79 billion under the House bill and $39 billion under the Senate bill. The House bill would have made $39.5 billion available on July 1, 2009, and another $39.5 billion available on July 1, 2010, while the Senate bill would have made $39 billion available in FY2009. Both the House and Senate bills would have made reservations from these funds prior to making grants to states. Under the House bill, from the total annual appropriation, up to 0.5% would have been reserved for the outlying areas. The Secretary could have reserved up to $12.5 million each year for administration and oversight, including program evaluation. In addition, the Secretary would have been required to reserve $7.5 billion annually to provide State Incentive Grants and establish an Innovation Fund. The Senate bill would also have reserved up to 0.5% of the total appropriation for the outlying areas. It also would have allowed the Secretary to reserve $25 million for administration and oversight—the same level that the House bill would have allowed over the two-year period during which funds would have been made available. Finally, the Senate bill would have required the Secretary to reserve $7.5 billion to provide State Incentive Grants and establish an Innovation Fund.\nAfter making these reservations, $31.790 billion would have been made available on July 1, 2009, and on July 1, 2010, under the House bill for grants to states, while $31.280 billion would have remained for grants to states in FY2009 under the Senate bill. Under both bills, these funds would have been allocated to states using two population measures: 61% of each state's grant would have been based on the state's relative population of individuals ages 5 to 24, and 39% of each state's grant would have been based on the state's relative total population.\nUnder the House bill, once funds were received at the state level, the state's governor would have been required to use at least 61% of the state's allocation to support elementary, secondary, and postsecondary education, while under the Senate bill all funds would have been used for this purpose as well as for early childhood education programs. Under both bills, the governor would have been required to use these funds to provide the amount of funds, through the state's principal elementary and secondary education funding formula, that was needed to restore state funding for elementary and secondary education to its FY2008 level. The Senate bill also would have allowed funds to be used to pay for state formula increases for FY2009-FY2011, as well as funding state equity and adequacy adjustments that were enacted before July 1, 2008.\nIn addition, under both bills the governor would have been required to use these funds to provide the amount of funds to public institutions of higher education in the state needed to restore state support for postsecondary education (not including support for capital projects or for research and development) to the FY2008 level. If the amount of funds provided through the State Fiscal Stabilization Fund was insufficient to restore state support for elementary, secondary, and postsecondary education to the FY2008 levels, plus formula increases and equity/adequacy adjustments for elementary and secondary education under the Senate bill, the governor would have been required to allocate funds between elementary and secondary education and postsecondary education in proportion to the relative shortfall in state support at each level of education. If, however, funds remained after restoring funds to the FY2008 level, the governor would have been required to use the remainder of the 61% of the state allocation (House bill) or all remaining funds (Senate bill) to provide grants to LEAs based on their share of Title I-A funding for the most recent year for which data were available.\nUnder the House bill, the governor would have been able to use up to 39% of the state funds for public safety and government services. These funds, however, could have been used to provide additional assistance for elementary and secondary education and for public institutions of higher education. As noted earlier, under the Senate bill, all funds provided to states under the State Fiscal Stabilization Fund would have been used for education.\nIn applying for funds from the State Fiscal Stabilization Fund, both bills would have required states to provide four assurances to ED. It is unclear how many states would have been able to provide all of the required assurances. Both the House and Senate bills would have required that the state agree to maintain support for elementary and secondary education at least at the level provided in FY2006, for FY2009 and FY2010; and the state agree to maintain support for public institutions of higher education at least at the FY2006 level, for FY2009 and FY2010. They both also would have required that the state establish a longitudinal data system as described in Section 6401(e)(2)(D) of the America COMPETES Act.\nBoth bills would have required states to provide assurances related to the equitable distribution of teachers between high- and low-poverty schools, but they approached this assurance in different ways. Under the House bill, the state would have been required to take actions to comply with requirements in ESEA, Section 1111(b)(8)(C) related to the provision of highly qualified teachers in schools receiving Title I-A funding to eliminate inequities in the distribution of teachers between high- and low-poverty schools and ensure that low-income and minority children are not taught at higher rates than other students by inexperienced, unqualified, or out-of field teachers. Under the Senate bill, states would have been required to take action, including implementing activities authorized in ESEA, Section 2113(c), such as reforming teacher and principal certification and establishing alternative routes for teacher state certification, to increase the number and improve the distribution of \"effective\" teachers and principals in high-poverty schools and LEAs.\nFinally, under both the House and Senate bills, the state would have had to agree to enhance the quality of its state assessments used to measure student achievement in reading, mathematics, and science through activities described in ESEA, Section 6112(a), including collaborating with institutions of higher education or other organizations to improve the quality, validity, and reliability of state assessments. Second, the state would have been required to agree to comply with requirements in the ESEA and IDEA related to the inclusion of children with disabilities and limited English proficient students in state assessments, the development of valid and reliable assessments for those students, and the provision of accommodations to facilitate their participation in state assessments. The Senate bill only would have required states to improve state academic content standards and student academic achievement standards consistent with requirements in the America COMPETES Act. The applicable requirements in the America COMPETES Act focus on identifying and making changes to a state's secondary school academic content and academic achievement standards in order to align these standards with the knowledge and skills necessary for success in credit-bearing postsecondary education coursework, the 21 st century workforce, and the Armed Forces without the need for remediation. Further, the Senate bill would have required states to ensure compliance with requirements related to schools identified for corrective actions and restructuring under ESEA Title I-A.\nAs noted earlier, each bill would have required the Secretary to reserve $7.5 billion to provide State Incentive Grants and, at his or her discretion, establish an Innovation Fund. State Incentive Grants would have been awarded by the Secretary to states that made significant progress in meeting the requirements described in the preceding paragraph. At least 50% of each state grant would have been allocated to LEAs in proportion to their ESEA Title I-A grants for the most recent year. If the Secretary choose to establish an Innovation Fund, up to $325 million of the funds made available on July 1, 2009, and on July 1, 2010, (House bill) or $650 million for FY2009 (Senate bill) could have been reserved for discretionary grants to eligible entities (states, LEAs or schools under the House bill; LEAs or partnerships between nonprofit organizations and LEAs or schools under the Senate bill). Grants would have been made by the Secretary to eligible grantees demonstrating significant gains in closing academic achievement gaps between pupil groups, and grantees would use these funds to expand their activities and serve as models for best practices.\nBoth the House and Senate bills included comparable provisions regarding the authorized uses of funds by educational agencies, schools, and institutions of higher education (IHEs) under the proposed State Fiscal Stabilization program. Funds for elementary and secondary education could have been used for any purpose authorized under the ESEA, IDEA, or the Carl. D. Perkins Career and Technical Education Act (Perkins Act). Together, these acts cover a very wide range of K-12 educational activities, including the hiring of teachers and paraprofessionals. Funds could not have been used for capital expenditures except those authorized under those acts (such uses are highly limited). No funds could have been used to provide financial assistance for pupils to attend private schools except (under the Senate bill) to provide special education and related services to pupils with disabilities as authorized by the IDEA.\nUnder both the House and Senate bills, funds for higher education could have been used by public IHEs for educational and general expenditures, including expenditures \"to mitigate the need to raise tuition and fees for in-State students.\" Funds could not have been used by IHEs to raise their endowments or for construction, renovation, or repair of facilities.", "The ARRA provides $53.6 billion in supplemental FY2009 appropriations for a State Fiscal Stabilization Fund (SFSF). The specific provisions associated with this fund include provisions from both the House and Senate bills. This section provides a summary of the key aspects of the State Fiscal Stabilization Fund under P.L. 111-5 .\nFrom the $53.6 billion appropriated for the State Fiscal Stabilization Fund, the Secretary may reserve up to 0.5% for the outlying areas (i.e., maximum reservation of $268 million). These funds are to be distributed to the outlying areas based on their respective needs as determined by the Secretary of Education in consultation with the Secretary of the Interior. Outlying areas are required to use these funds for activities consistent with those authorized under the State Fiscal Stabilization Fund under such terms and conditions as determined by the Secretary of Education.\nThe Secretary is also permitted or required to make two additional reservations of funds. First, the Secretary may reserve up to $14 million for administration, oversight, and evaluation of the State Fiscal Stabilization Fund. Second, the Secretary must reserve $5 billion to provide State Incentive Grants and establish an Innovation Fund.\nAssuming that each of these reservations are made at the maximum level, $48.318 billion will be available for grants to states. These funds will be allocated to states using two population measures: 61% of each state's grant will be based on the state's relative population of individuals ages 5 to 24, and 39% of each state's grant will be based on the state's relative total population.\nOnce funds are received at the state level, the state's governor must use 81.8% of the state's allocation to support elementary, secondary, and postsecondary education, and, as applicable, early childhood education programs and services. The governor must use these funds to provide the amount of funds, through the state's principal elementary and secondary education funding formula, needed to restore state funding for elementary and secondary education in FY2009, FY2010, and FY2011 through the formula to the greater of the FY2008 or FY2009 level, and, if applicable, to allow state formula increases to support elementary and secondary education for FY2010 and FY2011 to be implemented and to fund the phasing in of state equity and adequacy adjustments if these increases were enacted in state law prior to October 1, 2008. According to guidance published by ED on April 7, 2009, in providing funds through the state's funding formula, funds must be provided directly to LEAs. The governor is also required to use these funds to provide the amount of funds needed to restore state support for public IHEs (excluding tuition and fees paid by students) to the greater of FY2008 or FY2009 level for FY2009, FY2010, and FY2011.\nIf the amount of funds provided through the State Fiscal Stabilization Fund is insufficient to restore state support for elementary, secondary, and postsecondary education to the greater of the FY2008 or FY2009 level, plus support formula increases and equity/adequacy adjustments, if applicable, for FY2009, FY2010, and FY2011, the governor is required to allocate funds between elementary and secondary education and postsecondary education in proportion to the relative shortfall in state support at each level of education. If, however, funds remained after restoring state support for education, the governor is required to use the remainder of the 81.8% of the state allocation to provide grants to LEAs based on their share of Title I-A funding for the most recent year for which data are available.\nThe governor is required to use the remaining 18.2% of the state allocation for \"public safety and other government services,\" which may include assistance for elementary and secondary education and public IHEs, and for modernization, renovation, and repair of public school facilities and IHEs' facilities. Funds used for the latter purposes may be, but are not required to be, consistent with a recognized green building rating system. If the governor chooses to use these funds for IHEs, the governor shall not consider type or mission of an IHE and shall consider any IHE in the state for facility modernization, renovation, or repair funding if the IHE meets the Higher Education Act (HEA), Section 101 definition of an IHE and is eligible to participate in the federal student aid programs authorized by Title IV of the HEA.\nThe ARRA includes specific provisions related to the use of funds by LEAs and IHEs. Funds for elementary and secondary education can be used for any activity authorized under the ESEA, IDEA, the Adult and Family Literacy Act, or the Carl. D. Perkins Career and Technical Education Act (Perkins Act), or for the modernization, renovation, and repair of school facilities, including modernization, renovation, and repairs that are consistent with a recognized green building system. LEAs are prohibited from engaging in any school modernization, renovation, or repair that is inconsistent with state law. This language implicitly allows LEAs to use funds under the SFSF for an exceptionally wide array of activities and purposes. In particular, the ESEA includes the Impact Aid programs (Title VIII), under which funds can be used for any purpose or activity authorized under state and local law for LEAs. Through the Impact Aid program, funds are provided to LEAs to compensate them for the activities of the federal government, such as the education of children living on a military base. The federal government provides payments to LEAs to make up for this lost tax revenue. According to ED policy guidance:\nSchool districts use Impact Aid for a wide variety of expenses, including the salaries of teachers and teacher aides; purchasing textbooks, computers, and other equipment; after school programs and remedial tutoring; advanced placement classes; and special enrichment programs. Most Impact Aid funds are considered general aid to the recipient school districts and may be used in whatever manner they choose, in accordance with state and local requirements. Although most school districts use Impact Aid for current expenditures, funds may also be used for capital expenditures.\nIn guidance released April 1, 2009, ED explicitly states that LEAs may use funds provided through the State Fiscal Stabilization Fund for any purpose or activity authorized under the ESEA, including those authorized by the Impact Aid program. An LEA does not have to receive Impact Aid funds through the regular appropriations process to be able to use funds provided under the State Fiscal Stabilization Funds for these purposes. Thus, LEAs will be able to use funds provided through the State Fiscal Stabilization Fund for any purpose or activity authorized under state and local law , including new construction , except purposes specifically prohibited by the SFSF (such as those in the following paragraph) .\nNo funds may be used to provide financial assistance for pupils to attend private schools, except (according to H.Rept. 111-16 ) as authorized by ESEA, IDEA, the Adult and Family Literacy Act, or the Perkins Act. LEAs are prohibited from using State Fiscal Stabilization Funds for: (1) maintenance costs; (2) stadiums or other facilities used primarily for athletic contests or other exhibitions or other events for which admission is charged to the general public; (3) the purchase or upgrade of vehicles; or (4) the improvement of stand-alone facilities whose purpose is not the education of children.\nPublic IHEs that receive State Fiscal Stabilization Funds must use the funds for: (1) education and general expenditures, and in such a way \"to mitigate the need to raise tuition and fees for in-State students,\" or (2) modernization, renovation, or repair of IHE facilities that are primarily used for instruction, research, or student housing, including modernization, renovation, or repairs that are consistent with a recognized green building rating system. It should be noted that these required uses of funds appear to apply only to public IHEs. Non-public IHEs meeting the aforementioned criteria may receive funds from the 18.2% of state funds available for public safety and other government services, so it is unclear how these IHEs may use any funds received. The ARRA includes several prohibitions on the use of funds by IHEs that apply to all IHEs. Funds may not be used to increase an IHE's endowment. In addition, funds may not be sued for: (1) the maintenance of systems, equipment, or facilities; (2) modernization, renovation, or repair of stadiums or other facilities primarily used for athletic contests or other exhibitions or other events for which admission is charged to the general public; or (3) modernization, renovation, or repair of facilities used for sectarian or religious instruction or in which a substantial portion of the functions of the facilities are religious in nature.\nIn applying for funds from the State Fiscal Stabilization Fund, the ARRA requires states to submit an application to the Secretary that provides information required by the Secretary as well as five assurances (discussed below), baseline data demonstrating states' current status with respect to each of the five assurances, and a discussion of how the State Fiscal Stabilization Funds will be used, including whether the state will use funds to meet maintenance of effort requirements under ESEA and IDEA. The four assurances that the state must provide focus on state support for education, equity in teacher distribution, data collection, standards and assessments, and support for struggling schools. Each of the five assurances is discussed below.\n1. Maintenance of effort: The state must agree to maintain support for elementary and secondary education and for public institutions of higher education (not including support for capital projects or for research or development or tuition and fees paid by students) at least at the level of support provided in FY2006 for FY2009, FY2010, and FY2011. 2. Achieving equity in teacher distribution: The state must provide an assurance related to the equitable distribution of teachers between high- and low-poverty schools. The state must take actions to comply with requirements in ESEA, Section 1111(b)(8)(C) related to the provision of highly qualified teachers in schools receiving Title I-A funding to eliminate inequities in the distribution of teachers between high- and low-poverty schools and ensure that low-income and minority children are not taught at higher rates than other students by inexperienced, unqualified, or out-of field teachers. 3. Improving collection and use of data: The state is required to establish a longitudinal data system as described in Section 6401(e)(2)(D) of the America COMPETES Act. 4. Standards and assessments: The state must agree to enhance the quality of its state assessments used to measure student achievement in reading, mathematics, and science through activities described in ESEA, Section 6112(a), including collaborating with institutions of higher education or other organizations to improve the quality, validity, and reliability of state assessments. Second, the state must agree to comply with requirements in the ESEA and IDEA related to the inclusion of children with disabilities and limited English proficient students in state assessments, the development of valid and reliable assessments for those students, and the provision of accommodations to facilitate their participation in state assessments. Third, the state must agree to improve state academic content standards and student academic achievement standards consistent with requirements in the America COMPETES Act. The applicable requirements in the America COMPETES Act focus on identifying and making changes to a state's secondary school academic content and academic achievement standards in order to align these standards with the knowledge and skills necessary for success in credit-bearing postsecondary education coursework, the 21 st century workforce, and the Armed Forces without the need for remediation. 5. Supporting struggling schools: The state must ensure compliance with requirements related to schools identified for corrective actions and restructuring under ESEA Title I-A.\nAs noted earlier, the ARRA requires the Secretary to reserve $5 billion to provide State Incentive Grants and, at his or her discretion, establish an Innovation Fund. The Secretary may reserve 1% of the funds not being used for Innovation Fund to provide technical assistance to states in meeting the aforementioned assurances. The remaining funds will be used to provide State Incentive Grants in FY2010 to states that have made \"significant progress\" in meeting last four assurances discussed above. By historical standards, this is an unusually large amount of funding to be allocated at the Secretary's discretion.\nIn order to receive a State Incentive Grant, states must submit an application to the Secretary. The application must describe (1) the state's progress in meeting the last four assurances discussed above; (2) strategies the state is using to ensure that economically disadvantaged students, students from major racial and ethnic groups, students with disabilities, and students with limited English proficiency (hereafter referred to as subgroups of students) are making progress toward meeting state student academic achievement standards; (3) the achievement and graduation rates of public elementary and secondary education students and strategies being employed to ensure the aforementioned subgroups of students are making progress toward meeting state student academic achievement standards; (4) how the state would use its grant funding to improve student academic achievement; (5) and the state plan for evaluating state progress in closing achievement gaps. The Secretary will determine which states receive grants and the amount of those grants based on information provided in the state application and other such criteria determined by the Secretary, which may include a state's need for assistance in meeting the last four assurances discussed above. Each state that receives a State Incentive Grant must use at least 50% of the grant to provide subgrants to LEAs based on each LEAs relative share of funding under Title I-A for the most recent year.\nThe Secretary is permitted to use up to $650 million of the $5 billion reserved for additional programs to establish an Innovation Fund. The Innovation Fund will be used to provide academic achievement awards to LEAs or partnerships between a nonprofit organization and one or more LEAs or a consortium of schools (hereafter referred to as eligible entities). To be eligible to receive an award, an eligible entity must: (1) have \"significantly closed\" the achievement gaps among the aforementioned subgroups of students and students overall; (2) have exceeded the state's annual measurable objectives for two or more consecutive years or demonstrated success in \"significantly\" increasing student achievement based on another measure; (3) have made \"significant improvement\" in other areas (e.g., graduation rates, recruitment of high-quality teachers) that can be demonstrated with \"meaningful\" data; and (4) demonstrate that they have established partnerships with the private sector and that the private sector is contributing matching funds to help bring \"results to scale.\" Funds received by eligible entities will be used to allow eligible entities to expand their work and serve as best practice models, work in partnership with the private sector and philanthropic community, and identify and document best practices that can be shared and replicated.\nStates receiving funds under the State Fiscal Stabilization Fund are required to submit a report to the Secretary based on a timetable established by the Secretary that discusses how funds were used, how funds were distributed, the estimated number of jobs saved or created using the State Fiscal Stabilization Fund, tax increases that were averted, the state's progress in meeting the aforementioned assurances, increases in tuition and fees at public IHEs, changes in enrollment in public IHEs, and each modernization, renovation, and repair project funded. The Secretary is required to submit a report to the relevant authorizing and appropriating committees no later than six months following the submission of the state reports that evaluates the information contained in the state reports and the uses of funds that states included in their application for funds. In addition, the Government Accountability Office (GAO) is required to evaluate the State Incentive Grants and Innovation Fund, if applicable, programs.", "In its consideration of education-related provisions in economic stimulus funding proposals, some of the debate in Congress has centered on the extent to which states and LEAs should be given added flexibility with respect to certain fiscal accountability requirements that current statutes place on states and/or LEAs with respect to the use of federal education funds. A related issue is whether funds provided under the State Fiscal Stabilization Fund could be treated in some cases as \"non-federal\" funds in determining whether states and LEAs meet certain fiscal accountability requirements.\nA long-standing principle of federal aid to elementary and secondary education is that federal funding should add to, not substitute for, state and local education funding – i.e., that federal funds should provide a net increase in financial resources for specific types of educational services (such as the education of disadvantaged pupils or pupils with disabilities), rather than effectively providing general subsidies to state and local governments. All of the fiscal accountability requirements included in federal elementary and secondary education programs are intended to provide that all federal funds represent a net increase in the level of financial resources available to serve eligible pupils, and that they do not ultimately replace funds that states or LEAs would provide in the absence of federal aid.\nOne or more of three types of fiscal accountability requirements are applicable to major federal K-12 education aid programs. The first two of these are common to many federal assistance programs, while the third is unique to ESEA Title I-A. To meet the first requirement, maintenance of effort (MOE) , recipient LEAs must provide, from state and local sources, a level of funding (either aggregate or per pupil) in the preceding year that is at least a specified percentage of the amount in the second preceding year. A second fiscal accountability requirement provides that federal funds must be used to supplement, and not supplant (SNS) , state and local funds that would otherwise be available for the education of pupils eligible to be served under the federal program in question. SNS provisions prohibit states and/or LEAs from using federal funds: (1) to provide services that state and/or local funds have provided or purchased in the past, (2) to provide services that are required to be provided under federal, state, or local law, or (3) to provide services for some pupils (e.g., those eligible under specific federal programs) that are provided to other pupils with non-federal funds.\nThe third, distinctive, fiscal requirement under ESEA Title I-A is comparability —services provided with state and local funds in schools participating in ESEA Title I-A must be comparable to those in non-Title I-A schools of the same LEA. (If all of an LEA's schools participate in Title I-A, then services funded from state and local revenues must be \"substantially comparable\" in each school of the LEA.) Since the comparability requirement only applies to ESEA Title I-A, and is not currently a subject of debate or proposed waiver authority with respect to the ARRA, it will not be discussed further in this report.\nWith respect to current major federal K-12 education programs, for MOE , the requirement is that in order to be eligible to receive ESEA Title I-A grants, LEAs must spend, from state and local sources, in the preceding year an amount equal to at least 90% of the amount in the second preceding year, on either an aggregate or per pupil basis (whichever is more beneficial to the LEA). The ESEA provision is based on total state and local funding for public K-12 education, not funding for specific purposes. If the requirement is not met, the LEA still receives a grant that is reduced by the proportion to which the requirement is not met. The MOE requirement for Title I-A and other ESEA programs may be waived by the Secretary in cases of \"exceptional or uncontrollable circumstances\" or a \"precipitous decline in the financial resources\" (ESEA Section 9521).\nIn the case of IDEA, MOE applies to both SEAs and LEAs, and in general is based on 100%, not 90%, of previous spending levels. However, the IDEA includes a provision allowing LEAs, and possibly some states, to reduce funding by an amount of up to 50% of annual increases in IDEA allocations, if these funds are used for specified purposes. In addition, the MOE provision under IDEA is based on spending for special education services for pupils with disabilities, not total state and local spending. As under the ESEA, if the MOE requirement is not met, the SEA or LEA still receives a grant that is reduced by the proportion to which the requirement is not met. In addition, the state MOE requirement under IDEA may be waived by the Secretary in cases of \"exceptional or uncontrollable circumstances such as a natural disaster or a precipitous and unforeseen decline in the financial resources of the State\" (IDEA, Section 612(a)(18)(C)(i)). Further, the state SNS requirements under IDEA may be waived only if \"the State provides clear and convincing evidence that all children with disabilities have available to them a free appropriate public education\" (FAPE) and the Secretary of Education concurs with this evidence (IDEA Section 612(a)(17)(C)). Beyond this, it might be argued that IDEA incorporates an effective MOE at the level of services to individual pupils, with its requirement that FAPE be provided to pupils with disabilities in participating states.\nIn contrast to MOE, SNS is applied to both SEAs and LEAs under Title I-A, and there is generally no authority for the Secretary of Education to waive SNS under ESEA, and only a very restrictive authority to do so under IDEA, as it contingent upon the requirement in the previous sentence. Authority to waive SNS, as well as MOE, under ESEA programs was granted to areas affected by the 2005 Gulf Coast hurricanes for FY2006 and 2007. In particular, the broad waiver authorities included in ESEA Title IX, Part D, and the Education Flexibility Partnership Act of 1999 ( P.L. 106-25 , as amended) specifically exempt all three fiscal accountability provisions from authority to be waived (beyond the specific MOE waiver authority noted above).", "The ARRA implicitly applies current statutory provisions regarding MOE and SNS to increased appropriations for ESEA Title I-A and the IDEA. For the State Fiscal Stabilization program, a MOE based on state-source revenues for public K-12 education and higher education in FY2006 would apply to states, but there is no SNS requirement at any level and no MOE requirement for LEAs with respect to funds provided under this program. The MOE requirement for the Fiscal Stabilization program could be waived or modified by the Secretary of Education for any of FY2009-FY2011 if the Secretary determines that the state receiving the waiver will not provide a lower percentage of the total funds available for elementary and secondary education than in the preceding fiscal year.\nIn addition, under the ARRA, states or LEAs may, with prior approval of the Secretary, treat State Fiscal Stabilization Fund grants used for education as \"non-federal funds\" for purposes of meeting MOE requirements under any ED program, including ESEA Title I-A and the IDEA, for FY2009, FY2010, or FY2011. In determining whether to provide approval to allow states and LEAs to use State Fiscal Stabilization Funds as non-federal funds to meet MOE requirements, ED has indicated that it will be \"concerned\" if a state has reduced the proportion of total state revenues that are spent on education. If this proportion has been reduced, the Secretary will consider whether the reductions were due to exceptional or uncontrollable circumstances, the extent to which available financial resources have declined, and whether there have been changes in the demand for services.\nRequired levels of state and local funding in subsequent years will not be reduced as a result of this provision. This might allow approved states to reduce their level of spending for K-12 education without jeopardizing their eligibility for funding under the IDEA or Title I-A and other ESEA programs. However, the potential impact of this authority is not fully clear, particularly since SNS requirements would continue to apply to ESEA Title I-A, IDEA, and similar programs.", "Earlier versions of this report included estimated state grants for various education programs. CRS prepared those state grant estimates to support congressional decision-making by providing comparisons of the relative impact of alternative formulas or funding levels on the legislative process. These estimates were also provided to inform Members of Congress seeking information on legislation being considered for a vote. After a measure is enacted, however, it is the responsibility of the executive branch (e.g., U.S. Department of Education) to develop allocations and implement the law. CRS estimates produced during legislative consideration of a bill may differ from actual allocations due to differences in data used (e.g., actual allocations calculated by executive branch agencies may be based on data that are not yet available or have recently become available) or differences in interpretation of statutory language. Once executive branch agencies develop state allocations for formula grants (e.g., Title I-A Grants to LEAs), the executive branch agencies are the authoritative sources on grant amounts. CRS estimates are no longer included in this report because ED has released estimated state grants under the ARRA.", "The House-passed version of H.R. 1 would have provided about $145.005 billion for education programs that are or would have been administered by ED, while the Senate bill would have provided $79.964 billion for such programs. While funds generally would have been appropriated in FY2009, the House bill would have made some funding available in FY2009 and some funding available in FY2010. The Senate bill would have appropriated and made funds available in FY2009. Table A-1 provides an overview of the specific funding provided by the ARRA, and the funding that would have been provided under the House and Senate bills." ], "depth": [ 0, 1, 1, 1, 1, 2, 3, 4, 3, 4, 3, 4, 3, 4, 3, 4, 3, 4, 2, 3, 2, 3, 2, 3, 1, 2, 3, 2, 3, 2, 3, 2, 3, 2, 3, 2, 3, 2, 3, 2, 3, 1, 2, 1, 2, 1, 2, 1, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h3_full h1_full", "", "", "h0_full h3_full h2_title h1_title", "h1_title", "", "", "", "", "", "", "", "", "h1_full", "", "", "", "", "", "", "", "h2_full h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h2_full h1_title", "h1_full", "", "", "h3_title", "h3_full" ] }

{ "question": [ "What is the ARRA?", "How did the ARRA come to exist?", "What was the purpose of the ARRA?", "What does the ARRA provide funds to?", "How does the ARRA support education at the state level?", "How are these funds used?", "How would the House and Senate versions of H.R.1 provide funding for education?", "How would the House bill impact education differently than the Senate bill?", "How would the House bill and the Senate bill be similar?", "What does this report overview?", "What provisions are mentioned in this report?", "What is considered outside the scope of the report?" ], "summary": [ "The American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law by President Obama on February 17, 2009 (P.L. 111-5). The primary purposes of the ARRA focus on promoting economic recovery, assisting those most affected by the recession, improving economic efficiency by \"spurring technological advances in science and health,\" investing in infrastructure, and stabilizing state and local government budgets.", "The American Recovery and Reinvestment Act of 2009 (ARRA) was signed into law by President Obama on February 17, 2009 (P.L. 111-5).", "The primary purposes of the ARRA focus on promoting economic recovery, assisting those most affected by the recession, improving economic efficiency by \"spurring technological advances in science and health,\" investing in infrastructure, and stabilizing state and local government budgets.", "The ARRA provides funds to several existing education programs administered by the U.S. Department of Education (ED), including programs authorized by the Elementary and Secondary Education Act (ESEA), the Individuals with Disabilities Education Act (IDEA), and the Higher Education Act (HEA). It also provides general state fiscal stabilization grants to support education at the elementary, secondary, and postsecondary levels, as well as \"public safety and other government services.\"", "It also provides general state fiscal stabilization grants to support education at the elementary, secondary, and postsecondary levels, as well as \"public safety and other government services.\"", "Funds made available through the State Fiscal Stabilization Fund may be used for modernization, renovation, or repair of public school or higher education facilities.", "Under the House and Senate versions of H.R. 1, funds also would have been provided to several existing education programs administered by the U.S. Department of Education (ED), including programs authorized by the ESEA, IDEA, and HEA.", "The House bill, but not the Senate bill, would have created new programs to support school modernization, renovation, and repair at the elementary, secondary, and postsecondary education levels.", "Both the House bill and the Senate bill would have provided general funds for education to support state fiscal stabilization.", "This report provides a brief overview of the key provisions related to education programs that are or will be administered by ED that were included in the ARRA under Division A, Title VIII, Department of Education, and under Title XIV, State Fiscal Stabilization Fund. It also includes a discussion of relevant provisions that were included in the House and Senate bills.", "It also includes a discussion of relevant provisions that were included in the House and Senate bills.", "Education-related tax provisions, as well as Vocational Rehabilitation programs administered by ED, are beyond the scope of this report." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 1, -1, -1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 2, 3, 3, 3 ] }

{ "title": [ "", "Mission", "History and Selected Statutory Authorities", "Malcolm Baldrige National Quality Improvement Act of 1987", "Omnibus Trade and Competitiveness Act of 1988", "Hollings Manufacturing Extension Partnership Program", "Advanced Technology Program", "America COMPETES Act/America COMPETES Reauthorization Act of 2010", "Technology Innovation Program", "NIST Doubling Effort", "Middle Class Tax Relief and Job Creation Act of 2012", "Revitalize American Manufacturing and Innovation Act of 2014", "Previous NIST Programs", "Advanced Manufacturing Technology Consortia Program", "Manufacturing Technology Acceleration Centers Program", "NIST Appropriations", "Overview of NIST Appropriations Accounts", "NIST FY2019 Appropriations", "Funding Trends for NIST Accounts and Selected Programs", "Total NIST Funding", "Scientific and Technical Research and Services Account", "Construction of Research Facilities Account", "Industrial Technology Services Account", "Manufacturing Extension Partnership Program", "Advanced Technology Program/Technology Innovation Program", "Concluding Observations", "NIST Doubling Effort", "NIST Technology Policy", "National Network for Manufacturing Innovation" ], "paragraphs": [ "", "The U.S. Department of Commerce's National Institute of Standards and Technology (NIST) is the \"lead national laboratory for providing the measurements, calibrations, and quality assurance techniques which underpin United States commerce, technological progress, improved product reliability and manufacturing processes, and public safety.\"\nBy statute, NIST is \"to assist private sector initiatives to capitalize on advanced technology; to advance, through cooperative efforts among industries, universities, and government laboratories, promising research and development projects, which can be optimized by the private sector for commercial and industrial applications; and to promote shared risks, accelerated development, and pooling of skills which will be necessary to strengthen America's manufacturing industries.\"\nNIST conducts leading-edge research in its seven research laboratories located in facilities in Gaithersburg, MD, and Boulder, CO. NIST employs approximately 3,000 scientists, engineers, technicians, and support personnel, and hosts about 3,500 guest researchers and associates from academia, industry, and other government agencies, who collaborate with NIST staff and access user facilities. Research is focused on measurement, standards, test methods, and basic \"infrastructural technologies\" that enable development of advanced technologies. Infrastructural technologies assist industry in characterizing new materials, monitoring production processes, and ensuring the quality of new product lines. Cooperative research with industry to overcome technical barriers to commercialization of emerging technologies is a major component of NIST's work.\nIn addition, NIST manages extramural programs such as the Hollings Manufacturing Extension Partnership (MEP) program and the Network for Manufacturing Innovation (NMI, also referred to as Manufacturing USA). Several other extramural programs previously conducted by NIST have been eliminated or integrated into other NIST activities. These programs are discussed in the next section.", "Unlike most federal laboratories, NIST has a mission specified by statute (15 U.S.C. 271-282a), has a separate authorization and appropriation, and is headed by a Senate-confirmed presidential appointee (the Under Secretary of Commerce for Technology and Standards). NIST was originally created by the NBS Organic Act of 1901 (P.L. 56-177) as the National Bureau of Standards (NBS), at a time when the first centralized industrial labs were being established.\nUnder the act, NBS was charged with working on \"the solution of problems which arise in connection with standards\" and to engage in the \"determination of physical constants and the properties of materials, when such data are of great importance to scientific or manufacturing interests and are not to be obtained of sufficient accuracy elsewhere.\" These objectives remain central to NIST's laboratory work today.", "In 1987, the Malcolm Baldrige National Quality Improvement Act of 1987 ( P.L. 100-107 ) established the Malcolm Baldrige National Quality Award under the management of NBS. The act directs the President or the Secretary of Commerce to \"periodically make the award to companies and other organizations which in the judgment of the President or the Secretary have substantially benefited the economic or social well-being of the United States through improvements in the quality of their goods or services resulting from the effective practice of quality management, and which as a consequence are deserving of special recognition.\"", "The following year, amid widespread concerns about the state of U.S. industrial competitiveness, the Omnibus Trade and Competitiveness Act of 1988 ( P.L. 100-418 ) significantly expanded the role of NIST as the \"lead national laboratory for providing the measurements, calibrations, and quality assurance techniques which underpin United States commerce, technological progress, improved product reliability and manufacturing processes, and public safety\" by \"moderniz[ing] and restructur[ing] that agency to augment its unique ability to enhance the competitiveness of American industry.\" The act also changed the name from NBS to the National Institute of Standards and Technology to reflect its expanded mission. In addition to its long-standing work in standards and metrology, NIST was directed to offer support to the private sector for the development of precompetitive generic technologies and the diffusion of government-developed innovation to users in all segments of the U.S. economy. Among its provisions, the act established the Advanced Technology Program (ATP), and a program now known as the Hollings Manufacturing Extension Partnership program.", "The MEP is a program of regional centers that assist smaller, U.S.-based manufacturing companies in identifying and adopting new technologies. Operating under the auspices of NIST, centers in all 50 states and Puerto Rico provide technical and managerial assistance to firms. Federal funding for the centers is matched by nonfederal sources.", "The Advanced Technology Program was designed \"to serve as a focal point for cooperation between the public and private sectors in the development of industrial technology,\" according to the report accompanying the bill, and to help solve \"problems of concern to large segments of an industry.\" Placed within the National Institute of Standards and Technology in recognition of the laboratory's ongoing relationship with industry, ATP provided seed funding to single companies or to industry-led consortia of universities, businesses, and/or government laboratories for development of generic (broad-based), precompetitive technologies that have many applications across industries. Awards, based on technical and business merit, were for high-risk work past the basic research stage but not yet ready for commercialization. Market potential was an important consideration in project selection. Scientific and technical review generally was performed by federal and academic experts. Business plan assessments were made by individuals from the private sector.", "The America COMPETES Act ( P.L. 110-69 ) and the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) authorized NIST appropriations and several programs and activities.", "In 2007, the America COMPETES Act replaced ATP with a new program, the Technology Innovation Program (TIP). While similar to ATP in the promotion of R&D expected to be of broad-based economic benefit to the nation, TIP appeared to have been structured to avoid what was seen as government funding of large firms that opponents argued did not necessarily need federal support for research. The committee report to accompany H.R. 1868 , part of which was incorporated into P.L. 110-69 , stated that TIP replaced ATP in consideration of a changing global innovation environment focusing on small and medium-sized companies. The design of the program also \"acknowledges the important role universities play in the innovation cycle by allowing universities to fully participate in the program.\" Appropriations for TIP were provided from FY2008 to FY2011; no appropriations have been provided for TIP since FY2011.", "The America COMPETES Act authorized appropriations for NIST accounts for FY2008-FY2010, and the America COMPETES Reauthorization Act of 2010 authorized appropriations for NIST accounts for FY2011-FY2013. The authorization levels for NIST were part of a larger effort to double funding for selected accounts—all of the National Science Foundation, the Department of Energy Office of Science, and the NIST laboratory and construction accounts—that support physical sciences and engineering research. Congress's appropriations fell short of the authorizations in these acts, and President Obama's FY2017 request did not refer to the doubling goal. President Trump's FY2018 and FY2019 budgets do not include any reference to the doubling effort.", "As part of the Public Safety Trust Fund provided for in the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ), a share of spectrum auction proceeds are to be made available to NIST as part of a Wireless Innovation (WIN) Fund to help develop cutting-edge wireless technologies for public safety users. WIN funds are to be used for developing leading-edge wireless technologies for public safety users, including helping industry and public safety organizations conduct research and develop new standards, technologies, and applications to advance public safety communications in support of the initiative's efforts to build an interoperable nationwide broadband network for first responders. The spectrum auction provided NIST with approximately $285.0 million for this purpose; efforts began in FY2015 and are continuing in FY2018.", "In his FY2013 budget, President Obama proposed the creation of a National Network for Manufacturing Innovation (NNMI) to help accelerate innovation by investing in industrially relevant manufacturing technologies with broad applications, and to support manufacturing technology commercialization by bridging the gap between the laboratory and the market. Congress did not act on this request or a subsequent one made in President Obama's FY2014 request. President Obama renewed the request in his FY2015 budget. In December 2014, Congress enacted the Revitalize American Manufacturing and Innovation Act of 2014 (RAMI Act) as Title VII of Division B of the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ), establishing a Network for Manufacturing Innovation (NMI), largely similar to President Obama's concept for the NNMI. As specified in the act, the purpose of the NMI is to improve the competitiveness of U.S. manufacturing and to increase the production of goods manufactured predominantly within the United States; to stimulate U.S. leadership in advanced manufacturing research, innovation, and technology; to facilitate the transition of innovative technologies into scalable, cost-effective, and high-performing manufacturing capabilities; to facilitate access by manufacturing enterprises to capital-intensive infrastructure, including high-performance electronics and computing, and the supply chains that enable these technologies; to accelerate the development of an advanced manufacturing workforce; to facilitate peer exchange and the documentation of best practices in addressing advanced manufacturing challenges; to leverage nonfederal sources of support to promote a stable and sustainable business model without the need for long-term federal funding; and to create and preserve jobs.\nThe act did not appropriate funds specifically for the NMI program but instead authorized NIST to spend up to $5.0 million of its appropriated funds each year from FY2015 to FY2024 to carry out the program. In addition, the act authorizes the Department of Energy (DOE) to transfer up to a total of $250.0 million to NIST between FY2015 and FY2024 to carry out the program. The act also allows existing manufacturing centers to be classified as centers for manufacturing innovation, making them eligible to participate in the network. President Obama initiated the establishment of several such centers prior to enactment of the RAMI Act under the general statutory authority of several agencies, including the Department of Defense and Department of Energy.\nWhile no funding has been transferred from DOE to NIST as authorized by the RAMI Act, in December 2015, the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) provided specific funding, for the first time, for the establishment and coordination of institutes under the provisions of the RAMI Act. The act provides NIST with $25.0 million for FY2016 for the NNMI, to include funding for establishment of institutes and up to $5.0 million for coordination activities. The explanatory statement accompanying the act directs NIST to \"follow the direction of the Revitalize American Manufacturing and Innovation Act of 2014 in requiring open competition to select the technological focus areas of industry-driven manufacturing institutes.\"\nIn September 2016, Commerce Secretary Penny Pritzker announced that \"Manufacturing USA\" would be the new brand name for the National Network for Manufacturing Innovation. Congress continues to use the term National Network for Manufacturing Innovation in appropriations reports.\nOn February 19, 2016, NIST launched a competition to establish and operate one or more institutes. According to the announcement, NIST intended to provide up to a total of $70 million per institute over five to seven years, with federal funding matched by private and other nonfederal sources. On December 16, 2016, NIST awarded the National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL), led by the University of Delaware, \"to advance U.S. leadership in biopharmaceutical manufacturing.\" The Consolidated Appropriations Act, 2017 ( P.L. 115-31 ) provided $25 million to NIST for the NNMI, to include funding for center establishment and up to $5 million for coordination activities. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) provides $15 million to NIST for the NNMI for FY2018, to include funding for center establishment and up to $5 million for coordination activities. President Trump is requesting $15.1 million for FY2019 for Manufacturing USA, including $5.1 million for coordination activities.", "In July 2013, NIST launched two new programs: the Advanced Manufacturing Technology Consortia (AMTech) program and the Manufacturing Technology Acceleration Centers (M-TAC) program.", "Originally included in President Obama's FY2013 budget request, AMTech makes planning awards to \"establish industry-led consortia to identify and prioritize research projects supporting long-term industrial research needs.\" AMTech seeks to incentivize manufacturers to share financial and scientific resources with universities, state and local governments, and nonprofit organizations. AMTech does not have a statutory authorization; the Consolidated and Further Continuing Appropriations Act, 2013 ( P.L. 113-6 ) provided first-year funding of $14.5 million.\nIn December 2015, the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) directed NIST to merge the Advanced Manufacturing Technology (AMTech) Consortia program with the NNMI.", "The M-TAC program was a pilot effort under MEP that sought to address \"the technical and business challenges encountered by small and mid-sized U.S. manufacturers as they attempt to adopt, integrate, and execute advanced product and process technologies into their operations.\" The funded project work on all the MTAC projects has been completed and a final presentation was made by each awardee to MEP Center directors and staff in May 2016.", "", "Discretionary funding for NIST is generally provided through three appropriations accounts:\nThe Scientific and Technical Research and Services (STRS) account supports NIST in-house laboratory research. The account also provided funding for the Baldrige Performance Excellence Program through FY2011. The Construction of Research Facilities (CRF, also referred to in this report as construction) account supports construction, maintenance, and repair of NIST facilities at its facilities in Gaithersburg, MD, and Boulder, CO. From FY2008 to FY2010, CRF provided funding for a competitive grant program that funded the construction of research facilities at U.S. universities and research institutions. The Industrial Technology Services (ITS) account supports NIST's extramural programs. In FY2018, the ITS account provides funding for the MEP and NNMI programs. In earlier years, ITS provided funding for the Advanced Technology Program, the Technology Innovation Program, and the AMTech program.", "President Trump requested a total of $629.1 million for NIST in FY2019, $569.4 million (47.5%) below the FY2018 enacted level of $1,198.5 million. The President's FY2019 request included $573.4 million for R&D, standards coordination, and related services in the STRS account, a decrease of $151.1 million (20.9%) from the FY2018 level of $724.5 million. The House Appropriations Committee-reported level for FY2019 is $985 million, $213.5 million (17.8%) below the FY2018 level and $355.9 million (56.6%) above the request. The Senate Appropriations Committee-reported level for FY2019 is $1,037.5 million, $161.0 million (13.4%) below the FY2018 level, $408.4 million (64.9%) above the request, and $52.5 million (5.3%) above the House committee-reported level.\nThe President requested $15.1 million for the ITS account for FY2019, down $139.9 million (90.3%) from the FY2018 enacted level. The President's FY2019 request for ITS would discontinue funding for the Manufacturing Extension Partnership (MEP) program, and provide $15.1 million for the National Network for Manufacturing Innovation (NNMI)/Manufacturing USA, essentially the same as the FY2018 enacted level. The $15.1 million sought for the NNMI includes $10.0 million for continued support of the NIST-sponsored National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL) and $5.1 million to support NIST's role in coordination of the network. The House Appropriations Committee-reported level for the ITS account for FY2019 is $145.0 million, $10.0 million (6.5%) below the FY2018 level and $129.9 million (860.6%) above the request. The Senate Appropriations Committee-reported level for the ITS account for FY2019 is $155.0 million, equal to the FY2018 level, $139.9 million (926.9%) above the request, and $10.0 million (6.9%) above the House committee-reported level. Both the House and Senate committee reports would provide $140.0 million for the MEP program for FY2019; for the NNMI, the House would provide $5.0 million and the Senate would provide $15.0 million.\nThe President requested $40.5 million for FY2019 for the NIST CRF account, down $278.5 million (87.3%) from the FY2018 enacted level. The House Appropriations Committee-reported level for the CRF account for FY2019 is $120.0 million, $199.0 million (62.4%) below the FY2018 level and $79.5 million (195.9%) above the request. The Senate Appropriations Committee-reported level for the CRF account for FY2019 is $158.0 million, $161.0 million (50.5%) below the FY2018 level, $117.5 million (289.7%) above the request, and $38.0 million (31.7%) above the House committee-reported level.\nIn the absence of a year-long appropriation act for FY2019, NIST was funded under two continuing resolutions, first through December 7, 2018 (under P.L. 115-245 ), then through December 21, 2018 (under P.L. 115-298 ). NIST has been without appropriations since December 22, 2018. Following the start of the 116 th Congress, the House passed H.R. 21 , which would provide funding for each of the NIST accounts at the same levels as the Senate committee-passed bill from the 115 th Congress ( S. 3072 ). This section will be updated as Congress completes action on the FY2019 appropriations process.", "This section provides an overview of appropriations data for NIST in total and for each of its appropriations accounts, as well as for the Manufacturing Extension Partnership and the Advanced Technology Program (eliminated in 2007) and the Technology Innovation Program (last funded in 2011). Appendix A provides requested and enacted funding levels for NIST and its accounts for FY2003-FY2019. Appendix B provides requested and enacted funding levels for selected NIST programs.", "Figure 1 illustrates total requested and enacted NIST funding levels. Total appropriations for NIST grew from $707.5 million in FY2003 to $1,198.5 million in FY2018, a compound annual growth rate (CAGR) of 3.6%. Appropriations exceeded requests through FY2010; from FY2010 to FY2017, requests exceeded appropriations. In FY2018, appropriations once again exceeded the request. President Trump is requesting $629.1 million for NIST in FY2019, a $569.4 million (47.5%) reduction from the FY2018 appropriation level.", "Figure 2 illustrates requested and enacted funding levels for the NIST STRS account. This account saw a steady rise in both request and appropriations levels through FY2016. STRS funding requests declined in FY2017, FY2018, and FY2019. Appropriations for FY2017 were $10.0 million below the FY2016 level. In FY2018, Congress appropriated $724.5 million, an increase of $34.5 million (5.0%) above the FY2017 level of $690.0 million. For FY2019, President Trump is requesting $573.4 million for STRS, a $151.1 million (20.9%) reduction from the FY2018 appropriation level. Total appropriations for the STRS account grew from $357.1 million in FY2003 to $724.5 million in FY2018, a compound annual growth rate of 4.8%.", "Figure 3 illustrates requested and enacted funding levels for the NIST CRF account. The construction account has seen substantial fluctuations from FY2006 through FY2018. CRF funding jumped from $72.5 million in FY2006 to $173.7 million in FY2007, fell to $58.7 million in FY2008, and then rose to $532.0 million in FY2009 (of which $172.0 million was provided for in regular appropriations and $360 million provided under ARRA). In 2010, funding fell to $147.0 million, and fell again in 2011 to $69.9 million. Falling again in FY2012 to $55.4 million, appropriations remained relatively flat through FY2015, ranging from $50 million to $56 million per year. In FY2016, CRF appropriations jumped to $119.0 million; $60.0 million of the increase was designated for beginning \"the design and renovation of [NIST's] outdated and unsafe radiation physics infrastructure.\" In FY2017, CRF appropriations were $109.0 million, of which $60.0 million was designated for design and renovation of NIST's radiation physics infrastructure. In FY2018, CRF appropriations jumped to $319 million, an increase of $210.0 million (192.7%) from the FY2017 level. President Trump is requesting $40.5 million for CRF in FY2019, a $278.5 million (87.3%) reduction from the FY2018 appropriation level.\nIn FY2008, FY2009, and FY2010, the CRF account provided funding for the competitive construction grant program that funded the construction of research facilities at U.S. universities and research institutions. Appropriations for CRF also included funding for congressionally designated projects in some years. Figure 4 illustrates the funding levels for the NIST CRF account excluding congressionally directed projects and the competitive grant program (requested appropriations for FY2003-FY2019 and enacted appropriations for FY2003-FY2018).", "Figure 5 illustrates requested and enacted funding levels for the NIST ITS account. ITS requests and appropriations during this period have included the MEP, NNMI, AMTech, ATP, TIP, and Baldrige programs in some or all years. Total appropriations for the ITS account fell from $284.8 million in FY2003 to $128.4 million in FY2012, grew to $155.0 million in FY2016 and have since remained flat. President Trump is requesting $15.1 million for ITS in FY2018, a $139.9 million (90.3%) reduction from the FY2018 appropriation level. Substantial fluctuations in the levels of funding requested and provided for the MEP, ATP, and TIP programs are reflected in aggregate in Figure 5 , and illustrated and discussed in more detail on the following pages.", "Figure 6 illustrates requested and enacted funding levels for the NIST MEP program. FY2003 enacted appropriations of $105.9 million were cut to $38.6 million in FY2004, but returned to near the FY2003 level in FY2005 ($107.5 million) and stayed near that level through FY2007. The MEP funding dipped again in FY2008, to $89.6 million, then rose over the next several years to $140.0 million in FY2018. Requests from FY2003 to FY2009 were substantially lower than appropriations, falling to $2.0 million in FY2009. In FY2010, the Obama Administration requested $124.7 million for MEP. From FY2012 to FY2017, requests were somewhat higher than enacted appropriations. For FY2018, President Trump requested $6.0 million for the MEP program to provide \"for the orderly wind down of federal funding for the program\"; however, Congress appropriated $140.0 million. In FY2019, President Trump is requesting no funding for MEP, $140.0 million (100.0%) below the FY2018 appropriation level.", "The Advanced Technology Program saw its requests fall from $107.9 million in FY2003 to zero in FY2005, and its appropriations fall from $178.9 million in FY2003 to zero in FY2008; no funding was requested in FY2005 and subsequent years. The Technology Innovation Program, which succeeded ATP, was first funded at $65.2 million in FY2008 and rose to $69.9 million in FY2010 before falling to $45.0 million in FY2011. The TIP program received no funding in FY2012 or in subsequent years. The $69.9 million requested for TIP in FY2010 was fully funded; in FY2011 the TIP request was $79.9 million, and in FY2012 it was $75.0 million. No funding has been requested for TIP since FY2012.", "When NBS was renamed NIST under the provisions of the Omnibus Trade and Competitiveness Act of 1988, the laboratory was given additional missions and supporting programs. Two of the new programs—the Advanced Technology Program and the Manufacturing Extension Partnership program—were intended to improve U.S. innovation and industrial competitiveness. These programs generated criticism from some policymakers and analysts who objected to them on a variety of grounds, including whether such activities are appropriate for the federal government to undertake; whether they might result in suboptimal choices of technologies, choices better left to market forces; whether certain technologies, companies, or industries might be chosen for support based on criteria other than technical or business merit; and whether tax dollars should be awarded to already-profitable firms.\nIn contrast, NIST's historical mission of conducting laboratory research in support of standards and metrics continued to enjoy broad support and faced little controversy. Evidence of this support can be seen in the selection of the STRS account—through which NIST laboratory work is funded—as one of the targeted accounts in the doubling efforts of former Presidents George W. Bush and Barack Obama and successive Congresses. However, even with broad support and the absence of controversy, funding for the NIST STRS account did not grow at the pace its advocates supported in presidential budget requests and successive authorizations of appropriations due to tight overall fiscal constraints on the federal budget.\nThese issues are discussed in more detail below.", "In the early 2000s, many industry, academia, and policy leaders expressed growing concern that federal investments in physical sciences and engineering research were not growing fast enough to keep the United States on the leading edge of technological innovation and commercial competitiveness. In his 2006 State of the Union remarks, President Bush announced the American Competitiveness Initiative (ACI), which, among other things, sought to double funding for targeted appropriations accounts that fund physical sciences and engineering research over a 10-year period. Among the targeted accounts were the NIST STRS and construction accounts. Subsequently, Congress passed the America COMPETES Act ( P.L. 110-69 ), which set appropriations authorizations for the targeted accounts for FY2008-FY2010 that represented a compound annual growth rate (CAGR) of 10.1% that would have, if continued, resulted in a doubling over approximately seven years.\nIn his FY2010 Plan for Science and Innovation , President Obama stated that he (like President Bush) would seek to double funding for basic research over 10 years (FY2006 to FY2016) at the ACI agencies. Actual appropriations, however, did not keep pace with the America COMPETES Act authorization levels. In his FY2011 budget request, President Obama extended the period over which he intended to double these agencies' budgets to 11 years. In 2010, Congress enacted the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ), setting appropriations authorizations for the targeted accounts for FY2011-FY2013 at a level that effectively set an 11-year doubling pace (a 6.3% CAGR). However, as with the original act, appropriations did not keep pace with the authorization act levels. While reiterating President Obama's intention to double funding for the targeted accounts from their FY2006 levels, President Obama's FY2013 budget request did not specify the length of time over which the doubling was to take place. President Obama's FY2014 budget expressed a commitment to increasing funding for the targeted accounts, but did not commit to doubling. President Obama's FY2017 budget did not address the doubling effort. From FY2006, the base year for the doubling effort, through FY2016, funding for the NIST STRS and construction accounts grew by 42.3% in nominal terms, a compound annual growth rate of 3.6%, a rate that would result in doubling in about 20 years. President Obama's FY2017 request sought an increase in aggregate funding for these accounts of 2.0%. President Trump's FY2018 and FY2019 budget requests did/do not mention doubling. The doubling effort appears to no longer be a priority for Congress or the President. It remains to be seen how support for internal R&D at NIST will evolve.", "Some of NIST's external programs have faced substantial opposition over time. Beginning with the 104 th Congress, many Members expressed skepticism over a \"technology policy\" based on providing federal funds to industry for development of precompetitive generic technologies. This philosophical shift from previous Congresses, coupled with pressures to balance the federal budget, led to significant reductions in funding for NIST's external programs. The Advanced Technology Program and the Manufacturing Extension Partnership, which accounted for over 50% of the FY1995 NIST budget, were proposed for elimination. Although in the past strong support by the Senate led to their continued financing, funding for ATP remained controversial. Beginning in FY2000, the House-passed appropriations bills did not contain funding for ATP, and many of the budget proposals submitted by former President George W. Bush called for abolishing the program. In the 110 th Congress, the America COMPETES Act eliminated ATP and replaced it with the TIP initiative. While TIP received appropriations from FY2008 to FY2011, it has received no appropriations since. In his FY2003 budget proposal, President Bush also recommended suspension of federal support for those MEP centers in operation for more than six years; the following year, funding for the MEP program was significantly reduced. However, the FY2005 Omnibus Appropriations Act brought support for MEP back up to the level necessary to fully fund the existing centers. Since then, funding has grown from $107.5 million in FY2005 to $130.0 million in FY2016. President Obama requested $142.0 million for MEP for FY2017, an increase of $12.0 million (9.2%); Congress provided $130 million, an amount equal to its FY2016 level. For FY2017, Congress provided $140.0 million for MEP. President Trump's FY2018 budget request sought to end the MEP program, providing $6.0 million in FY2018 to provide \"for the orderly wind down of federal funding for the program.\" President Trump's FY2019 request would provide no funding for MEP. For more information on the MEP program, see CRS Report R44308, The Manufacturing Extension Partnership Program , by John F. Sargent Jr.", "In his FY2013 budget, President Obama requested $1 billion in mandatory funding for the creation of a National Network for Manufacturing Innovation to help accelerate innovation by investing in industrially relevant manufacturing technologies with broad applications, and to support manufacturing technology commercialization by bridging the gap between the laboratory and the market. Congress did not act on this request or on President Obama's FY2014 request for the same amount. In FY2015, President Obama requested $2.4 billion for the NNMI as part of his Opportunity, Growth, and Security Initiative. President Obama also requested $5.0 million for coordination of manufacturing innovation institutes as part of NIST's budget request. In December 2014, Congress enacted the Revitalize American Manufacturing and Innovation (RAMI) Act of 2014 as Title VII of Division B of the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ), establishing a Network for Manufacturing Innovation (NMI). The act does not appropriate funds specifically for the NMI program but instead authorizes NIST to spend up to $5.0 million of funds appropriated to NIST's ITS account each year from FY2015 to FY2024 to carry out the program. In addition, the act authorizes the Department of Energy (DOE) to transfer up to $250.0 million to NIST for the 10-year period FY2015 to FY2024 to carry out the program. As of the date of this report, DOE has not transferred any funding to NIST for this purpose.\nThrough the end of calendar year 2015, seven NNMI institutes sponsored by the Department of Defense (DOD) and Department of Energy had been awarded, and two additional institutes were being competed. In December 2015, Congress appropriated specific funding, for the first time, for the establishment and coordination of institutes under the provisions of the RAMI Act. The Consolidated Appropriations Act, 2016 ( P.L. 114-113 ) provided NIST with $25.0 million for FY2016 for the NNMI, to include funding for establishment of institutes and up to $5.0 million for coordination activities. The explanatory statement accompanying the act directed NIST to \"follow the direction of the Revitalize American Manufacturing and Innovation Act of 2014 in requiring open competition to select the technological focus areas of industry-driven manufacturing institutes.\"\nNIST subsequently announced its intention to establish two institutes. On December 16, 2016, NIST awarded the National Institute for Innovation in Manufacturing Biopharmaceuticals (NIIMBL), led by the University of Delaware, \"to advance U.S. leadership in biopharmaceutical manufacturing.\" NIST did not award a second institute due to a lack of funds.\nP.L. 115-141 provides $15.0 million for NIST NNMI efforts in FY2018, to include funding for its center and $5.0 million for coordination activities. President Obama had requested $25.0 million in discretionary funding and $1.9 billion in mandatory funding for NIST to establish institutes and coordinate the activities of the network.\nAs of the date of this report, 14 NNMI institutes have been established—8 by DOD, 5 by DOE, and 1 by the Department of Commerce.\nAs Congress completes the FY2019 appropriations process, an overarching issue will be how to respond to the Trump Administration's FY2019 NIST budget request and its policy implications, how much funding to provide to NIST in aggregate, and how to allocate NIST appropriations among the core standards and measurement functions performed by its laboratories and NIST external programs, such as MEP, AMTech, and the NMI.\nFor a broader discussion about the Network for Manufacturing Innovation and associated policy issues, see CRS Report R44371, The National Network for Manufacturing Innovation , by John F. Sargent Jr.\nAppendix A. Requested and Enacted Discretionary Appropriations for NIST Accounts\nAppendix B. Requested and Enacted Appropriations for Selected NIST Programs" ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 2, 3, 3, 2, 2, 2, 3, 3, 1, 2, 2, 2, 3, 3, 3, 3, 3, 3, 1, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full", "h0_title h2_title h1_title h3_title", "", "h0_full", "", "", "h2_title h1_title", "h2_full", "h1_full", "", "h3_full", "", "", "", "h2_title h1_title", "", "h1_full", "h2_title h1_title", "", "h1_full", "", "", "h2_full", "h2_full", "h2_title h1_title h3_title", "h1_full", "h2_full", "h3_full" ] }

{ "question": [ "What does NIST do?", "How does NIST serve the private sector?", "How does NIST utilize laboratory research?", "What has led to increased funding for NIST?", "How do appropriations compare to the presidential requests made for NIST funding?", "Did appropriations meet the presidential goals?", "Did appropriations increase as requested?", "How has NIST been a topic of discussion?", "What has led to decreased funding of NIST?", "What was the proposed reaction to decreased funding?", "What was the result of decreased funding?", "How has President Trump affected NIST funding?", "What did the Revitalize American Manufacturing and Innovation Act of 2014 establish?", "How did this influence NIST?", "How did Congress help NIST support NIIMBL?", "How has the government supported NNMI institutes?" ], "summary": [ "The National Institute of Standards and Technology (NIST), a laboratory of the Department of Commerce, is mandated to provide technical services to facilitate the competitiveness of U.S. industry.", "NIST is directed to offer support to the private sector for the development of precompetitive generic technologies and the diffusion of government-developed innovation to users in all segments of the American economy.", "Laboratory research is to provide measurement, calibration, and quality assurance techniques that underpin U.S. commerce, technological progress, improved product reliability, manufacturing processes, and public safety.", "Concerns about the adequacy of federal funding for physical science and engineering research led to efforts by successive Presidents and Congresses to double funding for the NIST laboratory and construction accounts, together with the National Science Foundation and the Department of Energy Office of Science.", "However, appropriations did not keep pace with authorization levels or presidential requests.", "However, appropriations did not keep pace with authorization levels or presidential requests. In addition, the appropriations authorizations for the accounts targeted for doubling lapsed at the end of FY2013.", "In addition, the appropriations authorizations for the accounts targeted for doubling lapsed at the end of FY2013. Appropriations for the targeted NIST accounts increased by 42.3% from FY2006 to FY2016.", "Funding for NIST extramural programs directed toward increased private sector commercialization has been a topic of congressional debate. Some Members of Congress have expressed skepticism over a \"technology policy\" based on providing federal funds to industry for development of precompetitive generic technologies.", "Some Members of Congress have expressed skepticism over a \"technology policy\" based on providing federal funds to industry for development of precompetitive generic technologies. This approach, coupled with pressures to balance the federal budget, led to significant reductions in funding for NIST.", "This approach, coupled with pressures to balance the federal budget, led to significant reductions in funding for NIST. The Advanced Technology Program (ATP) and the Manufacturing Extension Partnership (MEP), which accounted for over 50% of the FY1995 NIST budget, were subsequently proposed for elimination. In 2007, ATP was terminated and replaced by the Technology Innovation Program (TIP).", "In 2007, ATP was terminated and replaced by the Technology Innovation Program (TIP). TIP was subsequently defunded in the FY2012 appropriations legislation.", "President Trump has proposed the elimination of funding for the MEP program in FY2019.", "In December 2014, Congress enacted the Revitalize American Manufacturing and Innovation Act of 2014 (Title VII of Division B of P.L. 113-235), establishing a Network for Manufacturing Innovation (also referred to as the National Network for Manufacturing Innovation or NNMI).", "In December 2014, Congress enacted the Revitalize American Manufacturing and Innovation Act of 2014 (Title VII of Division B of P.L. 113-235), establishing a Network for Manufacturing Innovation (also referred to as the National Network for Manufacturing Innovation or NNMI). The explanatory statement accompanying the Consolidated Appropriations Act, 2016 (P.L. 114-113) directed NIST to use an open competition to select the technological focus areas of industry-driven manufacturing institutes.", "Congress appropriated $15 million in FY2018 funding for NIST to continue its support for NIIMBL and to coordinate network activities.", "Congress appropriated $15 million in FY2018 funding for NIST to continue its support for NIIMBL and to coordinate network activities. In total, 14 NNMI institutes have been established by the Department of Defense (8), Department of Energy (5), and Department of Commerce (1)." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 2, -1, -1, 1, 1, -1, -1, 0, -1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 2, 2, 2, 2, 3, 3, 3, 3, 3, 4, 4, 4, 4 ] }

{ "title": [ "", "Overview of the FY2011 Budget Cycle", "Economic Conditions Present Continuing Budget Challenges", "FY2011 Budget Submission", "Budget Estimates, Proposals, and Projections", "Projections of Federal Revenues", "Federal Outlays", "Outlays and Budget Authority", "Federal Outlay Projections", "Discretionary Outlays", "Mandatory Outlays", "Deficits", "", "On-Budget Deficits and Off-Budget Surpluses", "Federal Debt", "Economic Projections and Economic Recovery", "Issues Regarding Budget Projections", "Accuracy and Statistical Bias in Budget Forecasts" ], "paragraphs": [ "The federal budget outlines spending levels for government programs and how that spending will be funded, reflecting the policy priorities of Congress and the President. This report provides an overview of major budget estimates and projections for the FY2011 federal budget cycle. The report presents and compares budget projections calculated by the Obama Administration's Office of Management and Budget (OMB) and the Congressional Budget Office (CBO). In addition, the report discusses selected major budgetary issues.", "The congressional budget process, which includes the annual budget resolution and appropriations bills, usually begins once the Administration submits its budget to Congress. As Congress deliberates over the budget, the Administration often revises its proposals as it interacts with Members of Congress and as national and international economic conditions change.", "The economy continues to post major challenges to policymakers shaping the FY2011 federal budget. The economic recession, which many economists consider the most severe American recession since the Great Depression, has strongly affected budget estimates and projections. The U.S. economy shrank at an annual real (i.e., inflation-adjusted) rate of 6.8% in the last quarter of 2008, the biggest fall since 1982, followed by a 4.9% fall in annual-rate terms in the first quarter of 2009. While real GDP grew at an estimated annual rate of 5.0% in the fourth quarter of 2009, perhaps signaling the end of the recession, growth in 2010 has been slow relative to many other economic recoveries. Estimates put real annualized growth in the first quarter of 2010 at 3.7% and only 1.6% for the second quarter. While financial markets by mid-2009 have stabilized significantly, the chairman of the Federal Reserve Board recently described the state of the economy as \"unusually uncertain.\" While the economy is showing some signs of recovery, the national unemployment rate, which was 9.5% in July 2010, is projected to decline slowly. CBO estimates that the national unemployment rate will not recede to the 5% level until 2014. Some economists have become increasingly worried about the possibility of a \"double-dip\" recession, which would complicate existing budgetary challenges, although many forecasters do not predict a \"double-dip.\"\nFederal spending tied to means-tested social programs has risen due to elevated levels of unemployment, while federal revenues are projected to fall as individuals' incomes drop and corporate profits sink. Total federal revenues fell 17% between FY2007 and FY2009, and corporate income tax receipts fell even more sharply. CBO estimated in August 2010 that federal revenues will stabilize in FY2010, increasing from $2,105 billion in FY2009 (14.8% of GDP) to $2,143 billion in FY2010 (14.6% of GDP), and are projected to rebound somewhat in FY2011 to $2,648 billion (17.5% of GDP). Federal deficits, however, will likely be high relative to historic norms in FY2011, according to OMB and CBO projections. While federal deficits, according to CBO current-law baseline projections, will fall to 2.5% of GDP in FY2014, many budget experts consider the baseline assumptions, which were set in budget enforcement legislation, overly optimistic (see discussion in next section for details). In the later years of the current 10-year baseline budget window, federal deficits are projected to rebound, in large part due to the retirement of baby boomers and rising health care costs.\nThe federal government responded to the economic slowdown with an array of policy responses unprecedented in recent decades, including fiscal stimulus in the form of new spending and tax cuts. The federal government and the Federal Reserve also expanded or initiated major loan programs. As the economy recovers, the federal government and Federal Reserve plan to shrink or discontinue those programs as financial markets return to a more normal state. Some federal interventions, such as the Troubled Assets Relief Program, are now expected to cost far less than previous estimates, but the federal government may still face substantial credit risks associated with the takeovers of AIG, Fannie Mae, Freddie Mac, and large holdings in automobile manufacturers. Furthermore, the federal government could face new fiscal challenges if economic recovery falters or if financial turmoil reemerges.", "The Obama Administration released its FY2011 budget submission on February 1, 2010. The Administration featured policy initiatives targeted at speeding up economic recovery, reducing the unemployment rate, enacting health insurance reform, overhauling financial regulation, and stabilizing housing markets and the automobile industry. The Mid Session Review was released on July 23, 2010.\nOn February 18, 2010, President Obama set up the National Commission on Fiscal Responsibility and Reform, which was charged with finding ways to \"improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.\" The commission is slated to issue a report on December 1.\nOn April 22, the Senate Budget Committee passed its FY2011 budget resolution ( S.Con.Res. 60 ). As of the date of this report, however, neither the House nor the Senate had agreed to a budget resolution. On July 1, 2010, the House, by adopting H.Res. 1500 , was considered to have agreed to a \"deeming\" resolution ( H.Res. 1493 ), which serves some of the purposes of a budget resolution. In particular, deeming resolutions provide a basis for ongoing budget enforcement.", "Table 1 contains budget estimates for FY2011 from CBO and the Administration (the Office of Management and Budget, OMB). House and Senate Budget Committees are expected to issue their own budget totals in a budget resolution that reflects congressional funding priorities.\nBudget estimates and projections vary due to differing underlying economic, technical, and budget-estimating assumptions and techniques, as well as differences in policy assumptions. Minor differences in underlying assumptions, which may generate small short-term discrepancies, can produce wide divergences in projected long-term budget paths. In addition, the extraordinary nature of federal responses to financial turmoil and economic recession have complicated some scoring issues. Budget estimates issued by the President, CBO, or by others, should be expected to change as new data arrive or as economic conditions change.\nCBO current-law baseline projections are computed using assumptions set forth in budget enforcement legislation. The CBO baseline projections are not intended to serve as a prediction of what budget outcomes are most plausible or likely. Rather, the CBO baseline projections are designed to serve as a budgeting tool, which is used to determine how legislative changes would increase or decrease the federal deficit.\nCBO baseline projections typically yield estimates of higher growth in revenue and slower growth of discretionary spending relative to scenarios that independent forecasters consider likely. CBO baseline projections presume that\ndiscretionary spending remains constant in inflation-adjusted terms; the 2001 and 2003 tax cuts expire after FY2010 (as current law specifies); the existing \"patch\" to the alternative minimum tax (AMT), which currently applies to tax year 2009, would lapse; emergency unemployment benefits will not be extended; and cuts scheduled for Medicare physician services (Part B) as a result of \"sustainable growth rate\" calculations will not be delayed or cancelled.\nAfter FY2010, according to baseline projections, the expiration of most of the tax cuts from 2001 and 2003 would increase federal receipts. The assumption that these tax cuts expire and that growth in discretionary spending is zero in real terms explains much of the declining deficits that emerge over the 10-year CBO baseline forecast window and in the OMB BEA (Budget Enforcement Act) baseline. The Joint Committee on Taxation estimates that\nindexing the AMT to inflation for FY2010-FY2020 would cost $584 billion and extending tax cuts enacted in 2001 and 2003 (mainly EGTRRA and JGTRRA) would cost $2,465 billion over the FY2011-FY2020 period.\nBeyond the end of the current 10-year forecast window, federal deficits are expected to grow rapidly, largely because of growing health care costs and the retirement of the baby boomers, unless major policy changes are made.\nCBO's first budget report for the FY2011 budget cycle, released in January 2010, contained current-law budget baseline and economic projections for FY2011 through FY2020. This CBO report projected a FY2011 current-law baseline total deficit of $980 billion, significantly smaller than the estimated FY2009 ($1,414 billion) and FY2010 ($1,349) deficits, but far larger than the FY2008 deficit ($459 billion).\nCBO's January report also included estimated budgetary effects of selected policies on revenues and outlays. Those projections, which are based on assumptions that differ from current-law baseline conventions, can be used to assess costs of alternative policies. These alternative policy proposals interact in important ways, so that the costs of enacting two of these proposals may differ significantly from the sum of the costs of implementing each proposal separately. In particular, the effects of indexing the AMT and the extension of the 2001 and 2003 tax cuts interact in significant ways.\nOn March 5, 2010, CBO published a preliminary analysis of the President's FY2011 proposals. CBO issued a more detailed analysis on March 24, which incorporated legislative changes made before mid-March 2010, although the projections of budget aggregates were only slightly changed. The March CBO budget projections do not reflect enactment of either the Hiring Incentives to Restore Employment Act (HIRE; P.L. 111-147 ) or the Patient Protection and Affordable Care Act ( P.L. 111-148 ).\nAdministration proposals, according to CBO analysis, would lead to larger federal deficits over the 10-year FY2011-FY2020 budget window than those projected by the Obama Administration, in large part because CBO projects that the economy would grow more slowly than does OMB. CBO and OMB projections of gross domestic product (GDP) are presented in Table 11 . A section following that table discusses some technical challenges of budget forecasting.", "Administration and CBO projections of the future path of federal receipts are summarized in Table 2 . Because economic conditions strongly affect federal revenue streams, forecasts of federal receipts beyond the short term are necessarily imprecise. Economic recession caused federal receipts to fall sharply in FY2008 and FY2009. Federal revenues fell 17% between FY2007 and FY2009. Receipts in FY2010 are expected to reflect renewed economic growth, and a modest rebound is expected in FY2011.\nCorporate tax receipts and capital gains receipts can be especially sensitive to cyclical economic conditions. Asset values and corporate profits—and thus federal corporate income tax and capital gains revenues—typically recover more quickly after economic downturns than lagging indicators such as unemployment.\nSeveral major legislative initiatives enacted in the past two years included tax provisions that had significant effects on federal revenues. The American Recovery and Reinvestment Act of 2009 introduced a temporary Making Work Pay tax credit, included a one-year AMT patch, and altered rules affecting business depreciation and the treatment of cancelled debts. The Children's Health Insurance Program Reauthorization Act of 2009 ( P.L. 111-3 ) raised certain tobacco taxes to help fund the expansion of the State Children's Health Insurance Program (CHIP).\nUpdated CBO and OMB estimates predict that federal revenues as a share of GDP in FY2010 (14.6%) will be slightly less than in FY2009 (14.8%). The CBO baseline forecast for FY2011 expects economic recovery to boost federal revenues to 17.5% of GDP. At the end of the 10-year budget window, federal revenues are projected to be just over one-fifth of GDP (21.0% in FY2020). All projections shown in Table 2 project that FY2011 revenues will exceed FY2010 revenues.", "", "Many budget documents also report spending in terms of budget authority, which specifies what federal agencies can legally spend. Budget authority has been compared to funds deposited into a checking account, which then can be used for specified federal purposes. Congress often sets time limits on the availability of budget authority, although some accounts contain \"no-year\" funds that do not automatically expire. Federal agencies with available budget authority can obligate funds by signing contracts, hiring employees, or by entering into other binding agreements. Until the federal government disburses funds to make purchases, however, no outlays occur. Outlays will not increase until those funds are actually disbursed. Budget authority that is not obligated, aside from \"no-year\" funds, expires once the period of availability ends.\nOutlay data are more convenient for assessing the macroeconomic effects of the federal budgets, while analysts focusing on specific federal programs typically rely on budget authority figures. Appropriations legislation is generally framed in terms of budget authority, because Congress can control the amount of funds made available for specific purposes. The timing of federal outlays, on the other hand, often depends on administrative decisions of federal program officials, made within bounds set by Congress. This report focuses on outlays, rather than budget authority, in order to highlight broader effects of the federal budget on the economy.", "Table 3 summarizes Administration and CBO projections of future federal outlays (i.e., disbursed federal funds). Federal spending is projected to account for about a quarter of the U.S. economy in FY2011. In FY2008, federal spending accounted for just over one-fifth (20.9%) of the U.S. economy, nearly equal to its average share of gross domestic product (GDP) since FY1962.\nThe Administration's budget submission calls for FY2011 outlays of $3,834 billion (25.1% of GDP), $166 billion above the March 2010 CBO baseline. Those baseline projections show outlays rising from $3,537 billion in FY2010 to $3,668 billion in FY2011. CBO estimates that outlays under the President's budget plans would total $3,802 billion in FY2011 and $3,722 billion in FY2012.\nThe Obama Administration outlay projections include an estimate of future disaster costs, which is not included in either discretionary or mandatory spending projections. These estimates, shown in Table 4 , serve as budgetary \"plugs\" rather than projections of disaster costs in particular years. Thus, for both the OMB projections reflecting the President's budget proposals and the OMB current policy baseline, estimated future disaster costs would need to be added to discretionary outlays, mandatory outlays, and net interest in order to equal total outlays.", "Discretionary spending is provided and controlled through appropriations acts, which fund many of the activities commonly associated with such federal government functions as running executive branch agencies, congressional offices and agencies, and international operations of the government. Essentially all spending on federal wages and salaries is discretionary.\nTable 5 presents projections of discretionary outlays. While discretionary spending was the largest category of federal spending until the mid-1970s, mandatory spending in FY2010 (13.1% of GDP) accounted for about 4% more of GDP than discretionary spending (9.3% of GDP) according to August 2010 CBO estimates. Discretionary spending will decline to just 7.0% of GDP in FY2020, according to CBO baseline projections, which assume that discretionary spending is held constant in inflation-adjusted terms.\nDiscretionary spending over the next several fiscal years is projected to decrease in inflation-adjusted terms. The Obama Administration has called for a three-year freeze on non-security discretionary spending. The Obama Administration essentially defines \"security\" spending as funding for the Department of Defense, the Department of Energy's National Nuclear Security Administration, the Department of Homeland Security, the Department of Veterans Affairs, the Department of State, and international food aid programs. The Obama Administration has proposed moving funding for some Pell Grants, which are aimed at post-secondary education students that meet certain eligibility and financial need requirements, from discretionary spending to mandatory spending.", "Mandatory spending includes federal government spending on entitlement programs and the Supplemental Nutrition Assistance Program (SNAP; formerly Food Stamps) as well as other budget outlays controlled by laws other than appropriation acts. Entitlement programs such as Social Security and Medicare make up the bulk of mandatory spending. Other mandatory spending programs include Temporary Assistance for Needy Families (TANF), Supplemental Security Income (SSI), unemployment insurance, some veterans' benefits, federal employee retirement and disability, and the earned income tax credit (EITC).\nTable 6 summarizes projections of mandatory outlays. According to August 2010 CBO baseline estimates, mandatory outlays will total $2,085 billion (13.8% of GDP) in FY2011 and $1,971 billion (12.5% of GDP) in FY2012.\nMost of the costs of federal interventions that responded to financial turmoil in 2007 and 2008 were classified as mandatory, which pushed mandatory spending to $2,112 billion (14.8% of GDP) in FY2009. Stabilization of financial markets is expected to lead to lower mandatory spending totals in the next few years. Rising entitlement program costs, however, are projected to lead to significant increases in mandatory spending in later years.", "Deficits occur when Congress and the President enact policies that cause federal spending to exceed federal receipts. Deficits increase government debt held by the public, generally increasing net interest payments. Surpluses occur when federal receipts exceed outlays, which reduces federal debt held by the public. This can, in turn, reduce net interest payments.\nGovernments run deficits for several reasons. By running short-run deficits, governments can avoid raising taxes during economic downturns, helping households to smooth consumption over time. Running deficits can stimulate aggregate demand in the economy, giving policy makers a valuable fiscal policy tool that can help support macroeconomic stability. Long-run deficits allow transfers of economic resources from younger to older generations, enabling older generations to enjoy anticipated benefits of future economic growth, but also may be used to impose large burdens on future generations.\nDeficits can seriously harm national economies. Governments can spend more than they collect in revenues by printing money, which can cause inflation, or by borrowing. In the short run, fiscal overstimulation leads to inflation. In the long term, deficits either reduce capital investment, which retards economic growth, or increase foreign borrowing, which swells the share of national income going abroad. In the long run, governments that fail to repay borrowers, at least to the extent of stabilizing the ratio of government debt to gross domestic product, risk default and bankruptcy.\nTable 7 summarizes Administration and CBO projections of total federal deficits. Long-term CBO and OMB projections both show substantial increases in budget deficits in the years after FY2020. These deficits result from a projected gap between rising federal outlays and revenues. The growth of health care spending, as well as demographic changes, plays an important part of those fiscal trends. The federal government last ran a surplus in FY2001, which amounted to $128 billion or 1.3% of GDP.", "", "The total federal deficit (or surplus) is the sum of the off-budget and on-budget deficits or surpluses. The U.S. Postal Service net profits or losses and Social Security revenues net of beneficiary payments are by law considered off-budget entities.\nTable 8 summarizes projections of on-budget deficits. The on-budget deficit is estimated to decline to $1,154 billion (7.6% of GDP) in FY2011 according to CBO August 2010 baseline projections. None of the projections show an on-budget surplus within the next 5 or 10 years.\nTable 9 summarizes projections of off-budget surpluses, which mainly comprise Social Security surpluses. Since FY1985, Social Security surpluses have led to off-budget surpluses, which has reduced the size of the total deficit. High unemployment rates and other effects of economic recession have lowered inflows of payroll taxes, pushing off-budget surpluses below previously expected levels.", "Gross federal debt is the sum of debt held by the public and intragovernmental (IG) debt. IG debt is the amount owed by the federal government to other federal agencies, which the U.S. Treasury is obligated to pay at some future time. The Social Security and Medicare trust funds, which by law must be invested in federal securities, are the largest components of IG debt. IG debt also includes dozens of other federal trust funds.\nDebt held by the public is the total amount the federal government has borrowed from the public and remains outstanding. This measure is generally considered to be the most relevant in macroeconomic terms because it is the amount of debt sold in credit markets. Table 10 shows various projections of debt held by the public.\nCongress sets a ceiling on federal debt, which was raised twice in 2009 and once in early 2010. On February 17, 2009, the American Recovery and Reinvestment Act of 2009 ( H.R. 1 , P.L. 111-5 ) increased the debt limit to $12,104 billion.\nThe FY2010 budget resolution ( S.Con.Res. 13 ) recommended policies that would lead to a debt subject to limit of $13,233 billion at the end of FY2010, a level that would require an increase in the statutory debt limit. The House's adoption of the conference report on the FY2010 budget resolution ( S.Con.Res. 13 ) on April 29, 2009, triggered the automatic passage of H.J.Res. 45 to raise the debt limit to $13.029 trillion. In August 2009, Treasury reportedly said that the debt limit would be reached in mid-October, although it later stated that the limit would not be reached until mid or late December 2009. H.R. 4314 , passed by the House on December 16, 2009, and by the Senate on December 24, raised the debt limit to $12.394 trillion when the President signed the measure ( P.L. 111-123 ) on December 28. On January 28, the Senate passed an amended version of H.J.Res. 45 , which the House passed on February 4 and the President signed on February 12 ( P.L. 111-139 ), raising the federal debt limit to $14.294 trillion.\nFederal debt held by the public rose sharply from 40.8% of GDP at the end of FY2008 to 53.0% at the end of FY2010. That ratio, according to the August 2010 CBO baseline, is projected to rise to 66.1% at the end of FY2011. CBO's analysis of the President's FY2011 budget proposals suggests that ratio would reach 84.3% of GDP at the end of FY2020.", "Budget projections of the Administration and CBO are strongly influenced by expectations of the future health of the U.S. economy. The recent economic recession has also highlighted links between the federal budget and the economy. Budgetary projections for FY2011 and beyond depend in large part on how robust economic recovery is expected to be. The timing and strength of the economic recovery from the current recession will likely have major effects on the federal budget. In particular, changes in the expected path of the U.S. economy would affect future revisions of CBO baseline estimates of federal outlays and revenues. On the one hand, a faster-than-expected recovery would imply projections for higher federal revenues and lower outlays on certain \"automatic stabilizer\" programs whose spending increases when household incomes fall, which would lead to lower baseline projections of federal deficits. On the other hand, a slower or weaker-than-expected recovery would tend to increase projected federal deficits.\nThe current economic recession, as noted above, has been much deeper than many economic forecasters anticipated in 2007 and 2008. For instance, the U.S. economy contracted at an annualized real rate of 6.8% in the last quarter of 2008 and 4.9% in the first quarter of 2009, according to Commerce Department estimates, a sharper decline than many economists had expected. Estimates for the fourth quarter of 2009, which put annualized GDP growth at 5.0%, seemed to signal an end of the economic recession. More recent economic data indicate a slow and uncertain period of economic recovery. According to Commerce Department estimates, the economy grew at an annualized real rate of 3.7% in the first quarter of 2010 and only 1.6% in the second quarter. Given that in past years population growth has been about 1% per year, higher rates of economic growth would be necessary to reduce unemployment and raise living standards significantly.\nMost economists expect unemployment rates to remain elevated for the medium term. Unemployment rates have remained at high levels, with the national unemployment rate standing at 9.5% in July 2010. Unemployment rates are typically a lagging indicator, meaning that unemployment rates during recessions have stayed high even as other indicators of economic activity have showed signs of recovery. CBO estimates that the national unemployment rate will not recede to the 5% level until 2014.\nMany economic forecasters remain concerned about the medium-term strength of the economy for several reasons. State and local governments still face daunting fiscal problems, and many have exhausted rainy-day funds that cushioned them at the beginning of the recession. Interest-sensitive industries such as housing construction and automobile manufacturing that have helped spark past economic recoveries are considered unlikely to help economic recovery much in the near future. Many households are carrying high debt loads relative to historical levels and have suffered significant capital losses in housing and other investment, which may dampen private consumption for some time. Foreclosure rates are expected to continue at high levels, and concerns about the commercial real estate sector lead some to worry about the solvency of banks with substantial exposure to that sector. Finally, the financial services sector may face continuing challenges in coming years. For these reasons, many economists expect recovery from this recession to be more gradual than the economic rebound after shallower recessions in the past two decades. Forecasting turning points in economic trends, however, is difficult for technical and substantial reasons that are discussed in the next section. Table 11 presents forecasts of gross domestic product (GDP), which measures the size of the economy.", "Budget projections depend on models that reflect assumptions about the structure of the economy, expected tax and program changes, and how these interact, along with other factors that affect the budget. Changed economic conditions, such as faster or slower economic growth, higher or lower inflation, or new spending and tax policies, affect budget estimates and projections. In addition, technical components of the budget models may change as the structure of the economy evolves and as econometric techniques advance. In particular, major recessions can alter the structure of an economy in significant ways, making models based on historical data less reliable.\nBudget forecasts, unlike most other types of economic forecasts, are constructed in order to estimate the incremental costs of policy changes (i.e., scoring) in a consistent manner. If policy changes do occur, actual budget outcomes will then differ from baseline estimates. Technical factors and changes in economic conditions also affect budget forecasts. In recent years, OMB and CBO have provided information about how past forecasts have varied from actual results.\nCBO has analyzed the track record of its budget estimates extensively and now routinely includes information about its forecast record of baseline projections in its budget publications. CBO also provides detailed explanations of why its projections differ from OMB projections. CBO routinely provides a breakdown of economic, legislative, and technical factors responsible for divergences between past forecasts and actual outcomes.\nMaking accurate budget projections is inherently difficult. Reliable forecasting depends on the stability of trends. Some trends, such as population demographics, are highly predictable. For instance, many baby boomers will retire in the next decade, leading to higher spending for Medicare and Social Security. Estimating the growth in the beneficiary populations eligible for these programs is relatively straightforward. Budget estimates also depend on factors that are difficult to predict, such as future productivity growth and business cycles. Some factors that affect federal revenues, such as financial market trends, can be extremely volatile.\nMaking budget estimates and projections for the FY2011 budget cycle is especially challenging for several reasons. The economy is starting to recover from a painful recession that differs from recent downturns in important ways. The economy could emerge from the recession transformed in ways that may take time to understand fully. Continuing turmoil in financial markets makes forecasting interest rates, which affect the costs of many federal programs and debt servicing, difficult. Forecasting economic recoveries, even for milder downturns, is difficult. The Obama Administration has proposed major program initiatives in many policy areas. Estimating the budgetary effects of major changes is more difficult than estimating effects of incremental changes.\nEven in less tumultuous times, small changes in projected economic growth trajectories can lead to large budgetary consequences, especially for longer time horizons. Small changes in economic conditions, such as GDP growth, can produce large changes in the budget estimates. According to CBO estimates, a persistent 0.1% decrease in the real GDP growth rate would increase a deficit, including interest costs, by $61 billion cumulatively over a five-year period and by $273 billion over 10 years. Faster GDP growth would decrease deficits.", "Budget projections are inherently uncertain. Two measures of the quality of economic forecasts are statistical unbiasedness and accuracy . Statistical unbiasedness means that average forecast errors over time are close to zero. An unbiased forecasting method may be of little use if forecast errors are large. Accuracy means that forecast errors are small, meaning that outcomes are close to predictions. Some forecasting methods may sacrifice unbiasedness in order to gain greater accuracy. Most forecasters, as far as possible, strive to make projections that are both unbiased and accurate.\nPresidential budget requests in recent years have included measures that can be used to assess the accuracy and statistical bias of previous forecasts. Forecasts diverge from actual results because of legislative changes, unforeseen economic factors, and other factors. Current-law baseline projections will diverge from actual results when laws change, either expanding, constricting, or eliminating current programs, or by creating new programs. Projections that presume a president's policy proposals are enacted diverge from actual results if those policies are not enacted as proposed.\nSince FY1982, OMB February deficit projections for the upcoming budget year underestimated the total deficit by $55 billion. Changes in legislation accounted for most of that divergence. The standard deviation of Administration budget year deficit/surplus estimates was $233 billion for the same period FY1982-FY2009. A standard deviation measures the average size of forecast errors. The standard deviation for the corresponding four-years-ahead forecast was $343 billion. The accuracy of forecasts generally declines as the forecast window extends to later years because more policy and economic changes can occur in the interim.\nOMB used its standard deviation estimate to compute upper and lower bounds for deficit projections. In the FY2011 budget submission, OMB estimated the FY2015 federal deficit would be 3.9% of GDP, with an upper bound of 10.4% of GDP and a lower bound of a 2.6% surplus. If the statistical assumptions underlying that calculation were valid, the actual FY2015 deficit should fall within the upper and lower bounds with a 90% probability. The spread between the upper and lower bounds indicates the estimated precision of the five-years-ahead deficit forecast." ], "depth": [ 0, 1, 2, 2, 1, 1, 1, 2, 2, 2, 2, 1, 2, 2, 1, 1, 1, 2 ], "alignment": [ "h0_title h1_title", "h0_title h1_title", "h0_full h1_full", "", "h0_full", "", "", "", "", "", "", "", "", "", "h1_full", "h0_full", "", "" ] }

{ "question": [ "What are the lingering economic issues?", "How has economic growth in America been trending?", "How does the unemployment rate align with economic growth?", "What factors are causing a long and slow economic recovery?", "How has federal spending tied to means-testing been changing?", "How have costs of federal intervention been changing?", "How has federal deficits been changing?", "How are federal deficits influencing long run fiscal challenges?" ], "summary": [ "The current economic climate continues to pose major challenges to policymakers shaping the FY2011 federal budget. Although the economy has shown some signs of recovery from an economic recession that many economists consider the most severe since the Great Depression, unemployment remains at high levels.", "While the U.S. economy grew at an annual rate of 5.0% in the last quarter of 2009 in inflation-adjusted terms, after falling sharply in the last quarter of 2008 and the first quarter of 2009, annualized growth was 3.7% in the first quarter of 2010 and 1.6% in the second quarter.", "While the U.S. economy grew at an annual rate of 5.0% in the last quarter of 2009 in inflation-adjusted terms, after falling sharply in the last quarter of 2008 and the first quarter of 2009, annualized growth was 3.7% in the first quarter of 2010 and 1.6% in the second quarter. The national unemployment rate stood at 9.5% in July 2010 and is projected to decline slowly.", "Weakness in residential and commercial real estate, high household debt levels, and fiscal challenges facing state and local governments may contribute to a long and slow economic recovery. The recession and the prospect of a slow recovery have strongly affected budget estimates and projections.", "Federal spending tied to means-tested social programs has risen due to rising unemployment, while federal revenues are falling as individuals' incomes drop and corporate profits sink.", "Estimated costs of federal interventions in financial markets have fallen since late 2008 and early 2009, although fiscal risks associated with mortgage giants Fannie Mae and Freddie Mac remain.", "Federal deficits, according to OMB and CBO projections, will likely remain high relative to historic norms over the next few years.", "Long-run fiscal challenges have received renewed attention as the ratio of federal debt held by the public to GDP, which compares the accumulation of federal debt (excluding intragovernmental debt) to the size of the economy as a whole, reached 53% at the end of FY2009 and, according to OMB and CBO estimates, will exceed 60% at the end of FY2010" ], "parent_pair_index": [ -1, -1, 1, -1, -1, -1, -1, 2 ], "summary_paragraph_index": [ 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "FEMA Has Developed and Documented Misconduct Policies and Procedures for Most Employees, but Not its Entire Workforce", "FEMA Records Data on Employee Misconduct Cases and Their Outcomes, but Could Improve the Quality and Usefulness of These Data to Identify and Address Trends", "Multiple FEMA Offices Collect Misconduct Data; FEMA OCSO Recorded Approximately 600 Misconduct Complaints from January 2014 through September 30, 2016", "Aspects of FEMA’s Data Limit Their Usefulness for Identifying and Addressing Trends in Employee Misconduct", "FEMA Shares Misconduct Case Information Internally and with DHS OIG, but Does Not Accurately Track DHS OIG Referred Misconduct Complaints", "FEMA Offices Meet Regularly to Discuss Misconduct Allegations and Ongoing Investigations and Send Monthly Status Updates to DHS OIG", "FEMA’s Procedures for Tracking DHS OIG Referred Cases Need Improvement", "GAO Contact and Staff Acknowledgments" ], "paragraphs": [ "FEMA has developed a policy and procedures regarding misconduct investigations that apply to all FEMA personnel and has also documented policies and procedures regarding options to address misconduct and appeal rights for Title 5 and CORE employees. However, FEMA has not documented complete misconduct policies and procedures for Surge Capacity Force members or Reservists.\nDHS issued the Surge Capacity Force Concept of Operations in 2010, which outlines FEMA’s base implementation plan for the Surge Capacity Force. However, the document does not address any elements pertaining to Surge Capacity Force human capital management, specifically misconduct and disciplinary policies and procedures. According to the FEMA Surge Capacity Force Coordinator, despite the lack of documentation, any incidents of misconduct would likely be investigated by FEMA’s OCSO, which would then refer the completed report of investigation to the employee’s home component for adjudication and potential disciplinary action. However, although no allegations of misconduct were made at the time, the Federal Coordinating Officer in charge of one of the Hurricane Sandy Joint Field Offices said he had not seen anything in writing or any formal guidance that documents or explains how the process would work and stated that he would have had to contact FEMA headquarters for assistance in determining how to address any misconduct.\nWithout documented guidance, FEMA cannot ensure that Surge Capacity Force misconduct is addressed adequately in a timely and comprehensive manner. Therefore, in our July 2017 report we recommended that the FEMA Administrator document policies and procedures to address potential Surge Capacity Force misconduct. DHS concurred and stated that FEMA is developing a Human Capital plan for the Surge Capacity Force and will include policies and procedures relating to potential misconduct. DHS estimated that this effort would be completed by June 30, 2018. This action, if fully implemented, should address the intent of the recommendation.\nAdditionally, we found that FEMA’s Reservist Program Manual lacks documented policies and procedures on disciplinary options to address misconduct and appeal rights for Reservists. Both LER and PLB officials told us that, in practice, disciplinary actions for Reservists are limited to reprimands and termination. According to these officials, FEMA does not suspend Reservists because they are an intermittent, at-will workforce deployed as needed to respond to disasters. Federal Coordinating Officers and cadre managers have the authority to demobilize Reservists and remove them from a Joint Field Office if misconduct occurs, which may be done in lieu of suspension. Furthermore, LER and PLB officials also told us that, in practice, FEMA grants Reservists the right to appeal a reprimand or termination to their second-level supervisor. However, these actions are not documented in the Reservist Program Manual.\nWithout documented Reservist disciplinary options and appeals policies, supervisors and Reservist employees may not be aware of all aspects of the disciplinary and appeals process. Thus, in our July 2017 report, we recommended that FEMA document Reservist disciplinary options and appeals that are currently in practice at the agency. DHS concurred and stated that FEMA will update its Reservist program directive to include procedures for disciplinary actions and appeals currently in practice at the agency. DHS estimated that this effort would be completed by December 31, 2017. This action, if fully implemented, should address the intent of the recommendation.\nWe also reported in our July 2017 report that FEMA does not communicate the range of offenses and penalties to its entire workforce. Namely, FEMA revised its employee disciplinary manual for Title 5 employees in 2015, and in doing so, eliminated the agency’s table of offenses and penalties. Tables of offenses and penalties are used by agencies to provide guidance on the range of penalties available when formal discipline is taken. They also provide awareness and inform employees of the penalties which may be imposed for misconduct. Since revising the manual and removing the table, FEMA no longer communicates possible punishable offenses to its entire workforce. Instead, information is now communicated to supervisors and employees on an individual basis. Specifically, LER specialists currently use a “comparators” spreadsheet with historical data on previous misconduct cases to determine a range of disciplinary or adverse actions for each specific misconduct case. The information used to determine the range of penalties is shared with the supervisor on a case-by-case basis; however, LER specialists noted that due to privacy protections they are the only FEMA officials who have access to the comparators spreadsheet.\nBecause information about offenses and penalties is not universally shared with supervisors and employees, FEMA management is limited in its ability to set expectations about appropriate conduct in the workplace and to communicate consequences of inappropriate conduct. We recommended that FEMA communicate the range of penalties for specific misconduct offenses to all employees and supervisors. DHS concurred and stated that FEMA is currently drafting a table of offenses and penalties and will take steps to communicate those penalties to employees throughout the agency once the table is finalized. DHS estimated that this effort would be completed by December 31, 2017. This action, if fully implemented, should address the intent of the recommendation.", "", "The three offices on the AID Committee involved in investigating and adjudicating employee misconduct complaints each maintain separate case tracking spreadsheets with data on employee misconduct to facilitate their respective roles in the misconduct review process. We analyzed data provided by OCSO in its case tracking spreadsheet and found that there were 595 complaints from January 2014 through September 30, 2016. The complaints involved alleged offenses of employee misconduct which may or may not have been substantiated over the course of an investigation.\nBased on our analysis, the 595 complaints contained approximately 799 alleged offenses from January 2014 through September 30, 2016. As shown in figure 1 below, the most common type of alleged offenses were integrity and ethics violations (278), inappropriate comments and conduct (140), and misuse of government property or funds (119). For example, one complaint categorized as integrity and ethics involved allegations that a FEMA employee at a Joint Field Office was accepting illegal gifts from a FEMA contractor and a state contractor. Another complaint categorized as inappropriate comments and conduct involved allegations that a FEMA employee’s supervisor and other employees had bullied and cursed at them, creating an unhealthy work environment. Finally, a complaint categorized as misuse of government property or funds involved allegations that a former FEMA employee was terminated but did not return a FEMA-owned laptop.", "OCSO, LER, and PLB collect data on employee misconduct and outcomes, but limited standardization of fields and entries within fields, limited use of unique case identifiers, and a lack of documented guidance on data entry restricts their usefulness for identifying and addressing trends in employee misconduct. FEMA employee misconduct data are not readily accessible and cannot be verified as accurate and complete on a timely basis. These limitations restrict management’s ability to process the data into quality information that can be used to identify and address trends in employee misconduct. For example, an OCSO official stated that senior OCSO officials recently requested employee misconduct information based on employee type, such as the number of Reservists. However, the data are largely captured in narrative fields, making it difficult to extract without manual review.\nIn our July 2017 report we recommended that FEMA improve the quality and usefulness of the misconduct data it collects by implementing quality control measures, such as adding additional drop-down fields with standardized entries, adding unique case identifier fields, developing documented guidance for data entry, or considering the adoption of database software. In addition, we recommended that FEMA conduct routine reporting on employee misconduct trends once the quality of the data is improved. DHS concurred and stated that FEMA is working with the DHS OIG to develop a new case management system. The system will use drop-down fields with standardized entries and provide tools for trend analysis. Once the new system is implemented, DHS stated that FEMA will be able to routinely identify and address emerging trends of misconduct. DHS estimated that these efforts would be completed by March 31, 2018. These actions, if fully implemented, should address the intent of the recommendations.", "", "Officials from OCSO, LER, and PLB conduct weekly AID Committee meetings to coordinate information on misconduct allegations and investigations. The committee reviews allegations, refers cases for investigation or inquiry, and discusses the status of investigations. In addition to the weekly AID Committee meetings, LER and PLB officials stated that they meet on a regular basis to discuss disciplinary and adverse actions and ensure that any penalties are consistent and defensible in court. Employee misconduct information is also shared directly with FEMA’s Chief Security Officer and Chief Counsel. Within FEMA, these regular meetings and status reports provide officials from key personnel management offices opportunities to communicate and share information about employee misconduct. FEMA also provides DHS OIG with information on employee misconduct cases on a regular basis through monthly reports on open investigations.", "We found that OCSO has not established effective procedures to ensure that all cases referred to FEMA by DHS OIG are accounted for and subsequently reviewed and addressed. As discussed earlier, OCSO sends a monthly report of open investigations to DHS OIG. However, while these reports provide awareness of specific investigations, according to OCSO officials, neither office reconciles the reports to a list of referred cases to ensure that all cases are addressed. We reviewed a non-generalizable random sample of 20 fiscal year 2016 employee misconduct complaints DHS OIG referred to FEMA for review and found that FEMA missed 6 of the 20 complaints during the referral process and had not reviewed them at the time of our inquiry. As a result of our review, FEMA subsequently took action to review the complaints. The AID Committee recommended that OCSO open inquiries in 3 of the 6 cases to determine whether the allegations were against FEMA employees, assigned 2 cases to LER for further review, and closed 1 case for lack of information. According to an OCSO official, OCSO subsequently determined that none of the allegations in the 3 cases they opened involved FEMA employees and the cases were closed. The remaining 2 cases were open as of April 2017.\nThe results from our sample cannot be generalized to the entire population of referrals from DHS OIG to FEMA; however, they raise questions as to whether there could be additional instances of misconduct complaints that FEMA has not reviewed or addressed. Therefore, in our July 2017 report we recommended that FEMA develop reconciliation procedures to consistently track referred cases. DHS concurred and stated that once the new case management system described above is established and fully operational, FEMA will be able to upload all DHS OIG referrals into a single, agency-wide database. Additionally, FEMA will work with DHS OIG to establish processes and procedures that will improve reconciliation of case data. DHS estimated that these efforts would be completed by March 31, 2018. These actions, if fully implemented, should address the intent of the recommendation.\nChairman Perry, Ranking Member Correa, Members of the Subcommittee, this concludes my prepared testimony. I would be pleased to answer any questions that you may have at this time.", "If you or your staff members have any questions concerning this testimony, please contact me at 404-679-1875 or CurrieC@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this statement. Other individuals who made key contributions to this testimony include Sarah Turpin, Kristiana Moore, Steven Komadina, and Ben Atwater.\nThis is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately." ], "depth": [ 1, 1, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h0_full", "h1_title", "h1_full", "h1_full", "h2_title h1_title", "", "h2_full h1_full", "" ] }

{ "question": [ "What internal investigations has FEMA developed policies and procedures for?", "What has FEMA not yet documented?", "What problem is there with some of FEMA's policies?", "How could improved policies be beneficial?", "What is a problem with FEMA's recording of data?", "What aspects make this data problematic?", "What did GAO review?", "What could help improve FEMA?", "What misconduct-related procedures does FEMA lack?", "Why did FEMA take action to review complaints?", "How could FEMA account for all complaints in the future?", "What might the GAO review indicate about FEMA?" ], "summary": [ "Specifically, FEMA has developed policies and procedures regarding misconduct investigations that apply to all FEMA personnel and has also documented options to address misconduct and appeal rights for Title 5 (generally permanent employees) and Cadre of On-Call Response/Recovery Employees (temporary employees who support disaster related activities).", "However, FEMA has not documented misconduct policies and procedures for Surge Capacity Force members, who may augment FEMA's workforce in the event of a catastrophic disaster.", "Additionally, FEMA's Reservist (intermittent disaster employees) policies and procedures do not outline disciplinary actions or the appeals process currently in practice at the agency.", "Clearly documented policies and procedures for all workforce categories could help to better prepare management to address misconduct and mitigate perceptions that misconduct is handled inconsistently.", "FEMA records data on misconduct cases and their outcomes; however, aspects of this data limit their usefulness for identifying and addressing trends.", "However, limited standardization of data fields and entries within fields, limited use of unique case identifiers, and a lack of documented guidance on data entry across all three offices restricts the data's usefulness for identifying and addressing trends in employee misconduct.", "GAO reviewed misconduct complaints recorded by FEMA's Office of the Chief Security Officer (OCSO) from January 2014 through September 30, 2016, and identified 595 complaints involving 799 alleged offenses, the most common of which were integrity and ethics violations.", "Improved quality control measures could help the agency use the data to better identify potential problem areas and opportunities for training.", "FEMA shares misconduct case information internally and with the Department of Homeland Security Office of Inspector General (DHS OIG) on a regular basis; however, FEMA does not have reconciliation procedures in place to track DHS OIG referred cases to ensure that they are reviewed and addressed.", "GAO reviewed a random sample of 20 cases DHS OIG referred to FEMA in fiscal year 2016 and found that FEMA missed 6 of the 20 complaints during the referral process and had not reviewed them at the time of GAO's inquiry. As a result of GAO's review, FEMA took action to review the complaints and opened inquiries in 5 of the 6 cases (1 case was closed for lack of information).", "Procedures to ensure reconciliation of referred cases across FEMA and DHS OIG records could help ensure that FEMA accounts for all complaints.", "While the results from this review are not generalizable to the entire population of referrals from DHS OIG to FEMA, they raise questions as to whether there could be additional instances of misconduct complaints that FEMA has not reviewed or addressed." ], "parent_pair_index": [ -1, 0, 0, 2, -1, 0, -1, -1, -1, -1, 1, -1 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Structure of the Federal Reserve System", "Background", "Current Structure", "The Goals of Monetary Policy", "Differences Between Fiscal and Monetary Policy", "Policy Calibration, Lags, and the Role of Credibility", "Criticisms of Independence", "Independence", "Coordination", "Accountability and Disclosure", "What If Rules Replaced Discretion?", "Conclusion" ], "paragraphs": [ "", "The Constitution grants Congress the power to \"coin money, and regulate the value thereof....\" Congress has delegated responsibility for making U.S. monetary policy to the Federal Reserve System (Fed). This latter arrangement is one that many observers have criticized. Quasi-public in structure, overseen by a Board of Governors whose members are appointed to long terms, and reliant on its own source of funding, the Fed possesses a degree of independence that some argue is inimical to the spirit of democracy.\nAlthough this argument (and refutations of it) may be political or constitutional in nature, it is also rooted in certain notions about macroeconomic policy. Debates concerning the ability of the Fed to control interest rates, the need for coordination of monetary policy and fiscal policy, or even the importance of monetary policy, underlie the arguments for and against independence, and are matters of economic analysis.\nThus, in undertaking a discussion of whether the Fed should have more or less independence or accountability, it is essential to understand how monetary policy works, and its role relative to fiscal policy. Without this knowledge, it is possible that a decision to change the structure of the Fed would fail to bring about the economic effects desired, or would bring about other, adverse, effects not expected by advocates of the change.\nThis report gives a brief description of the structure of the Fed. It then discusses the economics of how Fed independence affects monetary policy. The report does not consider how Fed independence may affect the Fed's other duties, such as its oversight of the financial system. It then examines the probable economic ramifications of proposals to curb the independence of the Fed.", "", "While there are many economic arguments supporting Fed independence, it is interesting to note that none of these arguments—nor the primary duties of today's Fed that underlie these arguments—existed when the Fed was founded. Yet its structure today was largely determined in its earliest years.\nThe Federal Reserve System was created largely in response to the panic of 1907 and the many banking panics of the late 19 th century. This is ironic, since the Fed later presided over the country's worst series of banking panics in 1930-1933; federal deposit insurance would have to be created to prevent a reoccurrence of banking panics. Moreover, part of the Fed's original mandate, to create an \"elastic currency,\" is believed to be an expression of the \"real bills doctrine,\" a notion held in low regard within the economics profession today. As one author states, it is \"high on the list of longest lived economic fallacies of all time.\" Its job now, to conduct monetary policy, was not believed by most experts at the time of its creation to be a proper or even possible function of government. Before the 1930s, macroeconomic stabilization policy was not widely developed, and when it emerged from the Great Depression, monetary policy was seen as having little independent power to influence the economy and was just the helpmate of the more powerful fiscal policy. The Fed's principal method of undertaking monetary policy, open market operations, was not even envisioned at its creation; the technique of influencing the money supply through the sale and purchase of securities on the open market was inadvertently discovered during the early years of its existence as the Fed attempted to manage its portfolio of assets. For these reasons, it is not all that surprising that some observers believe that the Fed's structure is not well suited to its job.", "The Fed's structure has been changed several times since it was established. Its current structure, however, is largely the same as that which emerged in the late 1930s. U.S. monetary policy is determined within the Federal Reserve System. At the top of the system is the seven-member Board of Governors appointed to staggered 14-year terms by the President with Senate advice and consent. No member may be reappointed to a new term after having served a full term. By the same appointment and approval process, a Chairman and Vice Chairman are selected from the seven to serve four-year terms. These terms do not coincide with that of the President. The President can remove Fed governors \"for cause\" before their term has ended, but not on the basis of policy differences or incompatibility. In practice, the President has never done so. The Chairman of the Fed, though considered quite powerful, has only one vote on the Board. His power derives principally from setting the Board's agenda, from his role as the Fed's representative in meetings with other government officials, and from his control of the Board's staff.\nThere are 12 regional Federal Reserve Banks, which were established in the belief that the system should safeguard against a concentration of power in New York or Washington. Each is set up as a private operation owned by member banks, with a nine-member Board of Directors. Six of the Board members are selected by member banks and three by the Board of Governors, including a chairman and deputy chairman. The Board of Directors then appoints the president and first vice president of its regional bank, subject to Board of Governors approval.\nThe seven members of the Board of Governors sit with the president of the New York Federal Reserve Bank and four other regional bank presidents, who are selected on a rotating basis among the other 11 regional banks, on the Federal Open Market Committee (FOMC). The FOMC is responsible for determining the target for the federal funds rate, which is the inter-bank overnight lending rate. The target is maintained through open market operations, which is the principal tool of monetary policy. The discount rate, which is the rate at which the Fed lends to liquidity-constrained banks, is set by the Board alone upon application by a regional bank for a change.\nMoney is placed into circulation through the purchase of U.S. Treasury securities. Because the system holds a large portfolio of securities, it earns income. Essentially, this is income from money creation and it is technically referred to as seigniorage. Member banks are the shareholders of the Federal Reserve Banks, and a dividend is paid to member banks corresponding to their stake in the system. After operating costs are deducted, and additions are made to its capital account (to maintain solvency), the rest is remitted to the Treasury, where it is recorded as \"miscellaneous receipts.\" In 2005, it was estimated that 92% of the Fed's profits, or $21.5 billion, was remitted to the U.S. Treasury. About 3% of its profits were paid in dividends to shareholder banks and 5% were added to its capital.\nThe way in which the Fed earns and passes on income means, first, that the government receives the revenue from money creation just as it would if, say, the Treasury administered monetary policy instead of the Fed. It means, second, that the Fed does not need a congressional appropriation of funds to operate. It has its own source of revenue and can conduct policy free of concern that budgetary pressure might be applied by those wanting to influence its decisions.\nAlthough the Fed has great latitude in implementing monetary policy, the goals that it is mandated to achieve through monetary policy are determined by Congress. In this sense, monetary policy is neither independent nor undemocratic. Having said that, both opponents of the Fed's independence and many economists would agree that the Fed's current mandate is broad and vague, and, therefore, greatly enhances its independence for better or for worse. Its charge derives from the legislation that created it (Federal Reserve Act, P.L. 63-43), from which comes its responsibility to provide an \"elastic currency\"; the Federal Reserve Reform Act of 1977 ( P.L. 95-188 ), which directs it to maintain stable prices, maximum employment, moderate interest rates, and sustainable growth; and the Full Employment and Balanced Growth Act of 1978 ( P.L. 95-523 ), which requires it to relate its policy to the employment goals of the entire federal government set pursuant to the aims of the Employment Act of 1946 (P.L. 79-304).\nAs will be shown below, these goals frequently conflict. Collectively, they amount to telling the Fed that it is to make good economic policy. Given that these goals often cannot all be pursued simultaneously, and that some—even by themselves—can only be sustained temporarily, the Fed can usually find legislative authority for any monetary stance it assumes.", "Many recessions occur because aggregate supply exceeds aggregate demand. In other words, total spending is lower than what the economy is capable of producing. Economists attribute this phenomenon to the presence of price stickiness. When the demand for goods and labor falls, prices should fall to a point where adequate demand is restored. But because price adjustment does not happen quickly—due to the presence of contracts, menus, and uncertainty—output declines. This can lead to a vicious cycle where unemployment rises and resources fall idle—lowering aggregate demand further. In the long run, prices will adjust and the economy will return to its full potential. However, the examples of the Great Depression and the Japanese economy in the 1990s suggest that the long run can be very long indeed.\nIf the government does not wish to wait for this long run self-adjustment to occur, it has two primary tools at its disposal to boost aggregate demand. The favored tool at present is monetary policy. The Fed can inject newly printed money into the economy by purchasing U.S. Treasuries, a process referred to as expansionary monetary policy. Since prices do not adjust instantly, this money will increase aggregate output if there are unused resources in the economy. The channel through which this spending increase occurs is lower interest rates. The cost of borrowing is lowered as the reserves available to the banking system expand. Thus, aggregate spending is boosted through higher investment spending on capital goods, equipment, and buildings and through higher consumption on interest-sensitive goods like automobiles, homes, and appliances. Aggregate spending is also boosted through the foreign trade sector. Lower interest rates attract less investment to the United States, and, other things being equal, this reduces demand for the dollar. As the exchange rate depreciates, foreign spending on U.S. exports and the U.S. production of import-competing goods will rise.\nIn the long run, the printing of money can have no real effect on the economy—sustained inflation is a purely monetary phenomenon. Reductions in unemployment resulting from expansionary monetary policy are either temporary (if the economy was already at full employment when policy was changed) or would have eventually occurred anyway (if the economy was not at full employment). Prices will adjust to the increase in the money supply, causing inflation to rise. The closer the economy is to its full potential when monetary policy becomes expansionary, the more the increase in aggregate demand will be transmitted into higher inflation rather than greater output.", "Another stabilization tool at the government's disposal is fiscal policy. The government can boost its spending and finance it through an increase in its budget deficit (or a reduction in its surplus). This increases aggregate demand directly by increasing the government's purchase of goods and services. Similarly, the government can cut taxes through a smaller surplus or larger deficit, which boosts household spending by increasing disposable income (assuming that households spend the tax cut rather than save it). But unlike expansionary monetary policy, expansionary fiscal policy results in rising, rather than falling, interest rates, other things being equal. Interest rates rise because deficits are financed out of private saving. That results in the availability of less private saving for private capital investment. The demand for investment on a smaller pool of saving bids up the price of that saving, the interest rate. When the economy is deep in recession, the demand for investment may be very weak, and deficit spending will cause little upward pressure on interest rates. By contrast, if the economy is operating near full potential when expansionary fiscal policy is undertaken, then interest rates will rise substantially, crowding out most of the increase in aggregate demand caused by expansionary fiscal policy.\nWhen interest rates rise, foreign investment is attracted to the country, offsetting some of the decline in saving available for investment. However, this causes the dollar exchange rate to appreciate, which reduces foreign demand for U.S. exports and U.S. demand for import-competing goods. This also crowds out the boost in demand caused by expansionary fiscal policy to the extent that it causes interest rates to rise. Thus, as the U.S. has become more open to international capital flows and trade, monetary policy has become more powerful and fiscal policy less powerful. That is because exchange rate effects work to reinforce the effects of monetary policy on aggregate demand but offset the effects of fiscal policy.\nUnlike monetary policy, expansionary fiscal policy cannot lead to a sustained increase in the inflation rate—there is some limit beyond which the deficit will stop rising, even if it remains high. First of all, the deficit cannot exceed 100% of aggregate spending. Even before that point, the deficit must stop growing if the public can no longer reasonably believe that government bonds they purchase will be honored. But the money supply can keep growing as long as it is allowed to do so. As long as some people are willing to hold money, the money supply can grow; many historical examples of hyperinflation suggest that some people will hold money even at extremely high monetary growth rates.\nWhile the ability of fiscal policy to raise or lower inflation is only temporary, monetary policy can only raise or lower (inflation-adjusted) interest rates temporarily. Using monetary expansion to push rates down in an economy that is fully employed will just stimulate higher prices. These higher prices will offset the initial depressing effect that expansionary monetary policy had on interest rates since the Fed has not changed the resources available in the economy for investment. On the other hand, fiscal policy can have a permanent effect on interest rates. A high level of government borrowing, even if the level is constant, can hold interest rates up indefinitely because of its effects on the saving available for investment.\nThus, in the short run both fiscal and monetary policy increase economic growth and inflation. But expansionary fiscal policy results in higher interest rates, whereas expansionary monetary policy results in lower interest rates. Likewise, contractionary fiscal policy lowers growth and inflation with lower interest rates as a result, whereas contractionary monetary policy leads to higher interest rates. In the long run, monetary and fiscal policy have very different influences, however. Fiscal policy helps determine the interest rate, monetary policy does not. Monetary policy determines the inflation rate, fiscal policy does not. Neither can permanently boost the long-run economic growth rate; this is determined by the growth rate of labor, capital, and productivity.", "Obviously, not all the adjustments referred to above occur immediately. Otherwise there would be no short run imbalances and the economy would always be at full employment. Experience teaches that this is not the case. Historical evidence indicates that the full price effects from fiscal and monetary policy come roughly two years after the policy is implemented. Employment effects come much faster, within two or three quarters. The reason for this asymmetry in lags is price stickiness. Although hard to quantify, expectations play an important role here as well. If individuals expect inflation to accelerate or decelerate, it will do so more quickly, even if policymakers claim to desire otherwise.\nThe closer the economy is to full employment when demand management is undertaken, the faster the price effects will occur. But even in a fully employed economy, prices will not adjust quickly enough that output effects are zero and the full rise in inflation is immediate. Growth will be boosted, but the boom will be unsustainable and short lived. The legacy of expansionary policy will be higher inflation. Similarly, if faced with undesirably high inflation, contractionary policy will reduce output and increase unemployment in the short run. Only later will prices adjust to slow inflation.\nMoreover, how long it takes inflation to slow down in response to contractionary policy, and how long higher unemployment must be endured, depend on the credibility of the central bank's anti-inflation plan. If the public thinks that a contractionary policy will soon be abandoned, then prices will not be adjusted, and inflation and heightened unemployment will be slow to abate.\nThe role of credibility, expectations, and the state of the economy all result in variability in the length of the policy lag and the magnitude of the output response. Thus, it is difficult to design a policy with any precision that can systematically counteract the various pressures, which themselves are often poorly understood, that tend to generate swings in economic activity. This means not only is it impossible to calibrate policy well enough to avoid business cycles, but that attempts to do so may even make the cycles worse. In hindsight, some economists have blamed many recessions on monetary policy errors.", "Criticisms of the Fed's structure break down to three notions. First, some believe the Fed is too independent in the sense that its decisions are too far removed from the will of the public. Second, critics say that monetary and fiscal policy are made in isolation from each other, so that there is no mechanism to guarantee their coordination. Third, others argue that as an institution, the Fed is insufficiently open or accountable, with its activities shrouded in secrecy and with little external supervision or examination of its outlays, management practice, and policy decisions.\nIn general, both those who argue for continued broad discretion and those who argue for change emphasize the importance of monetary policy for the economy and make it the center of their arguments. Basically, one side maintains that monetary policy is too important to be put into the hands of a few appointed officials. The other believes that it is too important not to do so.\nWhile monetary policy is important, one must keep in mind how it is important. The short-run effects of monetary policy differ substantially from its long-run effects. Whatever argument is advanced to support or attack independence, it should not be predicated on the belief that the Fed's job is to control interest rates. The Fed's influence over the economy is short-term only. In the long run the Fed does not control real interest rates, and efforts aimed at controlling interest rates based on its short-run influence generally result in accelerating inflation or deflation.", "Whereas fiscal policy is made jointly by the legislative and executive branches, monetary policy is influenced only indirectly by either. The long terms of Fed governors, the fact that they are appointed rather than elected, and the fact that the institution has its own source of funding means that Fed governors and other FOMC members are likely to be less responsive to swings in public opinion than are the makers of fiscal policy.\nThis does not automatically mean that the structure of the Fed is inconsistent with the traditional character of American government. For example, members of the federal judicial branch are appointed, in their case for life, and there is a constitutional prohibition on diminishing their salary while in office. It should again be stressed that the overarching goals of monetary policy are determined by Congress; it is merely the day-to-day implementation of those goals that has been delegated to an independent Fed. What makes monetary policy unusual is the fact that it is not implemented by the executive branch, whose chief is directly elected but is otherwise staffed by civil servants and appointees serving at the discretion of the chief. Thus, at issue is not whether the Fed's independence is unique in our government—it is not—but whether its independence is appropriate or advantageous for the conduct of monetary policy.\nSeveral elements of the earlier analysis bear on this issue. First, there is the difference in the short-run and long-run effects of monetary policy. The positive employment effects from an over-expansion of the money supply are temporary and experienced in the short run. The higher rate of inflation comes later—it would not even begin to be felt for a year or two, the length of a congressional term. The economic costs of high and variable inflation are well chronicled. Similarly, anti-inflation policy takes a long time to achieve its results; in the interim it causes an increase in unemployment. If elected officials seek short-term \"gain\" at the cost of long-term \"pain,\" this lag structure would impart an inherent bias toward inflation. It would also tend to produce more business cycles if policy directed at reducing inflation is aborted before it is complete, only to be reintroduced again later when the renewed expansion makes inflation worse.\nBy insulating decision-makers from the immediate effects of public pressure, proponents point out that independence may help offset that bias. The Fed may be better able than other institutions to resist the temptation to \"gun\" the economy in preparation for an election. Similarly, when attempting to reduce entrenched inflation, the Fed may more easily \"tough out\" criticism of a contractionary policy until inflation abates, thereby avoiding a premature policy reversal that renders the already-incurred unemployment costs pointless.\nThis argument in favor of independence is necessarily not one for total insulation of decision making. In fact, total insulation probably does not exist: many Fed critics believe there are many historical examples that suggest that political pressure led to incorrect decisions by the Fed. What it might suggest is putting monetary policy on a \"slow fuse,\" where outside judgement operates over a longer time horizon. Even then, the economic advantage of independence would have to be weighed against a number of non-economic factors favoring less independence.\nSome proposals for change stop short of eliminating Fed independence. Whether it is worthwhile to decrease the Fed's independence by placing officials from the executive branch on the Board of Governors, or by subjecting the Fed's budget to congressional approval, is a matter of judgement of both a democratic and economic nature. But the economics of monetary policy is such that the cost of making the Fed more responsive to short-term public opinion would likely be an increased tendency to inflate the economy and to reverse anti-inflation policies before they have time to achieve their intended purpose. International evidence backs up this theory, at least when independence is broadly defined, since many central banks that do not enjoy a level of independence similar to the Fed have allowed higher inflation on average.\nThe second element of independence, credibility, reinforces the first economic argument. In the short run, the responsiveness of inflation to changes in monetary policy depends in part on people's expectations of the Fed's behavior. Imagine that the Fed were to tighten monetary policy to reduce an uncomfortably high inflation rate. If people believed that the Fed would be unwilling to follow through with an anti-inflationary stance once unemployment rose, then people would reduce their inflationary expectations very slowly and cautiously. This would feed through into wage contracts and pricing decisions by firms that would cause inflation to be temporarily higher than expected given the change in monetary policy. Since it is sluggish price adjustment that causes unemployment to rise and output to contract in the short run, this suggests that the rise in unemployment caused by the contractionary policy would be greater and more persistent than if the central bank had greater credibility. Thus, even when a less independent central bank is resolved to pursue an anti-inflationary policy to its end, its lack of independence may lower its credibility, making the policy more painful and persistent in the short run than it otherwise would be.\nThird, the alternative to an independent central bank has implications for the checks and balances of our government. Legislative bodies are not designed to administer policy; Congress could not fulfill the Fed's current task of setting discretionary policy on a day-to-day basis. Thus, Congress would have two choices: eliminate discretion through the adoption of a rule, an option considered below, or delegate the day-to-day administration of discretionary monetary policy to the administrative branch. The latter would tilt economic power significantly toward the executive. The checks and balances applicable to fiscal policy would not apply to monetary policy. Thus, eliminating the Fed's independence would not simply make the federal government more democratic; it would also have implications for the checks and balances of power that some might see as making the government less democratic.\nTo judge how important the economic benefits of Fed independence may be, it is useful to consider the example of fiscal policy. Like monetary policy, expansionary fiscal policy has short-run benefits, in terms of higher output and employment, and long-term costs, in terms of higher inflation and debt burdens. Perhaps the overwhelming reason why fiscal policy has fallen into disrepute with many economists as a stabilization tool is precisely because of the unwillingness of elected lawmakers to tighten fiscal policy (reduce a budget deficit) when aggregate demand is \"overheating.\" A rule of thumb for effective fiscal policy is that the budget should be balanced over the business cycle—budget deficits in recession years should be offset by surpluses in boom years. In practice, the federal budget was in deficit in 36 of 37 years between 1961and 1997, and returned to deficit in 2002 after four years of surplus.", "Some observers consider coordination an important element of Fed reform because under the current system monetary and fiscal policy are made separately. While coordination may take place, the Fed is free to follow a policy totally at odds with the fiscal stance taken by Congress and the President. It is entirely possible for monetary policy to be undoing what fiscal policy is doing with output and employment, or for monetary policy to be reinforcing the effect that fiscal policy is having on interest rates. Directed in concert, the two policies should be able to produce much more effective policy than if they are determined in isolation of each other.\nIn particular, using fiscal and monetary policy in concert allows aggregate demand to be influenced with minimal disruption to interest rates and the exchange rate, since fiscal policy pushes interest rates and the exchange rate in the opposite direction of monetary policy. This has several advantages. For example, if resources cannot be reallocated completely fluidly and costlessly, it may minimize the difference in output effects on particular sectors or regions of the economy in the short run. It may also prevent economic imbalances from forming or mitigate existing imbalances in the short run. Furthermore, it may make long-term business planning more predictable, since such planning is highly dependent on interest rates and exchange rates.\nHowever, if fiscal and monetary policy were coordinated, they could also produce much worse policy. Just as a well-conceived fiscal policy can be enhanced by monetary policy designed to support it, an ill-conceived fiscal policy can become all that more damaging to the economy if reinforced by a monetary policy made to go with it. Hence, good policy can be much better if monetary and fiscal policy are coordinated, but bad policy can be made much worse.\nThe potential for ill-conceived coordination is particularly great due to the relative roles of the two policies in affecting interest rates and inflation. Large fiscal deficits frequently arise from a deadlock concerning whether to raise taxes or reduce spending. These deficits tend to hold interest rates higher than they would be otherwise. In systems amenable to coordination, the temptation thereby arises to use expansionary monetary policy to lower interest rates that have been forced up by fiscal policy. Since interest rates are not something that monetary policy can influence in the long run, the result is accelerating inflation, an outcome that large deficits could not achieve on their own.\nIn this regard, it is worth noting that studies of hyperinflations have consistently identified two essential components of the policies that ultimately brought such episodes to an end; one of them is an independent central bank capable of refusing a government's requests for money. Clearly, coordination has not always proven a recipe for sound demand management policy.\nThe fiscal situation of the government in the 1980s and early 1990s illustrates the dilemma well. Large budget deficits tended to keep interest rates high, and relatively little progress was made in bringing deficits down until the late 1990s. Had the Fed been under the control or influence of the Administration or Congress, they would have had the option of \"coordinating\" this fiscal policy with more expansionary monetary policy as a solution to the problem of high interest rate effects. Since such policy is short-run in its effect, the effort to coordinate policy in this way would be inflationary.\nThis observation does not imply that coordination is undesirable. Rather, it highlights the cost of coordination: the risk of putting all policy eggs in one basket. The current division of economic policy responsibilities, therefore, produces yet another check-and-balance arrangement. Because of this split in responsibilities, no stabilization policy is likely to be carried very far in one direction unless consensus is achieved among different policymaking bodies.\nProposals to better coordinate monetary and fiscal policy, including placing monetary policy under the control of the Treasury, putting a Treasury official on the Board of Governors, and matching the term of the Fed chairman with that of the President, raise this balance-of-power dilemma. Opting for more or less coordination therefore boils down to a trade-off between maximizing the benefits that come from policy when it is well-chosen and minimizing the costs that occur when policy is ill-advised.", "The third area of concern to critics of the Fed's independence is the secrecy with which operations at the Fed are conducted. Transcripts of the FOMC's deliberations are not released for five years, and minutes of FOMC meetings are released only after the following FOMC meeting. The Board is audited by outside auditors. (Board staff audit the regional Fed banks.) The Government Accountability Office (GAO), already the auditor of a variety of sensitive government agencies and regulatory bodies, is limited in what kinds of audits it can conduct of the Fed. It is specifically prohibited from auditing the Fed's monetary policy activities.\nThe issue of accountability should be viewed as distinct from the issue of democracy. Democracy—in this case, the potential shifting of the powers of the Fed to elected officials—is one approach to increasing accountability, but it is not the only one. The next section considers an alternative method of increasing accountability, the use of rules. Hence, some may advocate greater Fed accountability without favoring diminished Fed independence.\nThere is little that economic analysis can contribute to this area of debate. Policy may be better or worse under greater public scrutiny, and whether it is or not must be judged in terms of what best makes for \"good government.\" Accountability could have two economic effects worth exploring. First, what costs does secrecy impose on markets? Second, how would greater disclosure affect the Fed's behavior and Congress's oversight abilities?\nFed-watching engages real resources, albeit small in comparison to the overall economy, in the task of second-guessing monetary policy. In addition, costs may be imposed by market fluctuations caused by unfounded speculation over Fed policy. The rational expectations literature stresses the importance of information about both the present and the future in making efficient decisions. If the Fed's secrecy creates needless uncertainty, economic efficiency and welfare could be reduced. Presumably, if more information on Fed deliberations were available to the public these costs could be reduced.\nThe need to out-guess the Fed, however, does not so much result from Fed secrecy as much as from the use of discretion in monetary policymaking. The advantage in any market is in predicting events before someone else does; this is true whether market agents are trying to figure out what Fed policy is or what it will be. And as long as discretion is employed, there are limits on just how much policy can be spelled out in advance. Thus, proposals to increase disclosure (e.g., through immediate release of FOMC minutes or official statements concerning the Fed's intermediate targets) might not do much to diminish Fed-watching. Nor would a reduction in independence diminish Fed-watching if the new policy regime were based on discretion.\nHowever, more complete disclosure might have a different benefit. It might produce better policy. The fact that the Fed can make pronouncements about policy in vague, qualitative terms allows the potential for policy to be made in an ad hoc or idiosyncratic way. Whether it does so in fact is not clear—indeed, it is impossible to judge objectively given that its pronouncements are vague. The members of the FOMC may have very definite models of economic behavior in mind when deciding whether to tighten or loosen policy. Whatever those models are, however, they are not always clear to outside observers.\nProponents of more complete disclosure believe it could promote more closely reasoned decisions about policy that reflect just what economic events are considered by the FOMC to be indicative of a certain policy, why that policy follows logically from those events, and what future events would be accepted as evidence that the policy is no longer appropriate. This view holds that fuller disclosure would force the Fed to specify its picture of the economy and thereby help ensure that one actually exists.\nBetter accounting of the Fed's actions could also help Congress in its oversight of Fed performance. Congress has the Congressional Budget Office (CBO) and the Joint Committee on Taxation to help provide independent evaluation of fiscal and tax policy. But it must depend on the Fed itself in assessing monetary policy much more than it does on the Treasury or Office of Management and Budget (OMB) in tax and budgetary matters. Independent evaluation of the Fed's actions on a periodic basis could put Congress in a position more analogous to that it is in when studying fiscal and tax policy.\nOther economists would argue that there is a limit to achieving adequate disclosure and oversight as long as the Fed explains its decisions qualitatively rather than quantitatively. For example, when reading the Fed's policy statements, some Fed watchers claim that the Fed's view of the potency of monetary policy—and hence personal culpability—sharply declines whenever there is an economic downturn. Ultimately, they argue, only rules that link hard data to policy decisions can be judged objectively.", "Critics of Fed independence cannot complain that the goals of monetary policy have been determined in an undemocratic fashion: the goals of the Federal Reserve are mandated by Congress. To a great extent, if the Fed's policymaking is vague and unaccountable, it is because Congress has given it a vague and oftentimes internally inconsistent mandate. Rather, opposition to Fed independence lies with the fact that unelected officials have considerable discretion in pursuing that mandate, and the fact that voters and elected representatives have limited institutional oversight to ensure that the Fed fulfills its mandate.\nSince the economics of independence suggest considerable economic disadvantages would arise from shifting discretion to elected officials, most economists concerned with the status quo have focused instead on devising ways to remove discretion from monetary policy. Their efforts have focused on strengthening the Fed's mandate such that it ceases to be a fuzzy guideline and instead becomes a strict rule. With a precise enough rule, decision-making by the Fed would be largely unnecessary, and accountability would be straightforward. \"Fed watching\" would be unnecessary as markets would never need to second-guess what motivated policy decisions and what decisions would follow a change in economic conditions. Policy would change predictably and automatically as economic data became available.\nThe drawback to a rule-based policy regime lies in the fact that the Fed does not precisely or directly control the variables with which it is most concerned—notably, inflation or the growth rate of aggregate demand. Its interest rate decisions influence these variables, but imprecisely, variably, and with long lags in their effectiveness. Thus, rules based on the variables of ultimate concern cannot be applied in a straightforward and easily verifiable fashion. Alternatively, the variables that the Fed can control are not variables that influence society's economic welfare in and of themselves. A rule could direct the Fed to cause the money supply to grow at a certain rate, to fix short term interest rates at a certain level, to fix the exchange rate value of the dollar, or to keep the price of gold constant. But none of these rules would be directly related to economic stability. Targeting the growth rate of the money supply or the price of gold would not deliver economic stability because neither are predictably or systematically related to economic growth or inflation. Fixing interest rates would not provide economic stability because the Fed only controls the supply of short-term credit. Variability in the demand for credit means that different interest rates are appropriate at different times. Fixing the exchange rate may increase external stability, but is unrelated to internal stability. The other drawback to a rule is that since the Fed has only one tool, it can potentially target only one variable with any precision. But it is concerned with at least two variables, inflation and the growth of aggregate demand. More goals dilute the effect that its policy tool has on each particular goal.\nThis difference between policy goals and the policy tools available explains why discretion exists in the first place. If there were a simple relationship between the Fed's actions and their effect on inflation and unemployment, the Fed would not need to use its discretion in determining the proper policy. The minority of economists who see the Fed itself as the primary cause of economic instability in the 20 th century would argue that any strict rule, regardless of how directly related to inflation and demand growth, would lead to greater economic stability than discretionary policy. But most economists accept that economic stability rests upon the use of monetary policy to stabilize inflation and demand growth. Those who accept this but oppose discretion have endorsed the \"Taylor rule,\" developed by economist John Taylor, now Undersecretary of the Treasury. Under a Taylor rule, the Fed would automatically alter interest rates based on a simple equation that responds to changes in inflation and output growth. Detractors of this and other rules stress that interest rate changes do not always influence the economy predictably, uniformly, or promptly; thus, the use of a rule could potentially be destabilizing, particularly in times of crisis.\nBetween the polar alternatives of complete discretion and strict rules lies a spectrum of looser rules that would reduce but not eliminate the Fed's discretion. The most famous of these is an inflation target, which has been adopted by several foreign central banks, including the European Central Bank and the Bank of England. An inflation target would mandate that the sole goal of monetary policy is to keep the inflation rate equal to a predetermined rate (or within a predetermined band) in the long run. But unlike a strict rule, central bankers would remain free to use their discretion to reach their target. If this rule were strictly interpreted, it would be quite strict indeed—even small increases in inflation would lead to sharp increases in interest rates under any circumstances, and vice versa. But it could be destabilizing since demand growth would be neglected entirely. For instance, an oil shock could simultaneously cause a recession and an acceleration in the inflation rate. A strict inflation target would require the central bank to raise interest rates, worsening the recession. In practice, foreign central banks have proven quite responsive to changes in demand growth, even when inflation is above its target. And their mandate has typically included many caveats and exemptions to ensure flexibility. This raises the criticism that inflation targets have not meaningfully reduced discretion—central bankers are still free to do as they see fit.\nViewed objectively, an inflation target strikes a balance between rules and discretion, and enjoys some of the benefits but suffers from some of the drawbacks of both. Under an inflation target, it seems unlikely that inflation would be allowed to get out of hand for long without ramifications. Central bankers could no longer justify any policy stance by pointing to conflicting parts of their mandate. In this way, accountability would be increased. On the other hand, an inflation target as practiced still lacks a quantifiable way to evaluate specific discretionary decisions. As economists Ben Bernanke and Frederic Mishkin (now Chairman and Governor of the Federal Reserve, respectively) argue, \"constrained discretion\" is probably a more apt description of the international experience with inflation targets.\nWould a rule-based monetary policy be a more democratic arrangement than discretionary control by unelected officials? The answer to that question is beyond the scope of this report. Economist Milton Friedman, for one, believed it would be more democratic. In Friedman's eyes, the contrast between rules and discretion in monetary policy was analogous to the contrast between the Bill of Rights and leaving decisions of individual liberty in the hands of the legislature. He reasoned satirically,\nWhy not take up each (free speech) case separately and treat it on its own merits? Is this not the counterpart to the usual argument in monetary policy that it is undesirable to tie the hands of the monetary authority in advance; that it should be left free to treat each case on its merits as it comes up? Why is not the argument equally valid for speech?", "An argument against independence cannot be predicated on the belief that interest rates can be fixed or that inflation and recession could always be avoided if interest rates were never raised. Instead, an economically valid argument against independence can be made as long as it recognizes that the positive effects interest rate reductions have on output and employment come sooner than the negative effects interest rate reductions have on inflation. Similarly, anti-inflation policies bring short-term pain and only long-term rewards.\nIn such circumstances, independence, or partially insulating the Fed from short-term political pressures through institutional arrangements, is a way to make painful but necessary policies more likely to occur. There are also some possible economic drawbacks to independence that merit consideration. First, oversight is difficult in the current system, and this makes it difficult to prevent or reverse poor policy decisions by the Fed. Second, potential benefits of coordinating monetary and fiscal policy cannot be secured. While disallowing coordination means that the benefits of good policy cannot be maximized, it also means that the effects of bad policy can potentially be minimized.\nIf reducing or eliminating Fed independence were deemed too economically costly, are there alternative reforms that could be considered to address the issues that critics have raised? Monetary policy rules are another way to make policy immune from detrimental short term pressures, and they do not suffer from some of the drawbacks of independence. Rules would also boost accountability and some might view them as more democratic in the sense that they reduce the discretionary power of unelected officials. The economic tradeoff between rules and discretion is of a different nature. It boils down to a question of how well a highly complex economy can be stabilized by a blunt and simple rule. Economists are highly divided on this point. Many of those who support rules do so because they have little faith in the ability of the FOMC to make better discretionary decisions than a simple rule.\nAn inflation target, as it has been practiced abroad, is a modest middle path between strict policy rules and unlimited discretion, but only because it has not been implemented too literally. Congressional oversight suffers from having the Fed's goals as vaguely defined as they are at present. An inflation target would tighten those goals and increase accountability if persistently egregious policy errors were made. It would not, however, significantly reduce the Fed's independence as it attempted to devise discretionary monetary policy for a highly complex and changing economy.\nThe economic arguments for and against Fed independence evaluated in this report apply only to the Fed's monetary policy responsibilities. Arguments for and against reassigning the Fed's other duties, such as bank regulation, to a less independent entity are beyond the scope of this report." ], "depth": [ 0, 1, 1, 2, 2, 1, 2, 2, 1, 2, 2, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h3_full", "", "", "", "h0_full h1_title", "h0_full", "h1_full", "h0_title h2_title h1_title h3_title", "h0_full h2_full h1_full", "h3_full h2_full", "", "", "h2_full" ] }

{ "question": [ "What do fiscal and monetary policies influence?", "How do fiscal and monetary policy work together?", "What are the long-run effects of fiscal and monetary policy?", "What is the result of monetary policy assumed to fix interest rates?", "How does monetary policy affect inflation?", "What kind of policy structure generates more inflation?", "What other effects can this policy structure have?", "Why are on-again, off-again policies a problem?", "What does reducing independence of the Fed mean?", "Why is reducing independence of the Fed an important consideration?", "What would the legislative branch have to do if it wanted to reduce the Fed's discretionary powers?", "What do economists who oppose rules fear?", "Why is better coordination of monetary and fiscal policy a double-edged sword?", "How then should policy structure be chosen?" ], "summary": [ "Along with fiscal policy, monetary policy is one of two kinds of policy that can be employed to influence aggregate demand. In the short run, both monetary and fiscal policy have the power to raise or lower employment. But they have opposite short-run effects on interest rates (expansionary monetary policy lowers interest rates and expansionary fiscal policy raises them), so that in concert they can achieve results that neither can in isolation. The long-run effects of the two policies are quite different from their short-run effects.", "But they have opposite short-run effects on interest rates (expansionary monetary policy lowers interest rates and expansionary fiscal policy raises them), so that in concert they can achieve results that neither can in isolation.", "The long-run effects of the two policies are quite different from their short-run effects. Fiscal policy helps determine interest rates in the long run, but not the rate of inflation. Monetary policy largely determines the inflation rate, but cannot be used to fix interest rates in the long run.", "Policies based on the assumption that monetary policy can fix interest rates ultimately generate accelerating inflation or deflation.", "Monetary policy affects inflation only after it affects employment.", "A policy structure that responds quickly to the immediate concerns of the public is thus more likely to generate inflation than one that allows policymakers to more easily weather bad times.", "It also tends to produce more business cycles if policy directed at reducing inflation is aborted before it is complete, only to be reintroduced again later when the renewed expansion makes inflation worse.", "On-again, off-again policies erode the credibility of the monetary authorities and make anti-inflation policy all the more costly and lengthy when it is undertaken in earnest.", "Reducing the independence of the Fed either means reducing the ability to engage in discretionary policy or shifting economic power to the executive branch.", "This is an important consideration given the difficulty in calibrating policy.", "Because the legislative branch is not in a position to exercise day-to-day control of monetary policy, if it wishes to reduce the Fed's discretionary powers, it must choose between establishing policy rules to which the Fed must adhere or allowing the executive to administer policy.", "Economists who oppose rules fear that they would be too rigid to deliver economic stability in a highly complex economy.", "If \"good\" policy is pursued, it will be all that much better if simultaneously pursued with both tools. But if \"bad\" policy is pursued, using both tools to pursue it will make the result that much worse.", "Thus, the choice boils down to whether the policy structure should be one that maximizes the benefits that come from policy when it is well chosen or minimizing the costs that occur when policy is ill-advised." ], "parent_pair_index": [ -1, 0, 0, -1, -1, -1, 1, -1, -1, 0, -1, -1, -1, 0 ], "summary_paragraph_index": [ 1, 1, 1, 1, 2, 2, 2, 2, 3, 3, 3, 3, 4, 4 ] }

{ "title": [ "Background", "Immigration Court System Roles, Structure, and Budget", "Overview of the Immigration Court Process", "Immigration Courts’ Caseload Grew Due to an Increased Case Backlog, Posing Challenges to Stakeholders", "The Immigration Courts’ Caseload and Case Backlog Grew As Immigration Courts Completed Fewer Cases", "Stakeholders Cited Various Factors That Potentially Contributed to the Growing Backlog, Which Poses Challenges to Respondents, Attorneys, and Court Staff", "BIA Appeal Receipts Declined at a Faster Rate than Appeal Completions, Resulting in a Decreased Backlog", "EOIR Could Improve its Workforce Planning, Hiring, and Technology Utilization to Help Address the Case Backlog", "Better Workforce Planning and Hiring Practices Could Help EOIR Address Staffing Challenges and the Case Backlog", "EOIR Needs to Better Manage Implementation of Its Electronic Filing Capability", "EOIR Plans to Expand Its VTC Use, but Would Benefit from Assessing Any Effects on Hearing Outcomes and Collecting Feedback from Respondents", "EOIR Could Improve Its VTC Program by Collecting More Reliable Data on VTC Hearings and Assessing Any Effects of VTC on Hearing Outcomes", "EOIR Could Further Ensure that Its VTC Program Meets User Needs by Collecting Feedback from Respondents on Their VTC Hearings", "Comprehensive Performance Assessment Could Help EOIR Identify Effective Management Approaches to Address the Case Backlog", "EOIR Established Some Performance Measures, But Has Not Consistently Met Them and Does Not Have Performance Measures for Most Cases", "Assessing Case Continuance Data Could Help EOIR Ensure Efficient Management Practices", "Timely and Accurate Recording of NTAs Could Help EOIR Better Track and Report Case Completion Times", "Experts and Stakeholders Have Proposed Restructuring EOIR’s Immigration Court System", "Experts and Stakeholders Have Proposed Establishing a Court System Independent of the Executive Branch, an Administrative Agency, or a Hybrid System", "Restructuring Benefits Cited Include Enhancing Perceptions of Independence, but Concerns Exist Regarding Whether Restructuring Could Resolve Existing Management Challenges", "Conclusions", "Recommendations for Executive Action", "Agency Comments and Our Evaluation", "Appendix I: Objectives, Scope, and Methodology", "Appendix II: Immigration Court Case Backlog, Case Receipts, and Case Completions, Fiscal Years 2012 through 2015", "Appendix III: Immigration Court Proceedings Continuances, Fiscal Years 2006 through 2015", "Appendix IV: Additional Characteristics of Selected Court and Adjudicatory Systems and the Immigration Court System", "Appendix V: Comments from Department of Justice", "Appendix VI: GAO Contact and Staff Acknowledgments", "GAO Contact", "Staff Acknowledgments" ], "paragraphs": [ "", "EOIR is an office within DOJ that, subject to the direction and regulation of the Attorney General, conducts immigration court proceedings, appellate reviews, and administrative hearings. EOIR was created as a separate agency within DOJ on January 9, 1983 as a result of an internal DOJ reorganization to improve the management, direction, and control of the quasi-judicial immigration review programs that had been within legacy Immigration and Naturalization Service. This reorganization placed the BIA and immigration judge functions under the newly created EOIR independent of the Immigration and Naturalization Service. OCAHO was established in 1987 by the Attorney General pursuant to the provisions of the Immigration Reform and Control Act of 1986. EOIR’s primary mission is to adjudicate immigration cases by fairly, expeditiously, and uniformly interpreting and administering federal immigration laws. EOIR immigration judges and the BIA members are responsible for hearing, and exercising their independent judgment and discretion in deciding, all cases that come before them.\nAs previously discussed, EOIR’s primary adjudicatory functions are housed within the Office of the Chief Immigration Judge, the BIA, and OCAHO, as shown in figure 1. The Office of the Chief Immigration Judge provides overall program direction, articulates policies and procedures, and establishes priorities applicable to the immigration courts. This office—comprised of approximately 998 full-time employees in 2016—is headed by a Chief Immigration Judge who carries out these responsibilities with the assistance and support of three Deputy Chief Immigration Judges and 14 Assistant Chief Immigration Judges. The Assistant Chief Immigration Judges serve as the principal liaisons between the Office of Chief Immigration Judge’s headquarters and the immigration courts, and have supervisory authority over immigration judges, court administrators, and judicial law clerks. At the court level, court administrators manage the daily court operations as well as the administrative staff, which include clerks and administrative assistants, among others. The BIA is headed by a Chairman designated by the Attorney General, who is to direct, supervise, and establish internal operating procedures and policies of the BIA. The Chairman has various management authorities, such as providing appropriate training for the BIA members and staff, and evaluating the performance of the BIA and taking corrective action where needed.\nEOIR has 58 courts nationwide, as shown in figure 2, including courts that are co-located with a detention center or correctional facility. The sizes of the immigration courts vary. For example, in fiscal year 2015, the smallest of the immigration courts—Fishkill, New York—consisted of 1 full-time employee and the largest court—Los Angeles, California—had approximately 85 full-time employees.\nIn 2016, the BIA had 237 full-time employees, including 15 BIA Members, who are the attorneys appointed by the Attorney General to hear and issue decisions regarding administrative appeals. In 2016, OCAHO had 11 full-time employees. Apart from the Office of the Chief Immigration Judge, the BIA, and OCAHO, EOIR has additional offices, including OIT, which is responsible for the design, development, operations, and maintenance of the agency’s information technology systems.\nEOIR’s total appropriation increased every year, except for fiscal years 2011 and 2013, from approximately $199 million in fiscal year 2005 to approximately $440 million in fiscal year 2017, as shown in figure 3. Regarding expenditures by component, the Office of the Chief Immigration Judge spent the highest percentage of total appropriated funds—about 51 percent—from fiscal years 2012 through 2016. The BIA’s average percentage of total expenditures from fiscal years 2012 through 2016 was approximately 15 percent, and OCAHO’s the smallest at less than 1 percent. EOIR’s Offices of Information Technology, Administration, General Counsel, Legal Access Programs, and Director made up the remainder of EOIR’s total expenditures for this period.\nDHS is responsible for identifying, detaining, litigating charges of removability against, and removing foreign nationals who are suspected and determined to be in the United States in violation of U.S. immigration laws. Within DHS, trial attorneys from U.S. Immigration and Customs Enforcement’s (ICE) Office of the Principal Legal Advisor (OPLA) are charged with representing the U.S. government as civil prosecutors in removal proceedings before EOIR immigration judges. ICE’s Enforcement and Removal Operations is responsible for detaining certain potentially removable foreign nationals pending the outcome of their immigration court cases and for detaining and removing from the country individuals subject to an immigration judge’s final order of removal.", "If DHS alleges a violation of U.S. immigration law that is subject to adjudication by the immigration courts (i.e., grounds of removability), it serves the individual—the respondent—with a charging document, known as a Notice to Appear (NTA), ordering the individual’s appearance before an immigration judge to respond to removal charges. DHS also files the NTA with whichever EOIR immigration court it determines appropriate and advises the respondent of, among other things, the nature of the proceeding, the alleged grounds of removability, the right to an attorney at no expense to the government, and the consequences of failing to appear at scheduled hearings. While removal proceedings are pending, respondents may be detained in ICE custody or, if otherwise eligible for bond, released on bond or conditional parole. Respondents may request a bond redetermination hearing in which an immigration judge reviews ICE’s custody and bond decision.\nIn conducting removal proceedings and adjudicating cases, immigration judges conduct an initial master calendar hearing to, among other things, ensure the respondent understands the immigration court proceedings and provide the respondent with an opportunity to admit or deny the charge(s) brought against them. If the issue of removability is not resolved at the initial or follow-on master calendar hearings, or if the respondent concedes or the immigration judge otherwise determines that the respondent is removable and the respondent seeks relief or protection from removal, the immigration judge schedules a merits hearing. During a merits hearing, the immigration judge may hear arguments as to removability, if still at issue, and if the respondent is deemed removable, any claims for, and OPLA opposition to, relief or protection from removal, such as asylum. Other forms of relief that may be sought during removal proceedings include adjustment of status, and withholding or cancellation of removal.\nAs part of the merits hearing, immigration judges hear testimony and review documentary evidence from the respondent regarding the facts and circumstances of their case relative to the statutory requirements for relief, and any other witnesses, such as family members, friends, or experts on country conditions; and attend to cross-examinations conducted by OPLA attorneys. Additionally, the immigration judge may question the respondent or other witnesses.\nBased on the testimonial and documentary evidence in the record, the immigration judge must then decide whether the removable respondent satisfies the applicable eligibility criteria for any requested relief, and with respect to discretionary relief, that the respondent merits a favorable exercise of discretion. If the judge finds that the respondent is removable and not otherwise eligible for relief, the judge will issue an order of removal and the respondent would be subject to removal pursuant to the judge’s order once it has become administratively final. Other potential outcomes of removal proceedings include the judge permitting the respondent to withdraw their application for admission; granting voluntary departure; or administratively closing, terminating, or dismissing the case. Immigration judges render oral or written decisions at the end of immigration court proceedings. EOIR uses its case management system to internally record events, actions, decisions, and workflow for all immigration cases. Figure 4 describes the general process for removal proceedings in immigration courts.\nIn addition to removal proceedings, described above, immigration judges conduct other types of hearings as well, including the following:\nCredible Fear Review. Arriving and other designated foreign nationals subject to expedited removal and deemed inadmissible as a result of seeking entry (or any other immigration benefit) by fraud or willful misrepresentation, falsely claiming U.S. citizenship, or lacking valid immigration documents and who express a fear of persecution or torture, or an intention to apply for asylum, are to be referred by DHS to a U.S. Citizenship and Immigration Services (USCIS) asylum officer for a credible fear interview. If the asylum officer determines that the individual has credible fear of persecution or torture, the individual will be referred to an immigration judge for further consideration of the asylum and withholding of removal claim in removal proceedings. If the asylum officer determines that the individual has not established a credible fear of persecution or torture, the respondent may request review of that determination by an immigration judge who may concur with the asylum officer’s credible fear determination and return the case to ICE for removal of the individual. However, if the immigration judge determines that the individual has a credible fear of persecution or torture, the individual is placed in removal proceedings for adjudication of their application for relief.\nReasonable Fear Review. If a foreign national who is subject to administrative removal for conviction of an aggravated felony at any time after admission, or a reinstated order of removal for having illegally reentered the country expresses a fear of persecution or torture if removed, DHS refers that individual to a USCIS asylum officer to determine whether this individual has a reasonable fear of persecution or torture. If the asylum officer determines that the individual has a reasonable fear of persecution or torture, the individual will be referred to an immigration judge solely for consideration of the request for withholding of removal (“withholding- only” proceedings); and if the asylum officer determines that the individual does not have such reasonable fear, the individual may request a review of that determination by an immigration judge.\nWithholding Only. As stated above, USCIS refers foreign nationals found to have a reasonable fear of persecution or torture to EOIR for “withholding only” proceedings, during which an individual may apply for withholding or deferral of removal under section 241(b)(3) of the Immigration and Nationality Act (INA) or the United Nations Convention Against Torture. To qualify for withholding of removal under INA § 241(b)(3), respondents must establish a clear probability that their life or freedom would be threatened on account of race, religion, nationality, membership in a particular social group, or political opinion in the proposed country of removal. An applicant for withholding of removal under the Convention Against Torture must establish that it is more likely than not that they would be tortured if removed to the proposed country of removal. An order granting withholding of removal does not prevent removal to a third country other than the country to which removal has been withheld or deferred.\nImmigration judges’ decisions become administratively final at the time of issuance, if no further action is taken by either party; or when all avenues for appeal through the BIA, the highest administrative body within DOJ for interpreting and applying immigration law, or review by the Attorney General, have been exhausted or waived. The BIA appeals are reviewed either by a single BIA member or by a three-member panel. In general, a single BIA member decides the case unless the case falls into one of six categories that require a decision by a panel of three members.\nThe BIA’s decisions can be reviewed by the Attorney General. After exhausting administrative remedies within DOJ, a respondent may appeal a final order of removal to the U.S. Court of Appeals for the circuit in which the immigration judge completed the initial removal proceedings. There are 13 U.S. Circuit Courts of Appeals (circuit courts), which are appellate courts that review U.S. District Court and certain administrative decisions, such as those made by the BIA. Circuit court decisions on the application of relevant immigration law to particular issues are binding on the BIA and immigration judges in cases presenting sufficiently similar factual scenarios that arise within the circuit court’s territorial jurisdiction.", "", "Our analysis of EOIR’s annual immigration court system caseload—the number of open cases before the court during a single fiscal year— showed that it grew 44 percent from fiscal years 2006 through 2015 due to an increase in the case backlog, while case receipts remained steady and the courts completed fewer cases. For the purpose of our analysis, the immigration courts’ annual caseload is comprised of three parts: (1) the number of new cases filed by DHS in the form of new NTAs (also called new case receipts); (2) the number of other case receipts the court receives due to motions to reopen, reconsider, or recalendar, or remands from the BIA; and (3) the case backlog—the number of cases pending from previous years that remain open at the start of a new fiscal year. During this 10-year period, the immigration courts’ overall annual caseload grew from approximately 517,000 cases in fiscal year 2006 to about 747,000 cases in fiscal year 2015, as shown in figure 5.\nAccording to our analysis, total case receipts remained about the same in fiscal years 2006 and 2015 but fluctuated over the 10-year period, with new case receipts generally decreasing and other case receipts generally increasing. Specifically, there were about 305,000 total case receipts in fiscal year 2006 and 310,000 in fiscal year 2015. The number of new cases filed in immigration courts decreased over the 10-year period but fluctuated within this period. New case receipts increased about four percent between fiscal year 2006 and fiscal year 2009, from about 247,000 cases to about 256,000 cases, but declined each year after fiscal year 2009, with the exception of an increase in fiscal year 2014. Overall, new case receipts declined by 20 percent after fiscal year 2009 to about 202,000 during fiscal year 2015. Other case receipts, such as motions to reopen, reconsider, or recalendar, or remands from the BIA, increased by about 50,000 over the 10-year period, from about 58,000 cases in fiscal year 2006 to about 108,000 cases in fiscal year 2015.\nOur analysis showed that EOIR’s case backlog more than doubled from fiscal years 2006 through 2015. In particular, the case backlog remained relatively steady from fiscal years 2006 through 2009 and then rose each year starting in fiscal year 2010. The immigration courts had a backlog of about 212,000 cases pending at the start of fiscal year 2006 and the median pending time for those cases was 198 days. By the beginning of fiscal year 2009, the case backlog declined slightly to 208,000 cases. From fiscal years 2010 through 2015, the case backlog grew an average of 38,000 cases per year. At the start of fiscal year 2015, immigration courts had a backlog of about 437,000 cases pending and the median pending time for those cases was 404 days.\nFurther, as a result of the case backlog some immigration courts were scheduling hearings several years in the future, according to EOIR documentation. As of February 2, 2017, half of courts had master calendar hearings scheduled as far as January 2018 or beyond and had individual merits hearings, during which immigration judges generally render case decisions, scheduled as far as June 2018 or beyond. However, the range of hearing dates varied; as of February 2, 2017, one court had master calendar hearings scheduled no further than March 2017 while another court had master calendar hearings scheduled in May 2021—more than 4 years in the future. Similarly, courts varied in the extent to which individual merits hearings were scheduled into the future. As of February 2, 2017, one court had individual hearings scheduled out no further than March 2017 while another court had scheduled individual hearings 5 years into the future—February 2022.\nThe increase in the immigration court case backlog occurred as immigration courts completed fewer cases annually. Specifically, the number of immigration court cases completed annually declined by 31 percent from fiscal year 2006 to fiscal year 2015—from about 287,000 cases completed in fiscal year 2006 to about 199,000 completed in 2015, as shown in figure 6.\nAccording to our analysis, while the number of cases completed annually declined, the number of immigration judges increased between fiscal year 2006 and fiscal year 2015, which resulted in a lower number of case completions per immigration judge at the end of the 10-year period. Specifically, the number of immigration judges increased by 17 percent, from 212 in fiscal year 2006 to 247 in fiscal year 2015, while the immigration court caseload increased by 44 percent during the same period. Further, the number of total case completions per immigration judge decreased on average 5 percent per year over the 10-year period— from 1,356 per immigration judge in fiscal year 2006 to 807 per immigration judge in fiscal year 2015. EOIR officials told us that EOIR engaged in hiring during this period and that new judges initially complete fewer cases as they are learning on the job, which contributed to the decrease in case completions per judge.\nIn addition, cases decided by immigration judges on the merits of the case (merit decisions) declined, while cases completed through administrative closure of the case increased over this period. Specifically, the percentage of merit decisions declined from 95 percent of all cases completed in fiscal year 2006 to 77 percent of all cases completed in fiscal year 2015. We found that when immigration judges made merit-based decisions, immigration judges ordered fewer respondents removed and provided relief or terminated more cases. Particularly, the percentage of respondents whom immigration judges ordered removed declined from 77 percent of all completed cases in fiscal year 2006 to 52 percent of all completed cases in fiscal year 2015. Conversely, the percentage of cases in which the immigration judge granted relief or terminated removal proceedings grew from 18 percent of all completed cases to 24 percent of all completed cases. The administrative closure of cases grew by 21 percentage points, from 2 percent of completed cases to 23 percent of completed cases over this same time period.\nInitial case completion time increased more than fivefold over the 10-year period. Overall, the median initial completion time for cases increased from 43 days in fiscal year 2006 to 286 days in fiscal year 2015. In particular, the median case completion time doubled from fiscal year 2011 to fiscal year 2012 and then more than doubled again from fiscal year 2012 to fiscal year 2013 before declining slightly in fiscal year 2014. However, as shown in table 1, case completion times varied by case type and detention status. For example, the median number of days to complete a removal case, which comprised 97 percent of EOIR’s caseload for this time period, increased by 700 percent from 42 days in fiscal year 2006 to 336 days in fiscal year 2015. However, the median length of time it took to complete a credible fear case, which comprised less than one percent of EOIR’s caseload during this period, took 5 days to complete in fiscal year 2006 as well as in fiscal year 2015. EOIR officials attributed the increase in case completion times after fiscal year 2011 to the number of relief applications filed by respondents as well as changes in the types of applications respondents filed. In particular, EOIR officials stated that asylum and withholding applications increased while voluntary departure applications decreased.\nInitial case completion times for both detained and non-detained respondents more than quadrupled from fiscal year 2006 through fiscal year 2015. The median case completion time for non-detained cases, which comprised 79 percent of EOIR’s caseload from fiscal year 2006 to fiscal year 2015, grew more than fivefold from 96 days to 535 days during this same period. Similarly, the median number of days to complete a detained case, which as discussed later in this report judges are to prioritize on their dockets, quadrupled over the 10-year period, increasing from 7 days in fiscal year 2006 to 28 days in fiscal year 2015.", "EOIR officials, immigration court staff, DHS attorneys, and other experts and stakeholders we interviewed provided various potential reasons why the case backlog may have increased and case completion times slowed in recent years, as well as identified challenges posed by the backlog. Despite an increase in immigration judges over the 10-year period, immigration judges, court administrators, DHS attorneys, experts and stakeholders told us that a lack of court personnel, such as immigration judges, legal clerks, and other support staff, was a contributing factor to the case backlog. Further, some of these experts and stakeholders told us that EOIR did not have sufficient funding to appropriately staff the immigration courts.\nEOIR officials, immigration court staff, DHS attorneys, and other experts and stakeholders also stated that a surge in new cases, beginning in 2014, contributed to the case backlog. Further, some of these experts and stakeholders told us that the nature of cases resulting from the surge exacerbated the effects of the backlog. Specifically, many of the surge cases were cases of unaccompanied children, which may take longer to adjudicate than other types of cases because, for example, such a child in removal proceedings could apply for various forms of relief under the jurisdiction of USCIS, including asylum and Special Immigrant Juvenile Status. In such cases the immigration judge may administratively close or continue the case pending resolution of those matters. Therefore, these experts and stakeholders told us that the surge not only added volume to the immigration court’s backlog, but resulted in EOIR prioritizing the cases of unaccompanied children over cases that may be quicker for EOIR to resolve. DHS attorneys, experts, and other stakeholders we spoke with stated that immigration judges’ frequent use of continuances resulted in delays and increased case lengths that contributed to the backlog. Immigration judges, court administrators, DHS attorneys, and other experts and stakeholders we spoke with also cited issues with the availability and quality of foreign language translation as creating unnecessary delays in cases. EOIR officials and immigration judges also highlighted increasing legal complexity as a contributing factor to longer cases and a growing case backlog. In particular, EOIR officials cited Supreme Court decisions in 2013 and 2016, which define analytical steps a judge must complete in determining whether a criminal conviction renders a respondent removable and ineligible for relief. Additionally, EOIR officials cited a reported growth in bond hearings for detainees, particularly in the Ninth Circuit, stemming from that circuit’s 2015 decision in Rodriguez v. Robbins, which was being reviewed by the Supreme Court as of April 2017. We examine some of these issues, such as court staffing, case prioritization, and the use of continuances, later in this report.\nImmigration judges and court staff, DHS attorneys, and other experts and stakeholders we interviewed stated that the delays caused by the backlog posed challenges to respondents, attorneys, and immigration judges and court staff.\nRespondents. Seven of the ten experts and stakeholders we contacted and staff at three of the immigration courts we visited told us that respondents can face challenges due to long delays in scheduling and hearing cases and heavy court caseloads. Experts and stakeholders cited challenges in one or more of the following areas:\nThe ability of respondents to produce witnesses or evidence or to obtain pro bono legal representation;\nThe ability of respondents with strong claims for relief to work or bring family members to the United States; and\nThe ability of respondents without sufficient claims for relief to remain in the United States longer than if the case had been promptly decided.\nFour of ten experts and stakeholders we spoke with told us that case delays due to the immigration court’s case backlog may decrease respondents’ ability to produce witnesses or evidence to support their applications for relief. For example, one of these experts and stakeholders told us that due to the backlog, merits hearings are frequently rescheduled. As a result, witnesses for respondents who need to travel to attend a hearing may be less likely to attend a rescheduled hearing. Two of these experts and stakeholders also stated that non- detained respondents can also lose track of witnesses who may be able to assist their cases if a significant amount of time passes between the respondent’s original merits hearing date and the respondent’s rescheduled hearing date. Further, according to four of the ten experts and stakeholders, private bar attorneys may be hesitant to accept pro bono cases because it is difficult for them to commit to representing a respondent at a merits hearing that may be scheduled several years into the future. Additionally, five of the ten experts and stakeholders also stated that due to the length of some cases, respondents who may have been eligible for relief at one point earlier in the case may no longer be eligible by the time the case is heard because the respondents’ circumstances have changed. For example, a respondent who is otherwise removable may be eligible for cancellation of removal if it would result in exceptional and extremely unusual hardship to the respondent’s U.S. citizen or lawful permanent resident spouse, parent, or child. However, if there is a material change in circumstances regarding a respondent’s qualifying family member, such as a child who turns 21, this could adversely affect the respondent’s eligibility for relief.\nOne immigration judge and two of the ten experts and stakeholders also noted that delays due to the case backlog may result in some respondents with strong cases for relief not obtaining the relief to which they are entitled in a timely manner. For example, one of the experts and stakeholders told us that some respondents with strong applications for relief, such as asylum, would generally have to wait to seek derivative status for qualifying family member(s) not initially included in the asylum application until the respondent’s own asylum claim has been granted. In light of the case backlog, which results in some cases not being heard for years, this may result in further hardship for the respondents with valid claims for relief. Two of the ten experts and stakeholders told us that respondents may not be able to work while awaiting their case decisions. Conversely, two immigration judges, DHS attorneys from three offices, EOIR officials, and four of the ten experts and stakeholders stated that the case backlog may also result in respondents without sufficient claims remaining in the United States far longer than if the case had been promptly decided. EOIR officials stated that due to the length of some cases, respondents who otherwise would not have strong claims for relief can develop a cognizable claim that the respondent would not have been able to make had the case been adjudicated more quickly, or the extended time allows the respondent to establish ties to the United States which could support an existing claim.\nAttorneys. DHS attorneys from six offices, one immigration judge, and one of the ten experts and stakeholders also cited caseload management and the increased cost of long cases as backlog-related challenges for private bar and DHS attorneys. DHS attorneys from five offices noted that it is difficult to assign cases to specific attorneys for the entire life of the case because they do not know which attorneys will be available when the merits hearing ultimately occurs, which can be months or years after a master calendar hearing in the case. According to these DHS attorneys, they must often assign a new attorney to the case, which requires the newly-assigned attorney to prepare for a case shortly before the merits hearing. As a result, according to these same attorneys, the amount of time spent per attorney in case preparation may increase, which ultimately increases the cost per case to DHS. In addition, one immigration judge posited that some private bar attorneys may miss filing dates due to the backlog and associated delays in hearing cases.\nCourt Staff. Immigration court officials, experts, and stakeholders we spoke with cited challenges for immigration court staff, including increased workloads, limited time for administrative tasks, and decreased morale. Immigration judges from four of the six courts we visited told us that delays result in increased work, such as additional motions and evidence to review for each case, changes in immigration law that occur over the life of a case that the immigration judge must consider, and increasingly complicated cases that require more time to complete than if the hearings for these cases had been scheduled and held in a shorter timeframe. Immigration judges from four of the six courts we visited also told us that the growing backlog increases the amount of clerical work for court staff because they must continue to process motions and other paperwork for pending cases irrespective of when the next hearing date is scheduled. One immigration judge told us that as cases are pending they accumulate more filings and ultimately take longer to review.\nImmigration judges from five of the six courts we contacted also stated that they do not have sufficient time to conduct administrative tasks, such as case-related legal research or staying updated on changes to immigration law. Further, one immigration judge stated that in cases where immigration judges must consider hardship to family members, such as for a cancellation of removal case, delays in processing the case may create additional hardships that the immigration judge must consider in deciding the case. For example, the longer a respondent remains in the United States, the greater the likelihood that the respondent could create ties to the United States including through marriage or parenthood that the immigration judge would consider, as appropriate, before deciding on any applications for relief. Additionally, as a result of the backlog, immigration judges from three of the six courts reported that court staff had feelings of low morale and job-related stress.", "According to our analysis, from fiscal years 2006 through 2015, the number of new appeals filed with the BIA decreased by 37 percent while the number of appeals completed declined by 33 percent. The appeal backlog—the number of appeals pending at the start of each fiscal year— declined by 40 percent over this same period. Specifically, the number of new appeals filed with the BIA annually decreased from about 47,000 appeals filed in fiscal year 2006 to about 29,000 filed in fiscal year 2015. During this period, the number of appeals the BIA completed declined by 33 percent, from about 51,000 in fiscal year 2006 to about 34,000 in fiscal year 2015. Because new appeal receipts declined at a faster rate than appeals completed from fiscal year 2006 to fiscal year 2015, the appeal backlog decreased, from about 42,000 appeals pending at the start of fiscal year 2006 to about 25,000 at the start of fiscal year 2015. Further, the number of appeals pending at the beginning of fiscal year 2016 declined to about 20,000 appeals. Cases that were pending at the start of fiscal year 2015 had a median pending time of 211 days, 19 days shorter than the median pending time for appeals that had been pending at the start of fiscal year 2006.\nOur analysis showed that over the 10-year period, the largest category of BIA appeal completions were appeals of removal decisions by immigration judges, but this category declined from 55 percent of all appeals completed in fiscal year 2006 to 42 percent of all appeals completed in fiscal year 2015. The completion of DHS decision appeals increased from about 5,000 in fiscal year 2006 to about 7,000 in fiscal year 2015, growing from 10 percent of appeals completed in fiscal year 2006 to 19 percent of appeals completed in fiscal year 2015. Appeals of other decisions by immigration judges, such as appeals of bond redeterminations, motions to reopen when the original case was held in absentia, and interlocutory appeals, remained relatively steady during this 10-year period, accounting for 32 percent of appeals in fiscal year 2006 and 35 percent of appeals in fiscal year 2015.\nAs previously discussed, single-member or three-member BIA panels review all appeals. From fiscal year 2006 to fiscal year 2015, single BIA members annually reviewed 90 percent or more of completed appeals. Three-member panels consistently reviewed 10 percent or less of completed appeals throughout the 10-year period. Further, the number of appeals completed by three-member panels averaged about 3,000 appeals per year from fiscal years 2006 through 2015.\nThe overall median time it took the BIA to complete any type of appeal decreased by 29 percent, from 317 days in fiscal year 2006 to 224 days in fiscal year 2015; however, changes in appeal completion times varied across appeal types, as shown in figure 7.", "", "EOIR could help address its staffing challenges, such as not hiring enough immigration judges to meet its authorized number of judges, and the case backlog through better workforce planning and hiring practices. EOIR uses various inputs to estimate staffing needs on an annual basis. However, these annual estimates do not account for a number of factors that affect EOIR’s staffing needs, and EOIR has not developed and implemented a workforce plan to guide its efforts for identifying and addressing staffing needs. According to EOIR officials, EOIR currently estimates staffing needs using an informal approach that considers the needs of specific courts, staff availability, and funding. Specifically, EOIR calculates its immigration judge staffing needs by dividing its entire projected caseload for the upcoming fiscal year by the average number of cases completed per immigration judge in the previous year. EOIR then calculates its support staff needs using a predetermined ratio of support staff per immigration judge.\nHowever, this estimate does not account for long-term staffing needs, reflect EOIR’s performance goals, or account for differences in the complexity of different types of cases immigration judges are required to complete. For example, in developing this estimate EOIR does not calculate staffing needs beyond the next fiscal year or take into account resources needed to achieve the agency’s case completion goals, which as discussed later in this report, establish target time frames in which immigration judges are to complete a specific percentage of certain types of cases. Furthermore, according to EOIR data, approximately 39 percent of all immigration judges are currently eligible to retire. However, EOIR has not systematically accounted for these impending retirements in calculating its future staffing needs.\nEOIR’s most recent Strategic Plan, which covered 2008-2013, stated that EOIR would create staffing plans for each office that take into account new skills needed to achieve EOIR’s mission in the future. However, according to EOIR officials, EOIR did not complete these staffing plans due to a lack of resources. In 2016, EOIR awarded a contract to a consulting company for the development of a workforce planning report. Under this contract, the consultant is to provide, by April 2017, objective and standardized measures of judicial and court staff workloads and a method or formula by which EOIR can assess the need for additional resources. Additionally, according to EOIR officials, as of February 2017, the Office of the Chief Immigration Judge had initiated a study of the activities critical to case completion and the time it takes court staff to complete these activities. However, EOIR was unable to provide documentation describing the specific goals of this study.\nEOIR’s upcoming workforce planning report and the study of case activities are positive steps that could help strengthen EOIR’s strategic workforce planning efforts; however, they do not include key elements of a strategic workforce plan that would help EOIR better address current and future staffing needs. Strategic workforce planning, also called human capital planning, focuses on developing long-term strategies for acquiring, developing, and retaining an organization’s total workforce to meet the needs of the future, as described in figure 8. We have identified key principles for effective strategic workforce planning that describe several important elements of a strategic workforce plan. For example, the key principles state that agencies should determine the critical skills and competencies that will be needed to achieve current and future programmatic results. Our key principles also state that agencies should develop strategies that are tailored to address gaps in number, deployment, and alignment of human capital approaches for enabling and sustaining the contributions of all critical skills and competencies. Further, the key principles state that agencies should monitor and evaluate the agency’s progress toward its human capital goals and the contribution that human capital results have made toward achieving programmatic results.\nEOIR’s initial contract for the workforce planning report required the development of a method or formula for assessing the need for additional immigration judges and staff, but it did not require the contractor to identify critical skills and competencies or tailor identified requirements to current or future programmatic results. For example, EOIR’s contract states that the report will identify the volume of judicial and staff resources necessary to allow EOIR to better fulfill its mission of timely adjudication, as defined by completions that meet EOIR’s case completion goals. However, as discussed later in this report, EOIR does not have case completion goals for non-detained cases, and the majority of EOIR’s cases—90 percent of the immigration courts’ total caseload in fiscal year 2015—do not fit within a case completion goal. Therefore, EOIR’s new resource allocation model to be provided under the contract is unlikely to account for target time frames for the adjudication of the vast majority of cases. Moreover, although EOIR’s upcoming report is to identify gaps in the number of staff needed, the contract does not require the contractor to develop strategies or approaches to address those gaps or analyze the range of flexibilities in hiring available under current authorities. In addition, EOIR’s contract does not contain procedures for monitoring or evaluating progress toward its human capital goal of developing a skilled and diverse workforce. EOIR officials stated that the contract does not include these items because EOIR has the option of extending the contract and requesting additional deliverables.\nFollowing our raising of these issues with EOIR in February 2017, EOIR officials stated that the agency is beginning to develop a strategic plan for fiscal years 2018 through 2023 that will address the agency’s human capital needs. Specifically, according to EOIR officials, the strategic plan and follow-on plans will collectively include strategies to ensure that short- and long-term human capital needs are met as well as milestones to monitor and evaluate the agency’s progress towards meeting these goals. However, EOIR was unable to provide documentation related to the content of this strategic plan. In February 2017, EOIR officials also told us that the agency had recently established an inter-component management staffing committee that will determine the optimal number and type of positions needed in each court. Additionally, in February 2017, EOIR provided us a document indicating that the agency has started to assess in which immigration courts to place 25 judges it may be allocated during fiscal year 2017. These are positive steps; however, in the absence of any follow-on workforce planning contracts or documentation related to EOIR’s strategic plan, the extent to which these efforts will result in effective strategic workforce planning reflective of key principles is uncertain. Further, while EOIR’s recent establishment of a staffing committee and efforts to determine where to place new judges are good initial steps, developing and implementing a strategic workforce plan that addresses key principles for effective strategic workforce planning, such as including a determination of critical skills and competencies, strategies to address skill and competency gaps, and monitoring and evaluating progress made, would better position EOIR to address current and future staffing needs.\nAdditionally, EOIR does not have efficient practices for hiring new immigration judges, which has contributed to immigration judges being staffed below authorized levels. We have previously reported that agencies should self-assess their human capital policies and procedures, including hiring, to ensure they are accomplishing agency policy and programmatic goals. Specifically, we have reported that agencies should have a recruiting and hiring strategy that is targeted to fill short- and long-term human capital needs. However, EOIR has not assessed its hiring process or developed a formal hiring strategy, and its hiring process has not kept pace with agency-identified immigration judge staffing needs or authorized staffing levels. EOIR identified a need to continue to aggressively hire immigration judges, according to its fiscal year 2016 congressional budget justification, and requested funding for 55 new immigration judge positions to, among other things, address its caseload and improve the efficiency of the immigration courts. As mentioned earlier, the number of immigration judges has increased from 212 judges in fiscal year 2006 to 247 in fiscal year 2015. However, as Congress has allocated funds to increase the authorized number of judges, the actual number of immigration judges has consistently lagged behind authorized levels, resulting in staffing shortfalls. For example, in fiscal year 2016, EOIR was allocated 374 immigration judge positions and had 289 judges on board at the end of the fiscal year. EOIR officials attributed these gaps to delays in the hiring process. Furthermore, as previously discussed, about 39 percent of its immigration judges are currently eligible for retirement according to EOIR officials.\nEOIR hires judges through a multi-step process, involving both EOIR and DOJ. EOIR officials first issue a vacancy announcement, review and interview applicants, and identify top candidates. EOIR then forwards the top candidates to the DOJ Office of the Deputy Attorney General, where a panel reviews the applicants and selects candidates for appointment by the Attorney General. The candidate may then receive an initial employment offer, which the candidate has 21 days to accept or reject. Upon acceptance, the candidate must undergo a background investigation by the Federal Bureau of Investigation and vetting through DOJ’s Office of Attorney Recruitment and Management and Office of Legal Counsel. Following this step, the Deputy Attorney General and Attorney General both review and approve the candidate’s application package a second time. EOIR may then make a formal offer of employment to the candidate upon receiving the approval of the Attorney General.\nEOIR has not assessed its hiring process or developed a hiring strategy that is targeted to fill short- and long-term human capital needs. According to EOIR officials, this is because EOIR has instead focused on improving aspects of its hiring process. For example, EOIR has entered into contracts for additional human resource support staff. Under one of these contracts, EOIR receives assistance with hiring support staff, which, according to EOIR officials, permits EOIR’s human resources staff to focus more of their time on immigration judge hiring. Under the other contract, EOIR is to receive support onboarding new immigration judges. Additionally, EOIR has hired six additional human resources staff members and taken steps to improve its hiring process, according to EOIR officials. Specifically, prior to the contracts increasing EOIR’s human resources support, the agency’s human resources staff directly referred all applications to the Assistant Chief Immigration Judges who initially reviewed applications and selected the interviewees. According to EOIR officials, this method saved some time in the hiring process because, for example, most applicants who were of sufficient caliber to be identified by the Assistant Chief Immigration Judges as candidates for the position already met the basic qualifications that human resources staff looked for in their initial review of applications.\nHowever, our analysis of EOIR hiring data found that from 2011 to August 2016, EOIR took an average of more than 2 years—742 days—to hire new immigration judges. According to EOIR officials, this time period included a 3-year hiring freeze from January 2011 through February 2014 that prolonged the hiring process. When we only included hires initiated after the hiring freeze ended in February 2014, we found that EOIR took an average of 647 days to hire an immigration judge. EOIR officials also attributed the length of the hiring process to delays in the Federal Bureau of Investigation background check process, which is largely outside of EOIR’s control. However, our analysis found that other processes within EOIR’s control accounted for a greater share of the total hiring time. In fiscal year 2015, EOIR began tracking the immigration judge hiring process in greater detail by maintaining a spreadsheet listing key dates in the process. Prior to 2015, EOIR did not track all key dates in the process, such as dates associated with the background check process, in its hiring files. For judges hired since EOIR began tracking these dates until August 2016, our analysis found that background checks accounted for an average of about 41 days. However, for the same period our analysis found that an average of 135 days elapsed between the date EOIR posted a vacancy announcement and the date EOIR officials began working to fill the vacancy. During this period of time, EOIR’s Office of Human Resources reviews and prepares the applications for a subsequent review by hiring officials in the Office of the Chief Immigration Judge. According to EOIR officials, EOIR’s vacancy announcements do not necessarily correspond to vacant positions. Rather, EOIR issues annual hiring announcements that cover a large number of immigration courts before they have determined whether those courts have open vacancies. When EOIR seeks to fill a vacancy or a new judge position, officials begin by determining where the judge should be located. Then, EOIR officials use the previously-issued vacancy announcements to begin identifying candidates for the positions.\nFurther, our analysis found that since EOIR began tracking key hiring dates, an average of 74 days elapsed between the time EOIR began working to fill a vacancy and the time EOIR’s Office of Human Resources provided a list of qualified applicants to hiring officials. EOIR officials attributed this length of time to the large number of applicants EOIR receives for each vacancy announcement. Figure 9 provides an overview of the hiring process and key milestones for immigration judges hired during or after fiscal year 2015, when EOIR began comprehensively tracking dates.\nIn February 2017, EOIR officials stated that the agency was under a hiring freeze as a result of the President’s January 23, 2017 memorandum freezing the hiring of federal civilian employees, but that EOIR planned to request an exception to permit the agency to resume hiring. The explanatory statement accompanying the Consolidated Appropriations Act, 2017, states that within the funding provided, EOIR is to continue hiring new judges funded in fiscal year 2016 and hire at least 10 new immigration judge teams. The President’s fiscal year 2018 budget, released in May 2017, proposed funding to allow EOIR to hire 75 additional immigration judge teams, including judges and supporting staff. Uncertainty regarding when and for how long EOIR will be able to hire immigration judges coupled with its staffing gaps makes EOIR’s ability to hire judges efficiently, when authorized, particularly important. EOIR’s beginning to track key dates in its hiring process is a positive step toward gathering information needed to assess and improve its hiring process. Using this and other information to assess its immigration judge hiring process to identify opportunities for efficiency; using the assessment results to develop a hiring strategy that targets short- and long-term human capital needs; and implementing actions to increase efficiency could better position EOIR to hire new judges more quickly and address immigration judge staffing gaps, which could improve EOIR’s overall operations.", "EOIR identified a comprehensive electronic filing (e-filing) capability—a means of transmitting documents and other information to immigration courts through an electronic medium, rather than on paper—as essential to meeting its goals in 2001; however, as of February 2017 EOIR has not implemented such a system. In particular, EOIR issued an executive staff briefing for an e-filing system in 2001 that stated that only through a fully electronic case management and filing system would the agency be able to accomplish its goals. These goals include, among other things, adjudicating all cases in a timely manner while ensuring due process and fair treatment for all parties, and promoting internal and external communication with court stakeholders.\nThe briefing cited several benefits of an e-filing system, including: Increasing the ability of the immigration courts to track and schedule cases;\nReducing the data-entry, filing, and other administrative tasks associated with processing paper case files; Improving communication with external court stakeholders, such as respondents and attorneys, by providing the ability to file court documents from private home and office computers;\nEnabling immigration court staff to have concurrent and immediate access to the same case file, as well as the ability to share, annotate, and edit documents through e-mail; and\nAllowing immigration court staff and management to conduct analysis and strategic planning using the e-filing system’s data to ensure that the agency is meeting its goals.\nSince 2001, EOIR has been working to develop a comprehensive e-filing capability, but has not adhered to several of its stated goals and timeframes for implementing this capability. EOIR proposed in the 2001 briefing that the agency would, following the implementation of a case management database in 2002 and successful pilot tests of the e-filing system, fully implement the system in 2003. However, EOIR did not achieve these goals. Rather, in 2005 EOIR issued an alternatives and cost-benefit analysis for a new system known as eWorld, which was to serve as a platform for developing an e-filing capability, among other functions. Specifically, according to this analysis, EOIR planned to implement eWorld in four phases: (1) eInfo to provide a single integrated case management system to replace the legacy systems; (2) eAccess to create web-based internal EOIR and public access mechanisms to access EOIR information, including the incorporation of digital audio recording capabilities; (3) eFiling to automate document-processing capabilities; and (4) ePrecedents to assist judges and BIA members with searching and assembling legal and other information pertaining to cases. The implementation of these phases, according to this analysis, was expected to occur over 7 years and EOIR would develop an e-filing technology that would allow, among other things, all parties to electronically file documents with the immigration courts during fiscal year 2006.\nEOIR implemented other components of eWorld, such as a case management system and digital audio recording systems in all courts, but did not implement the e-filing component during fiscal year 2006, as planned. EOIR continued to emphasize the importance of acquiring a comprehensive e-filing capability in its most recent strategic plan, which covered 2008 to 2013, by establishing the implementation of an e-filing system as one of its four strategic goals to achieve excellence in management, administration, and customer service.\nIt is unclear, due to a transition in oversight responsibility and a lack of historical documentation, why EOIR did not fully carry out these efforts to implement a comprehensive e-filing system. According to EOIR OIT officials, decision-making authority for these e-filing efforts resided with EOIR’s Office of Planning, Analysis, and Technology, which has since dissolved, and OIT is now responsible for implementing new technology. According to these officials, the Office of Planning, Analysis, and Technology—which had the decision-making authority for overseeing eWorld, including e-filing—may have disposed of records documenting reasons for not meeting prior goals and timeframes pursuant to mandatory record retention schedules. As a result, OIT officials were unable to locate historical documentation on prior efforts, such as program baselines or cost estimates.\nEOIR OIT officials offered several reasons for not meeting past goals and time frames, including the need to develop several incremental technical capabilities before implementing a comprehensive e-filing system. EOIR has implemented several systems foundational to a comprehensive e- filing system since 2001, which have provided additional capabilities, but have not yet led to the implementation of an e-filing system. EOIR spent approximately $10 million on its case management system and $9 million on its digital audio recording system, which were implemented in 2007 and 2010, respectively. The digital audio recording system allows the immigration courts to digitally record immigration hearings and provide an electronic transcript of the hearings, which was, according to EOIR OIT officials, a key capability they needed to develop before implementing a comprehensive e-filing system. More recently, in 2015 EOIR implemented the eInfo and eRegistration systems, which cost approximately $3.7 million. The eInfo system, which is different from the system envisioned under the eInfo phase of the eWorld platform, is a web-based application that allows registered attorneys and fully accredited representatives to view their clients’ case information. The information provided by the eInfo application is similar to that which is currently available by telephone via the Automated Case Information Hotline. The eRegistration system is an electronic registry of respondent representation, such as attorneys and other accredited representatives and allows respondents’ representatives to electronically file the forms indicating respondent representation with the immigration courts and the BIA. This application allows for the electronic filing of two forms indicating respondent representation, but EOIR immigration court officials explained that the forms still need to be printed out and placed in the paper case files EOIR maintains.\nEOIR OIT officials also explained that prior timeframes and goals were not met because the technology needed to develop a comprehensive e- filing system was evolving and unavailable at the time. Specifically, according to EOIR officials, a single commercial-off-the-shelf solution for an e-filing system was unavailable. However, EOIR reported in 2001 that it was technologically feasible to develop a comprehensive e-filing system and, in 2005, identified two potential e-filing systems in its alternatives analysis for the eWorld platform that would have cost approximately the same as maintaining the existing paper-based method of filing documents with the immigration court. As previously described, it is unclear, due to a lack of available historical documentation, what decisions EOIR made regarding the e-filing options identified in the 2005 alternatives analysis for eWorld. Further, EOIR OIT officials stated in 2016 that it remains unlikely that EOIR will be able to implement a single commercial-off-the- shelf solution without a fair amount of customization before implementation. Additionally, in terms of available technology, other court systems, such as the U.S. district courts, courts of appeals, and U.S. Bankruptcy Courts were able to begin converting to a comprehensive e- filing system in 2001 with the district and bankruptcy courts completing their conversion in 2006 and the courts of appeals completing their conversion in 2012.\nEOIR OIT officials also cited evolving federal government technological requirements for data centers, staffing shortages, and a decrease in funding as affecting EOIR’s capacity to implement e-filing technology prior to 2016. However, EOIR did not demonstrate how evolving data center requirements would prohibit EOIR from developing and implementing a comprehensive e-filing system because these requirements are designed, in part, to encourage IT efficiencies and were not established until 2010 and 2014 respectively. In regard to EOIR staffing shortages, DOJ and EOIR had a hiring freeze, but it did not occur until 2011, nearly 10 years after EOIR first envisioned the development of an e-filing capability. According to EOIR officials, EOIR’s OIT experienced a significant decrease in its budget and staffing during key years of the eWorld effort that required the agency to defer costs into 2007 and beyond. Specifically, according to EOIR officials, its Office of Planning, Analysis and Technology’s budget decreased from approximately $41 million in fiscal year 2010 to approximately $30 million in fiscal year 2013. However, as previously described, EOIR’s total appropriation increased every year from fiscal years 2005 through 2016, except for fiscal years 2011 and 2013.\nEOIR initiated a comprehensive e-filing effort in 2016, but improved oversight for this effort could help ensure the successful and timely implementation of this capability. In April 2016, EOIR initiated a market research effort for a comprehensive e-filing system—the EOIR Courts and Appeals Systems (ECAS). According to EOIR OIT officials, EOIR envisions ECAS to be a web-based system that tracks, displays, and manages immigration-related records; routes immigration-related documents for the appropriate approvals and decisions; provides improved access to select immigration data; allows for electronic filing and payment; delivers statistics and reports for enhanced court management; and allows for the intergovernmental secure transfer of data. Key documents associated with the development of ECAS underscore the importance EOIR has identified for implementation of an e-filing system. For example, according to EOIR’s statement of work for ECAS, EOIR currently relies on a myriad of outdated systems on multiple platforms. Further, EOIR stated in its fiscal year 2009 budget justification that upon fully implementing an e-filing system EOIR will be able to improve the efficiency of its entire adjudication process and that a higher percentage of its cases will be completed within target timeframes. Additionally, officials in 4 of the 6 immigration courts and DHS attorneys in all 6 of the offices we met with reported negative effects due to the absence of an e-filing system, such as an increased risk of losing documents; increased resources and staff hours spent manually entering data into the case management system and filing, storing, and processing paper files; and delays due to, and costs incurred by, reliance on sending paper documents through the mail. Conversely, officials in 3 of the 6 immigration courts reported potential challenges in implementing and using an e-filing system, such as difficulties for unrepresented respondents in accessing and navigating the system, and the need for additional court staff to scan existing paper case files and evidence, such as marriage licenses and birth certificates into the system.\nEOIR OIT officials stated that EOIR is in the early phases of the ECAS project and that it will take several years to fully implement ECAS, with the first phase of implementation estimated to begin in 2018. Specifically, in April 2016, EOIR contracted with a vendor to determine the types of commercial-off-the-shelf technologies that are available for implementing ECAS. According to EOIR OIT officials, this effort will result in a “roadmap” for determining the technical solution EOIR should implement for ECAS. The vendor, according to EOIR officials, submitted the alternatives analysis and cost estimate for this effort—a key project milestone—2 months after it was originally due to EOIR. EOIR OIT officials estimated that the process of identifying the ECAS solution, gaining approval from EOIR leadership, and requesting proposals from potential vendors who will implement this solution will be completed by the end of October 2017 and that the contract for implementing ECAS will be awarded by January 2018.\nBest practices for effective program oversight cite the importance of oversight in managing the acquisition and development of IT systems. Standards for Internal Control in the Federal Government also state that internal control is a process that should provide reasonable assurance that the objectives of the agency are being achieved. Further, according to internal control standards, management is to identify risks throughout the entity, including the use of new technology in operational processes, and design control activities so that the entity meets its objectives and addresses related risks. According to leading governance practices, to ensure effective program oversight, organizations should, among other practices, create an entity for overseeing IT projects; document policies and procedures for program governance and oversight; monitor program performance and progress toward expected cost, schedule, and benefits; ensure that corrective actions are identified and assigned to the appropriate parties at the first sign of cost, schedule, or performance slippages; and ensure that corrective actions are tracked until the desired outcomes are achieved.\nIn alignment with these best practices, EOIR has documented policies and procedures governing how its primary ECAS oversight body—the ECAS Executive Committee—will oversee ECAS through the development of a proposed ECAS solution. Specifically, the ECAS Executive Committee, comprised of representatives from EOIR’s BIA, Office of the Chief Immigration Judge, and OIT, among other offices, is charged with meeting regularly for ECAS progress reviews, ensuring that the agency’s needs are met, and determining and approving ECAS solutions. Additionally, to comply with requirements of the Federal Information Technology Acquisition Reform Act, in 2016 the EOIR Investment Review Board was established and is responsible for reviewing proposals and recommendations regarding major investments over $1 million and EOIR-wide high risk projects for all information systems, data collections, and resources. According to OIT officials, the board held its first meeting in March 2017 and was briefed on the ECAS project. Consistent with best practices for project oversight, EOIR documented its policies and procedures for how the EOIR Investment Review Board will oversee all major IT investments within EOIR, including how it is to monitor program performance, identify and track corrective actions, and ensure that desired outcomes are achieved.\nHowever, EOIR OIT officials stated that the EOIR Investment Review Board was never intended to oversee ECAS implementation due to the detailed nature of this system’s implementation, and EOIR has not yet designated an oversight entity or documented a plan for overseeing ECAS during critical stages of its development and implementation. According to the ECAS Executive Committee charter, the committee will dissolve after 1 year when the ECAS roadmap for eventually determining the solution is identified. EOIR OIT officials stated that they are discussing future oversight for ECAS and may choose to extend the Committee’s term, but will not decide how the phased implementation of ECAS, including oversight, will proceed until they identify a vendor because doing so is not yet necessary. As a result, it is unclear how the ECAS project will be overseen during the actual deployment of the ECAS solution. More specifically, it is not clear how the appropriate oversight body will monitor program performance and progress toward expected cost, schedule, and benefits; ensure that corrective actions are identified and assigned to the appropriate parties at the first sign of cost, schedule, or performance slippages; and ensure that corrective actions are tracked until the desired outcomes are achieved. Without a designated oversight entity and a documented plan for oversight for ECAS through its deployment, EOIR is not well-positioned to monitor progress towards meeting expected costs and schedule milestones, such as the awarding of the ECAS contract and the deployment of the solution. Given EOIR’s longstanding efforts to develop a comprehensive e-filing system and a delay in meeting a key ECAS milestone, identifying and establishing an appropriate entity for exercising oversight for the entirety of the ECAS effort upfront is particularly important. Further, documenting and implementing a plan that is consistent with best practices for exercising oversight over ECAS until it is fully implemented would better position the agency to identify and address any risks and implement ECAS in accordance with its cost, schedule, and operational expectations.", "", "EOIR could enhance its VTC program by collecting more reliable data on VTC hearings and using the information to assess any effects of VTC use on hearing outcomes. EOIR is authorized by statute to hold immigration removal proceedings: (1) in person; (2) in the absence of the respondent, where agreed to by the parties; (3) through video conference (i.e., VTC), in which case consent need not be obtained from either party; or (4) through telephone conference, which requires consent of the respondent if it is an evidentiary hearing on the merits. According to EOIR officials, EOIR largely uses VTC for hearings for detained individuals, including both master calendar and individual merits hearings. According to EOIR officials, VTC provides several benefits for the agency, including saving time and funds for judge travel to physical court rooms, particularly in remote locations; and providing more timely hearings for respondents who have cases in which the judge would have to travel to hear their case. Additionally, according to EOIR officials, using VTC can minimize judges’ lost productivity resulting from a respondent or their representative not appearing at a court proceeding because the judge can, by virtue of using VTC to remotely hear the case, transition to hearing another case in the courtroom or conducting other work. According to EOIR officials, EOIR is undertaking and considering measures to ensure that VTC technology is available for use in every courtroom, which may result in increased VTC usage. EOIR officials also stated that EOIR is considering expanding its VTC program to provide additional interpretation services over VTC to the immigration courts.\nBest practices for VTC hearings established by the Administrative Conference of the United States (ACUS) provide technical, operational, and environmental guidance on how agencies may implement or improve their use of VTC in administrative hearings and related proceedings. These best practices include, among others, ensuring available IT support staff and ensuring that the use of VTC is outcome-neutral and meets the needs of users. In alignment with these best practices, EOIR has dedicated technical support personnel for trouble-shooting both routine and urgent VTC technical issues.\nHowever, EOIR has not adopted the best practice of ensuring that its VTC program is outcome-neutral because it has not evaluated what, if any, effects VTC has on case outcomes. Further, Standards for Internal Control in the Federal Government state that agencies must have relevant, reliable, and timely information relating to internal as well as external events to manage the agency’s operations. EOIR, though, does not collect reliable data on (1) the number of hearings it conducts by VTC, (2) respondent appeals related to the use of VTC in their cases, or (3) motions filed by respondents requesting in-person instead of VTC hearings.\nAccording to EOIR’s most recent analysis of caseload data, EOIR conducted approximately 13 percent of all hearings (105,000 of 809,000) by VTC in fiscal year 2014. However, the number of VTC hearings EOIR conducted could be larger because EOIR does not require the collection of this information. In particular, according to EOIR management officials, EOIR does not require immigration court staff to indicate the hearing medium—in-person, telephonic, or VTC—in its case management system because court personnel have numerous other tasks to accomplish during hearings. Rather, the data field for the hearing medium is automatically populated as “in-person” unless court staff manually select an alternative medium on a drop-down menu within the system. Because the data for this field are auto-populated and voluntarily entered, EOIR does not have reliable data on how many VTC hearings it has conducted.\nCongressional committees have also identified a need for EOIR to evaluate its VTC program to determine any relationship between VTC and hearing outcomes. In particular, the House Committee report accompanying the Consolidated and Further Continuing Appropriations Act, 2015 requested that EOIR, in order to assess a possible relationship between the use of VTC and the impact on managing caseloads and outcomes, collect information on the number and type of VTC hearings it conducts, analyze the results to determine if there are any effects of VTC use in hearings on case outcomes, and submit the results of the analysis to the Committee at the time of the fiscal year 2016 budget request. In the House Committee report accompanying the Consolidated Appropriations Act, 2016 the committee noted that this VTC report had not yet been submitted, and directed EOIR to submit the report as soon as possible. As of February 2017, EOIR had not submitted the report, but in a response to the House Committee, EOIR stated that it would need to consult with outside experts to develop a methodology and cost estimate for the study to ensure its validity and that EOIR was receptive to further discussing the study with the Committee.\nAccording to EOIR officials, EOIR has not collected information on or evaluated the use of VTC in its hearings for several reasons.\nFirst, officials stated that modifying EOIR’s case management system and retraining court staff to record the hearing medium for every case would create considerable costs for EOIR and create an extra task for already busy court staff. However, as previously described, EOIR’s case management system includes a non-mandatory field for collecting data on the hearing medium, including the use of VTC, and some staff are already entering this data into the non-mandatory field to change the auto-population from in-person to VTC, as evidenced by EOIR data showing that over 100,000 hearings were held by VTC in fiscal year 2014.\nSecond, officials stated that a study would likely be difficult, costly, time-consuming, and require EOIR to hire outside experts because it would need to account for several non-VTC factors, such as criminal history, that may affect the outcome of an individual’s hearing.\nThird, any study on the effects of VTC would have to account for instances in which some hearings for a respondent were held in- person, while other hearings for the same respondent were held by VTC throughout the course of the respondent’s case, according to EOIR officials. However, there are alternative methods for conducting studies absent the ability to randomly assign individuals to hearings with VTC and hearings without non-VTC for comparison purposes for evaluation. In addition, other administrative agencies that use VTC, including the Department of Veterans Affairs (VA) Board of Veterans’ Appeals (BVA) and the Social Security Administration’s (SSA) Office of Disability Adjudication and Review (ODAR), have analyzed the impact of VTC on their hearings.\nFourth, EOIR officials explained that they do not track the number of appeals related to the use of VTC and motions requesting in-person hearings because, due to the complexity of appeals and motions, it would require additional training for legal assistants and would compel EOIR to begin tracking reasons for other appeals and motions as well. However, the BIA has screening panels of staff attorneys tasked with identifying the legal issues in appeals who could incorporate this additional responsibility into their existing duties with respect to appeals. Additionally, EOIR does not necessarily have to, by virtue of collecting data on motions and appeals related to VTC, collect data on all reasons for motions and appeals.\nSeveral immigration court officials, experts, and stakeholders we interviewed expressed concern that the use of VTC technology poses challenges for holding immigration hearings. Specifically, officials from all six of the immigration courts we visited reported challenges related to VTC hearings, including difficulties maintaining connectivity, hearing respondents, exchanging paper documents, conducting accurate foreign language interpretation, and assessing the demeanor and credibility of respondents and witnesses. One judge explained that VTC can further complicate foreign language interpretation using two interpreters to translate an uncommon language. For instance, VTC may be used for a first interpreter to translate a respondent’s testimony from an uncommon language, such as Quiche, to a more common language, such as Spanish, and for a second interpreter to simultaneously translate the first interpreter’s Spanish translation into English. Also, one judge explained that it can be difficult to exchange documents during VTC because the documents must be sent by a fax machine and it is hard to reference specific documents over the VTC. Additionally, immigration court officials from half of the immigration courts we visited stated that they had changed their assessment of a respondent’s credibility that was initially made during a VTC hearing after holding a subsequent in-person hearing. For example, one immigration judge described making the initial assessment to deny the respondent’s asylum application during a VTC hearing in which it was difficult to understand the respondent due to the poor audio quality of the VTC. However, after holding an in-person hearing with the respondent in which the audio and resulting interpretation challenges were resolved, the judge clarified the facts of the case, and as a result, decided to grant the respondent asylum. Another immigration judge reported being unable to identify a respondent’s cognitive disability over VTC, but that the disability was clearly evident when the respondent appeared in person at a subsequent hearing, which affected the judge’s interpretation of the respondent’s credibility.\nAdditionally, 9 of the 10 experts and stakeholders we contacted also expressed concerns with VTC immigration hearings, including the potential for VTC to affect hearing outcomes. One of the experts and stakeholders we interviewed reported concerns with EOIR increasingly using VTC to conduct merits and asylum hearings, which generally address substantive case issues and can result in a decision. According to this individual, hearings held by VTC instead of in-person can exacerbate perceived barriers to pro se respondents—individuals without representation—who already have difficulty understanding the complex immigration legal system. Another one of the experts and stakeholders cited a situation in which the respondent’s attorney who was not physically co-located with the respondent could not confidentially confer with his client over VTC, and the respondent was ordered removed by the immigration judge. These experts and stakeholders also cited challenges during VTC hearings related to exchanging documents between multiple locations and the quality of foreign language interpretation during VTC hearings due to poor connectivity and audio quality.\nFollowing our discussion of these issues with EOIR in February 2017, EOIR’s Office of Planning, Analysis, and Statistics developed a preliminary proposal document describing possible approaches for studying VTC effects on case outcomes. However, as of February 2017, senior EOIR officials told us that EOIR does not have definitive plans to move forward with a study, leaving the extent to which EOIR will assess the use of VTC in immigration hearings uncertain. By collecting and analyzing data to assess the use of VTC in immigration hearings, EOIR could fulfill the directive in the House Committee report accompanying the Consolidated Appropriations Act, 2016, be better positioned to manage and improve its VTC program, as well as assess and address, as appropriate, concerns expressed by immigration court officials, experts, and stakeholders. Specifically, through collecting more complete data on the number and type of hearings it conducts by VTC, EOIR would have more reliable information for understanding the extent and nature of the agency’s VTC use, particularly as it plans to expand its VTC program. Further, by collecting data on appeals related to the use of VTC and the number of in-person hearing motions filed, EOIR would have additional information on how respondents may view the use of VTC for hearings.\nBy using these and other data to assess VTC hearing outcomes and implementing any corrective actions resulting from this analysis, EOIR could have further assurance that its use of VTC in immigration hearings is neutral.", "EOIR could further ensure that its VTC program meets user needs by soliciting feedback from respondents regarding their satisfaction and experiences with VTC hearings. According to EOIR officials responsible for implementing the VTC program, EOIR primarily gathers informal feedback on its VTC program through meetings between Assistant Chief Immigration Judges, immigration judges, and private bar and DHS attorneys. Additionally, immigration judges and other court stakeholders can take the initiative to provide feedback on the VTC program to the court administrator and Assistant Chief Immigration Judge, according to EOIR officials. However, EOIR does not, according to EOIR officials, systematically collect feedback on VTC immigration hearings from respondents.\nAccording to ACUS best practices for VTC use, federal agencies should solicit feedback and comments about VTC from those who use it regularly. Specifically, ACUS recommends that agencies maintain open lines of communication with participants in order to receive feedback about the use of VTC for the hearing. Post-hearing surveys or other appropriate methods, according to ACUS best practices, should be used to collect information about the experience and satisfaction of the participants with the VTC hearing.\nAs previously discussed, immigration court officials from all six of the immigration courts we visited cited challenges related to using VTC for immigration hearings, which could impact respondents. Specifically, several of the immigration court officials we interviewed expressed concerns regarding the visual and audio quality of VTC hearings. For instance, one immigration judge explained that she discovered respondents from one DHS detention center frequently could not see all of the courtroom participants, including the immigration judge, on the VTC screen in the detention center. A member from the immigration judges’ union explained that this lack of visibility in the courtroom for the respondents is a significant concern because, according to this member, it could affect the ability of the respondents to present evidence in support of their case and respond to evidence presented against them during the proceedings. Additionally, one immigration judge reported that she does not like to hold VTC hearings because it is sometimes hard to hear and fully comprehend what is being said over VTC, which, according to this judge, can make it difficult to assess the respondent’s demeanor and credibility. Another immigration judge stated that respondents often cannot see everyone in the courtroom or know who is speaking during VTC hearings. Further, an additional immigration judge stated that there are sometimes poor connections over VTC that make it hard to hear the respondent. Additionally, officials from 5 of the 6 immigration courts we visited cited challenges related to VTC equipment malfunctions, including the need to reschedule hearings, move court-rooms, and a lack of visual and audio quality for VTC hearings which could lead to delays in respondents receiving a decision in their case.\nSeven of the ten experts and stakeholders that we contacted similarly reported challenges with the visual and audio quality of VTC hearings that could affect respondents and immigration judges. Specifically, one of the experts and stakeholders reported that in some VTC hearings cameras are not always placed in an effective location. Another one of the experts and stakeholders stated that sometimes respondents and private bar attorneys cannot hear or see over VTC what is occurring in the court- room and that foreign language interpretation is also difficult to conduct over VTC when respondents cannot hear the translation, due to VTC audio quality issues. Three additional experts and stakeholders also expressed concerns with immigration judges not being able to see all of the hearing participants due to VTC technical issues.\nEOIR does not, according to EOIR officials, systematically collect feedback on VTC immigration hearings from respondents for several reasons:\nThe immigration court system is adversarial and respondents may not be able to separate their experiences with VTC from their satisfaction with the outcomes of their cases;\nRespondents can raise concerns with the medium of their hearing by filing an appeal with the BIA; and\nSystematic surveys to collect feedback on its VTC program would likely require significant resources.\nHowever, EOIR could collect the respondent feedback after a hearing, but not necessarily after the immigration judge has decided the case. Specifically, because some cases entail multiple hearings, EOIR could collect feedback after a VTC hearing but prior to the conclusion of the case and respondents knowing the outcome. Additionally, other adjudicatory systems that use VTC have developed methods to collect feedback from respondents. For example, BVA officials stated that they previously used a survey card and then an overall veteran satisfaction survey to gather feedback from veterans regarding their hearing experience after the judge decided the case. However, BVA officials explained that due to concerns that the case outcome might bias the veterans’ response to the survey and that the integrity of the data may be compromised by waiting to administer the survey, the BVA changed its method and will in 2017 begin using a new survey that it will conduct within 2 or 3 weeks after the hearing and prior to the BVA’s decision. Additionally, instead of solely relying on the appeals process to address any respondent concerns with VTC hearings, EOIR could utilize existing feedback processes or potentially lower-cost approaches to collecting feedback that would not likely require significant resources. For instance, EOIR could build on its existing complaint process, which allows respondents to submit complaints regarding immigration judges, private bar attorneys, and foreign language interpreters through e-mail to established EOIR e-mail accounts for receiving each type of complaint.\nAccording to ACUS best practices for using VTC for hearings, in addition to soliciting user feedback agencies should also ensure that conditions allow participants to see, be seen by, and hear other participants. Soliciting feedback from respondents on their satisfaction and experiences with VTC hearings, including the visual and audio quality of the VTC hearing, could give respondents the opportunity to raise such technical and other issues and, in turn, help EOIR identify and address them. Further, soliciting feedback from respondents can help EOIR better ensure that its VTC program meets all users’ needs, including respondents whose cases are heard and decided during VTC hearings.", "", "EOIR previously established performance monitoring activities and measures to assess aspects of the immigration courts, but has eliminated several of these performance assessment mechanisms and has not met its remaining goals consistently since fiscal year 2010. Further, EOIR no longer has goals for most cases it adjudicates, including some cases it prioritizes for adjudication. Beginning in 1997, EOIR used the Immigration Court Evaluation Program to qualitatively measure the courts’ operational performance. This program employed teams of peer evaluators— immigration judges, court administrators, and legal assistants from other courts—to evaluate a court’s operations against established objectives, identify challenges the court faced in achieving EOIR’s goals, and recommend appropriate corrective measures. In 2002, EOIR also established 11 quantitative performance goals to help ensure the timely completion of cases, as shown figure 10. In particular, immigration judges were expected to complete a specific percentage of cases within a specified time frame. For example, EOIR established a goal that 80 percent of detained cases—cases in which the respondent is detained throughout the case—were to be completed within 60 days. DOJ uses performance results related to two of these goals—case completion time for detained cases and Institutional Hearing Program cases—in its Annual Performance Report to assess efforts in achieving its strategic objective of adjudicating all immigration cases promptly and impartially in accordance with due process.\nHowever, EOIR officials stated that in fiscal year 2008 EOIR moved from conducting qualitative on-site evaluations through the Immigration Court Evaluation Program to using quantitative performance measures. Further, in fiscal year 2010, EOIR eliminated and condensed several of these goals. Specifically, EOIR eliminated four quantitative case completion goals, including goals for most non-detained cases, and condensed four other goals into two goals, leaving five total performance goals for case completion times, as shown in figure 10.\nSince fiscal year 2010, EOIR reported that it has not consistently met its five remaining goals. Specifically, according to internal quarterly performance reports, EOIR has only consistently met, or come close to meeting, its goal to complete 85 percent of bond redetermination hearings within 21 days, as shown in table 2.\nFurther, as a result of changes to its performance activities and measures, EOIR does not have performance measures or goals for most of the cases it adjudicates. For example, EOIR does not have performance goals for cases in which the respondent is not detained (non-detained cases). In 2012, the DOJ Office of Inspector General recommended that EOIR develop immigration court case completion goals for non-detained cases. EOIR partially concurred with this recommendation and began to track non-detained case completion times, but did not implement case completion goals for non-detained cases. EOIR officials explained that the agency did not ultimately implement these goals because case completion goals are a statement of agency priorities, and EOIR officials stated that counting every case as a priority does not allow EOIR to effectively allocate its resources. Non-detained cases comprised 83 percent of immigration courts’ total caseload from fiscal year 2010 through fiscal year 2015. Further, non-detained cases grew at an average annual rate of 10 percent over that time period and in fiscal year 2015 represented 90 percent of EOIR’s total caseload.\nAdditionally, EOIR has identified certain types of cases as priorities for adjudication and issued guidance to courts on how to prioritize these cases through their scheduling of hearings, but EOIR has not established goals to ensure the timely completion for all of these cases. From September 2014 to January 2017, EOIR prioritized the cases of detained recent border crossers, unaccompanied children, and families held in detention or released on alternatives to detention. EOIR had case completion goals for detained respondents, but not for the other cases it considered a priority—unaccompanied children or families released on alternatives to detention.\nOur analysis showed that from September 2014 when the guidance was issued to September 2015, prioritized cases accounted for 28 percent of the NTAs EOIR received as shown in table 3. Prioritized cases without case completion goals, families released on alternatives to detention and unaccompanied children, accounted for 23 percent of NTAs EOIR received during this period.\nIn January 2017, EOIR changed the cases it prioritized to (1) all detained individuals; (2) unaccompanied children in the care and custody of the Department of Health and Human Services, Office of Refugee Resettlement without a sponsor identified; and (3) individuals released from detention pursuant to a Rodriguez bond hearing. EOIR has maintained its case completion goals for detained respondents and incorporated cases involving unaccompanied children without an identified sponsor into the category of detained cases. However, as of February 2017, EOIR has not developed a case completion goal for its case priority of individuals who have been released from detention pursuant to a Rodriguez bond hearing and none of its current five case completion goals encapsulate this priority because this category of respondents are not detained. Further, EOIR officials stated that the agency does not plan to develop a goal for completing these cases.\nEOIR officials provided several reasons for changes to its performance assessment and measures. According to EOIR officials, EOIR changed the Immigration Court Evaluation Program from a qualitative performance assessment to a solely quantitative assessment as a result of a DOJ hiring freeze in 2011, which reduced the number of available staff for on- site evaluations. EOIR officials stated that in January 2017, the agency hired a staff member to start a new program, the Organizational Results Unit, intended as a successor to the Immigration Court Evaluation Program. According to these officials, EOIR plans to have the new program in place before the end of fiscal year 2017. EOIR officials also told us that EOIR eliminated and combined the quantitative performance measures because the remaining five measures represent the agency’s highest priorities. Further, these officials stated that tracking case completion goals for non-priority cases, such as non-detained cases, would limit the agency’s ability to focus on meeting case completion goals for prioritized cases. However, EOIR does not have case completion goals for some of the cases it considers priorities, such as individuals who have been released from detention pursuant to a Rodriguez bond hearing. Additionally 6 of 12 immigration judges we spoke with told us that achieving case completion goals was not as important to them as ensuring the due process rights of respondents. However, EOIR’s primary mission is to adjudicate immigration cases in a careful and timely manner, and, according to statements by EOIR’s Director, EOIR works to hear priority cases as quickly as possible while protecting due process.\nStandards for Internal Control in the Federal Government state that management should monitor and assess the quality of performance over time. Additionally, these standards state that information is needed throughout an agency to achieve all its objectives. Moreover, we previously identified practices for enhancing agency use of performance information, including communicating performance against established targets. Without establishing performance goals and targets that more comprehensively account for case types, including the majority of its caseload and 73 percent of completed cases in fiscal year 2015, EOIR cannot fully evaluate whether the immigration courts are achieving EOIR’s mission which includes the timely adjudication of all cases—both detained and non-detained. Comprehensive case completion goals, including for example new case completion goals for non-detained respondents, and cases it considers a priority, such as individuals who have been released from detention pursuant to a Rodriguez bond hearing, would help EOIR more effectively monitor its performance. Further, such goals would not preclude EOIR from reflecting agency priorities by assigning priority cases a shorter case completion goal, a larger percentage goal, or both.", "EOIR collects information on the extent and reasons why immigration judges issue continuances—temporary adjournments of case proceedings until a different day or time—but does not systematically assess these data to identify and address potential operational challenges affecting the immigration courts or areas where immigration judges could benefit from additional guidance or training. Immigration judges may adjourn a case for a variety of reasons, either on their own volition or for good cause shown by the respondent or DHS. For example, an immigration judge has discretionary authority to grant a motion for continuance to allow respondents to obtain legal representation or DHS to complete required background investigations and security checks. EOIR tracks the extent to which immigration judges issue continuances and the reason for each continuance within its case management system. EOIR categorizes reasons for case continuances into approximately 70 different categories, including:\nRespondent-related continuances, such as illness of a respondent or their witness or attorney;\nDHS-related continuances, such as the need for more time to complete a background investigation or security check; Immigration judge-related continuances, such as unplanned leave or insufficient time to complete a hearing; and\nOperational continuances, such as a lack of a foreign language interpreter, or a VTC malfunction.\nIn 2013, EOIR issued guidance to assist immigration judges with fair and efficient practices related to the issuance of continuances. This guidance states that while many requests for continuances are for legitimate or unforeseen reasons, multiple continuances result in delay in the individual case, and when viewed across the entire immigration court system, exacerbate already crowded dockets. According to this guidance, multiple hearings in a case resulting from the use of continuances, especially at the individual calendar hearing, require administrative time and resources for the preparation of notices to the parties, often involve contract interpreters, and use docket time that could otherwise have been used for case resolution.\nOur analysis of about 3.7 million continuance records from fiscal years 2006 through 2015 showed that the use of continuances has grown over time and that, on average, cases that experience more continuances take longer to complete. Specifically, our analysis of EOIR’s continuance data found that the use of all types of continuances increased by 23 percent from fiscal year 2006 to fiscal year 2015. According to our analysis, immigration judge-related continuances increased by 54 percent from about 47,000 continuances issued in fiscal year 2006 to approximately 72,000 continuances issued in fiscal year 2015. Operational continuances increased by 33 percent from about 35,000 continuances issued in fiscal year 2006 to about 47,000 continuances issued in fiscal year 2015. Respondent-related continuances increased by 18 percent from about 214,000 continuances issued in fiscal year 2006 to about 252,000 continuances issued in fiscal year 2015. DHS-related continuances declined by 2 percent from about 25,000 continuances issued in fiscal year 2006 to about 24,000 continuances issued in fiscal year 2015.\nWe also found that the percentage of completed cases which had multiple continuances increased from fiscal year 2006 to fiscal year 2015 and that, on average, cases with multiples continuances took longer to complete than cases with no or fewer continuances. Specifically, 9 percent of cases completed in fiscal year 2006 experienced four or more continuances compared to 20 percent of cases completed in fiscal year 2015. Additionally, cases that were completed in fiscal year 2015 and had no continuances took an average of 175 days to complete. In contrast, cases with four or more continuances took an average of 929 days to complete in fiscal year 2015. EOIR officials attributed this trend to successful legal challenges brought by respondents where circuit courts have remanded to the BIA cases in which the BIA upheld immigration judge decisions to deny a request or motion for a continuance.\nDHS attorneys from four out of six offices we visited told us that granting multiple continuances in cases resulted in inefficiencies and wasted resources such as DHS attorneys having to continually prepare for hearings that continued multiple times. Additionally, some of these attorneys stated that the increased use of continuances across the immigration courts contributed to—or were the primary cause of—the courts’ case backlog. Further, DHS attorneys from two offices stated that they had expressed their concerns about the increased use of continuances—some of which they characterized as excessive or unwarranted—to EOIR management but had not seen a shift in the extent to which judges grant continuances. For example, one of these DHS attorneys cited cases involving respondents convicted of serious crimes, such as gang rape, who have received multiple continuances in their cases. As a result, according to this DHS attorney, the cases have remained open and pending in immigration court for several years and in some of these cases the respondents committed additional crimes while their cases were pending. EOIR’s 2013 guidance directs immigration judges to document the circumstances for providing two types of continuances, but EOIR does not track the use of these or any other type of continuance to identify potential management challenges. EOIR officials stated that it does not track the frequency or reasons for continuances because immigration judges have broad discretion over whether to grant continuances. Further, EOIR officials also stated that systematically analyzing the use continuances is not necessary because they have other mechanisms, such as tracking complaints from parties involved in a case, that would alert EOIR to the same issues that analyzing continuances would.\nStandards for Internal Control in the Federal Government state that accurate and timely recording of events provide relevance and value to management when controlling operations and making decisions. Further, we have previously found that best practices in managing for results include using performance information to identify effective approaches, as well as identify problems and take corrective action. Systematically analyzing the use of continuances, particularly operational continuances, could provide EOIR officials with valuable information about potential challenges the immigration courts may be experiencing or areas that may merit additional guidance and training for immigration judges. EOIR officials can continue to use complaints from parties to track issues on a case-by-case basis, but also analyzing the use of continuances on a systematic basis would give EOIR greater insight into more widespread issues. For example, EOIR could analyze the extent to which, if any, operational issues with translators, VTC malfunctions, or other issues that could be affecting the immigration courts. In addition, EOIR could use this information to determine whether additional guidance or training in the use of continuance codes would be helpful for judges. For example, our analysis of continuance records showed that judges continued 2,882 hearings in fiscal year 2015 due to the federal government shutdown that occurred and ended in October of fiscal year 2014. Further, using this information to potentially address operational challenges could help EOIR meet its goals for completing cases in a timely manner, which it did not consistently do from fiscal year 2010 through fiscal year 2015 as previously discussed.", "EOIR could improve the reliability of its case management data and reports on case completion times by ensuring that court staff accurately record NTAs in a timely manner. As discussed earlier in this report, EOIR has used case completion times to assess its performance since at least 2002 and reports this information publically in DOJ’s Annual Performance Report. EOIR does not have guidance or data integrity efforts to ensure the timely and accurate recording of NTAs in its case management system. Federal regulations and EOIR’s docketing manual state that cases before the immigration court begin on the date that DHS files an NTA with the court, known as the receipt date. EOIR maintains a policy that court staff enter NTAs received from DHS into its case management system upon receipt. According to guidance EOIR issued in 1987, the timely and accurate entry of NTAs into the case management system is vital to ensuring the accuracy and completeness of the system, as well as the accuracy of data in statistical reports. The guidance requires court staff to update the court’s caseload in its case management system on a monthly basis and verify the accuracy of this information on a quarterly basis. However, EOIR officials told us that this guidance is outdated because it is based on a case management system EOIR stopped using in 2007. Further, EOIR has not issued new guidance to ensure the timely and accurate recording of NTAs into its current case management system.\nWe found that at least 16 percent of cases entered into EOIR’s case management system from fiscal year 2006 through 2015 had NTA receipt dates that may be unreliable. Specifically, our analysis showed that 16 percent of cases had NTA receipt dates that occurred after the input date—the date automatically generated when court staff enter the respondent’s NTA into the case management system. An input date cannot occur prior to the receipt date because the receipt date reflects the date the NTA was first received by the court. Both EOIR officials and DHS attorneys identified the timely recording of NTAs as a challenge for immigration courts. EOIR officials told us that the agency has used temporary duty assignments and added resources to assist courts that are the least timely in recording NTAs. Nonetheless, EOIR officials told us that they recognize that court personnel often enter NTAs for priority cases before non-priority cases due to limited resources. For example, three of the five EOIR court administrators we interviewed stated that they do not always have sufficient personnel to enter NTAs in a timely manner or that they have a backlog of NTAs waiting to be recorded at their courts. Additionally, EOIR officials reported that the receipt date is more susceptible to human error since it is manually inputted rather than automatically generated by the case management system.\nStandards for Internal Control in the Federal Government require that management establish internal controls and develop policies and procedures to ensure their implementation. These standards also call for agencies to communicate quality information with external parties, such as other government entities, to make informed decisions and evaluate the entity’s performance in achieving key objectives. EOIR officials stated that its guidance on docketing priority cases, as well as the agency’s case completion goals, provide timeframes for the entering of NTAs. Specifically, EOIR officials stated that its guidance that detained cases must be scheduled on the earliest possible date and its expedited timeframe goals for completing detained cases, credible fear reviews, and asylum cases ensures that staff are entering NTAs in a timely manner. However, this guidance does not instruct staff to ensure the reliability of NTA data and further, as previously described, cases with case completion goals account for a minority of cases EOIR adjudicates. Also as discussed earlier in this report, EOIR has not met its goals for these three case types since fiscal year 2012, suggesting that the existence of these goals alone does not ensure the timely completion, including NTA entry, for the minority of cases that do have completion goals. Updating policies and procedures to remind staff about the importance of, and guide them in, timely and accurate recording of all NTAs would provide EOIR greater assurance that its case management data are accurate— including the size of its case backlog. Further, improving the reliability of these data would allow EOIR to provide more accurate information in DOJ’s Annual Performance Report, which would give external stakeholders, including Congress and the public, a more accurate understanding of case completion times.", "", "Some immigration court experts and stakeholders have recommended restructuring EOIR’s administrative review and appeals functions within the immigration court system—immigration courts and BIA—and OCAHO, with the goal of seeking to improve the effectiveness and efficiency of the system or, among other things, to increase the perceived independence of the system and professionalism and credibility of the workforce. To enhance these areas, these experts and stakeholders, such as individuals affiliated with professional legal organizations and former EOIR immigration judges, have proposed changing the immigration court system’s structure, location among the three branches of government, and aspects of its operations. In order to identify restructuring scenarios that experts and stakeholders have proposed, we reviewed publications and interviewed individuals affiliated with eight entities, as well as two former immigration judges selected based on their expertise in immigration court issues. See appendix I for more information on the ten expert and stakeholder entities and individuals we selected. We found that these experts and stakeholders generally supported one of the following scenarios for restructuring the immigration court system, all of which would require a statutory change to implement: a court system independent (i.e., outside) of the executive branch to replace EOIR’s immigration court system (immigration courts and the BIA), including both trial and appellate tribunals; a new, independent administrative agency within the executive branch to carry out EOIR’s quasi-judicial functions with both trial-level immigration judges and an appellate level review board; or a hybrid approach, placing trial-level immigration judges in an independent administrative agency within the executive branch, and an appellate-level tribunal outside of the executive branch.\nSix of the 10 experts and stakeholders we interviewed also discussed a range of other court systems and administrative agencies within the U.S. government that could serve as examples of these potential court structures, including, but not limited to, the:\nU.S. Bankruptcy Courts, which are units of the U.S. District Courts made up of bankruptcy judges who are judicial officers appointed to hear bankruptcy cases;\nSocial Security Administration’s (SSA) Office of Disability Adjudication and Review (ODAR), which is the component responsible for overseeing SSA’s administrative hearings and appeals process; and\nBoard of Veterans’ Appeals (BVA) and Court of Appeals for Veterans Claims (CAVC), a hybrid system consisting of an administrative agency within the Department of Veterans Affairs (VA) and an appellate court outside of the executive branch.\nThere are various characteristics related to the structure, location among the three branches of government, and operations of the current court systems, as described in table 6, that are not inherent to the proposed structural scenarios. However, these characteristics are relevant to consider in deciding whether and how to restructure the immigration courts and the BIA. For instance, the role of the courts and the types of cases they adjudicate, their caseloads, and the processes for appointing judges are characteristics that vary widely across court systems. Specifically, in regard to appointment processes, bankruptcy court judges are appointed by the U.S. Court of Appeals for the circuit in which the district is located after considering recommendations of the circuit court’s judicial council. In contrast, the Office of Personnel Management manages and oversees the hiring process for SSA judges, known as administrative law judges, and all other administrative law judges federal government-wide. SSA hires its judges from the Office of Personnel Management’s register, which is comprised of candidates that have satisfied certain qualification requirements and been rated based on an Office of Personnel Management-administered administrative law judge examination. Meanwhile, the President appoints CAVC judges and the BVA Chairman with the advice and consent of the Senate and the Secretary of Veterans Affairs appoints the other members of the BVA, known as veterans law judges, from a list of recommendations of the Chairman, which are approved by the President. For additional information on the characteristics of these court systems, see appendix IV.\nThe potential effects of restructuring on immigration court system costs could also be examined when considering restructuring scenarios. Under the current system, EOIR’s largest expense is its personnel and compensation, which constituted approximately 53 percent of its fiscal year 2015 expenditures and averaged approximately $181 million annually from fiscal years 2012 through 2015. Accordingly, this cost category could be significantly affected by changes in personnel and compensation costs resulting from a restructuring of the immigration court system. Therefore, it is important to consider how, if at all, immigration judge compensation may potentially change under a restructuring, particularly if the job series and classification of immigration judges were adjusted under a new structure. For instance, according to data on judge pay rates, in 2014 bankruptcy judges’ compensation—approximately $183,000—was higher than the compensation of the most senior immigration judges at approximately $167,000.\nThe costs associated with how a restructuring is specifically carried out are another relevant factor to consider. For instance, a restructuring of the immigration court system would likely result in different facility and IT costs depending on whether the restructured system preserved existing facilities or occupied new ones, and whether it adopted new IT systems or used existing ones. One of the experts and stakeholders we interviewed also stated that it would be important to focus on the immigration courts’ support functions and staff under a restructuring since the immigration courts support staff would be critical in managing the transition to a newly restructured court with potentially new facilities and administrative practices.\nThe placement of OCAHO within a restructured immigration court system could also be examined when considering restructuring scenarios. In seeking experts’ and stakeholders’ perspectives, we solicited their views on placement options for OCAHO. The experts and stakeholders we interviewed recommended a range of potential locations for OCAHO, with some suggesting the office be independent of, and others suggesting that it be included within, a restructured system. For example, experts and stakeholders that suggested OCAHO be independent of a restructured immigration court system recommended that it be instead placed within DOJ’s Civil Rights Division, the Department of Labor, or DHS. Two of the experts and stakeholders explained that since OCAHO provides a very different function—adjudication of immigration-related employment and document fraud cases—from that of the immigration courts and the BIA that it does not need to be placed within the same organization as the courts and the BIA. Similarly, another one of the experts and stakeholders stated that OCAHO’s mission is more compatible with that of DHS and the Department of Labor. In contrast, one of the experts and stakeholders recommended that OCAHO be merged with a restructured immigration court system and that OCAHO’s administrative law judges become immigration judges who, in addition to hearing immigration-related employment and document fraud cases, also adjudicate removal and other proceedings that presently fall within the jurisdiction of immigration judges. This individual offered several advantages to merging OCAHO functions with the immigration court system. For example, according to this individual, under this proposal EOIR could potentially reduce travel- related costs for OCAHO judges who as immigration court judges would no longer be centrally located and would instead be assigned to immigration courts nationwide.", "Six of the ten experts and stakeholders we interviewed, including individuals affiliated with professional legal organizations, academia, and the private immigration bar, supported restructuring the immigration court system into a court independent of the executive branch. Two of the experts and stakeholders we contacted supported a new independent administrative agency within the executive branch. One of the experts and stakeholders supported the hybrid scenario, placing trial-level immigration judges in an independent, administrative agency within the executive branch, and an appellate-level tribunal outside of the executive branch. As summarized in table 7 and further described below, experts and stakeholders offered several reasons for each of the proposed scenarios, such as potentially increasing the perceived independence of the immigration court system; as well as provided reasons against restructuring options, such as potentially complicating the appointment of immigration judges. We are not taking a position on any of these restructuring proposals, or on any of the reasons offered for or against them. We present the information we obtained from the experts and stakeholders to inform policymakers about proposals that have been put forth regarding restructuring the immigration court system.\nThe experts and stakeholders we interviewed cited several reasons for the proposed restructuring scenarios, as described in table 7 and below.\nIndependence: Six of the ten experts and stakeholders we contacted stated that establishing a court system independent (i.e., outside) of the executive branch could increase the perceived independence of the system. For example, one of the experts and stakeholders explained that the public’s perception of the immigration court system’s independence might improve with a restructuring that removes the quasi-judicial functions of the immigration courts and the BIA from DOJ because DOJ is also responsible for representing the government in appeals to the U.S. Circuit Courts of Appeals by individuals seeking review of final orders of removal. This same expert and stakeholder noted that removing the immigration court system from the executive branch may help to alleviate this perception that the immigration courts are not independent tribunals in which the respondents and DHS attorneys are equal parties before the court. Another one of the experts and stakeholders explained that under the existing immigration court system, respondents may perceive, due to the number of immigration judges who are former DHS attorneys and the co-location of some immigration courts with ICE’s OPLA offices, that immigration judges and DHS attorneys are working together. Two of the ten experts and stakeholders we interviewed also proposed that an immigration court system independent of the executive branch would be less susceptible to political pressures within the executive branch. Experts and stakeholders cited similar independence-related reasons for supporting the administrative agency and hybrid scenarios.\nJudicial autonomy: Four of the ten experts and stakeholders we interviewed stated that a court system independent of the executive branch might give immigration judges and BIA members more judicial autonomy over their courtrooms and dockets. For example, one of the experts and stakeholders stated that immigration judges in an independent court system would be able to file complaints against private bar attorneys directly with the state bar authority instead of filing the complaint with DOJ first, as presently required for immigration judges acting in their official capacity. EOIR officials explained that while immigration judges cannot directly file a complaint with the state bar authority, EOIR’s Disciplinary Counsel, which is charged with investigating these complaints, can file a complaint with the state bar on behalf of the immigration judge.\nWorkforce professionalism or credibility: Four of the ten experts and stakeholders we contacted stated reasons why a court system independent of the executive branch might also improve the professionalism or credibility of the immigration court system’s workforce. For example, one of the experts and stakeholders explained that placing judges in an independent immigration court system could elevate their stature in the eyes of stakeholders, and by extension, enhance the perceived credibility of their decisions. Additionally, one of the experts and stakeholders explained that if the judge career path was improved under a restructuring such that immigration judges were able to advance to more prestigious judgeships, this could assist in attracting candidates to the immigration bench. Regarding the hybrid scenario, one of the experts and stakeholders noted that this proposal may attract a more diverse and balanced pool of candidates for immigration judge positions.\nOrganizational capacity or accountability: Two of the ten experts and stakeholders who supported a court system independent of the executive branch cited enhanced organizational capacity or accountability as a reason for adopting this scenario. One of the experts and stakeholders explained that this type of restructuring may allow the immigration court system to improve its organizational capacity by changing the way it staffs its managerial and supervisory positions. For example, this expert and stakeholder explained that instead of placing immigration judges in managerial positions, EOIR could, as an independent court system, more easily attract and fill managerial positions with individuals who have experience in court management and public administration. Similarly, this same expert and stakeholder also noted that if the restructured immigration court system was placed within the purview of the Administrative Office of the U.S. Courts, which provides a wide range of support services to the federal judiciary (including administrative, technological and legal services), it could use its expertise in court management to assist with managing the system.\nIn terms of enhancing organizational accountability, this expert and stakeholder explained that an independent court system could also increase the transparency of the performance evaluation system for immigration judges by incorporating feedback from court stakeholders, such as DHS and private bar attorneys, on the judges’ performance. Similarly, EOIR might be better-positioned under an independent court system, according to this expert and stakeholder, to increase the transparency of the process for making complaints against immigration judges. Specifically, the complaint process for other federal judges, according to this individual, is more transparent and the judges are given an opportunity to address the complaint and appeal any decisions that resulted from the complaint. In addition, according to this same expert and stakeholder, a court outside of the executive branch would allow for more flexibility to address physical space and hiring issues without the involvement of another executive agency or department. One of the experts and stakeholders who supported the independent administrative agency scenario and explained that this proposal might increase EOIR’s administrative efficiency by allowing for the appointment of one full-time, high-level person responsible for administering the immigration courts, as well as attracting highly-qualified managerial talent.\nThe experts and stakeholders we interviewed also cited several reasons against the proposed restructuring scenarios, as described in table 7 and below.\nResolution of existing management challenges or case backlog: Two of the ten experts and stakeholders we contacted stated that a court system independent of the executive branch may not address the immigration courts’ management challenges, such as the case backlog. For example, one of the experts and stakeholders stated that the immigration court system would likely have a large caseload regardless of how it is structured. Another one of the experts and stakeholders explained that issues related to how EOIR supports respondents without legal representation and—in this individual’s opinion—the poor quality of foreign language interpretation in some cases could persist even with a restructuring of the system. One of the experts and stakeholders stated that restructuring the immigration court system into an independent administrative agency would not address EOIR’s systemic issues, such as its case backlog.\nAppointment of immigration judges: Two of the ten experts and stakeholders we interviewed noted that requiring the presidential nomination and senate confirmation of immigration judges under an independent court system could further complicate and delay the hiring of new judges by making the appointment of additional judges more dependent on external parties.\nAdministrative challenges: Two of the ten experts and stakeholders we interviewed stated that it may be difficult to establish and administer a court system independent of the executive branch. Specifically, these experts and stakeholders expressed concern that the Administrative Office of the U.S. Courts may be reluctant to assume the vast responsibility of administering a newly created court system. Regarding administrative challenges associated with the establishment of an independent administrative agency, one of the experts and stakeholders explained that this scenario might be overly complicated to implement since EOIR would need to develop its own administrative functions outside of DOJ. Further, this same expert and stakeholder stated that this scenario could also result in, to a large extent, a duplication of the existing immigration court system. According to one of the experts and stakeholders, creating a hybrid court system may further complicate the administration of the immigration court system and potentially result in difficulties for respondents.\nProcurement of resources: Five of the ten experts and stakeholders we interviewed expressed the concern that a restructured immigration court system, regardless of the scenario, would not be able to procure sufficient resources outside of DOJ. For example, one of the experts and stakeholders noted that a restructured independent court or administrative agency might have less leverage outside of DOJ to compete for resources. One of the experts and stakeholders noted that the existing immigration court system must compete with other DOJ funding priorities for resources.\nTrial level disconnection from the appellate level: One of the experts and stakeholders stated that if the hybrid scenario were to be adopted, the trial level may become more disconnected from the appellate level, due to the placement of the immigration courts within the executive branch and the appellate body outside of the executive branch.\nOfficials from existing court and adjudicatory systems that, according to experts and stakeholders, could serve as potential examples for restructuring also cited reasons for and against adopting characteristics from each of their respective systems. For instance, according to the Secretary of the Judicial Conference of the United State—which makes administrative policies for the U.S. Bankruptcy Courts, among other duties—the bankruptcy courts may not be a useful model for restructuring the immigration court system due to, among other factors, the complexity of their jurisdiction. Under law, the federal district court has original and exclusive jurisdiction of all bankruptcy cases, but each district court may refer bankruptcy cases and proceedings to the bankruptcy judges of its district and retains the authority to withdraw referral to the bankruptcy court and handle a bankruptcy case itself. In terms of establishing an independent immigration court system outside of the executive branch, the Judicial Conference of the United States also cautioned that placing immigration courts within the judiciary would strain the judiciary’s financial and administrative resources and ability to focus on existing criminal and civil adjudication.\nAn official from SSA’s ODAR—the component responsible for overseeing the administrative hearings and appeals process—stated that they have experienced success using, among other practices, regional and national case assistance centers that assist local hearing offices with case preparation and decision writing. However, these officials also cited challenges with increasingly lengthy case files due to significant increases in the submission of medical evidence, staffing shortages, and the timely selection of administrative law judges through the Office of Personnel Management’s appointment process. Regarding the third type of court system—a hybrid of an independent court system and an administrative agency—CAVC officials explained that it is beneficial for the CAVC to have its budget reviewed by appropriators within the veterans community of interest instead of as part of the judiciary appropriations process. However, CAVC officials also cited challenges with its independent structure in that it is not directly supported by the Administrative Office of the U.S. Courts—the judiciary’s organization for assisting courts with administrative and managerial functions. As a result, the CAVC is responsible for many of its management functions, such as information technology support, procuring facility space, and hiring personnel, which can be challenging, according to these same officials. Additionally, one of the experts and stakeholders familiar with the BVA explained that its dual appellate structure with the CAVC reviewing BVA decisions and, in instances in which CAVC decisions are appealed, the U.S. Court of Appeals for the Federal Circuit reviewing CAVC decisions, can delay the decision-making process, among other challenges. This form of judicial review creates, according to this individual, redundancies in the review of BVA decisions. However, BVA officials explained that much of the delay may be attributed to the multiple layers of review within the VA before the appeal is heard at the BVA level. For instance, the VA must issue a new decision each time a veteran provides additional evidence for the appeal, which delays the VA’s certification of the appeal for a BVA hearing and can result in lengthy wait times for veterans, according to BVA officials.", "The doubling of the immigration courts’ backlog over the last decade to more than 437,000 cases at the beginning of fiscal year 2015 poses challenges to EOIR in meeting its mission to adjudicate immigration cases by fairly, expeditiously, and uniformly administering and interpreting federal immigration laws. The effects of the case backlog are significant and wide-ranging, from some respondents waiting years to have their cases heard to immigration judges being able to spend less time considering cases. Taking steps to improve its workforce planning, hiring, technology utilization, and performance assessment could better position EOIR to address its case backlog and help improve the agency’s overall effectiveness and efficiency in carrying out its important mission.\nEOIR has begun to address its workforce needs through its contract for workforce planning support and other recently-initiated efforts. However, EOIR could be better positioned to address its current and future staffing needs by developing and implementing a strategic workforce plan that addresses key principles for effective strategic workforce planning, such as the determination of critical skills and competencies. Furthermore, assessing its hiring process, developing a hiring strategy, and taking actions to increase its efficiency could allow EOIR to hire judges more quickly and address immigration judge staffing gaps, which in turn could improve EOIR’s overall operations and help reduce the immigration courts’ case backlog.\nEOIR could improve accountability and further empower the immigration courts to address the case backlog and strengthen operations by improving how the agency leverages technology. Specifically, identifying and establishing an oversight body and documenting and implementing a plan that is consistent with best practices for exercising oversight over ECAS until it is fully implemented would better position the agency to implement ECAS, thus providing efficiencies to assist the courts with addressing the backlog. Further, as EOIR takes steps that may result in increased use of VTC for hearings, which EOIR management officials cited as beneficial to addressing the agency’s caseload, collecting and analyzing data, such as data on appeals in which the use of VTC formed some basis for the appeal, could provide EOIR with further assurance that its use of VTC in immigration hearings is outcome-neutral. Additionally, soliciting feedback from respondents could help EOIR better ensure that its VTC program meets the needs of all users, including respondents whose cases are heard and decided through VTC.\nTaking steps to improve how it assesses performance could also help EOIR identify effective management approaches that could help address the backlog. In particular, establishing comprehensive case completion goals would help EOIR more effectively monitor its performance. In addition, systematically analyzing the cause of certain continuances, particularly operational continuances, could provide EOIR with valuable information about potential challenges the immigration courts may be experiencing or areas that may merit additional guidance and training. Updating policies and procedures to ensure the timely and accurate recording of NTAs would provide EOIR greater assurance that its case management data are accurate—including the size of its case backlog. Further, improving the reliability of these data would allow EOIR to provide more accurate information in DOJ’s Annual Performance Report, which would give external stakeholders, including Congress and the public, a more accurate understanding of case completion times.", "To better address current and future staffing needs, we recommend that the Director of EOIR develop and implement a strategic workforce plan that addresses, among other areas, key principles of effective strategic workforce planning, including (1) determining critical skills and competencies needed to achieve current and future programmatic results; (2) developing strategies that are tailored to address gaps in number, deployment, and alignment of human capital approaches for enabling and sustaining the contributions of all critical skills and competencies; and (3) monitoring and evaluation of the agency’s progress toward its human capital goals and the contribution that human capital results have made toward achieving programmatic results.\nTo better address EOIR’s immigration judge staffing needs, we recommend that the Director of EOIR: (1) assess the immigration judge hiring process to identify opportunities for efficiency; (2) use the assessment results to develop a hiring strategy that targets short- and long-term human capital needs; and (3) implement any corrective actions related to the hiring process resulting from this assessment.\nTo help ensure that EOIR meets its cost and schedule expectations for ECAS, we recommend that the EOIR Director: identify and establish the appropriate entity for exercising oversight over ECAS through full implementation, and document and implement an oversight plan that is consistent with best practices for overseeing IT projects, including (1) establishing how the oversight body is to monitor program performance and progress toward expected cost, schedule, and benefits; (2) ensuring that corrective actions are identified and assigned to the appropriate parties at the first sign of cost, schedule, or performance slippages; and (3) ensuring that corrective actions are tracked until the desired outcomes are achieved.\nTo provide further assurance that EOIR’s use of VTC in immigration hearings is outcome-neutral, we recommend that the Director of EOIR:\nCollect more complete and reliable data on the number and type of hearings it conducts through VTC;\nCollect data on appeals in which the use of VTC formed some basis for the appeal, and the number of in-person hearing motions filed; and\nUse these and other data to assess any effects of VTC on immigration hearings and, as appropriate, address any issues identified through such an assessment.\nTo further ensure that EOIR’s VTC hearings meet all user needs and help EOIR identify and address technical issues with VTC hearings, we recommend that the Director of EOIR develop and implement a mechanism to solicit and monitor feedback from respondents regarding their satisfaction and experiences with VTC hearings, including the audio and visual quality of the hearing.\nTo better assess court performance and use data to identify potential management challenges, we recommend that the Director of EOIR take the following actions:\nEstablish and monitor comprehensive case completion goals, including a goal for completing non-detained cases not currently captured by performance measures, and goals for cases it considers a priority;\nSystematically analyze immigration court continuance data to identify and address any operational challenges faced by courts or areas for additional guidance or training; and\nUpdate policies and procedures to ensure the timely and accurate recording of NTAs.", "We provided a draft of this report to DOJ, including EOIR; ACUS; the Administrative Office of the U.S. Courts; VA; CAVC; SSA; and DHS for their review and comment. EOIR provided written comments, which are reproduced in appendix V; the remainder of the agencies did not provide written comments. DOJ, EOIR, the Administrative Office of the U.S. Courts, VA, SSA, and DHS provided technical comments, which we incorporated as appropriate.\nIn its written comments, EOIR stated that it agrees with most of our 11 recommendations and has begun to address them. However, the steps EOIR described taking do not fully address our recommendations. In addition, EOIR did not specifically state whether or not it agrees with individual recommendations. Rather, EOIR provided comments on the recommendations in five areas: (1) strategic workforce planning, (2) immigration judge staffing, (3) ECAS (EOIR’s new comprehensive e-filing effort), (4) VTC, and (5) court performance and management.\nWith regard to the first area, strategic workforce planning, which includes our recommendation that EOIR implement a strategic workforce plan that addresses key principles of effective strategic workforce planning, EOIR stated that it recognizes the importance and benefits of strategic workforce planning, including the need to monitor and evaluate results. To this end, EOIR stated that it has a contract in place to determine the critical skills and competencies used in the immigration courts, particularly at the legal assistant level, and to then produce a workforce staffing model to achieve current and future operational and programmatic results. As discussed in this report, EOIR’s initial contract for the workforce planning report requires the development of a method or formula for assessing the need for additional immigration judges and staff. However, the contract documentation EOIR provided to us does not specifically require the contractor to identify critical skills and competencies or tailor identified requirements to current or future programmatic results. We agree with EOIR that this contract is a positive step, but we continue to believe that EOIR would further benefit from developing and implementing a strategic workforce plan that addresses, among other areas, key principles of effective strategic workforce planning.\nRegarding the second area, immigration judge staffing, which includes our recommendation that EOIR assess the immigration judge hiring process, EOIR stated that it has assessed this process, is implementing a hiring streamlining plan announced by the Attorney General on April 11, 2017, and is committed to assessing the immigration judge hiring process on an ongoing basis. Specifically, EOIR stated that it has continually assessed its hiring process and made significant improvements. As discussed in this report, we found that while EOIR has undertaken efforts to improve aspects of its hiring process, it has not assessed its hiring process or developed a hiring strategy that is targeted to fill short- and long-term human capital needs consistent with best practices. For example, EOIR did not provide documentation demonstrating that it has systematically assessed its hiring process to identify opportunities for efficiency. Further, with regard to the recent hiring streamlining plan, this plan will, according to EOIR, change how it announces immigration judge positions, evaluates the files of candidates at both the agency- and department-levels, and approves candidates to enter on duty. EOIR expects, according to its comments, that it will reduce the amount of time it takes to hire immigration judges in the future. EOIR’s development of a hiring plan is a positive step toward addressing our recommendation; however, to fully address the intent of our recommendation, the agency needs to provide documentation demonstrating that it has assessed the immigration judge hiring process, developed a hiring strategy that targets short- and long-term human capital needs, and implemented any necessary corrective actions.\nWith respect to the third area, ECAS, regarding our recommendation that EOIR identify and establish the appropriate entity for exercising oversight over ECAS through full implementation, EOIR stated that it established an ECAS Executive Committee to provide effective oversight through the development and implementation of the ECAS solution. EOIR further stated that it established the Investment Review Board to review proposals for major IT investments exceeding $1 million and believes that in the future the ECAS Executive Committee, its subgroups, and the Investment Review Board will serve as vital institutions within EOIR to help ensure the effective oversight of ECAS implementation. EOIR also stated that it is committed to establishing the appropriate oversight body and while it fully intends to do so, it is not yet at the stage where this oversight body could make resource allocation decisions to implement a comprehensive e-filing system. As discussed in this report, according to the ECAS Executive Committee charter, the committee will dissolve after 1 year when the ECAS roadmap for eventually determining the solution is identified. Additionally, as discussed in this report, EOIR OIT officials stated that the EOIR Investment Review Board was never intended to oversee ECAS implementation due to the detailed nature of this system’s implementation, and EOIR has not yet designated an oversight entity or documented a plan for overseeing ECAS during critical stages of its development and implementation. Given the ambiguity in EOIR’s plans for overseeing ECAS through full implementation and its need to better manage its longstanding efforts to develop a comprehensive e-filing system, we continue to believe that the agency would benefit from (1) identifying the appropriate entity for exercising oversight over ECAS through full implementation and (2) documenting and implementing an oversight plan that is consistent with best practices for overseeing IT projects.\nWith regard to the fourth area, EOIR’s use of VTC to conduct hearings, which includes our four recommendations that the agency, among other things, collect more complete and reliable data on its use of VTC in hearings and develop a mechanism to solicit feedback from respondents on these hearings, EOIR stated that it is committed to the effective utilization of VTC in immigration court proceedings. Specifically, EOIR stated that although the U.S. Courts of Appeals have repeatedly upheld the use of VTC in immigration hearings as comporting with due process requirements, EOIR is amenable to collecting additional data on the number and type of hearings conducted by VTC, as well as identifying appeals that raise the use of VTC as a basis for appeal. EOIR agreed that such data collection may assist the agency in identifying and addressing technical issues associated with VTC, as well as any possible effects on case outcomes that may relate to the use of VTC in immigration proceedings. If effectively implemented, this additional data collection should help address the intent of our recommendations focused on collecting more complete and reliable VTC hearing data. To fully address the intent of our recommendations for EOIR to collect data on the number of in-person hearing motions filed and how the agency might use these and other data to assess any effects of VTC on immigration hearings, EOIR needs to take additional actions focusing on the collection and analysis of VTC data.\nIn response to our other VTC-related recommendation that EOIR develop and implement a mechanism to solicit and monitor feedback from respondents on their VTC hearings, EOIR stated that while EOIR is committed to making additional improvements to its VTC program, it is not feasible to solicit accurate and useful feedback concerning VTC from respondents in removal proceedings, which are inherently adversarial. As discussed in this report, to mitigate the concern that immigration hearings are inherently adversarial, EOIR could collect respondent feedback after a hearing, but not necessarily after the immigration judge has decided the case. Specifically, because some cases entail multiple hearings, EOIR could collect feedback after a VTC hearing but prior to the conclusion of the case and respondents knowing the outcome. Therefore, we continue to believe that developing and implementing a mechanism to solicit and monitor feedback from respondents regarding their satisfaction and experiences with VTC hearings could help EOIR further ensure that its VTC hearings meet all user needs and identify and address technical issues.\nWith regard to the fifth area related to court performance, EOIR stated that it agrees with the recommendations to establish and monitor comprehensive case completion goals, analyze continuance data, and update guidance for recording NTAs. Specifically, EOIR stated that it should measure case completions in all categories and the agency will study whether to refine its current capabilities. EOIR also stated that it supports conducting additional analysis of immigration court continuance data and recognizes that additional guidance or training regarding continuances may be beneficial to ensure that immigration judges use continuances appropriately in support of EOIR’s mission to adjudicate immigration cases in a careful and timely manner.\nIn addition to providing comments on our recommendations, EOIR also took issue with certain aspects of our methodology and findings. In particular, EOIR stated that the report would benefit from additional context and information in four areas: (1) pending caseload; (2) workforce planning; (3) electronic case management, e-filing, and VTC; and (4) performance measurements.\nFirst, in regard to pending caseload, EOIR stated that the report is missing a contextualized discussion of why its caseload has grown. Specifically, EOIR stated that the report does not discuss various factors affecting its pending caseload, such as increasing case complexity; growth in the number of applications for relief, bond hearings, and detained cases; changing case priorities; and a decrease in immigration court staff. However, this report discusses EOIR’s perspective on factors that contributed to increases in the case backlog along with perspectives from DHS attorneys and other experts and stakeholders. For example, this report discusses EOIR’s perspective that a surge in new cases, beginning in 2014, contributed to the case backlog. Additionally, this report notes that EOIR officials and immigration judges highlighted increasing legal complexity as a contributing factor to longer cases and a growing case backlog. Further, this report states that EOIR officials cited Supreme Court decisions in 2013 and 2016, which define analytical steps a judge must complete in determining whether a criminal conviction renders a respondent removable and ineligible for relief. In regard to the effect of immigration court staffing on the case backlog, this report discusses the number of case completions per judge from fiscal year 2006 through 2015 and found that the number of immigration judges increased during this period.\nSecond, in regard to workforce planning, EOIR stated that our report did not sufficiently account for changes in the immigration judge hiring process, such as those due to a hiring freeze, and that our methodology and results in assessing the length of the hiring process, including the background investigation phase, were unclear and differed from EOIR’s own analysis. Specifically, EOIR stated that our analysis covered a period during which the agency was subject to a hiring freeze—January 2011 through February 2014. However, this report both discusses EOIR officials’ perspective that this hiring freeze prolonged the hiring process and includes our analysis of the time it took EOIR to hire immigration judges after the hiring freeze ended. Specifically, as discussed in this report, when we only included hires initiated after the hiring freeze ended in February 2014, we found that EOIR took an average of 647 days to hire an immigration judge.\nRegarding our methodology, we describe in this report how we determined the overall length of the hiring process, as well as phases of the hiring process. For instance, as discussed in this report, to calculate the average time it took EOIR to hire an immigration judge, we calculated the average number of calendar days between the day EOIR posted a vacancy announcement for the position and the day the judge started in the position. In regard to our hiring analysis results, EOIR stated that, according to its own hiring analysis, for the 87 judge positions filled since the start of fiscal year 2016, the average number of days it took EOIR to hire these judges was 485 days, which differs from our result of 647 days. We would expect our results to differ from EOIR’s because we analyzed data for a different and longer period of time—February 2014 to August 2016 instead of only fiscal year 2016.\nEOIR also raised concerns with our analysis of the time it took the department to complete background investigations during the hiring process. Specifically, EOIR stated that it could not replicate our finding of 41 days to complete this phase of the hiring process. EOIR may not have been able to replicate our analysis because it assessed data for a different period of time than we did. Our sample included all judges who had entered on duty by August 2016, whereas EOIR’s sample included judges who had only completed background investigations—but had not necessarily entered on duty—by August 2016. Additionally, EOIR stated that that it is likely that the sample we used provides an inaccurate reflection of the length of this phase because it likely represents federal employees who already had a background investigation in place or being processed and, as a result, does not accurately reflect the time it takes to complete an investigation for non-federal employees. However, our analysis of the hiring process, including the background investigation phase, included all judges—both federal and non-federal employees— and thus proportionately considered the time it took to conduct background investigations for non-federal employees hired during the period we examined.\nThird, EOIR raised concerns regarding our approaches for assessing EOIR’s electronic case management, e-filing, and VTC program efforts. Specifically, EOIR stated that the report focuses on its prior electronic case management initiatives only as they relate to the agency’s ability to fully implement a comprehensive e-filing system and does not acknowledge that these initiatives were critical in operating the courts and positioning the agency to be able to implement an e-filing system. However, this report describes several systems which, according to EOIR, are foundational to a comprehensive e-fling system, such as the case management, digital audio recording, eInfo, and eRegistration systems. For instance, as discussed in this report, the digital audio recording system EOIR implemented that allows the immigration courts to digitally record immigration hearings and provide an electronic transcript of the hearings was, according to EOIR OIT officials, a key capability they needed to develop before implementing a comprehensive e-filing system.\nAdditionally, EOIR disputed our finding that it could further ensure that Its VTC program meets user needs by collecting feedback from respondents on their VTC hearings because it believes the finding relied almost exclusively on anecdotal statements from interviews with immigration court officials, experts, and stakeholders. We did, in part, base our finding on interviews with judges, administrators, and DHS attorneys assigned to a non-probability sample of six immigration courts, and our interviews with 10 immigration court experts and stakeholders identified through a detailed selection process, as described in appendix I. However, as described in this report, we primarily assessed EOIR’s implementation of its VTC program against ACUS best practices for using VTC in hearings, along with evidence from EOIR officials responsible for implementing the VTC program that the agency does not systematically collect feedback on VTC immigration hearings from respondents. Specifically, the ACUS best practices recommend that agencies maintain open lines of communication with participants to receive feedback about the use of VTC for the hearing, and that agencies use post-hearing surveys or other appropriate methods to collect information about participants’ experiences and satisfaction with the VTC hearing. The information from our interviews with immigration court officials, experts, and stakeholders provided insights and examples into some of the circumstances and challenges associated with the use of VTC in hearings and why it could be important for EOIR to solicit and monitor feedback from respondents regarding their VTC hearings.\nFourth, in regard to performance measurement, EOIR stated that we conflated performance measurements and case completion goals and that the 11 case completion goals that the agency previously had were a hindrance to the efficient processing of cases. Standards for Internal Control in the Federal Government define a performance measure as a means of evaluating the entity’s performance in achieving objectives and quantitative objectives are those where performance measures may be a targeted percentage or numerical value. Since case completion goals, as described in this report, measure whether immigration judges are completing a specific percentage of cases within a specified time frame and thus meet the definition of a performance measure, we viewed case completion goals as performance measures. As discussed in this report, in fiscal year 2010 EOIR eliminated and condensed several of its 11 performance goals, leaving five total performance goals for case completion times. We acknowledge in this report EOIR’s perspective that when all cases are subject to case completion goals, EOIR staff do not know which cases to prioritize. For example, as discussed in this report, EOIR officials stated that tracking case completion goals for non-priority cases, such as non-detained cases, would limit the agency’s ability to focus on meeting case completion goals for prioritized cases. However, as discussed in this report, EOIR does not have case completion goals for some of the cases it considers priorities, such as individuals who have been released from detention pursuant to a Rodriguez bond hearing. Further, as discussed in this report, such goals would not preclude EOIR from reflecting agency priorities by assigning priority cases a shorter case completion goal, a larger percentage goal, or both.\nEOIR also raised concerns regarding how we describe case completion goals for prioritized cases in the report. Specifically, EOIR stated that while it acknowledges that it has not recently met the case completion goals for its top priority—detained cases—this is due, in part, to the addition of new priorities in 2014. We acknowledge in this report that, while detained cases were a priority prior to 2014, EOIR began in 2014 to also prioritize the cases of detained recent border crossers, unaccompanied children, and families held in detention or released on alternatives to detention. Additionally, EOIR stated that, contrary to what we described in this report, it had case completion goals for its 2014 priorities and that it met all of these goals, which were to schedule these cases within specified timeframes. However, as discussed in this report, EOIR identified certain types of cases as priorities for adjudication and issued guidance to courts on how to prioritize these cases through their scheduling of hearings, but EOIR has not established goals to ensure the timely completion for all of these cases. EOIR also clarified in its written comments that, contrary to what we described in our draft report, it includes cases involving unaccompanied children in the care and custody of the Department of Health and Human Services, Office of Refugee Resettlement who do not have a sponsor in the detained case category for case completion goal purposes. We amended the report to reflect this clarification.\nWe are sending copies of this report to the appropriate congressional committees, the Attorney General, the Secretary of Homeland Security, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov.\nIf you or your staff have any questions about this report, please contact me at (202) 512-8777 or gamblerr@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI.", "This report addresses (1) what Department of Justice’s (DOJ) Executive Office for Immigration Review (EOIR) data indicate about its caseload, including the backlog of cases, and potential contributing factors and effects of the backlog according to stakeholders; (2) how EOIR manages and oversees immigration court operations, including workforce planning, hiring, and technology utilization; (3) the extent to which EOIR has assessed immigration court performance, including analyzing relevant information, such as data on case continuances; and (4) scenarios that have been proposed for restructuring EOIR’s immigration court system and the reasons that have been offered for or against these proposals.\nTo address all four objectives, we analyzed agency documentation, consulted with immigration court system experts and stakeholders, and interviewed headquarters officials from EOIR and the Department of Homeland Security (DHS). Specifically, we reviewed, among other documentation: policies and procedures for immigration court operations; manuals describing EOIR’s case management system; contractual documents, such as contractual documents for EOIR’s workforce planning study; EOIR’s plans for implementing a comprehensive electronic filing system; and reports related to the agency’s performance assessment system and case completion goals. We also interviewed selected experts and stakeholders on the immigration court system and reviewed publications related to the effects of the case backlog on court stakeholders, EOIR’s management and oversight of the immigration court system, and proposals for restructuring the immigration court system. Additionally, we interviewed EOIR headquarters officials from the Office of the Chief Immigration Judge (OCIJ), which oversees the immigration courts, and the Offices of Administration; General Counsel; Information Technology; and Planning, Analysis, and Statistics. We also interviewed headquarters officials from the U.S. Immigration and Customs Enforcement (ICE) Office of the Principal Legal Advisor (OPLA), the office responsible for overseeing the DHS attorneys who represent the government in immigration proceedings at the courts, to obtain their perspectives regarding any effects of the case backlog on DHS and EOIR management and oversight of the immigration courts.\nAdditionally, we visited a non-probability sample of six immigration courts in Baltimore, Maryland; Chicago, Illinois; Houston, Texas; Port Isabel, Texas; San Francisco, California; and Seattle, Washington to interview immigration court staff and observe immigration hearings. Toward maximizing the diversity of the sites we visited, we selected them to include courts with relatively large and small case backlogs; relatively high and low case completions per judge; a large number of detained cases, which are deemed a priority by EOIR; and that have experienced staffing shortfalls. We also selected courts in different geographic regions and courts that are proximate to other courts. At each court we conducted semi-structured interviews with immigration judges and DHS attorneys assigned to OPLA’s Offices of the Chief Counsel proximate to each immigration court and observed a variety of hearings, including master calendar and individual merits hearings. We interviewed court administrators in five immigration courts and observed hearings conducted by video-teleconferencing (VTC) in three of the immigration courts we visited. In total, we interviewed 12 judges, 4 court administrators, and 12 DHS attorneys from six offices. Because immigration judges have large caseloads and constrained schedules, we interviewed judges who were available to speak with us during our scheduled visits. For the immigration court staff interviews, we asked questions about (1) the court’s case receipts, completions, backlog of cases over time, and any causes or effects of the backlog on stakeholders; (2) EOIR’s management and oversight of the court, including court staffing, hiring, and technology utilization; and (3) how EOIR assesses the court’s performance. For the DHS attorney interviews, we asked questions about any effects case backlogs have had on their work; their views on the court’s case management practices, including the use of technology and coordination between the immigration courts and DHS; and scenarios proposed by experts and stakeholders for restructuring the immigration court system. Since we selected a non- probability sample of courts to visit, the information we obtained cannot be generalized more broadly to all immigration courts. However, it provides important context and insights into EOIR’s case backlog, particularly effects of the backlog on court stakeholders, EOIR’s management and oversight of the immigration court system, and expert proposals for restructuring the immigration court system.\nTo address our first objective, what EOIR data indicate about its caseload, including the backlog of cases, and potential contributing factors and effects of the backlog according to stakeholders, we first obtained and analyzed data on immigration case receipts and completions from EOIR’s case management system from fiscal years 2006 through 2015 which covers the period of time since our previous report on the subject in August 2006 until the last full fiscal year of data available at the time we began our review in November 2015. We assessed the reliability of these data by reviewing system documentation, interviewing knowledgeable officials about system controls, and conducting electronic testing. We determined that the data were sufficiently reliable for the purposes of our reporting objectives. We included in our analysis all immigration court cases received or completed that were adjudicated by EOIR immigration judges in EOIR immigration courts or at the Board of Immigration Appeals (BIA). We used these data to determine the number of new Notices to Appear (NTAs) received from DHS each fiscal year and the number of cases each court completed within a fiscal year. We determined the case backlog for each court by calculating the number of cases that were opened in previous fiscal years that remained open at the start of the new fiscal year. We also determined the time immigration courts took to complete cases each fiscal year by calculating the number of calendar days between the date EOIR received the NTA from DHS and the date the case was initially completed, and computed the median of these durations. We further calculated case completion times for different types of cases, such as removal, credible fear, and asylum cases, and cases in which the respondent was detained or not detained. Since later motions to reopen, remand or redetermine a case can occur many years after the initial decision and are out of the control of immigration court judges, we considered a case complete when the judge made an initial ruling on the case and excluded these later actions from our analysis of case completions times.\nWe used the same procedures described above to calculate the case backlog for appeals cases. To determine the time the BIA took to complete cases each fiscal year, we calculated the number of calendar days between the date the appeal was filed and the date the appeal was completed, and computed the median of these durations. We also calculated appeal completion times for different types of appeals such as appeals of removal cases, appeals of other decisions by immigration judges such as appeals of bond redeterminations, motions to reopen when the original case was held in absentia, and interlocutory appeals, and DHS decisions.\nIn addition, during our interviews with immigration court judges, court administrators, DHS attorneys, and 10 experts and stakeholders, the selection of which we describe further below, we obtained their perspectives on potential contributing factors for the case backlog as well as the effects of the backlog on respondents, attorneys, and immigration staff.\nTo address our second objective, how EOIR manages and oversees the immigration court system, we identified and analyzed relevant literature addressing EOIR’s management of the immigration courts. Specifically, a GAO research librarian conducted searches of scholarly and peer reviewed publications; trade and industry articles; association, nonprofit, and think tank publications; congressional hearings and transcripts; government reports; dissertations; and general news articles from January 2000 through November 2015 pertinent to the immigration court system. The literature search produced 363 related publications, of which we determined 22 were relevant to this objective by reviewing each publication’s content for relevancy to EOIR’s management and oversight of the immigration court system. Following an initial review to further refine the scope of publications most relevant to this objective, an additional GAO analyst then independently reviewed these reports to identify the most commonly cited management issues affecting the immigration court system. Any differences between their assessments were reconciled to reach agreement on the management issues. This process identified workforce planning and hiring, technology utilization, and performance assessment—the focus of our third objective—as the most prominent issues raised by these publications related to EOIR’s management and oversight of the immigration court system.\nTo assess EOIR’s workforce planning efforts, we analyzed documents related to its workforce planning initiatives and contract, such as the contractor-provided blanket purchase agreement describing the deliverables, and interviewed EOIR headquarters OCIJ and Office of Administration officials about how it determines its workforce needs. We then assessed EOIR’s workforce planning and hiring processes against GAO’s key principles for effective strategic workforce planning and human capital self-assessment checklist, which provides human capital guidance for agencies. We also reviewed EOIR’s most recent Strategic Plan, which covered 2008-2013, to understand the agency’s workforce planning goals.\nTo assess EOIR’s hiring efforts, we analyzed data on the number of immigration judges it was authorized by Congress to hire and the number of immigration judges who had entered on duty for fiscal years 2006 through 2015. We also analyzed data related to timeframes for hiring immigration judges from fiscal years 2011 through August 2016 to determine the length of the hiring process. Specifically, through interviews with EOIR officials, we identified two sources of data on the agency’s hiring timeframes for new immigration judges: (1) hard copy personnel files for all immigration judges hired since fiscal year 2011; and (2) a spreadsheet tracking key dates for hiring immigration judges that the agency developed in fiscal year 2015. Through reviewing these sources we observed that EOIR’s personnel files generally included the date a judge applied for a position and entered on duty, but not detailed interim dates, such as those associated with background checks. In contrast, the agency’s spreadsheet included such detailed information. To capture both the longer time period encompassed by the personnel files and more detailed dates in EOIR’s spreadsheet, we collected and analyzed data from both sources. Specifically, for judges hired from fiscal year 2011 through February 2016, we reviewed hard copy personnel files and collected available dates in the hiring process using a data collection instrument. To ensure sufficient data reliability, two GAO staff independently reviewed each hiring file and then reconciled any discrepancies between the data collected. For judges hired from fiscal year 2015 until August 2016, we used the tracking spreadsheet as the primary source of hiring data. We assessed the reliability of data in this spreadsheet by comparing a sample of dates in it to those in corresponding personnel files. We also gathered information on the reliability of the hiring data through interviews with EOIR headquarters officials and determined that the data in both the personnel files and tracking spreadsheet were sufficiently reliable for the purposes of our reporting objectives.\nUsing the results of our file review and the tracking spreadsheet, we developed a consolidated file with all available dates in the hiring process for immigration judges who were hired and entered on duty from fiscal years 2011 through August 2016. We then analyzed these data to determine average total hiring time for all judges as well as average time for interim steps in the hiring process for judges who were hired and entered on duty from fiscal year 2015 through August 2016.\nWe also interviewed EOIR headquarters officials to obtain information on the agency’s hiring process for immigration judges, including reasons for any delays, and any efforts to assess the process. We assessed EOIR’s hiring process against GAO’s human capital self-assessment checklist, a diagnostic tool for managers to use in assessing their agencies’ human capital policies and practices.\nTo assess how EOIR utilizes technology in the immigration courts, particularly its efforts to implement a comprehensive electronic-filing (e- filing) system and its use of VTC for immigration hearings, we reviewed pertinent agency documentation, interviewed EOIR headquarters and immigration court officials from the six courts we visited, and observed technology use during these site visits. We analyzed available documentation related to EOIR’s e-filing efforts since 2001—when the agency initiated efforts to implement an e-filing system—such as a 2001 executive staff briefing and a 2005 alternatives analysis. For EOIR’s most recent comprehensive e-filing effort, the EOIR Court and Appeals Systems (ECAS), we analyzed, among other documents, the ECAS project plan, business requirements, and ECAS Executive Committee Charter. Regarding VTC use, we reviewed documentation such as the Immigration Judge Benchbook and VTC training materials, to determine how immigration judges are to use VTC for immigration hearings.\nAdditionally, we interviewed EOIR officials from its Office of Information Technology—responsible for implementing technology at EOIR—and immigration court staff at the six immigration courts we visited to obtain information on EOIR’s efforts to implement a comprehensive e-filing system, including their perspectives on how an e-filing system would affect immigration court operations. To understand how EOIR manages it VTC program, including any efforts to assess and collect feedback on this program, we interviewed the OCIJ official responsible for implementing the program. We also interviewed immigration court officials at all six immigration courts and observed a range of hearings held by VTC at three of the courts we visited to gather information on the audio and visual quality and other operational aspects of VTC hearings. Additionally, we interviewed DHS attorneys from OPLA’s Offices of the Chief Counsel assigned to each immigration court we visited and selected experts and stakeholders on the immigration court system to obtain their perspectives on EOIR’s ongoing development of a comprehensive e-filing system and the benefits and challenges of VTC hearings. We assessed EOIR’s effort to implement a comprehensive e-filing system against best practices for developing and acquiring technology, including oversight of information technology projects. In addition, we assessed EOIR’s implementation of its VTC program against best practices established by the Administrative Conference of the United States (ACUS) that provide technical, operational, and environmental guidance on how agencies may implement or improve their use of VTC in administrative hearings and related proceedings.\nTo address our third objective on the extent to which EOIR has assessed immigration court performance, we analyzed EOIR’s performance monitoring activities and measures from fiscal year 2006 through fiscal year 2015. Specifically, we reviewed internal and external documentation related to performance measures and goals, such as internal quarterly reports on case completion times, to determine the extent to which EOIR has established performance measures, met its goals, and has performance measures in place that reflect the majority of its caseload and case priorities. Furthermore, we reviewed DOJ documents, such as a DOJ Office of Inspector General report and DOJ’s Annual Performance Reports, to gain additional context for how DOJ uses EOIR’s performance information to assess agency and departmental efforts to meet its strategic objective of adjudicating all immigration cases promptly and impartially. We also interviewed EOIR officials, including OCIJ officials, on EOIR performance measures and goals, and other performance monitoring activities, such as the Immigration Court Evaluation Program. We further analyzed data from EOIR’s case tracking and management system to determine how these data support EOIR’s performance monitoring activities. As previously mentioned, we determined that these EOIR data were sufficiently reliable for the purposes of this report. Specifically, we calculated the percentage of EOIR’s caseload that may or may not be subject to performance goals, and determined the number of priority cases for which EOIR has received NTAs for which it does and does not have case completion goals. We assessed EOIR’s performance monitoring activities and measures against Standards for Internal Control in the Federal Government, EOIR’s most recent strategic plan covering fiscal years 2008 through 2013, and best practices on using performance information for management decisions.\nTo assess EOIR’s use of continuance data to guide court operations, we also analyzed EOIR’s data on case continuances from fiscal years 2006 through 2015 to determine the number and type of case continuances that judges have issued. We analyzed EOIR’s guidance to judges on the use of continuances as well as EOIR’s practices related to these data and EOIR’s practices against Standards for Internal Control in the Federal Government.\nWe further used EOIR’s data on NTAs to determine the extent to which EOIR is recording NTAs in a timely and accurate manner. Specifically, we compared the date EOIR received the NTA from the DHS to the date that EOIR entered the NTA into its case management system. We also reviewed EOIR guidance related to entering NTAs and interviewed EOIR and DHS attorneys about practices related to the recording of NTAs in a timely and accurate manner. We then compared this information to Standards for Internal Control in the Federal Government governing information and communication.\nTo address the fourth objective, what scenarios have been proposed for restructuring the immigration court system, we obtained information on restructuring scenarios, including reasons for and against these proposals, from experts and stakeholders on the immigration court system. To select the experts and stakeholders, we first reviewed relevant literature on the immigration court system, particularly proposals for restructuring the system. Similar to the search we conducted for literature on EOIR’s management of the immigration courts, a GAO research librarian conducted searches of scholarly and peer reviewed publications; trade and industry articles; association, nonprofit, and think tank publications; congressional hearings and transcripts; government reports; dissertations; and general news articles from 2000 through January 2016 pertinent to proposals for immigration court system restructuring. We also reviewed literature identified as relevant by GAO’s Office of General Counsel as well as individuals affiliated with academia and legal associations.\nThis literature search produced 21 related publications, which we reviewed for relevance to this objective and methodological quality, and determined that 9 publications were appropriate to use to identify experts and stakeholders. Specifically, through this review, we identified an initial list of experts and stakeholders who had published at least one publication examining one or more aspects of a potential restructuring of the immigration court system in a refereed medium, such as journal articles and think tank studies. These experts and stakeholders included individuals, such as law professors, and groups, such as the American Bar Association. To assess the methodological quality of the selected expert’s and stakeholder’s studies, we reviewed the analytical methods used in the research, eliminated some research if we felt the methods were not appropriate or rigorous, and then summarized the research findings. After selecting experts and stakeholders based on their published work, we also considered their type and depth of experience with the immigration court system. Specifically, we gathered information on the experts’ and stakeholders’ affiliations with any organizations, such as professional associations or nonprofit groups, and their years of experience studying or working with the immigration court system, and if a group, the source of funding for this group. We also considered those individuals and groups recommended by EOIR as experts on the immigration court system and by the experts and stakeholders themselves. We evaluated these recommendations based on the number of times an individual or organization was cited as a credible expert or stakeholder and the type of experience and background of the cited expert or stakeholder to help ensure diversity and inclusiveness among our selected experts and stakeholders. Toward maintaining EOIR’s impartiality as an office within DOJ, EOIR officials elected not to provide perspectives on how, if at all, the immigration courts should be restructured or associated advantages and disadvantages. To mitigate the absence of EOIR officials’ perspectives on restructuring, we also considered whether experts and stakeholders recommended by other experts and stakeholders had formerly worked for EOIR in selecting our sample of experts and stakeholders.\nWe selected the following 10 individuals and organizations as experts and stakeholders to interview: 1. American Bar Association: Established in 1878, the bar is a voluntary organization whose mission is to support the legal profession by providing resources to attorneys and accrediting law schools, among other things. 2. American Immigration Lawyers Association: Non-partisan national association of attorneys and law professors who practice and teach immigration law. 3. Appleseed Network and the Chicago Appleseed Fund for Justice: Research, education, and advocacy organization that works to achieve reform by addressing policies and practices that relate to social justice and government effectiveness issues. 4. Lenni Benson and Russell Wheeler: Lenni Benson—a Professor of Law at New York Law School—and Russell Wheeler, President of the Governance Institute and Visiting Fellow at the Brookings Institution, co-authored a report on the immigration court system for ACUS. The views and opinions they expressed were their own, and not those of the ACUS. We considered them as one of our experts and stakeholders. 5. Federal Bar Association: Dedicated to the advancement of the science of jurisprudence and to promoting the welfare, interests, education, and professional development of all attorneys involved in federal law. 6. Heartland Alliance’s National Immigrant Justice Center: Provides direct legal services to, and advocates for, immigrants, refugees, and asylum seekers through policy reform, impact litigation, and public education. 7. Eliza Klein: Former immigration judge who served on the Miami, Florida; Boston, Massachusetts; and Chicago, Illinois immigration courts from 1994 to 2015. 8. National Association for Immigration Judges: Designated as the recognized representative for collective bargaining for all U.S. immigration judges. 9. Angelo Paparelli: Private bar immigration attorney and partner in the Business Immigration Practice Group of Seyfarth Shaw LLP. 10. Paul Wickham Schmidt: BIA Chairman and member from 1995 to 2001 and former immigration judge from 2003 to 2016.\nWe used semi-structured interview questions to gather information from these experts and stakeholders on scenarios for restructuring the immigration court system, including reasons for and against various restructuring proposals. We provided relevant excerpts from our draft report to these experts and stakeholders to confirm the accuracy of the information they provided. These entities may not be representative of the universe of experts and stakeholders on the immigration court system and therefore may not represent all views on this topic; however, their views provide insights on proposals for restructuring the immigration court system.\nIn addition, we interviewed officials and reviewed related documentation from existing court and adjudicatory systems that could, according to the experts and stakeholders we interviewed, serve as examples of the possible court structures. The existing systems were the U.S. Bankruptcy Courts, the Social Security Administration’s Office of Disability Adjudication and Review, and the Board of Veterans’ Appeals and Court of Appeals for Veterans Claims.\nTo identify the potential effects of restructuring on immigration court system costs, we analyzed EOIR budget data from fiscal years 2005 through 2016. Specifically, we obtained and analyzed data regarding EOIR budget requests and appropriations for this time period, as well as expenditures for fiscal years 2012 through 2015. In particular, we determined EOIR’s primary cost categories, such as personnel compensation and benefits, and expenditures among the immigration courts, the BIA, and the Office of the Chief Administrative Hearing Officer.\nWe conducted this performance audit from November 2015 to June 2017 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.", "The Department of Justice’s (DOJ) Executive Office for Immigration Review (EOIR) conducts immigration hearings at 58 immigration courts located nationwide. For each court from fiscal years 2012 through 2015, the following tables provide:\nCase backlog—the number of cases pending at the start of the fiscal year in that court;\nNew case receipts—the number of new Notices to Appear (NTA) that the court received from the Department of Homeland Security within the fiscal year;\nOther case receipts—the number of other case receipts that the court received within the fiscal year, such as cases that were administratively closed and then reopened or cases remanded from the Board of Immigration Appeals;\nCase completions—the number of cases each court completed within\nChange of venue or transfer proceedings—the number of Change of Venue or Transfer proceedings that the court held within the fiscal year; and\nTotal caseload—the total number of cases pending at the start of the fiscal year and new and other cases referred to the court during the year.", "Judges may continue a case—issue a temporary adjournment of case proceedings until a different day or time—for a variety of reasons, either at their own instance or, for good cause shown by the respondent or the Department of Homeland Security (DHS). For example, an immigration judge has discretionary authority to grant a motion for continuance to allow respondents to obtain legal representation or DHS to complete required background investigations and security checks. The Executive Office for Immigration Review (EOIR) tracks the extent to which judges issue continuances and reasons for continuances within its case management system. EOIR categorizes reasons for case continuances into approximately 70 different categories, including:\nRespondent-related continuances, such as illness of a respondent or their witness or attorney;\nDHS-related continuances, such as the need for more time to prepare Immigration judge–related continuances, such as unplanned leave or insufficient time to complete a hearing; and\nOperational continuances, such as a lack of a foreign language interpreter, a video- teleconference (VTC) malfunction, or to allow a priority case to be heard instead.\nTable 10 provides the percentage of completed immigration court cases by the number of continuances for fiscal years 2006 through 2015, and table 11 provides the average days to case completion by number of continuances for fiscal years 2006 through 2015. Table 12 represents the number of continuances by overall category for each year, as well the percentage of total continuances and the percentage change of each category.\nAdditionally, the following tables provide an overview of immigration judges’ use of continuances from fiscal years 2006 through 2015:\nTable 13 represents the number of respondent-related continuance reasons, the percentage of total continuances, and the percentage change of each continuance reason.\nTable 14 represents the number of DHS-related continuance reasons, the percentage of total continuances, and the percentage change of each continuance reason.\nTable 15 represents the number of immigration judge-related continuance reasons, the percentage of total continuances, and the percentage change of each continuance reason.\nTable 16 represents the number of operational-related continuance reasons, the percentage of total continuances, and the percent change of each continuance reason.", "Table 17 provides additional characteristics of selected court and adjudicatory systems exemplifying the restructuring scenarios proposed by experts and stakeholders and the current immigration courts and Board of Immigration Appeals.", "", "", "", "In addition to the contact named above, Taylor Matheson (Assistant Director), David Alexander, Ashley Davis, Kathleen Donovan, Juan Garcia, Michael Holland, Eric Hauswirth, Benjamin Licht, Grant Mallie, Sasan J. “Jon” Najmi, Robin Nye, Adam Vogt, and Hannah Weigle made key contributions to this report." ], "depth": [ 1, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 3, 3, 1, 2, 2, 2, 1, 2, 2, 1, 1, 1, 1, 1, 1, 1, 1, 1, 2, 2 ], "alignment": [ "", "", "", "", "", "", "", "h0_title", "h0_full", "", "", "", "", "h1_title", "", "h1_full", "", "", "", "", "h0_full", "", "", "h2_full", "", "", "", "", "", "", "" ] }

{ "question": [ "What could EOIR do to address workforce needs?", "What practices does EOIR need?", "What did GAO find about the current practices EOIR implements?", "How can EOIR be more efficient?", "Why do judges issue continuances?", "What does GAO's analysis on continuances show?", "How could systematically analyzing the use of continuances be beneficial?", "What was GAO asked to review?", "What does the GAO report address?", "How did GAO collect information for the report?" ], "summary": [ "EOIR has taken some steps to address its workforce needs, such as entering into a contract to determine judicial staff workloads, but does not have a workforce plan that would help EOIR better address staffing needs, such as those resulting from the 39 percent of its immigration judges who are currently eligible for retirement.", "EOIR also does not have efficient practices for hiring new immigration judges, which has contributed to immigration judges being staffed below authorized levels.", "GAO found that it took an average of 742 days to hire new judges from 2011 through August 2016.", "By assessing its hiring process and developing a hiring strategy that targets staffing needs, EOIR would be better positioned to hire judges more quickly and address its staffing gaps.", "One example of EOIR's efforts to assess court operations is the extent and reasons why judges issue continuances—temporary case adjournments until a different day or time.", "GAO's analysis of continuance records showed that that the use of continuances increased by 23 percent from fiscal years 2006 through 2015.", "Systematically analyzing the use of continuances could provide EOIR officials with valuable information about challenges the immigration courts may be experiencing, such as with operational issues like courtroom technology malfunctions, or areas that may merit additional guidance for immigration judges.", "GAO was asked to review EOIR's management of the immigration court system and options for improving EOIR's performance.", "This report addresses, among other things, (1) what EOIR data indicate about its caseload, including the backlog of cases; (2) how EOIR manages and oversees immigration court operations, including workforce planning and hiring; and (3) the extent to which EOIR has assessed immigration court performance, including case continuance data.", "GAO analyzed EOIR's case data from fiscal years 2006 through 2015—the most current data available—reviewed EOIR documentation, interviewed agency officials, and conducted visits to six immigration courts selected to include courts with relatively large and small case backlogs, among other things. GAO also interviewed experts and stakeholders selected based upon, among other things, their published work on the immigration court system." ], "parent_pair_index": [ -1, -1, 1, -1, -1, 0, 0, -1, 0, 0 ], "summary_paragraph_index": [ 3, 3, 3, 3, 4, 4, 4, 1, 1, 1 ] }

{ "title": [ "", "Background", "Current System of Federal Budgeting", "How the Current System Addresses National Security", "How UNSB Advocates View the Current System", "Challenges to the UNSB School", "Unified Approaches to Budgeting for National Security", "A Single National Security Budget", "Mission-Based Budgeting", "National Security Crosscut Displays", "Strategically Driven Budgeting", "Issues", "Ends", "Scope", "Ways and Means", "Resource Implications", "Risks", "Assessments", "Congressional Oversight" ], "paragraphs": [ "Recent years have witnessed a growing interest, in Congress, in the executive branch, and in the broader policy community, in re-examining how well the U.S. government conducts the business of national security—from decision-making, to strategy-making, to budgeting, to planning and execution, to accountability and oversight. That interest reflects concerns with effectiveness—how well the U.S. government accomplishes the mission—and with efficiency—how well the U.S. government stewards scarce resources—in the national security arena.\nWithin the context of these debates, a number of practitioners and observers have called for the adoption of \"unified\"—or \"consolidated\" or \"integrated\"—approaches to national security budgeting. The primary concern of this unified national security budgeting school, loosely defined, is not to improve U.S. budgeting practices per se , but rather to use budgetary mechanisms to drive changes in the priorities and practice of national security.\nMembers of the school broadly share the view that some U.S. national security concerns, such as counter-terrorism, or stabilization and reconstruction, are inherently cross-cutting: that is, they require the participation of multiple agencies, and their associated responsibilities could conceivably be divided up any number of ways among various agencies. In turn, members of the school argue that the current system allows little space for holistic consideration of such cross-cutting national security issues, and they propose an array of budgetary tools designed to promote cross-fertilization. They suggest that for such cross-cutting issues, more \"unified\" budgeting approaches could facilitate the identification of overlaps and gaps among agencies' efforts; enable more deliberate assignment of roles and responsibilities; catalyze closer collaboration; and provide greater transparency to help support congressional oversight. Such changes, they add, could improve effectiveness and save money.\nThe school itself is far from unified—there is no single model for \"unified national security budgeting.\" Various proponents have put forward quite different proposed remedies and are—apparently—aiming to solve quite different underlying problems. The fact that the debate itself is not cohesive has no logical bearing on the value of the various associated proposals, but it suggests a need to define terms, as a starting point.\nFor Congress, constitutionally mandated to control the power of the purse, fundamental issues at stake include both oversight of the effectiveness and efficiency of U.S. government national security activities, and the integrity of the overall federal system of budgeting. Of particular interest may be the extent to which, if any, efforts to optimize the overall system, and efforts to optimize its national security \"sub-system,\" constitute competing imperatives.\nThis report describes and characterizes the unified national security budgeting school's broadly shared critique of the current system; describes and analyzes various proposed unified national security budgeting approaches; and offers a succinct list of considerations for Members and staff of Congress who may be interested in this issue.", "The U.S. government system of budgeting for national security activities is part of a much larger, highly complex system of federal budget development—based on the constitutional distribution of roles and responsibilities between Congress and the President, on statute, and on a wide array of established practices by key stakeholders. The system necessarily covers the full panoply of U.S. government responsibilities and activities, and therefore by definition—de facto if not explicitly—adjudicates among all competing concerns. In a sense, the federal budget system not only reflects the distribution of power among branches, but also refines and institutionalizes that power balance. So the stakes associated with any possible revision of the federal budget system are quite high.", "The current, extremely complex federal budgeting system includes at least three major processes directly germane to the consideration of national security.\nIn the executive branch, the Office of Management and Budget (OMB), part of the Executive Office of the President (EOP), is responsible for administering budget development and execution. OMB typically assigns each federal Department and agency an informal topline—a total funding limit—early in the process. OMB may also provide additional funding level guidance for some specific activities. Agencies then typically work within their respective toplines, which can be negotiable, to craft their budget requests. The appropriate Resource Management Offices (RMO) within OMB consider the draft requests and work with agencies to refine them. OMB leadership considers the findings—a process in which National Security Staff (NSS) members, for national security-related matters, may participate. OMB \"passes back\" its decisions to agencies, revisions are made, any agency appeals are adjudicated, final EOP decisions are taken, and the results are put forward to Congress as the President's budget request.\nIn Congress, appropriations committees allocate shares of the discretionary budget to their subcommittees, each of which has specified oversight responsibilities. Each subcommittee's remit corresponds to some broad mission area—such as \"defense\" or \"homeland security.\" But those remits do not fully align with Departments and agencies—subcommittees may be responsible for some activities at multiple agencies, and agencies may answer to more than one subcommittee.\nMeanwhile, as an organizing construct, the entire federal government uses a hierarchy of categories—budget \"functions\" and \"sub-functions,\" based on the purpose the funding is intended to serve—to organize compilation and consideration of budget requests. These functions do not fully align with Departments and agencies, nor do they correspond directly to appropriations subcommittees—for example, there is no single budget function for \"homeland security,\" which is both an agency and a subcommittee title. According to a number of practitioners, budget function categories do not fully reflect the way that budget requests are developed or considered in either participating branch of government.", "The current system does not budget for national security in an explicit and bounded way. There is no legal definition stating how \"national security\" maps onto any of the sets of boundaries used in the current budget process—including executive branch agencies, appropriations subcommittees, or budget functions.\nIt is worth noting that bounding \"national security\" for the purposes of budgeting would require more than organizational or administrative fixes; it would also require significant conceptual efforts to define the boundaries of the category. The broader policy community has no single, shared understanding of the arenas and activities that contribute to national security. In practice, the debates about boundaries tend to be shaped by real-world developments. For example, in the wake of the terrorist acts of September 11, 2001, many practitioners and observers urged closer integration between homeland security and traditional national security efforts. The Obama Administration, at the start of its first term, declared the two \"indistinguishable\" and institutionalized the concept organizationally with a merger of the previously separate National and Homeland Security Councils. Yet on one hand, it is not obvious that all national and homeland security concerns should be combined, for all purposes. And on the other hand, contributions to U.S. national security might be defined more broadly still—to include energy, the environment, and the economy, for example.\nIn principle, incorporation of some activities that are not traditionally included under a national security umbrella might give them additional prominence and might even boost their chances of getting funded. Even more ambitiously, broadening the scope of \"national security\" in the budgeting process might encourage practitioners to think more creatively about how various instruments of national power contribute to U.S. national security, and to use resourcing decisions to re-balance the weight of those contributions. Yet inclusion of broader activities in the national security mix could conceivably have the opposite effect by sharpening the zero-sum contest for resources between traditional and less-traditional national security tools.", "Unified national security budget advocates typically characterize the current system in at least two important ways. First, they rightly point out that the current system does not treat \"national security\" in a distinct, bounded way.\nSecond, they tend to argue that the various national security-related components of the budget are developed in striking isolation from one another. They suggest that the executive branch process would do well to undertake more ambitious cross-cutting consideration of national security issues; and they add that in practice it is better at ensuring the internal consistency of each agency's budget request than at reconciling the requests of various agencies. They suggest that appropriations committees would do well to adjudicate more actively how cross-cutting national security priorities are met by adjusting the mix of activities undertaken, or the division of labor among agencies, or both. But they argue that in practice, subcommittees tend to guard against perceived incursions into their respective jurisdictions, and full committee-level adjudication is relatively rare.", "Skeptics might raise concerns about any of several broadly shared facets of UNSB community thought. First, they might point to the relatively limited attention UNSB advocates tend to give to the integrity of the federal government budgeting system—to the damage that might be done to the overall system including, not least, congressional oversight, by changes to any of its basic modalities. Second, some might suggest that the UNSB community typically fails to consider what additional room there might be for holistic consideration of cross-cutting issues within the formal bounds of the current system through fuller utilization of existing tools.\nThird, skeptics might observe that \"national security\" is but one subset of overall U.S. concerns, and that optimizing for national security might well mean sub-optimizing in other arenas and at the level of U.S. government responsibilities. Finally, some suggest that unified budgeting advocates may be particularly eager to label national security activities as \"cross-cutting,\" viewing holistic consideration as an additive good without associating any opportunity costs with the forfeiture of single-agency responsibility. In principle, single agency-based approaches may sometimes offer greater efficiency and greater effectiveness. Further, unified budgeting advocates may tend to believe that an activity either is cross-cutting or it is not. Yet in practice, activities may have some single-agency facets and some cross-cutting facets, so the art would be to weigh the benefits and opportunity costs of treating such activities either holistically or within single agencies.", "While a number of practitioners and outside experts have called for adopting more \"unified\" approaches toward budgeting for national security, those calls themselves have hardly been unified in the prescriptions they have put forward. They vary greatly in content and—more fundamentally—in intent.", "Perhaps the most ambitious approach to unified budgeting for national security would feature a single, shared pool of funding for all national security activities, with systemic-level decision-making and accountability from the White House, and with holistic congressional oversight of the entire pool. A key variant of such an approach would limit the scope of the shared pool and other associated modalities to those national security activities that are inherently \"cross-cutting\"—those, for example, that by definition require the participation of more than one agency such that integration of effort is required, or those that could conceivably be carried out by any of several different agencies such that decisions about roles and responsibilities are required. Other activities that contribute to national security, deemed to be self-contained within given agencies, might be excluded from such a cross-cutting pool. Either variant would require discrete choices regarding scope—of national security activities writ large, or of some cross-cutting subset.\nPotential benefits of such an approach, given its shared funding pool and its systemic-level adjudication, might include enabling trade-offs to be made—among activities, agencies, or both—across the full span of U.S. government national security efforts. Such an approach might not only make tradeoffs theoretically possible, but also catalyze deeper strategic thinking about the best balance of tools of national power for delivering \"security.\"\nA list of potential costs of this approach might start with the possibility that such fundamental adjustments to the mechanisms of budgeting for national security could trigger shifts in the balance of power between the Legislative and executive branches—particularly if the new modalities entail a more proactive de facto exercise of authority over the budget process by the President. In addition, the scope of this approach—particularly in its maximal, comprehensive, version—could prove unwieldy and make it hard to manage a disciplined process. Further, a single comprehensive pool of such scope would likely require a more robust mechanism for systemic-level adjudication, and might also require a greater number of systemic-level adjudicators at the NSS and OMB, with the appropriate expertise, to carry it out. In turn, the use of a genuinely shared funding pool, with no a priori decisions about the division of responsibilities and resources among agencies, might also require new modalities for congressional oversight. Finally, while the process of determining the best use for a large, shared pool might conceivably help foster a strong, shared sense of purpose, it might also intensify zero-sum competitions among agencies for both resources and relevance.", "An alternative to comprehensive unified budgeting for national security is \"mission-based budgeting,\" which typically refers to some form of unified budgeting across multiple agencies in a specific mission area. This approach is sometimes regarded as a \"pilot\" for a broader unified budgeting effort, and sometimes as an end in itself. Mission-based approaches might, in theory, take any of a wide variety of forms, with a correspondingly wide variety of potential costs and benefits.\nThe Global Security Contingency Fund (GSCF) might be considered a leading example of mission-based budgeting. Regardless of how accurately it reflects that approach, however, its prominence in official rhetoric, congressional interest, and policy community attention make it an important touchstone for consideration. GSCF is a budgeting mechanism that allows State and DOD to transfer funds to a discrete Treasury account, to be used to provide assistance to foreign security forces to help them conduct counterterrorism or stability operations.\nGSCF is sometimes characterized as a bold step forward toward unified national security budgeting, away from past approaches designed merely to \"work around\" existing limitations. Yet in practice, GSCF's specific mechanisms and narrow scope raise questions about the kind of change it is intended to drive. GSCF's total funding stream is relatively limited. More importantly, not all U.S. government activities—or even all State and DOD activities—within the specified mission areas, are covered by GSCF, so the mechanism is limited in its ability to highlight the full range of gaps, unnecessary overlaps and potential tradeoffs in these areas. Further, GSCF is horizontally adjudicated—as a rule, State and DOD conduct programmatic decision-making between themselves, which may limit the Fund's ability to directly link national strategy and resourcing. In turn, the adjustments required in order for Congress to provide oversight are in this case relatively simple, compared to hypothetical, comprehensive unified budgeting approaches, because the Fund involves only two agencies.\nDOD's use of joint capability areas (JCAs) in its internal budgeting process may be a helpful agency-level analogue for the concept of mission-based budgeting. It is also a good counterpoint to GSCF, because the two approaches differ markedly in their business rules. In general, DOD budgeting might be viewed as a microcosm of broader executive branch budgeting, given the need to coordinate and reconcile budget requests among Military Services and agencies, each with its own mandate but all broadly supporting of a single defense strategy.\nJCAs are an organizing construct designed to give DOD leadership a single consolidated view of key mission areas—such as \"Battlefield Awareness\"—and to support analysis and decision-making over portfolios of related matters. Unlike GSCF, they are not based on shared funding pools. But also unlike GSCF, they are designed, in theory, to be comprehensive within a given mission area, and thus able to provide a full picture and enabling identification of gaps, overlaps, and potential tradeoffs. And unlike GSCF, JCA adjudication and decision-making are conducted at the systemic level—at the level of the Office of the Secretary of Defense and the Joint Staff—rather than horizontally among Services and agencies. The process typically generates displays that could be used to inform both internal decision-making and external review by the White House and/or Congress.\nThe potential benefit, and also costs, of mission-based budgeting are likely to vary greatly based on the design of any specific initiative. One potential virtue of a focus on mission area, rather than on the entire field of national security, is its relative manageability, given both the narrower substantive scope and the smaller quantitative scale. In turn, if the mission area is defined inclusively—as JCAs are—it can provide focused analysis and tee up decision-making regarding gaps, overlaps and tradeoffs within that arena. While it cannot shed light on the appropriate balance among mission areas, it might help make decision-making—and execution—within single arenas more effective. Further, if the mission area is defined inclusively, the adjudication process could easily generate comprehensive displays of all the associated budgetary choices, which might facilitate oversight by illuminating the Administration's approaches and choices.\nDifferent levels of adjudication for mission-based budgets suggest different potential pay-offs. Systemic-level adjudication might help ensure that top national priorities, rather than agency equities, drive choices within that arena. Horizontal adjudication might, as some practical experience suggests, present greater difficulties in arriving at solutions. But if participants of horizontal processes persevere, their enforced collaboration on budgeting might conceivably open doors to broader collaboration in that mission area—for example in planning and execution.\nCosts, like benefits, would be likely to vary greatly depending on design. One consideration—a limitation more than a cost—concerns scope. Mission-based budgets may be less well-placed than a more comprehensive unified national security budget to consider genuinely alternative approaches, or to catalyze fundamental re-thinking about the provision of national security—for example, tradeoffs in the balance of prevention and preparedness efforts.\nIn turn, different levels of adjudication might introduce different kinds of potential costs. Systemic-level adjudication of a mission area would require—as it would for a comprehensive unified budget—the time and attention of systemic-level adjudicators, as well as their ability to grasp the full spectrum of issues, activities, and agency equities at stake. That suggests the need for sufficient numbers of personnel with the appropriate expertise at the NSS and OMB, and for effective NSS/OMB collaboration mechanisms.\nHorizontal adjudication might hold more potential pitfalls; practical experience and organizational theory suggest that the instruction to \"sort it out amongst yourselves\" can be fraught with peril. Arguably, this variant might require sufficient strategic guidance from the systemic level to allow—or force—major stakeholders to work toward the same ends, and with a shared understanding of the basic division of labor. In addition—or instead—this approach might require interlocutors who are steeped in their own agencies' capabilities and equities, but who also fully appreciate other agencies' roles and contributions.\nTo that end, many have argued that the best means for making sure that agencies can collaborate fluidly on national security matters—on planning and execution as well as on budgeting—is by building, across the federal government, a cadre of national security professionals, through shared education, training, and inter-agency exchange service. In theory, such cadre-building might foster a stronger sense of shared purpose and priorities, and the participants—fully cognizant of the roles and capabilities of other agencies as well as their own—might come to approach budgeting for cross-cutting national security issues more collaboratively—for example, more readily identifying, and agreeing to, tradeoffs.\nFinally, mission-based budgeting might require, or make desirable, some form of coordinated congressional oversight. For example, some activities designed to be carried out by multiple agencies might only be executable if each agency receives the necessary authorization and appropriations from its respective committees of jurisdiction. That is, it might make sense to decide \"yes\" or \"no\" across the board. And some requests by individual agencies for resources and authorities might only make logical sense in the context of the Administration's request for the entire mission area.", "Many proposals regarding national security budgeting focus not on the use of a shared funding pool, but rather on a variety of other measures, often in combination with each other. Of those, \"crosscut displays\" may be the most common. In general, a crosscut budget display refers to a comprehensive visual depiction of all activities by two or more agencies within a given policy arena.\nCrosscuts are not a new idea—they have long been used in a variety of fields, sometimes but not always congressionally mandated. The homeland security arena provides one of the most prominent crosscut display examples of recent years. In the wake of the terrorist attacks of September 11, 2001, Congress required that the President submit, with the annual budget request, a display of funding—by budget function, by agency, and by initiative area—contributing to homeland security. The requirement consolidated and expanded previous requirements for crosscut displays concerning counterterrorism, and domestic emergency preparedness. Today the results of that mandate are captured in an appendix to the Analytical Perspectives component of the President's budget submission, which is entitled \"Homeland Security Funding by Agency and Budget Account.\" This display, which covers recently enacted budgets as well as the current budget request, highlights the remarkably broad spectrum of agencies considered to contribute to homeland security.\nCrosscut budget displays have many potential benefits. Their most obvious virtue might be transparency, providing both the executive branch and Congress a picture of overall U.S. effort in a given field, including all the facets of that effort and the respective contributions of all participating agencies. That picture might highlight gaps and unnecessary redundancies, and might help facilitate adjudication of the roles and missions of various actors. For Congress, even without any adjustments to current modalities for oversight, crosscuts might provide broader context for the activities within a given committee's jurisdiction, and might also facilitate cross-talk among committees as needed.\nOne cost associated with the use of crosscuts is the discipline required in order for the results to be meaningful. In particular, all contributors have to share the same vocabulary and understanding of concepts. Enforcing such discipline might require additional systemic-level supervision. Under the heading of \"costs\" broadly defined, the use of crosscuts also carries certain limitations. Crosscuts do not, on their own, tee up decision-making—they merely reflect decisions made—so additional steps would be required in order for crosscuts to serve as tools for change of any kind. Crosscuts also do not inherently indicate accountability for the cross-cutting mission areas they depict. Instead, effective execution may require the additional step of assigning responsibility, whether to the systemic level, to a lead agency, or to a combination of agencies, for ensuring that all facets of a mission area are integrated and accomplished. And unlike pooled funding, crosscuts, even when they indicate gaps or unnecessary overlaps in effort, include no mechanism for the re-allocation of resources and/or authorities. Any such changes might require additional actions by Congress as well as the executive branch.\nIn addition to costs and limitations, the use of crosscuts merit particular caution in several ways. First, regardless of how the scope of inclusion is defined, crosscuts might give the impression of being comprehensive and might therefore focus disproportionate attention on aggregate funding levels over time. That is, they might encourage particular scrutiny of whether the U.S. government is spending \"too much\" or \"too little\"—a consideration that would only be as meaningful as the defined scope of the crosscut, and the consistency of that definition over time. Second, crosscuts displays might tacitly encourage straight cost comparisons among activities that might not make sense: how, after all, should a timely, effective diplomatic intervention be weighed against the acquisition of a major weapons system as contributions to national security?", "Also commonly encountered in the unified national security budgeting debates—and in the national security reform debates more broadly—are calls for the White House to issue more specific strategic guidance that sets the terms for budgetary decisions. Some view such a step as a necessary precursor for any effective pooled funding approach. Others suggest that a very rigorous process designed to develop such strategic guidance might provide some of the same benefits that pooled funding mechanisms are designed to deliver.\nCurrently the most prominent delivery system for national security guidance is the National Security Strategy. The law requires that Administrations deliver such a strategy annually, and Administrations have varied in their compliance with that timeline. Typically, the final products provide elegant descriptions of fundamental U.S. interests, U.S. security concerns around the world, and an array of U.S. objectives. But they typically do not articulate priorities, assign roles and responsibilities to specific Departments and agencies, or provide resource parameters.\nResponding to these perceived shortcomings, many practitioners and observers have recommended a more rigorous approach: the conduct of a systemic-level national security review, every four years, led by the NSS with strong support from OMB and full participation by all relevant agencies. Such a review would be designed to clarify core U.S. national security interests; identify and prioritize U.S. objectives; identify and prioritize the activities—the \"ways and means\"—to be used to achieve those objectives; assign roles and responsibilities to Departments and agencies; establish resource constraints; and elaborate a shared understanding of associated risks and opportunities to mitigate them. The review process would generate internal, classified guidance—national security planning guidance (NSPG)—that would serve as the basis for agencies to build their budget requests. In turn, the broad themes of the review would be released as a public document, the national security strategy, that is, as a by-product rather than as the primary goal of the review effort. For its part, Congress has shown some interest in the potential utility of such an approach, mandating that the President issue NSPG in one major mission area—countering al Qaeda and its affiliates.\nThe potential benefits of the use of more explicit strategic guidance would likely depend on how rigorously and iteratively the associated reviews are conducted. In principle, a rigorous review process that links strategy and resourcing and delivers clear guidance has great potential to ensure that national priorities are met both effectively and efficiently. In particular, the approach includes the potential to make cross-cutting comparisons—for example, which approach should be chosen, when it would be possible to use any of several different instruments of national power to achieve an objective? And who should exercise those instruments? Also importantly, the hands-on direction by the Executive Office of the President gives this approach, unlike the use of crosscut displays alone, a built-in mechanism for decision-making as an integral part of the process.\nStrategically driven budgeting carries a number of potential costs in the sense of additional requirements. The approach relies on rigorous adjudication at the systemic level by both strategy and resource experts, working closely with each other and managing a complex dialogue with all contributing agencies. That implies a requirement for sufficient numbers of personnel with sufficient expertise, at the NSS and OMB, and for adequate collaboration mechanisms. While a key distinguishing quality of this approach is the strong role played by the EOP, it might also require sufficiently rigorous strategic, planning, and budgetary processes within participating agencies, so that they can contribute meaningfully to the interagency reviews.\nCrosscut displays might be considered an additional requirement of this approach, although their use might more appropriately be considered a likely inherent facet of the strategic review process itself. Finally, because this approach does not alter the basic modalities for submitting budget requests to Congress, it would not necessarily require changes in congressional oversight. However, to the extent that an Administration makes significant tradeoffs across mission areas, and/or across agencies in order to provide national security, Members of Congress might be interested in using cross-cutting modalities of their own—such as holding joint hearings among several committees, or considering the Administration's crosscut displays together—to better evaluate Administration decision-making.", "In evaluating proposals and options for possible refinements to budgeting for national security activities, Congress may wish to consider the following issues.", "The debates about unified budgeting for national security lack a shared sense of the basic problem that needs to be solved. Accordingly, they also lack a shared sense of the basic goal that needs to be achieved.\nFor any given unified budgeting proposal, what problem is it designed to solve—for example, are current U.S. national security efforts perceived to be too expensive, too ineffective, or imbalanced in the distribution of labor across the executive branch? In reality, how if at all does the current system of budgeting for national security fall short? What advantages if any might it have over proposed alternative systems? To what extent might cross-cutting consideration of national security issues be expanded within the formal constraints of the current system? How do various proposals balance the magnitude of the perceived problem and the anticipated benefits of proposed changes, against the anticipated costs of change in terms of time, energy and resources, together with the risks of unanticipated damage to the rest of the system?", "In theory, many different choices could be made regarding the appropriate boundaries of national security writ large, or of explicitly \"cross-cutting\" issues within the field of national security, for use in unified budgeting approaches.\nIn budgeting for national security activities, regardless of the mechanisms for doing so, what purchase might be gained by considering national security as a whole? What advantages might examination, instead, of explicitly cross-cutting national security activities, offer? If either cross-cutting national security issues, or national security issues writ large, deserve explicit attention in the budgeting process, what should those categories include? What are the broader stakes—for both agencies and issues—of exclusion from or inclusion under a national security umbrella?", "Regardless of the specific goals that any changes to national security budgeting might be designed to achieve, any number of different approaches, or combinations of approaches, might theoretically be selected to help achieve those goals.\nWhich of the various possible \"ways and means\" put forward in different proposals would in principle be compatible with each other? For any given desired end, which ways and means would best achieve the desired results? For any proposed set of ends/ways/means, which of the ways and means are essential to making the approach work, and which are merely helpful additions?", "Almost any changes to current ways of doing business would be likely to carry some near-term financial costs as a reflection of adjustments to new practices. But some changes might introduce longer-term savings, either because the process itself becomes more efficient, or because new processes yield a more effective practice of national security writ large.\nFor any given proposal, what would be the likely near-term associated resource requirements? What longer-term savings, if any, might it generate? How might the likelihood that refined budget processes would reduce future U.S. requirements through the more effective execution of national security activities—for example, through better-integrated or better-balanced instruments of national power—best be calculated? How might the likelihood that refined budget processes would increase future U.S. requirements—either through initial investments as changes are institutionalized, or through unanticipated consequences—best be calculated?", "Any analysis of unified budgeting proposals would sensibly include a consideration of risk.\nIn taking apart various facets of the current system (together with the myriad behavior patterns that inevitably develop in any bureaucratic order to compensate for the inefficiencies of the formal system), what unanticipated ripple effects might be created? What steps if any do proposals offer for mitigating such risks?", "A particularly vexing problem for both national security practice and organizational theory concerns assessments—knowing in what ways, to what extent, and why introduced changes are generating desired results. One unsatisfying approach would be to consider immediate \"outputs\"—for example, does the system produce decisions? A much more sophisticated approach would consider effects—for example, what additional contributions, if any, does a modified system of budgeting for national security make to the protection of U.S. national security interests? What quickly becomes apparent is the great difficulty of distinguishing among the impacts of many different variables—budgeting, but also decision-making, strategy-making, planning, execution.\nFor any unified budgeting proposal, how would the impact of its use on both effectiveness and efficiency be determined? How would its impact be distinguished from that of other facets of the national security process? How much time would it take for any results to manifest themselves? To what extent if any might the tools provided by the GPRA Modernization Act of 2010, P.L. 111-352 , be helpful for ascertaining the impact of any changes to modalities for budgeting for national security on the effectiveness and/or efficiency of results in that field?", "Some unified budgeting approaches suggest—while others would seem to require—changes in the modalities of congressional oversight.\nTo what extent if any could Congress, in theory, without any formal changes, engage in more holistic consideration of national security matters? What benefits if any might that have? To what extent, if any, would any given unified national security budgeting proposal necessitate changes in the modalities of congressional oversight, of authorizations as well as appropriations? What impact if any might proposed changes in congressional oversight—for example, holding more frequent joint hearings concerning cross-cutting national security issues, or increasing the size of appropriations committee staffs—have on the effectiveness and/or efficiency of U.S. national security efforts, even without changes in the structure or organization of executive branch national security budgeting?" ], "depth": [ 0, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 2, 2, 2, 2, 2 ], "alignment": [ "h0_title h2_title h1_title", "h0_title h2_title h1_title", "", "h1_full", "", "h0_full h2_full", "h0_title h1_title", "h1_full", "h0_full", "", "h1_full", "h0_title h2_full", "", "", "", "h0_full", "", "", "h2_full" ] }

{ "question": [ "How have facets of U.S. government national security practice been identified?", "How are these facets \"cross-cutting?\"", "What are problems with these facets?", "How can national security issues be holistically considered?", "What is the goal of people who call for the use of UNSB?", "What strategies do supporters of the use of UNSB call for?", "What kinds of change do proponents hope to achieve?", "What is the most important issue regarding budget for Congress?", "Why does Congress have vested interest in U.S. national security practices?", "What challenge might Congress have regarding budget?" ], "summary": [ "In recent years a number of observers and practitioners have identified various facets of U.S. government national security practice—decision-making, strategy-making, budgeting, planning and execution, and congressional oversight—as inherently \"cross-cutting.\"", "They have in mind arenas—such as counterterrorism, and stabilization and reconstruction—that by definition involve multiple agencies, or for which responsibilities could be divided up in any number of ways among various agencies.", "For such facets of national security, they argue, the U.S. government is seldom able to conduct genuinely holistic consideration. The cost, they add, is a loss of effectiveness, or efficiency, or both.", "In order to encourage holistic consideration of national security issues, some members of this inchoate school have called for the use of \"unified national security budgeting\" (UNSB).", "To be clear, their goal is not to refine the U.S. federal system of budgeting, but rather to use budgetary mechanisms to drive changes in U.S. national security practices.", "Within this broad school of thought, various proponents call for the adoption of a number of different approaches, from a single shared funding pool for all national security activities, to mission-specific funding pools, to crosscut displays, to more strategically driven budgeting.", "In turn, various proponents apparently aim to achieve quite different kinds of change with their proposed remedies—from rebalancing the distribution of roles and responsibilities among executive branch agencies, to saving money, to revisiting fundamental understandings about how U.S. national security is best protected.", "For Congress, constitutionally mandated to control the power of the purse, the most fundamental issue at stake may be ensuring the integrity of the overall federal budgeting system—there may be no single best answer regarding how it should function, but that it function would seem to be of paramount importance.", "At the same time, while the current system does not adjudicate \"national security\" in an explicit, bounded way, and while no single, generally agreed definition of the boundaries of \"national security\" exists, Congress has oversight responsibility for any number of activities and executive branch agencies that could reasonably be considered to contribute to national security, and thus vested interests in both the effectiveness and the efficiency of U.S. national security practices.", "A basic challenge for Congress may be fundamental tensions between optimizing the overall federal budgeting system, and optimizing for its national security sub-system." ], "parent_pair_index": [ -1, 0, 0, -1, -1, 1, 1, -1, 0, 0 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "", "Summary of H.R. 3964", "Title I—Central Valley Project Water Reliability", "Background", "Summary of Title I Provisions", "New CVPIA Purposes, Definitions", "CVP Contracts", "Facilitated/Expedited Water Transfers", "Changes to Fish, Wildlife, and Habitat Restoration", "Central Valley Project Restoration Fund (CVPRF)", "Bay-Delta Accord as Operational Guide", "Non-Project Water Deliveries and Replacement Water Plan", "Removal of Non-Native Fish Species in the Stanislaus River", "Other Miscellaneous Provisions", "Analysis", "Title II—San Joaquin River Restoration", "Background24", "Summary of Title II Provisions", "General Repeal and Amended Purposes of San Joaquin River Restoration Settlement", "Restoration Implementation", "Analysis", "Title III—Repayment Contracts and Acceleration of Repayment of Construction Costs", "Background", "Summary", "Analysis", "Title IV—Bay-Delta Watershed Water Rights Preservation and Protection", "Background", "Summary", "Analysis", "Title V- Miscellaneous", "Summary", "Analysis", "Concluding Remarks" ], "paragraphs": [ "This report provides summary and analysis of H.R. 3964 , the Sacramento-San Joaquin Valley Emergency Water Delivery Act, as passed by the House of Representatives on February 5, 2014. It contains an update of information contained in a CRS report on a bill in the 112 th Congress (CRS Report R42375, H.R. 1837—The Sacramento-San Joaquin Valley Water Reliability Act , by [author name scrubbed]). It includes a brief summary overview of H.R. 3964 , followed by a more in-depth discussion of each title, including some of the key provisions within each section and analysis of some of these provisions.", "H.R. 3964 , the Sacramento-San Joaquin Valley Emergency Water Delivery Act, was introduced on January 29, 2014. It passed the House on February 5, 2014. H.R. 3964 is similar to H.R. 1837 (introduced in the 112 th Congress) with some notable additions. Below is a summary of each title in H.R. 3964 . Each title addresses a different aspect of California water policy.\nTitle I , Central Valley Project Water Reliability. Overall, Title I would make numerous changes to management and operation of the federal Central Valley Project (CVP), primarily by amending the Central Valley Project Improvement Act (CVPIA). Among other things, it would alter CVPIA in the following ways: broaden the purposes for which water previously dedicated to fish and wildlife can be used (by removing the directive to modify CVP operations to protect fish and wildlife with dedicated fish flows and making this action optional); add to the purposes a provision \"to ensure\" water dedicated to fish and wildlife purposes is replaced and provided to CVP contactors by the end of 2018 at the lowest \"reasonably achievable\" cost; changing the definitions of fish covered by the act; broaden purposes for which Central Valley Project Restoration Fund (CVPRF) monies can be used; reduce revenues into the CVPRF; mandate that the CVP be operated under a1994 interim agreement, the Bay-Delta Accord; and mandate development and implementation of a plan to increase CVP water yield by October 1, 2018. Title II , San Joaquin River Restoration. Title II would direct the Secretary to cease implementation of the San Joaquin River Restoration Settlement Agreement, which was agreed to in 2006 and authorized under the San Joaquin River Restoration Settlement Act (SJRRS) in 2010. It would declare that the new legislation satisfies all obligations of the Secretary and others to keep in good condition any fish below Friant Dam, including obligations under the California Fish and Game Code, the state public trust doctrine, and the federal ESA. It would also remove the salmon restoration requirement in the SJRRS that was authorized in P.L. 111-11 . Title III , Repayment Contracts and Acceleration of Repayment of Construction Costs . This title would direct the Secretary of the Interior, upon request from water contractors, to convert utility-type water service contracts to repayment contracts, and then allow accelerated repayment of those outstanding repayment obligations. Irrigation repayment obligations for the CVP for 2012, the last year for which such data are readily available, total approximately $1.18 billion; municipal & industrial (M&I) repayment obligations for 2012, the last year for which such data are readily available, total approximately $121 million. Allowing this accelerated (or early) repayment would allow irrigators to be exempt from certain Reclamation requirements sooner than under current repayment schedules. Title IV , Bay-Delta Watershed Water Rights Preservation and Protection . Title IV would provide assurances of water rights protections for those with water rights senior to the CVP, including Sacramento River Valley Settlement Contractors. It would also direct a new shortage policy for certain north-of-Delta CVP water service contracts, which would aim to limit maximum reductions to these supplies. Title V , Miscellaneous . Title V declares that the unique circumstances of coordinated operations of the CVP and California State Water Project (SWP) \"require assertion of Federal supremacy to protect existing water rights throughout the system\" and that as such shall not set precedent in any other state. Title V also declares that nothing in the act shall \"affect in any way\" the State of California Proclamation of State Emergency and associated executive order issued by the Governor on January 14, 2014. It would also adjust a Wild and Scenic River boundary, potentially allowing for increased storage at Exchequer Dam.", "", "Title I of H.R. 3964 would make numerous changes to the CVPIA, and includes other provisions that are not alterations to CVPIA but relate to water availability in California's Central Valley. When enacted, the CVPIA made broad changes to the operations of the Bureau of Reclamation's Central Valley Project. The act set protection, restoration, and enhancement of fish and wildlife on par with other project purposes (such as delivering water to irrigation and M&I contractors), dedicated a certain amount of water for fish and wildlife purposes (e.g., 800,000 acre-feet of Sec. 3406(b)(2) water and certain levels for valley refuges), established fish restoration goals, and established a restoration fund (Central Valley Project Restoration Fund) to pay for fish and wildlife restoration, enhancement, and mitigation projects and programs. It also made contracting changes and operational changes. The CVPIA was quite controversial when enacted and has remained so, particularly for junior water users whose water allocations were ultimately limited due to implementation of the act and other subsequent factors, such as revised biological opinions protecting certain threatened and endangered species. Compounding the controversy over CVP water allocation are other factors that limit water deliveries—namely state water quality control requirements, variable hydrological conditions, the state system of water rights priorities, and implementation of other laws.", "Title I of H.R. 3964 addresses many of the provisions of the CVPIA that are opposed by some irrigators, namely dedication of project water to address fish and wildlife purposes, enhancement and mitigation activities, water transfer limitations, tiered pricing formulas, and other restoration and mitigation charges. Some of these changes are controversial. A summary of the main changes in the bill is provided below.", "Section 101 would add two purposes to the CVP under CVPIA: to ensure that the water used for fish and wildlife purposes is replaced and available for CVP water contractors, and to facilitate water transfers under the act. Existing CVP purposes as identified by CVPIA include protection, restoration, and enhancement of fish and wildlife habitats in the Central Valley and Trinity River basins, operational flexibility of the CVP, expanded use of water transfers, achieving balance among competing demands, and related uses.\nSection 102 would narrow the scope and definition of fish stocks provided protection under CVPIA. It would change the definition of \"anadromous fish\" to limit coverage to those found in the Sacramento and San Joaquin Rivers as of October 30, 1992 and eliminate coverage for non-native species, including striped bass and shad. Some stocks were already absent or in severe decline by 1992, including winter run Chinook salmon, which were listed as endangered under the Endangered Species Act (ESA) in 1990, and some (San Joaquin River runs) had become extinct by the 1950s. Thus, the section would change the baseline for fish protection and restoration, to set restoration goals at population levels after some species were already listed as endangered.\nSection 102 would also add a new term, \"reasonable flows,\" which as used in Section 105 could potentially lead to flows for fish and wildlife under the CVPIA being constrained due to the inclusion of other considerations. (See below section, \" Facilitated/Expedited Water Transfers \").", "Section 103 of the bill would make a number of changes to contracting provisions under CVPIA. Specifically, Section 103(1) would remove a qualified limitation under CVPIA that prohibits the signing of new CVP contracts until a number of other conditions are satisfied. This would allow new contracts to be issued without some of these conditions being met. Section 103(2) would increase the maximum contract term, from 25 years to 40 years, thereby returning the duration of these contracts to pre-CVPIA levels, if requested by contractors. It would also direct the Secretary to renew these contracts successively over a 40 year term. It is not clear if such a renewal would be subject to negotiation or review (as is done now), or whether such direction would preclude further National Environmental Policy Act (NEPA) review and Endangered Species Act consultation on contract renewal.\nSection 103(2) would direct that existing long-term repayment of water service contracts be administered under the Act of July 2, 1956. The 1956 act provides for contracts to have a provision allowing conversion of water service contracts (9(e) contracts) to repayment contracts (9(d) contracts), and provides that contractors who have repaid obligations shall have a \"first right\" to a stated share of project water for irrigation \"(to which the rights of the holders of any other type of irrigation water contract shall be subordinate) ... and a permanent right to such share or quantity ... \", subject to state water rights laws and provided \"[T]hat the right to the use of water acquired under the provisions of this Act shall be appurtenant to the land irrigated and beneficial use shall be the basis, the measure, and the limit of the right.\" This would give water service contractors long-term certainty over water supplies from the CVP. Finally, this section would also direct that all projects include a provision that parties are charged only for water actually delivered. Currently, some contractors pay for water based on acreage irrigated under certain contracts with the Bureau of Reclamation (or Reclamation) and must pay whether water is delivered or not, which, in case of drought years can be onerous.", "Several provisions of Section 104 deal with water transfers. Section 104(1) would direct the Secretary to \"take all necessary actions\" to facilitate and expedite water transfers in the CVP and would add a provision requiring a determination by reviewing parties as to whether the proposal is \"complete\" within 45 days. Further, it would add a new section that would prohibit environmental or mitigation requirements as a condition to any transfers. These mitigation requirements are sometimes employed for transfers that have been determined to affect third parties. This section would also add a new subsection to Section 3405 of CVPIA, which would allow for transfers that could have been made before enactment of CVPIA to go forward without being subject to the requirements of that act's requirements for water transfers. Section 104 would also add language that specifies that water use related to the CVP must only be measured by contracting district facilities up to the point where surface water is commingled with other water supplies. It would also eliminate the tiered pricing requirement and other revenue streams that fund fish and wildlife enhancement, restoration, and mitigation under the CVPRF, thus reducing CVPRF revenue collections.", "A number of provisions in Section 105 address fish, wildlife, and habitat restoration under CVPIA. First, Section 105 would remove the existing mandate that the Secretary modify CVP operations to provide flows to protect fish, making this action optional rather than required and stipulating the new term \"reasonable water flows\" to provide further guidance for this authority. Section 105 would further direct that any such flows shall be provided from the 800,000 acre feet of water for fish and wildlife purposes under Section 3406(b)(2) of the CVPIA (also known as \"(b)(2) water\"). Thus, flows in excess of this amount for fish and wildlife purposes would appear to not be authorized under this legislation. The 800,000 acre feet for fish and wildlife purposes would be a \"ceiling,\" rather than a floor under this provision. The section would remove the requirement that the Secretary of the Interior consult with the California Department of Fish and Game regarding modification of CVP operations for fish and wildlife, and substitute instead, consultation with the U.S. Geological Survey.\nSection 105 of H.R. 3964 would also allow (b)(2) flows to be used for purposes other than fish protection. Under this section, fish and wildlife purposes would no longer be the \"primary\" purpose of such flows. It would also adjust accounting for (b)(2) water, by directing that all water used under that section be credited based on a methodology described in the legislation. It appears that state water quality requirements, ESA, and all other contractual requirements would now need to be met via use of the (b)(2) water; however this is not entirely clear in the language. This section also would direct that (b)(2) water be reused.\nSection 105 would alter the provisions of the CVPIA related to reductions in deliveries for (b)(2) water. It would mandate an automatic 25% reduction of (b)(2) water when Delta Division water supplies are forecast to be reduced by 25% or more from the contracted amounts. Currently under CVPIA, the Secretary is allowed to reduce (b)(2) deliveries by up to 25% when agricultural deliveries of CVP water are reduced. Thus, whereas as the reduction was optional under CVPIA and can be up to 25%, under this section there would be a mandatory trigger for reductions, and said reductions would be required to be 25%.\nFinally, Section 105 would deem pursuit (as opposed to accomplishment) of fish and wildlife programs and activities authorized by the amended Section 3406 as meeting the mitigation, protection, restoration, and enhancement purposes of Section 2 of the CVPIA, as amended.", "Section 106(a) would strike the CVPIA direction that not less than 67% of funds made available to the Central Valley Project Restoration Fund (CVPRF) be set aside to carry out habitat restoration and related activities. The funds would presumably be made available for any purposes under the act. The section would also prohibit as a condition to providing for the storage or conveyance of non-CVP water, delivery of surplus water, or for any water that is delivered for groundwater recharge, the requirement of donations or other payments or any other environmental restoration or mitigation fees to the CVPRF. Finally, it would amend Section 3407(c) of CVPIA to strike the requirement for the collection of payments to recover mitigation costs. The Secretary would retain general authority to collect and spend payments as provided for other activities under Title I of CVPIA.\nSection 106(d) of the legislation would set a limit of $4 per megawatt hour for payments made to the CVPRF by CVP power contractors. Historically these payments have fluctuated. It also would require completion of fish, wildlife and habitat mitigation and restoration actions by 2020, thus shortening the likely time such payments would be in place and thereby reducing water and power contractor payments into the CVPRF. Currently, the CVPRF payments will continue until such actions are complete; then payments would be cut substantially. Section 106(d) would also establish an advisory board responsible for reviewing and recommending CVPRF expenditures. The board is to be primarily made up of water and power contractors (10 of 12), with the other two members designated at the discretion of the Secretary.", "Section 108(a) would direct that the CVP and the State Water Project (SWP) be operated per principles outlined in a previous agreement, the 1994 Bay-Delta Accord. Among other things, that agreement set maximum restrictions on water which were, in some cases, less restrictive than those in place today. This section of the legislation provides that the accord should be implemented, \"without regard to the [ESA] or any other law pertaining to operation of the [CVP] and [SWP].\" However, pursuant to Title IV, Section 401 of the bill, states water rights priorities would remain intact (See below section, \" Title IV—Bay-Delta Watershed Water Rights Preservation and Protection \"). How these two sections would be reconciled is unclear.\nSection 108(b) would prohibit federal or state imposition of any condition restricting the exercise of valid water rights in order to conserve, enhance, recover, or otherwise protect any species that is affected by operations of the CVP or SWP. It also prohibits the state of California, including any agency or board of the state from restricting water rights to protect any \"public trust value\" pursuant to the state's \"Public Trust Doctrine.\" Section 108(c) would provide that no costs associated with this section may be imposed on CVP contractors, other than on a voluntary basis. Finally, Section 108(d) would preempt state law regarding catch limits for nonnative fish that prey on native fish species (e.g., striped bass) in the Bay-Delta.", "Section 107 would make a number of other changes, including amending the CVPIA to provide the Secretary with authority to utilize CVP facilities to transfer, impound, or otherwise deliver nonproject water for \"beneficial purposes.\" It also provides that rates charged for this water shall not be provided to the CVPRF.\nSection 107 would also require a least-cost plan by the end of FY2015 to increase CVP water supplies by the amount of water dedicated and managed for fish and wildlife purposes under CVPIA, as well as to otherwise meet all purposes of the CVP, including contractual obligations. This section would also require implementation of the increased water plan (including any construction of new water storage facilities that might be included in the plan), beginning on October 1, 2015, in coordination with the state of California. If the plan fails to increase the water supply by 800,000 acre feet by the end of FY2016, implementation of any non-mandatory action under Section 3406(b)(2) would be suspended until the increase is achieved.\nSection 107(e) would authorize the Secretary to partner with local joint power authorities and others in pursuing storage projects (e.g., Sites Reservoir, Upper San Joaquin Storage, Shasta Dam and Los Vaqueros Dam raises) authorized for study under P.L. 108-361 (also known as \"CALFED\"), but would prohibit federal funds to be used for financing and constructing the projects. It would authorize non-federal construction of these facilities (so long as no federal funds are used).", "The fishing of non-native anadromous fish in California is regulated by the state of California. State regulations limit the size of fish that can be caught as well as number of fish caught per season, among other things. Some popular non-native anadromous fish in state include striped bass and largemouth bass. In the past few years, there have been proposals to loosen restrictions for fishing non-native anadromous fish, such as striped bass. Those in favor of lowering regulations (e.g., increasing bag limits and decreasing size limits for striped bass) contend that non-native anadromous fish are harming native species such as salmon and Delta smelt, both listed on the Endangered Species List. Those opposed to changing limits are concerned that without limits, these sport fisheries could decline.\nSection 114 of H.R. 3964 would establish a pilot program to remove non-native predator fish in the Stanislaus River and eliminate any state restrictions on catch, take, or harvest of any non-native or introduced aquatic or terrestrial species that preys upon anadromous fish that is found in the Stanislaus River. Specifically, Section 114 would direct the Commissioner of Reclamation, along with Oakdale and South San Joaquin Irrigation Districts, to develop and implement a pilot program to remove non-native striped bass, smallmouth bass, largemouth bass, black bass, and other non-native predator fish from the Stanislaus River. The program is to be scientifically based; include methods to quantify fish removed and impact of non-native anadromous species on native species; use specific control methods such as electrofishing; obtain relevant permits; and be implemented for seven years; among other things. The Commissioner and two districts are to manage the program jointly. The Districts would be responsible for 100% of the funding for this program. Costs for Reclamation are to be deposited in the Reclamation Fund by the Districts. Reports are to be made annually on the fishery data and a final report describing the program's effectiveness is to be provided at the end of the program. The permits are to be issued in the name of Reclamation and the Districts. Further, this provision is largely similar to H.R. 2705 (The Stanislaus River Native Anadromous Fish Improvement Act) , introduced July 2013.\nUnder subsection (i), anadromous fish as applied to the Stanislaus River and New Melones Dam, would be defined as those native stocks of salmon (including steelhead) that were present in the Stanislaus River as of October 30, 1992, among other conditions. This sets a baseline number for native salmon population stocks in the Stanislaus River. The section further states that the definition of anadromous fish under Section 3403(a) of CVPIA does not apply to the operation of New Melones Dam and Reservoir, or any federal action in the Stanislaus River. This would alter the application of actions for anadromous fish under CVPIA for the Dam and River.", "Title I of the bill contains several other significant provisions which are summarized below:\nSection 109 would mandate that hatchery fish be included in making determinations regarding anadromous fish covered by H.R. 3964 under the ESA. Currently, hatchery fish are not included in population estimates of protected species, due largely to their different genetic makeup from wild fish. The inclusion of these fish could lessen some ESA restrictions compared to current levels. Section 110 would expand the CVP service area to cover a portion of Kettleman City. The Secretary is directed to enter into a long-term contract with the Kettleman City Community Services District for up to 900 acre-feet of CVP water; however, similar to other areas, actual deliveries would depend on annual allocations by Reclamation. Under this section, the district would be responsible for additional infrastructure and costs to implement this section. Section 111 would deem compliance under the California Environmental Quality Act to suffice for compliance with NEPA for any project related to the CVP or related deliveries, including permits under state law. This would allow CVP projects and deliveries that conform to state law to circumvent traditional NEPA requirements. A potential benefit of this approach might be to speed up project approval processes. A potential downside might be a less thorough – or at least different – assessment of the environmental impacts of the proposed project or action. Section 112 would direct the Secretary to offer a contract under its authorities in the Warren Act for impoundment and storage of up to 200,000 acre-feet of Oakdale Irrigation and South San Joaquin Irrigation districts' Stanislaus River water rights in New Melones Reservoir. The Secretary must first determine that such storage will not adversely affect other CVP water contractors with regard to operation of the CVP to meet legal obligations related to ESA, CWA, or state water quality laws. This section also provides other conditions for the provision of these contracts, including minimum storage requirements, and that contracts must be for at least 10 years. Section 113 would direct the Secretary to offer a Warren Act contract for impoundment and storage of up to 100,000 acre-feet of Calaveras County Water District Stanislaus River water rights in New Melones Reservoir. This section also includes other conditions for the provision of these contracts, including minimum storage requirements, and requires that contracts must be for at least 10 years. Section 115 directs the Secretary to allow certain south-of-Delta water service or repayment contractors to reschedule unused CVP water for storage and subsequent use in the following year. The section also includes timelines and conditions, including that such rescheduling shall not interfere with CVP operations in the contract year into which the water has been rescheduled. This direction appears to be consistent with the approach of Reclamation in recent years in making available rescheduled water from the San Luis Reservoir, subject to that year's CVP operations.", "Many of the provisions in Title I have tradeoffs embedded in them. For example, provisions in Section 102 limiting the scope and definition of fish stocks receiving protection by the act may benefit some stakeholders, but are strongly opposed by others. Similarly, expanding the use of dedicated fish flows and funding for fish and wildlife restoration under Section 105 may provide more water to irrigators or other water users, but may contribute to the decline of salmon and other fish populations. This tradeoff may also be applicable to some of the more controversial sections of the bill, such as directing renewal of existing contracts (Section 103), which could be viewed on one hand as an attempt to circumvent future NEPA review, but on the other hand as a way to guarantee supplies of water and streamline the regulatory process. Section 108 of H.R. 3964 , which directs the Secretary to operate the CVP and SWP according to principles outlined in the 1994 Bay-Delta Accord, also would benefit some water users (e.g., to the extent that more water would be made available for use than under current law), but may harm other stakeholders (e.g., to the extent such operation would negatively affect Delta water quality or fish viability)\nThe provisions of the bill under Title I raises several key questions regarding CVP water supplies for users and the environment. Selected questions include: How much more water would be available to CVP water users under H.R. 3964 in various scenarios? Specifically, how much more water would be available for export from the Delta, and how would the bill affect reservoir releases? Would there be more water also available at desirable times for CVP and SWP contractors in the Sacramento watershed (and if so, how much)? How would the bill affect the viability of listed species? What effects would it have on water quality, recreation, and commercial and sport fishing?", "", "Historically, Central California's San Joaquin River supported large Chinook salmon populations. Since the Bureau of Reclamation's Friant Dam on the San Joaquin River became fully operational in the late 1940s, much of the river's water has been diverted for agricultural uses. As a result, approximately 60 miles of the river became dry in most years, making it impossible to support Chinook salmon populations upstream of the Merced River confluence. In 1988, a coalition of environmental, conservation, and fishing groups advocating for river restoration to support Chinook salmon recovery sued the Bureau of Reclamation. A U.S. District Court judge subsequently ruled that operation of Friant Dam was violating state law because of its destruction of downstream fisheries. Faced with mounting legal fees, considerable uncertainty, and the possibility of dramatic cuts to water diversions, the parties agreed to negotiate a settlement instead of proceeding to trial on a remedy regarding the court's ruling.\nA settlement agreement was reached in the fall of 2006. Implementing legislation was debated in the 110 th Congress ( H.R. 4074 , H.R. 24 and S. 27 ) and 111 th Congress and became law in the spring of 2010 (Title X of P.L. 111-11 ). The Settlement Agreement and its implementing legislation call for new releases of water from Friant Dam to restore fisheries (including salmon) in the San Joaquin River and for efforts to mitigate water supply losses due to the new releases, among other things. As of 2014, Reclamation (with partners) had undertaken a number of implementation actions, including reintroduction of spring-run Chinook salmon in the San Joaquin River for the first time in more than 60 years.\nBecause increased water flows for restoring fisheries (known as restoration flows) reduce diversions of water for off-stream purposes, such as irrigation, hydropower, and municipal and industrial uses, the settlement and its implementation have been controversial. The quantity of water used for restoration flows and the quantity by which water deliveries would be reduced are related. However, the relationship would not necessarily be one-for-one due to flood flows in some years and other factors that affect water flows. Under the Settlement Agreement, no water would be released for restoration purposes in the driest of years; thus, the Settlement Agreement would not reduce deliveries to Friant contractors in those years. Additionally, in some years, the restoration flows released in late winter and early spring may free up space for additional runoff in Millerton Lake, potentially minimizing reductions in deliveries later in the year—assuming Millerton Lake storage is replenished. Consequently, how deliveries to Friant water contractors might be reduced in any given year depends on many factors.\nRegardless of the specifics of how much water might be released for fisheries restoration versus water diverted for off-stream purposes (such as irrigation), there will be impacts to existing surface and groundwater supplies in and around the Friant Division Service Area. Although some opposition to the Settlement Agreement and its implementing legislation remains, the largest and most directly affected stakeholders (i.e., the majority of Friant water contractors, their organizations, and environmental, fisheries, and community groups) supported the Settlement Agreement and publicly supported the implementing legislation. On the other hand, others opposed the Settlement Agreement and have continued to oppose its implementation.", "Title II of H.R. 3964 would address the ongoing controversy associated with the San Joaquin River Restoration Settlement (SJRRS) by declaring that the Title \"satisfies and discharges\" all obligations of the Secretary and others to keep in good condition any fish below Friant Dam, including obligations under Section 5937 of the California Fish and Game Code, the state public trust doctrine, and the federal ESA. While many of the underlying authorities provided for in the P.L. 111-11 would remain, Title II of H.R. 3964 would remove most references to the Settlement Agreement itself, and would amend the San Joaquin River Restoration Settlement Act's purpose to be restoration of the San Joaquin River, instead of implementation of the Settlement Agreement. A summary of some of the key provisions in each section is provided below.", "Sections 201-203 provide for the general repeal of the San Joaquin River Restoration Settlement Act (SJRRSA), and make changes to the purposes and definitions of P.L. 111-11 . Section 201 of H.R. 3964 would repeal the San Joaquin River Restoration and direct the Secretary of the Interior to \"cease any action\" to implement the stipulated Settlement Agreement on San Joaquin River Restoration. Section 202 would amend the \"Purpose\" section of P.L. 111-11 to change the purpose of that act from \"implementation of the Settlement\" to \"restoration of the San Joaquin River.\" Section 203 makes alterations to the definitions in P.L. 111-11 , including adding new terms for 'Restoration Flows,' 'Water Year' and 'Critical Water Year' that are referenced in other sections (see below). It also strikes most of the other terms originally defined in P.L. 111-11 .", "Section 204 of Title II would make a number of significant changes to the restoration settlement authorized under Section 10004 of P.L. 111-11 . Among other things, it would remove several provisions from P.L. 111-11 that authorize physical restoration of the San Joaquin River such as channel and structural improvements. It also employs the new definition for \"Restoration Flows\" provided in Section 203. Pursuant to the new definition, the additional water released or bypassed from Friant Dam must not result in a target flow entering the Mendota Pool below 50 cubic feet/second (cfs), except in a Critical Water Year (also defined in Section 203). This approach contrasts with the Settlement, which calculates Restoration Flows based on a water year type.\nSection 204 would also direct the Secretary to develop and implement within one year a \"reasonable plan\" to fully recirculate, recapture, reuse, exchange, or transfer all restoration flows (defined as a target of 50 cfs entering Mendota Pool, 62 miles below Friant Dam). It would also provide such flows to contractors within the units of the CVP that relinquished such restoration flows. This would allow for restoration water supplies to be replenished for users, thus potentially increasing their water supplies. However, it is unclear where this replenished water would come from and how it would be distributed to users. It would also direct the Secretary to identify impacts associated with implementation of modified restoration flows and create and implement mitigation actions to address those impacts before restoration flows begin. It is not clear how impacts would be defined, nor how they would be addressed by this section.\nFinally, Section 204 would also preempt and supersede state law from providing more restrictive requirements than what is contained in the bill. It includes a qualified preemption of Section 8 of the Reclamation Act of 1902 (which establishes deference to state law, as long as state law is not inconsistent with the act's purposes) and specifically \"preempts and supersedes any State law, regulation, or requirement that imposes more restrictive requirements or regulations on the activities authorized under this part.\" It does, however, make an exception for certain state water quality rules. Section 207 of the bill would provide that certain obligations under California state law and the federal ESA as they pertain to fish below Friant Dam are satisfied by carrying out P.L. 111-11 . This provision refers to the basis of the Stipulated Settlement Agreement, in that a federal court had found that Reclamation was in violation of state law by not protecting and keeping in good condition fish below Friant Dam. This language would deem those state obligations, as well as those under the federal ESA, to be met.\nSeveral other provisions would make significant changes to the implementation of the SJRRSA. Examples of these changes include:\nSection 208 would amend Section 10008(a) of the P.L. 111-11 to provide protections to third parties and allow CVP contactors to bring action against the Secretary for injunctive relief or damages, or both, for failure to comply with the new requirements of Section 10004(a)(3) of P.L. 111-11 . In addition to creating a mechanism to mitigate impacts, this section would also set up a process for filing claims for damages. Both provisions would provide support to water users affected by a reduction in flows. Section 209 would significantly alter the authorization of appropriations under Section 10009 of P.L. 111-11 , including repealing the authorization of $250 million in discretionary appropriations for implementation of the settlement. It would also remove other directions and references to repealed sections of P.L. 111-11 . Section 210 would make limited changes to Section 100010 of P.L. 111-11 , which pertain to repayment contracts and accelerated repayment. It would remove references to the settlement and conform references to changes made under Sections 203 and 204 of H.R. 3964 pertaining to the new definition for \"restoration flows.\" Section 211 would repeal in its entirety Section 10011 of P.L. 111-11 , which addresses implementation issues associated with the re-introduction of Central Valley spring run Chinook salmon. Under that section, Congress had previously provided specific instructions in regards to congressional intent for the introduction of these fish under the Endangered Species Act. Section 212 would alter the authority provided in P.L. 111-11 for the Secretary to provide financial assistance for certain water supply projects related to San Joaquin River restoration. The authority would be amended as to reference the newly defined restoration flows defined under Section 203. Section 213 would repeal P.L. 111-11 's authorization of appropriations for the Secretary to provide financial assistance to the California Water Institute for a study to conduct a study regarding the coordination and integration of sub-regional integrated regional water management plans into a unified Integrated Regional Water Management Plan.", "It is not clear how the proposed changes to SJRRSA would affect the Stipulated Settlement Agreement itself. Parties who helped author the settlement's implementing legislation have opposed Title II of the bill. They have argued that the benefits of restoration are just beginning to accrue, and that the settlement itself has not in practice resulted in significantly reduced water deliveries. However supporters of these provisions disagree, and argue that the settlement has harmed irrigators. Limited information from both sides is available that indicates how exactly enactment of the bill would affect ongoing restoration efforts.", "", "Since the passage of the Reclamation Act of 1902, reclamation law has been based on the concept of project repayment—reimbursement of construction costs—by project water and power users (also known as project beneficiaries). Typical \"repayment contracts\" were made for terms of 40 or 50 years, with capital costs amortized over the long-term period and repaid in annual installments (without interest for irrigation investments and with interest for M&I investments). According to one account, because the CVP is a \"financially integrated\" system, a different type of contract was used, known as a \"water service contract.\" Under water service contracts, contractors pay a combined capital repayment and operations and maintenance (O&M) charge for each acre-foot of water actually delivered. This water service payment is different from repayment contracts, in that under repayment contracts the annual repayment bill is due regardless of how much water is used in a given year. Repayment contracts tend to be the norm outside of California; however, some other projects do have some water service contracts. Water service contracts in the CVP were also typically written for 40-year terms. However, in 1992, with the passage of the Central Valley Project Improvement Act (CVPIA, Title 34 of P.L. 102-575 ), contract terms were reduced to a maximum of 25 years.\nAnother early tenet of reclamation law still in existence is a limit on how much land one can irrigate with water provided from federal reclamation projects. The idea behind the limitation was to prevent speculation and monopolies in western land holdings and to promote development and expansion of the American West through establishment of family farms. Over the ensuing decades, several attempts were made to increase the acreage limitation, and in 1982, pursuant to the Reclamation Reform Act (RRA, P.L. 97-293 ), the original acreage limitation of 160 acres was raised to 960 acres. Scholars and others have written extensively on enforcement issues resulting from the 960-acre limit. It has remained, on one hand, an unpopular provision among large landholders who do not want limits on their land, particularly in the Central Valley where large industrial farms are more common than other areas of the West. On the other hand, it is a key rallying point for taxpayer groups, environmentalists, and others who have opposed using federally subsidized water to irrigate large swaths of land. Under current law, once a repayment contract is paid out, the contractor no longer is subject to the 960-acre limit or other provisions of RRA (e.g., full-cost pricing for water).", "Title III contains one section: Section 301. Section 301 would authorize and direct the Secretary, upon request, to convert any agricultural water service contracts (known as 9(e) contracts) to repayment contracts (known as 9(d) contracts), as well as M&I water service contracts to repayment contracts. It would direct that under such conversions, the Secretary would require repayment either in lump sum or accelerated prepayment of a contractor's remaining construction costs, thus accelerating the process and advantages associated with full project repayment. It would also authorize the Secretary to similarly convert contracts for municipal water. The section would reiterate current law regarding the elimination of an obligation to pay full-cost pricing rates or abide by the acreage (ownership) limitations of Reclamation law once the repayment obligation is met.", "It is not clear how many contractors within the CVP might take advantage of these provisions and opt to prepay or accelerate their payments. Current CVP contract rates are based on a target repayment date of 2030; however, because the project is technically not complete, adjustments are made annually to capital cost obligations. Current CVP rate books (updated in 2012) show outstanding repayment obligations of approximately $1.15 billion for irrigation contracts and $147 million for M&I contracts. Presumably, districts interested in prepaying or accelerating repayment would need to obtain a loan or issue a bond to raise capital to make the payment, unless they have cash or other relatively liquid assets on hand. Because the federal repayment amount in agricultural contracts is akin to a no-interest loan for irrigation contracts, a district would have to weigh the financial costs of new financing with the operating and opportunity costs of continuing to remain under reclamation ownership and full-cost pricing rules. The added permanency of the water contract provided for under proposed Title I of this bill (i.e., directed renewal of 40 years, upon request, and potentially without NEPA review), might make such prepayment more attractive. On the other hand, if under Title I a water service contractor could also enjoy such benefits anyway (due to the renewal language and administration under the 43 U.S.C. 485h-1 ), it is not clear that the added benefits of being able to use Bureau of Reclamation water on more land and elimination of other requirements would outweigh the financial and administrative costs of new financing. One other incentive to prepay is the reporting requirements required for landowners. Those that own many properties throughout the West would no longer have to report acreage irrigated.", "", "Section 8 of the Reclamation Act of 1902 requires Reclamation to comply with state law, including requiring the agency to acquire water rights for its projects, such as the CVP. For the CVP, Reclamation found it necessary to enter into \"settlement\" or \"exchange\" contracts with senior water users who had rights pre-dating the project, and were thus senior water rights holders. \"Sacramento River Settlement Contractors\" are one such class. They entered into Sacramento River Settlement Contracts with Reclamation, which guarantee these contractors a certain amount of \"base supply water\" (some users also contract out for \"project water\"). \"Exchange Contractors\" are the other primary class of senior water rights holders. This refers to water users (south of the Delta) who diverted water from the San Joaquin River prior to construction of Friant Dam. These users exchanged their direct diversion of river water for water delivered from the Delta via the CVP Delta-Mendota canal. Both classes of contractors (as well as wildlife refuges) are generally limited as to the maximum reductions to their water supplies based on hydrological conditions (e.g., no less than 75%). These same limits on reductions are not currently provided for water service contractors.", "Title IV of H.R. 3964 aims to protect senior water rights and what are known as \"area-of-origin\" priorities that are currently embedded in state law. The Title also includes specific language protecting Sacramento River Settlement Contracts from potential reductions due to ESA implementation and to protect such contractors from adverse consequences of H.R. 3964 's Section 108 preemption of state and federal law on CVP and SWP Delta operations.\nFollowing is a summary of a few key provisions of Title IV:\nSection 401 would direct the Secretary to strictly adhere to state water rights by honoring senior water rights, \"regardless of the source of priority.\" This would stipulate that state water rights are to remain intact, and aim to prevent any use of the authority provided for under Section 108 to alter any existing water rights. Section 402 would provide that in implementing the ESA, water supply reductions for Sacramento Valley Settlement Contractors must adhere to water rights priorities as stipulated in those contacts. Section 403 would place new limits on water supply reductions for Sacramento River watershed water service contractors, subject to the seniority provided to Settlement Contractors under Section 402. These limits on reductions would be similar to those provided to senior water contractors and wildlife refuges. For example, under this section, the Secretary of the Interior in operation of the CVP would have to deliver not less than 75% of Sacramento River watershed water service contractors' contracted water supply in a \"dry\" year (no such protection would be provided for water service contractors outside of this area). Currently, these water service contractors have no minimum guarantee of water deliveries in dry years. The section also provides protections for M&I water contractors. Section 404 would direct the Secretary to ensure \"that there are no redirected adverse water supply or fiscal impacts to those within the Sacramento River watershed or to the State Water Project arising from the Secretary's operation of the [CVP]\" to meet legal obligations imposed by or through a state or federal agency, including but not limited to the ESA or H.R. 3964 , or actions or activities implemented to meet \"the twin goals of improving water supply or addressing environmental needs of the Bay Delta.\" The latter clause appears to be a reference to ongoing state and federal efforts to develop a Bay-Delta Conservation Plan [BDCP] and the state's implementation of a Delta action plan.", "While Title IV would protect northern and other senior water rights holders (senior to those rights or permits belonging to the CVP), it does not appear to provide the same level of protection to water users in the Delta or others whose water rights may be more junior to the CVP, but perhaps senior to others. Additionally, to the extent the bill would not provide new water to junior contractors beyond what might be garnered from prohibition on environmental restrictions beyond those contained in the Bay-Delta Accord, it is not clear the bill would end water supply shortages until new water supplies or other increases in yield anticipated by the bill were developed or accomplished.\nIt is not clear how some sections of Title IV square with the broad preemption language of Section 108 and Title V, or how such legislation would be implemented in practice. Some of the sections in Title IV appear to conflict with the goals of Title I. It is unclear how much new water would be available to junior contractors, beyond water used for environmental purposes that would no longer be allowed under H.R. 3964 .", "", "Title V has three sections. Section 501 includes findings of Congress that the unique circumstances of coordinated operations of the CVP and SWP \"require assertion of Federal supremacy to protect existing water rights throughout the system\" and that as such shall not set precedent in any other state. As noted above, there has been concern from some western states that the state and federal preemptions contained in H.R. 3964 might be used as precedent in other western states and threaten their allocation of state water rights, and this provision attempts to address these concerns.", "Some might question if provisions in the bill conflict with certain emergency authorities provided to the State Water Resources Control Board (SWRCB), and how the competing provisions are to be reconciled. Section 502 attempts to reconcile those concerns by declaring that that nothing in the act shall \"affect in any way\" the Proclamation of State Emergency and associated Executive Order (Emergency Order); issued by Governor Brown on January 17, 2014, or the authorities granted by the Proclamation. Further, the bill would not limit the authority provided by the Proclamation to allow the SWRCB to modify and standards or operational constraints adopted to implement the Bay-Delta Accord so as to make additional water supplies available to service areas during a state of emergency. Under the Emergency Order, the Governor authorizes the SWRCB to expedite and streamline water transfers, expedite funding for water supply projects and water conservation projects, notify water right holders that they might be directed to cease or reduce diversions based on water shortages, modify requirements as they relate to reservoir releases and to implementing a water quality control plan, among other things. Section 503 includes language that would adjust a Wild and Scenic River boundary for the Merced River, potentially allowing for increased storage at Exchequer Dam. The removal of sections of the Merced River from the Wild and Scenic Rivers Act would remove that section of the river from restrictions in the act aimed at protecting river segments from certain types of development and adverse effects of water management regimes (notably the requirement that the river segment remains in a free flowing condition).\nSection 504 would direct that a January 17, 2014 Proclamation of State Emergency and Executive Order by the Governor of California shall be considered a request for a fisheries disaster declaration under the Magnuson-Stevens Act. If it is determined that such a disaster as occurred, these areas would potentially be eligible for disaster assistance.", "H.R. 3964 would make extensive changes to implementation of federal reclamation law under the Central Valley Project Improvement Act, the contracting provisions under the 1939 Reclamation Project Act, restoration efforts under the San Joaquin River Restoration Settlement Act, and state and federal relationships under Section 8 of the Reclamation Act of 1902. The bill would also alter the way the state of California implements its own state laws with regard to operation of the CVP and SWP and non-native fisheries.\nH.R. 3964 is primarily aimed at addressing decreased water deliveries to California's CVP and SWP contractors, particularly those south of the Delta, since passage of the CVPIA in 1992. The bill would allow water to be delivered to contractors that would likely become available due to changes in restrictions in environmental and other laws. It would result in greater water deliveries by preempting federal and state law, including fish-and-wildlife protections and other CVP operational mandates, which are all tied to the coordinated operations of the CVP and SWP. It is unclear what impacts such changes would have on other water users in the state. Title IV of the bill attempts to provide protections for California's senior water right holders, particularly those in the Sacramento Valley watershed and in \"area-of-origin\" areas. A key remaining unknown consequence is the significance of the bill's use of the fixed 1994 Bay-Delta Accord as a basis rather than current (and evolving) in-Delta water quality standards and biological opinions under the federal ESA. The current water quality standards impose water flow restrictions and appear to be a contributing factor to annual pumping restrictions in the Delta, along with ESA requirements.\nThe exact amount of water the bill would make available to certain users under various scenarios is unclear. While much attention has been paid to the effects of federal and state environmental laws on reductions in water supplies south of the Delta, the extent to which the bill would relieve current and ongoing water supply shortages, particularly in drought years, is uncertain. Limited increases in deliveries for water contractors may be garnered from a prohibition or alteration of some state and federal environmental restrictions (including the State's Public Trust Doctrine and other laws proposed under the bill. However, the legislation does not appear to fundamentally change some of the other factors driving water shortages and delivery curtailments in the Delta, including the fundamental tenet of state water rights during times of shortage. Indeed, under some drought scenarios junior water rights holders may face curtailed water deliveries (i.e., regardless of environmental restrictions), while senior water rights holders continue to receive water. Additionally, another significant factor in recent pumping restrictions in the Delta is the state water quality control plan, which includes salinity and flow requirements under California State Water Resources Control Board Decision 1641 (also known as \"D-1641\"). This decision in some cases dictates the timing and quantity of water deliveries south of the Delta. It is unclear the extent to which water quality standards that would be required under the Bay-Delta Accord would correlate with the current requirements under D-1641. Such correlation (or lack thereof) could have a potentially significant effect on the extent of water exports in a given year.\nLonger term consequences of the legislation may also be of interest to Congress. Unlike some other proposals, H.R. 3964's provisions would be in effect beyond the current drought, and would continue in perpetuity absent future changes to the statute. Effects of the legislation on other ongoing plans, such as the Bay Delta Conservation Plan (BDCP), are unknown but could be significant. Some have argued that if ESA and state protections in the Bay-Delta are removed as proposed, there would be less need for the BDCP, a habitat conservation plan. The precedent of legislation may be of interest, as well. Among other things, the waiver of ESA and state laws in order to provide increased water deliveries for federal project contractors would be a significant departure from the previous deference to these laws.\nH.R. 3964 goes to the heart of the water supply issue in California by proposing to prohibit \"any\" state or federal law (including the public trust doctrine) from reducing water supplies beyond those allowed in the Bay-Delta Accord. It would also declare federal supremacy over water management to \"protect existing water rights throughout the system.\" However, some argue that the bill would undermine efforts to achieve the \"co-equal\" goals of \"providing for a more reliable water supply for California and protecting, restoring, and enhancing the Bay-Delta ecosystem,\" which is the foundation of state and federal efforts in development of the Bay Delta Conservation Plan. Therefore the overall approach of the legislation, as well the extent to which it would alter the existing water management regime in California, may elicit ongoing debate." ], "depth": [ 0, 1, 1, 2, 2, 3, 3, 3, 3, 3, 3, 3, 3, 3, 2, 1, 2, 2, 3, 3, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 1 ], "alignment": [ "h0_title h2_title h1_title h3_title", "h0_full h1_full", "h3_title", "", "", "", "", "", "", "", "", "", "", "", "h3_full", "h1_title", "", "h1_title", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "h0_full h3_full h2_full h1_full" ] }

{ "question": [ "Why have some water contractors in California's Central Valley received less than their full contract water supplies?", "Why are these reductions significant?", "Why have fish populations in Central Valley declined?", "How is the government working to fix issues in Central Valley?", "What was enacted on February 5, 2014?", "What would the Sacramento-San Joaquin Valley Emergency Water Delivery Act amend?", "What would the Sacramento-San Joaquin Valley Emergency Water Delivery Act preempt?", "What would the Sacramento-San Joaquin Valley Emergency Water Delivery Act substitute?", "What would the Sacramento-San Joaquin Valley Emergency Water Delivery Act repeal?", "What do proponents of H.R. 3964 argue?", "What do opponents of H.R. 3964 argue?", "How would the bill undermine efforts resolve reliability issues according to opponents?", "What issues is Congress facing regarding H.R. 3964?", "What is a tradeoff concerning H.R. 3964?", "What would be the result of this tradeoff?", "What is currently unknown regarding H.R. 3964?" ], "summary": [ "Although such allocations are in part the result of the prior appropriation doctrine in western water law and are consistent with the expectation of a \"junior\" water user in times of drought, tensions over water delivery reliability have been exacerbated by reductions in deliveries even in non-drought years.", "Such reductions are significant because much of the California urban and agricultural economy operates under junior water rights, and reductions in water allocations can cause significant disruption and economic losses, particularly in drought years.", "At the same time, fish populations throughout the Central Valley have dramatically declined due to water diversions and other factors, and this has been accompanied by significant losses for fishing communities and others dependent on fish and wildlife resources.", "At the same time, fish populations throughout the Central Valley have dramatically declined due to water diversions and other factors, and this has been accompanied by significant losses for fishing communities and others dependent on fish and wildlife resources.", "On February 5, 2014, the House enacted H.R. 3964, the Sacramento-San Joaquin Valley Emergency Water Delivery Act.", "The bill would, among many other things, amend the Central Valley Project Improvement Act of 1992 (CVPIA) to potentially reduce some water allocations for fish and wildlife and redirect them to other purposes (i.e., agricultural and municipal and industrial uses).", "It would preempt \"any\" (including state and federal) law pertaining to operation of the federal Central Valley Project (CVP) and California's State Water Project (SWP).", "It would also substitute for those laws operational principles from a 1994 interim agreement, known as the Bay-Delta Accord, which some believe would provide more reliable water supplies for federal and state water contractors.", "It would also repeal certain components of a 2010 law authorizing a settlement agreement for the San Joaquin River, and would make numerous other changes.", "Proponents of H.R. 3964 argue that implementation of the CVPIA and the San Joaquin River Settlement, coupled with state and federal environmental laws (e.g., the federal Endangered Species Act, its state equivalent, and state regulations implementing the federal Clean Water Act), have compounded the impact of drought on water deliveries.", "Opponents argue that the bill would harm the environment and resource-dependent local economies, particularly coastal communities. Some also argue that it would undermine efforts to resolve environmental and water supply reliability issues through development of the BDCP.", "Some also argue that it would undermine efforts to resolve environmental and water supply reliability issues through development of the BDCP.", "Issues for Congress include the extent to which the bill changes decades of federal and state law, including state and federal environmental laws, and at what benefit and cost.", "For example, there are tradeoffs embedded in the bill's preemption of state water law, including fish and wildlife protections, as a means to increase the water deliveries to some irrigation contractors and municipalities.", "These changes might benefit water contractors in some areas, but potentially reduce environmental protections and improvements and the industries they support (e.g., recreational and fishing industries) in others.", "Congress may also consider the potential extent to which the bill would relieve water supply shortages, particularly in drought years. While much attention has been paid to the effects of federal and state environmental laws on reductions in water supplies south of the Bay-Delta, many factors affect pumping restrictions and the overall water allocation regime for CVP contractors. How H.R. 3964 would in practice affect these factors is uncertain." ], "parent_pair_index": [ -1, 0, -1, -1, -1, -1, 1, 1, 1, -1, -1, 1, -1, 0, 1, -1 ], "summary_paragraph_index": [ 0, 0, 0, 0, 1, 1, 1, 1, 1, 2, 2, 2, 3, 3, 3, 3 ] }

{ "title": [ "", "Introduction", "Overview and Background", "Size of the Tax Expenditure", "Distribution of Tax-Exempt Interest Income", "The Value of the Tax-Exemption to Issuers", "Proposals for Changing Tax Preference", "Capping the Income Tax Benefit of the Tax-Exempt Interest", "Impact on Investors", "Impact by Marginal Tax Rate", "Impact on Issuers", "Simpson-Bowles Deficit Reduction Committee Plan", "Impact on Investors", "Impact on Issuers", "Congressional Budget Office Revenue Option", "Impact on Investors", "Impact on Issuers", "Conclusion" ], "paragraphs": [ "", "The current budget situation has prompted Congress to examine a variety of revenue raising options. Repealing or modifying some or all of the long list of so-called tax expenditures is often included as part of those options. The exclusion from income of the interest paid on state and local government debt is one such tax expenditure. There are three primary types of proposals that include changes to state and local government bonds—capping the preference, eliminating the preference, and changing the preference to a direct issuer subsidy. These three types can be seen in the following proposals. The President's FY2013 budget proposal would include partial elimination of the tax preference by capping the preference at the 28% marginal tax rate. The Simpson-Bowles (SB) deficit reduction plan proposes complete elimination of the tax preference. The Congressional Budget Office (CBO) \"Revenue Options\" report proposes changing the tax exclusion for investors to a direct tax subsidy to issuers .\nOne of the cited reasons for the elimination (or at least modification) of the tax exclusion for interest on state and local government bonds (tax-exempt bonds) is that the preference is a financially and economically inefficient tool for inducing public capital investment. In short, the federal revenue loss is greater than the subsidy to state and local governments. Thus, modifying, eliminating, or reducing the tax preference could generate federal revenue and make the federal tax code more economically efficient.\nPolicymakers must weigh a variety of competing concerns when evaluating these proposals to modify tax-exempt bonds. Issuers, such as governments and certain private entities, benefit from lower cost of borrowing and relatively high-income investors benefit from the resulting tax-free income. With the proposals presented here, issuers would likely encounter higher borrowing costs and relative wealthy investors would lose a significant tax preference. In particular, the top 10% of all earners realize more than 77% of the total reported tax-exempt interest income. The reduced benefits accruing to issuers and these investors, however, should be weighed against the benefit of a potentially more efficient (and to some, equitable) federal income tax.", "The impact of changes to the tax treatment of the interest on state and local government debt can be assessed from three perspectives to analyze: the size of the tax expenditure, the distribution of the tax-exempt interest income, and the value of the tax-exemption to issuers.", "The size of the tax subsidy is significant. The Administration's 2013 budget includes a tax expenditure estimate of $227.5 billion for the 2013 to 2017 budget window for public purpose state and local government bonds ( Table 1 ). The 2013 budget also estimates that non-governmental tax-exempt bonds (so-called qualified private activity bonds) will generate an additional $78.7 billion in revenue losses over the same time frame. The single largest non-governmental tax expenditure for tax-exempt bonds is for non-profit hospital bonds ($26.9 billion). The column identified \"Rank\" in Table 1 is the position of the provision in the list of all 173 federal tax expenditures contained in the 2013 budget.\nHow this tax subsidy is distributed across taxpayers underlies the analysis of the potential impact of tax reform proposals. The President's 2013 budget would cap the exclusion of interest income from tax-exempt bonds at 28%. The Simpson-Bowles (SB) plan would eliminate the income exclusion entirely and lower marginal tax rates. The CBO deficit reduction options report proposes to replace the interest exclusion for tax-exempt bonds with a direct payment to issuers.", "The distribution of tax-exempt interest is skewed to higher income taxpayers because the marginal income tax rates provide a higher after-tax rate of return for these taxpayers. Consequently, proposals that change the tax rules for tax-exempt bonds will have a greater impact on higher-income taxpayers.\nThe Internal Revenue Service, Statistics of Income Division (SOI), publishes annual summaries of the composition of income for all tax returns. Relatively few returns report earning tax-exempt interest income. In 2009, approximately 4.5% of all returns (6.3 million) reported tax-exempt interest income. As income increases, however, the percentage of returns reporting tax-exempt interest income rises significantly. Almost two-thirds (64.1%) of returns with adjusted gross income (AGI) over $1 million included tax-exempt interest income.\nTable 2 presents the distribution of interest income by AGI with a break at the $200,000 income threshold. The $200,000 income level roughly approximates the income threshold at which policymakers have discussed reducing preferences in the tax code—as in the FY2013 budget proposal. In 2009, 80.6% of returns reported AGI under $200,000. These returns with AGI of less than $200,000 accounted for just 50.5% ($37.2 billion) of tax-exempt interest income. The remaining 19.4% of returns with AGI above $200,000 reported 49.5% ($36.4 billion) of tax-exempt interest income.\nThe data by broad AGI groups presented in IRS published reports provides a reasonable assessment of the distribution of tax-exempt interest income. The IRS also releases data for public use that can be organized to address different policy questions. For example, Figure 1 reports the portion of tax-exempt interest reported by tax return decile for the 2007 tax year. The deciles for the figure are created by sorting all returns by AGI from lowest to highest. The first decile is the first 10% of returns and includes many returns with \"negative\" income. Each successive decile represents the next 10%. The deciles provide a smoother climb up through the range of AGI. The tenth or highest decile, returns with AGI above $113,400, reported over 77% of all tax-exempt interest income and exceeded total AGI for the cohort. Interestingly, the bottom decile, with negative aggregate AGI, actually claimed 2.0% of the interest income and was the only other cohort with tax-exempt interest income that exceeded aggregate AGI. This income cohort likely includes filers that in previous years had been in higher income cohorts and are temporarily in this lowest cohort. This cohort also includes retired taxpayers that do not earn wage and salary income.\nWithin the top decile, tax-exempt interest income is even further concentrated in the top one percent of AGI. In 2007, the top one percent of returns all reported AGI over $407,500 and earned 49.0% of all tax-exempt interest income. Clearly, the benefit of the tax exclusion is concentrated in the upper income groups. Thus, modification of the tax preference will impact this income cohort the most.", "Generally, the interest rate on tax-exempt bonds is considered the \"cost of capital\" for the issuing entity. If the interest rate on state and local government bonds is lower than the comparable taxable interest rate for private borrowers, then the issuing government is receiving a federal subsidy, reducing the cost of capital. Thus, the relative difference between taxable bonds and tax-exempt bonds (or spread) is a straightforward way to evaluate or quantify the value of the interest exclusion to issuers.\nThe next section reviews selected proposals that would modify the tax preferences for tax-exempt bonds. The 2013 budget proposal, the Simpson-Bowles deficit reduction proposal, and the Congressional Budget Revenue Option, would all impact tax-exempt bonds directly if enacted.", "As discussed above, three types of proposals are examined here. The first, capping the benefit of the tax-exemption to the 28% marginal tax rate, was included in the President's 2013 budget. The second, eliminating the tax-exemption while broadening the income tax base and lowering rates, was included in the Simpson-Bowles Deficit Commission Report. The third, replacing the tax-exemption for investors with a direct payment to the issuer, was proposed in the Congressional Budget Office publication, \"Revenue Options.\" Variants of this last proposal include so-called tax credit bonds where the issuer or investor receives a tax credit rather than a tax exclusion. For example, the President's FY2013 budget includes reinstating one type of tax credit bond, the Build America Bond (BAB), which expired December 31, 2010.", "One proposal is to cap the benefit of tax-exempt interest at the 28% marginal tax rate. The plan would allow taxpayers over $200,000 ($250,000 for joint filers) an exclusion only up to the equivalent of a 28% marginal income tax rate. The impact on investors will be greater the higher the marginal tax rate. Generally, the taxpayers in tax brackets at or above the 33% rate will encounter the largest effect as more of their tax-exempt earnings would be subject to some tax under this proposal.", "Investors evaluate the attractiveness of a tax-exempt bond investment through comparison to a taxable alternative. More generally, the market interest rate where the after-tax rate of return on a taxable bond matches the tax-exempt rate is commonly called the \"market clearing rate.\" If some of the interest on a tax-exempt bond becomes taxable, then the market clearing rate will increase.\nThe change in the market clearing rate is a rough gauge of the relative impact of the proposed modification to the tax treatment of interest paid on tax-exempt bonds. In Table 3 , the column labeled \"Hypothetical Taxable Bond Rate\" is a taxable investment that serves as an investment alternative to tax-exempt bonds. Under current law (the third column), higher income investors would be willing to accept ever lower tax-exempt bond returns because the after-tax return to taxable bonds, the alternative, declines with the marginal tax rate. For example, a taxpayer in the 35.0% marginal tax bracket would earn a 3.90% after-tax rate of return on a taxable bond with a hypothetical 6% pre-tax rate of return. Thus, any tax-exempt bond that pays interest that is greater than 3.90% would provide a higher after-tax rate of return.\nUnder the proposed cap the tax benefit is capped at the 28% marginal tax bracket. As a result, previously tax-exempt interest would be taxed for those in tax brackets above 28%. The higher required yield for the tax-exempt bond under this policy reflects the higher marginal tax rate which exceeds the proposed cap. The after-tax rate of return for partially tax-exempt bonds under the proposal for taxpayers in the 35.0% marginal tax bracket would rise to 4.19%, a 0.29% \"premium\" when compared to current law for a taxable investment with a 6% pre-tax return. The size of the premium would move with prevailing market interest rates. The higher the market interest rate, the larger the value of the premium. The market clearing rate for a tax-exempt security is the following if the taxpayer's marginal tax rate exceeds the cap:\nwhere the t i is the individuals tax rate and the policy tax rate cap is t cap . If the tax rate were less than the cap, then the clearing rate is simply:\nThe link between a taxpayers marginal tax rate and the value of investing in tax-exempt bonds complicates the investment decision for taxpayers. Generally, the tax cap would reduce the attractiveness of tax-exempt bonds for taxpayers in tax brackets above the 28% threshold. The decrease in demand would likely increase the borrowing costs for state and local governments.", "The concentration of tax-exempt interest income in the higher income ranges implies that a significant share of taxpayers receiving tax-exempt interest will be affected by such a policy shift. The response to the changing tax status of tax-exempt bonds by investors as proposed by the cap, however, may be muted. Most tax-exempt bonds would still provide a greater after-tax return than comparable taxable investments. The array of marginal tax rates in the first column of Table 3 are a mix of current law rates and rates as proposed in the President's FY2013 budget. Specifically, the top two rates, 36.0% and 39.6%, would apply to taxpayers filing joint returns with taxable income over $250,000 and single taxpayers with taxable income over $200,000 in 2013 if current law is not extended.\nFor example, a taxpayer in the 33% tax bracket who holds a $100,000 taxable bond with a 6% coupon payment would receive $6,000 each year. Investors then determine tax implications to arrive at the after-tax return of investments. Under current law, the taxes would amount to 33% of that amount or $1,980. After paying this tax, the investor would have $4,020. Thus, a tax-exempt bond investment would need to offer at least 4.02% to lure this investor under current law. In contrast, under the proposal, the investor would need a 4.23% return on a tax-exempt bond because some of the interest would be taxed. The last column of Table 3 provides a relative measure for \"tax premium\" on tax-exempt bonds for the selected tax rates given a 6% market interest rate on taxable bonds. Note that for the highest rate investors, the premium approaches 50 basis points or almost one-half a percent.\nThe number of taxpayers in the top two brackets comprise just 1.9% of all returns in 2007, but 35.2% of all tax-exempt interest or $25.6 billion (see Table 4 ). If the 28% proposal were in effect, these taxpayers would pay some tax on these earnings. Assuming the hypothetical 6% market rate and no change in taxpayer behavior, then the additional revenue would be $70.3 million for this cohort. As discussed earlier, for the 33.0% marginal tax rate investors, taxes would be owed at the 5% rate difference between the cap amount and marginal tax rate (7% for the 35% marginal tax bracket). Even with the premium imposed by this proposal, there is still a significant subsidy for these taxpayers. The reduced after tax rate of return would still likely be greater than the taxable investment alternative for most taxpayers, particularly for those in the 35% bracket.", "The impact on issuers is difficult to predict because the response of investors is uncertain and is a critical element in evaluating issuer impact. And, as noted above, the magnitude of investor response is unclear. Some have suggested that the retroactive application of the proposed tax cap could introduce a tax-risk premium to all tax-exempt bonds. The tax-risk premium would be passed on to issuers through higher interest costs. The impact on issuers will depend on the extent to which a premium exists and how much is passed on to the issuer.", "The Simpson-Bowles (SB) deficit reduction committee plan recommended eliminating the exclusion of interest on state and local government debt paired with a reduction in marginal tax rates. Specifically, the SB plan would repeal the tax-exemption for all newly issued state and local government bonds. The tax rate on these bonds would be the proposed individual income tax brackets contained in the proposal ( Table 5 ). Thus, under the SB plan, interest payments from new bonds issued by state and local governments would be treated like all other income.", "Investment in tax-exempt bonds would no longer receive a tax preference if SB were to become law. Current high-income investors would no longer prefer tax-exempt bonds to taxable alternatives and would likely adjust their portfolios accordingly. The reduction in demand from this segment of the bond market, however, may be partly mitigated by an increase in demand from entities that previously did not invest in tax-exempt bonds. This group would include international investors and U.S. pension funds. These new investors, who do not pay U.S. taxes, place no value on the tax exclusion. The increased demand of these two types of investors combined would have positive impact on the tax-exempt bond market and a generally negative impact on the taxable bond (or similar taxable asset) market. This effect, however, will likely be minimal.\nAs with the income tax cap, the impact of the SB proposal would be concentrated in the top two current marginal tax rates. For the top two rate brackets, tax-exempt interest would shift from generating a tax savings of 33% or 35% to a tax liability of 28%. Table 4 shows that almost 40% of tax-exempt interest ($29.8 billion) was earned by taxpayers in these two marginal rate brackets in 2007.\nAn additional impact would be on the secondary market for outstanding tax-exempt debt. Assuming the tax treatment of outstanding tax-exempt bonds would not change, the supply of these bonds would shrink, increasing the price offered to current holders. The windfall gain to current tax-exempt bond holders may be significant.", "The cost of tax-exempt bond-financed investment would likely increase under the SB plan absent the federal tax preference. Proponents of preserving tax-exempt bonds claim that\nIf eliminated, the interest rates on what would now amount to taxable bonds would rise dramatically, almost certainly resulting in a period of stagnation within state and local governments. Important infrastructure, education, health care, and community amenity projects would be delayed, scaled back, or altogether eliminated.\nThis claim, though likely overstated, is the primary reason cited for preserving the tax exemption.\nEliminating the tax-exempt bond market for new issues as under SB would also eliminate the tilt of the federal preference to riskier projects. Under current law, the tax preference applies to all projects regardless of relative risk. Thus, the absolute value of the tax preference (and federal revenue loss) is greater for projects with a greater risk profile. This arises because the interest rate premium on those projects is greater (i.e., the interest rate is higher). Returning to Table 3 , the hypothetical comparative taxable bond was assumed to be 6.0% and an investor in the 35% bracket needed a tax-exempt return of at least 3.9% to invest in the tax-exempt bond. If the project were deemed riskier, then the rate on a taxable bond of like risk could be as high as 8.0% (the higher rate is the so-called \"risk premium\"). This implies the tax-exempt interest rate would need to be at least 5.2% to justify investment in the riskier project. Under SB, issuers of riskier bonds would not receive more federal assistance as the risk premium increases.\nThe elimination of the exclusion of interest on state and local government debt would also have a differential impact across states. States that rely more on debt will realize a greater increase in the cost of debt than states less reliant on debt. And, within states, relatively debt reliant local governments would also be relatively worse off. In FY2009, state and local governments in Massachusetts, New York, and Kentucky all had debt outstanding exceeding 25% of state gross domestic product (GDP). In contrast, governments in Iowa, Idaho, and Wyoming had debt to GDP ratios of less than 12%. From this, one could conclude that elimination of the tax-exemption would have roughly twice the impact in the most debt reliant states compared to the least debt reliant states.", "The Congressional Budget Office (CBO) provided several options to reduce the deficit and one was to replace the \"tax exclusion for interest income on state and local government bonds with a direct subsidy to the issuer.\" This option is estimated to increase revenues $142.7 billion over the 2012 to 2021 budget window. In addition to raising revenue, the proposal would also increase the economic efficiency of the tax preference for non-federal government borrowing. Under current law, the tax exclusion provides a disproportionately greater benefit to high-income taxpayers. This proposal would replace the tax bracket dependent preference (see the column labeled \"Current Law\" in Table 3 ) with a subsidy payment to the issuer. The proposed payment amount, 15% of the issuer coupon payment, is lower than the estimated rate that would equate a direct pay bond to traditional tax-exempt bonds. This option is similar to the now expired Build America Bond (BAB), though the subsidy payment was significantly higher, 35%.\nSimilar to the CBO proposal, the President's 2013 budget proposes making permanent an expanded version of the BAB financing tool for state and local governments issuers as well as non-profit issuers (hospitals and universities). The new BAB program would carry a subsidy rate of 30% for 2013, dropping to 28% thereafter. The subsidy rates in the President's budget are intended to be revenue neutral though are still estimated to reduce revenues $1.1 billion over the 2013 to 2022 budget window.", "There are three types of investors to consider when assessing the impact of the CBO proposal: (1) high marginal tax bracket investors, (2) current holders of bonds, and (3) potential new investors in taxable state and local government debt. If the CBO proposal were to become law, high marginal tax rate tax-exempt bond investors would lose a tax preference. In 2009, $73.6 billion in tax-exempt interest income was reported (see Table 2 ). Current holders of tax-exempt bonds would likely see a windfall gain with the now limited stock of tax favored bonds (if the tax status of existing bonds were grandfathered). There would likely be a negative impact on the market for existing taxable bonds. If potential investors rebalanced portfolios by reducing their holdings of other taxable bonds, then prices for those securities would decline. New investors that are not subject to federal income taxes, such as pension funds and international investors, would likely buy state and local government bonds. The additional investment option for these investors would likely be a welcome change from current law and could be viewed as a positive impact for investors.", "The issuers would have a higher interest cost because the 15% subsidy rate would not match the savings with tax-exempt bonds. Nevertheless, the subsidy would flow directly to the issuer and still provide a federal tax benefit. The subsidy would also be more economically efficient than the current subsidy delivered with the tax exclusion as investors in higher marginal tax brackets would not receive the previously explained windfall gain.", "Under current law, there is a significant transfer of federal tax revenue to tax-exempt bond issuers and investors. Investors benefit from the exclusion of interest on the bonds from taxable income and the above market rate of return offered by most tax-exempt bonds. State and local governments, non-profit hospitals, educational institutions, and a variety of other entities all benefit from lower interest rates than otherwise would be the case. Importantly, the federal revenue loss to the federal government exceeds the benefit received by the issuer.\nThe three proposals reviewed here would all reduce the benefit received by issuers and investors while increasing revenues for the federal government. As a result, under these proposals, issuers will face higher borrowing costs and investors will lose one option for earning tax-free income. The proposals do differ in the relative impact on investors and issuers. The FY2013 budget proposal to cap the benefit to the 28% tax bracket would be felt relatively equally between issuers and investors and would not address the inefficiency of using tax-exempt bonds to encourage investment in public capital. The SB tax reform plan would eliminate the tax preference thereby eliminating the economic inefficiency generated by the current tax preference, but would also eliminate the relative benefit of tax-exempt bonds for both issuers and investors. The CBO proposal also eliminates the tax preference for investors, but would preserve the issuer preference albeit at a lower level. The economic inefficiency arising from the current tax preference would also be eliminated by the CBO proposal. The CBO proposal can be modified to yield a roughly equivalent subsidy to the current tax-exempt bond preference for issuers.\nBalancing the loss of tax preferences for issuers and investors against the benefit of a more economically efficient tax code and a smaller deficit is the critical challenge for Congress." ], "depth": [ 0, 1, 1, 2, 2, 2, 1, 2, 3, 3, 3, 2, 3, 3, 2, 3, 3, 1 ], "alignment": [ "h0_title h2_title h1_title", "h2_full h1_full", "h0_title", "h0_full", "", "", "h0_title h2_full h1_title", "h0_title h2_title h1_full", "h0_full", "h2_full", "", "h1_title", "h1_full", "", "h0_full", "", "", "h0_full h2_full h1_full" ] }

{ "question": [ "What does current law say about interest income from bonds?", "What are effects of the current law?", "What is being examined with regard to tax preferences?", "How do issuers benefit from tax preference?", "How do investors benefit from tax preference?", "How specifically do those in the top tax brackets benefit?", "What does the report include?", "What is included in the analysis of several different proposals?", "How are the proposals different?" ], "summary": [ "Under current law, interest income from bonds issued by state and local governments is exempt from federal income taxes. In addition, interest on bonds issued by certain nonprofit entities and authorities is also exempt from federal income taxes.", "Together, these tax preferences are estimated to generate a federal revenue loss of $309.9 billion over the 2012 to 2016 budget window. Along with this direct \"cost,\" economic theory holds that tax-exempt bonds distort investment decisions (leading to over-investment in this sector).", "As with many other tax preferences, the income exclusion is being examined as part of fundamental tax reform.", "Issuers, principally state and local governments (but also certain nonprofits and qualified private entities) benefit from a current lower cost of borrowing.", "Investors, particularly those in the top tax brackets, benefit from mostly tax-free income.", "In particular, the top 10% of all earners realize more than 77% of the total reported tax-exempt interest income.", "This report first explains the tax preference and the distribution of the receipt of tax-exempt interest. An analysis of the impact of several different proposals then follows.", "Included in this analysis are proposals to (1) cap the benefit at a specific income tax rate (as offered in the FY2013 budget), (2) eliminate the tax preference and lower overall rates (as proposed in the Simpson-Bowles (SB) deficit reduction plan), and (3) change the current tax exclusion for investors to a tax credit (or subsidy) for issuers (as proposed in the Congressional Budget Office (CBO) Revenue Options report).", "The proposals differ in the relative impact on investors and issuers." ], "parent_pair_index": [ -1, 0, -1, -1, -1, 1, -1, -1, 1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1, 2, 2, 2 ] }

{ "title": [ "", "Introduction", "Recent Nominations Activity", "Activity During 2010", "Activity During 2009", "Activity During 2005-2006", "The Roberts Nomination", "The Miers Nomination", "The Alito Nomination", "Measuring the Pace of Supreme Court Appointments", "Official and Unofficial Timetables", "Objectives of This Report", "How Supreme Court Vacancies Occur", "Death of a Sitting Justice", "Retirement or Resignation of a Sitting Justice", "Nomination of a Sitting Justice to Another Position", "Controversial, Withdrawn, and Rejected Nominations", "Data Presentation", "Date of Actual or Prospective Vacancy", "Announcement-of-Nominee Date", "Use of Medians to Summarize Intervals", "The Duration of the Nomination-and-Confirmation Process", "Changes Since 1981", "Factors Influencing the Speed of the Process", "How the Vacancy Occurs", "The Senate's Schedule", "Committee Involvement and Institutional Customs", "Controversial Nominations", "Discussion and Conclusions" ], "paragraphs": [ "", "The nomination and confirmation of a Chief Justice or an Associate Justice to the U.S. Supreme Court is an infrequent event of major significance in American public life. To receive what may be lifetime appointment to the Court, a candidate must first be nominated by the President and then confirmed by the Senate. Midway in the appointment process, intensive hearings on a Supreme Court nomination, often taking at least three or four days, are routinely held by the Senate Judiciary Committee, which then can vote on whether to report the nomination to the Senate with a favorable recommendation.\nNominating and confirming Supreme Court Justices is an interdependent process. Neither the President nor the Senate acts alone. The decisions that each branch makes determine how quickly nominations are made and considered, and whether the nomination is successful. This report provides information on the pace of all Supreme Court nominations and confirmations since 1900, focusing on the actual amounts of time that Presidents and the Senate have taken to act (as opposed to the elapsed time between official points in the process). As discussed below, the speed with which the President makes Supreme Court nominations and the Senate acts on those nominations has been of continuing concern to Congress in recent years. Especially since 2005, a high priority has been assigned to making appointments according to timetables designed to assure that vacancies taking effect while the Court is in summer recess are filled in time for the nine-member Court to be at full strength when it convenes its next annual term.", "", "On April 9, 2010, Associate Justice John Paul Stevens wrote to President Obama that he would retire from \"regular active service\" when the Court recesses for the summer. Speculation about the retirement had been reported in the media for weeks, but even days before writing to President Obama Stevens' plans remained at least publicly unknown. According to one media account, Stevens' letter arrived at the White House at 10:30 a.m. on April 9. White House counsel Robert Bauer then notified the President, who was traveling aboard Air Force One.\nAlmost immediately, the President, Members of Congress, and members of the media began to comment on a potential schedule for considering Justice Stevens' replacement. In fact, the retirement letter itself referenced time concerns. Justice Stevens wrote he had concluded that \"it would be in the best interests of the Court to have my successor appointed and confirmed well in advance of the commencement of the Court's next Term\" in October 2010. President Obama also expressed his desire for a new Justice to be seated by the start of the fall term, saying that he would \"move quickly to name a new nominee.\" He also urged the Senate to \"move quickly in the coming weeks to debate and then confirm my nominee so that a new Justice is seated in time for the fall term.\" Senator Patrick Leahy, Chairman of the Judiciary Committee, has predicted that the new Supreme Court Justice would be confirmed by the Senate's August 2010 recess and said that there is \"no question\" that a nominee would be confirmed by the start of Court's fall term.\nOn May 10, 2010, President Obama announced that he had selected Solicitor General Elena Kagan as his nominee to replace Justice Stevens. At that time, the President reiterated his call for quick action on the nomination, saying, \"I hope that the Senate will act in a bipartisan fashion ... and that they will do so as swiftly as possible, so she can get busy and take her seat in time to fully participate in the work of the Court this fall.\" Senator Leahy subsequently announced, on May 19, 2010, that Ms. Kagan's confirmation hearings would begin on June 28, 2010. Calling that timetable \"a reasonable schedule that is in line with past practice,\" Senator Leahy noted that the Sotomayor confirmation hearings had begun 48 days after her nomination was announced (as noted in Table 2 at the end of this report). That schedule proceeded as expected. Forty-nine days elapsed between the May 10 announcement of the Kagan nomination and the start of hearings on June 28. Both time spans (49 and 48 days respectively for the Kagan and Sotomayor nominations) are close to or at the median 49 days that elapsed between the nomination announcement and the start of hearings for all Supreme Court nominees between 1981 and 2010. Figure 1 and discussion in the rest of this report provide additional detail.\nThe entire Kagan appointment process, starting with when President Obama first learned that Justice Stevens would leave the Court, until Senate confirmation on August 5, lasted 118 days. This interval was relatively close to, but longer than, the median duration of 113 days of the entire appointment process for Court nominations which received final Senate action during the 1981-2010 period.\nSome individual phases of the Kagan appointment process took longer than the corresponding intervals for previous Supreme Court nominations. One such phase, for example, is the time interval between final committee action and final Senate action. Sixteen days elapsed between final Judiciary Committee action on July 20, when the committee favorably reported the nomination, and August 5, when the Senate confirmed Kagan. That 16-day interval was almost twice the nine-day median elapsed time between final committee and final Senate actions on Supreme Court nominations between 1981 and 2010. In a few relatively recent instances, however, the full Senate has taken much longer to act on a reported Court nomination than it did with the Kagan nomination. Specifically, the Senate took 34 days to vote on the Rehnquist Chief Justice and the Scalia Associate Justice nominations in 1986. Overall, it took longer to announce and consider the Kagan nomination than any since Ruth Bader Ginsburg's in 1993. Although the Kagan appointment process lasted 118 days, then-Judge Ginsburg's lasted 137. The timetable for selecting and considering the Kagan nomination stretched 21 days beyond what was required for then-Judge Sotomayer's nomination in 2009. Timetables for action on Supreme Court nominations are affected by the selection process, the Senate schedule, and other factors. For any given nomination, the Senate may, of course, proceed at any pace it deems appropriate.", "Before the Stevens announcement, the Senate most recently considered a Supreme Court nomination during the spring and summer of 2009. On May 1, 2009, President Barack Obama announced that Justice David H. Souter intended to retire when the Court recessed for the summer. During his brief appearance at a White House press briefing on May 1, the President expressed the \"hope that we can swear in our new Supreme Court Justice in time for him or her to be seated by the first Monday in October when the Court's new term begins.\"\nOn May 26, 2009, President Obama announced his intention to nominate Sonia Sotomayor, then a judge on the U.S. Court of Appeals for the Second Circuit, to the Souter seat. Shortly thereafter, discussion of various timetables began to emerge. The President and some Senate Democrats expressed the hope that the Senate would vote to confirm Judge Sotomayor before the Senate's August 2009 recess, in order to afford time for her to prepare for the start of the Court's term in October. Some Senate Republicans, however, were less supportive of a Senate vote before September, saying they wished to have as much time to examine the Sotomayor nomination as Senate Democrats were given in 2005-2006 for the Supreme Court nominations of Samuel A. Alito, Jr. and John G. Roberts, Jr.\nThe Senate Judiciary Committee began hearings on the Sotomayor nomination on July 13, 2009, and favorably reported it (by a vote of 13-6) on July 28. The Senate confirmed Sotomayor (68-31) on August 8, 2009—the same day the new Justice took the constitutional and judicial oaths of office.", "Late 2005 and early 2006 marked a period of transition among Supreme Court Justices. Associate Justice Sandra Day O'Connor's July 2005 retirement announcement marked the first pending Court vacancy since 1994. Within a few months, however, the Senate considered three nominations. As is discussed below, Judge John G. Roberts, Jr. was initially nominated to replace O'Connor, but that nomination was withdrawn when Chief Justice William H. Rehnquist died in early September. The Roberts nomination was withdrawn and re-submitted for the Chief Justice vacancy. The Senate confirmed Roberts in September 2005. Then-White House Counsel Harriet Miers was initially nominated to fill the again-pending O'Connor vacancy, but the Miers nomination was eventually withdrawn. Judge Samuel A. Alito, Jr. was confirmed to the O'Connor seat in January 2006.\nAs is noted throughout this report, media accounts and other research suggest that when these and other Court vacancies arise, the President, members of the Senate, and their staffs, can begin work on nominations immediately, even if official nominations are days or weeks away. Particularly when multiple vacancies occur in close succession or simultaneously, as they did in 2005, the President and the Senate might have different preferences about how quickly new nominees should be considered. Until 1980, the President often took longer to announce a nominee than the Senate did to take final action on nominees. By contrast, since 1981, Presidents have been quicker to announce nominations than the Senate has been to confirm or reject those nominations. The President and members of the Senate (especially the Judiciary Committee) each proposed their own timetables regarding the Roberts, Miers, and Alito nominations. The following discussion provides additional details.", "On July 1, 2005, Associate Justice Sandra Day O'Connor surprised many in official Washington, and possibly President George W. Bush, with a one-paragraph letter announcing her retirement from the Supreme Court, effective upon the confirmation of her successor. Her announcement created the first vacancy on the Court in 11 years. The Court had just concluded its 2004-2005 term, and the opening session of the Court's next term, on October 3, 2005, was three months away. Finding a new Associate Justice took on added urgency, given the failing health of then-Chief Justice William H. Rehnquist. Departure of the Chief Justice as well as Justice O'Connor could result in the need for two Court appointments, and create the possibility of at least one vacancy on the Court when it reconvened in October—unless the new appointments were made expeditiously.\nHours after Justice O'Connor announced her retirement, a senior aide to Senate Majority Leader Bill Frist told reporters that, \"Our goal is to have the court back at full strength by the first Monday in October.\" Senate Judiciary Committee staff were reportedly \"poised to begin reviewing background materials\" on potential nominees. Nevertheless, appointment of a new Justice in time for the Court's opening session seemed like a challenging goal. In recent years, the Senate Judiciary Committee, and the full Senate as well, had been embroiled in controversies over some of the President's nominations to the lower federal courts. Continued controversy seemed likely surrounding any future nominations to the Supreme Court.\nOn July 19, 2005, 18 days after receiving Justice O'Connor's retirement letter, President Bush announced his selection of John G. Roberts, Jr., a federal appellate judge, to be the next Associate Justice. Ten days later, on July 29, the President formally nominated Judge Roberts to the Court, with the nomination document immediately transmitted to the Senate, where it was referred to the Senate Judiciary Committee. Hearings on this nomination were scheduled to begin September 6, but those hearings would never take place.\nWhen Chief Justice William H. Rehnquist died on September 3, Judge Roberts became the first Supreme Court nominee to be withdrawn by the President for one seat on the Court and re-nominated for another. The Senate Judiciary Committee quickly cancelled its Associate Justice hearings, and began Roberts's Chief Justice hearings on September 12, 2005. After receiving a favorable 13-5 vote by the Judiciary Committee on September 22, the nomination of Judge Roberts to be Chief Justice was confirmed by the Senate on the morning of September 29, 2005, by a 78-22 vote. Later that day, the confirmed nominee took both his constitutional and judicial oaths of office at the White House.\nDue to the speed with which Judge Roberts was nominated to be Chief Justice and considered by the Senate Judiciary Committee and the full Senate, his appointment was completed in time for the Court to be at full strength at the start of its 2005-2006 term. With the start of that term, Justice O'Connor remained on the Court, in keeping with the intention stated in her retirement letter of stepping down only upon the confirmation of her successor. For his part, President Bush had declined to name a replacement for John Roberts to succeed Sandra Day O'Connor prior to the Senate vote on September 29 confirming Judge Roberts as Chief Justice.", "On October 3, 2005, President Bush announced his nomination of White House Counsel Harriet E. Miers to succeed Sandra Day O'Connor as Associate Justice on the Supreme Court. The President said that the Senate had shown during the confirmation of Chief Justice Roberts that it could act promptly, and called upon the Senate to \"review [Miers's] qualifications thoroughly and fairly and to vote on her nomination promptly.\" At a press conference the next day, the President said that he expected the Senate \"to hold an up-or-down vote on Harriet's nomination by Thanksgiving\" (i.e., by November 24, 2005). Similarly, Senate Majority Leader Bill Frist called on his colleagues to move \"expeditiously but carefully,\" and encouraged a floor vote \"by Thanksgiving.\" Several news reports suggested that confirmation hearings could begin as early as November 7, 2005. Senator Arlen Specter, Chairman of the Senate Judiciary Committee, reportedly told reporters that he hoped the committee would complete hearings by Thanksgiving, but also reportedly emphasized that \"thoroughness will be the objective,\" as opposed to meeting a particular timetable. He also reportedly said that the timing of hearings on the nomination would in part be up to Miers, who would have to study \"so that she would have the grasp of these very complex decisions.\"\nOn October 27, 2005, Miers delivered a letter to the President withdrawing her nomination as Associate Justice, and the President \"reluctantly accepted\" her withdrawal. Both Miers and the President indicated that the action was precipitated by the Senate's request for documents about her service in the White House. However, others suggested that other factors may have been involved. In his statement accepting the withdrawal, the President said that he expected to fill the vacancy \"in a timely manner.\"", "Four days after Harriet Miers's withdrawal, on October 31, 2005, President George W. Bush announced his nomination of Samuel A. Alito, Jr., a judge on the U.S. Court of Appeals for the Third Circuit, to replace Justice O'Connor. President Bush called on the Senate to \"act promptly on this important nomination so that an up or down vote is held before the end of this year.\" Senate Majority Leader Bill Frist also predicted a relatively quick timetable for Senate consideration, but other Senators, including Minority Leader Harry Reid, suggested that Senate consideration of the nomination could last into the new year.\nOn November 3, 2005, Senate Judiciary Committee Chairman Arlen Specter and Ranking Minority Member Patrick Leahy announced that confirmation hearings on Judge Alito's nomination would not begin until January 9, 2006, with a vote by the committee scheduled for January 17, 2006, after five days of hearings. They said that the full Senate would vote on the nomination on January 20, 2006. Judiciary Committee hearings on the Alito nomination began and concluded as scheduled, although a targeted January 17 committee vote was postponed until January 24, 2006. A final floor vote was anticipated before President George W. Bush's January 31, 2006, State of the Union address. After Senators Specter and Leahy reportedly reached agreement on the revised committee schedule over the January 14-16 weekend, Majority Leader Bill Frist announced that \"as soon as the Judiciary Committee reports the nomination, the full Senate will begin debate on Judge Alito the next day and move swiftly to a fair up-or-down vote.\" In a 10-8 party line vote, the Senate Judiciary Committee on January 24 reported Alito's nomination to the full Senate, which confirmed Alito, 58-42, on January 31, 2006.", "For many Supreme Court appointments, the timing of individual events is determined by the decisions of various key players—by sitting Justices planning to leave the Court; by the President, who selects nominees to fill Court vacancies; and by Senate committee and party leaders, who respectively schedule committee and floor action on Supreme Court nominations. First, Justices who retire or resign from the Court must decide whether to provide the President with advance notice of that decision. For example, Justice Harry A. Blackmun told President William J. Clinton of his decision to retire in 1994, more than four months before the decision became public on April 6 of that year. Justice O'Connor, on the other hand, did not appear to have given President George W. Bush any advance notice when she resigned on July 1, 2005. Also, the mode of presidential notification varies. While President Clinton learned of Justice Blackmun's plans to retire through an informal conversation, Justice O'Connor apparently notified President Bush of her decision through a formal letter.\nOnce the President chooses a nominee, he alerts the Senate—by public announcement as well as by formal transmission of a written nomination to the Senate. Frequently, the President will announce and formally nominate his Supreme Court choice on the same day, or take both actions within a few days of each other. Less commonly, Presidents announce their intention to nominate a candidate, then make the official nomination a week or more later. The most extreme case of the latter involved President Ronald Reagan in 1981. On July 7 of that year, President Reagan announced he would send the nomination of Sandra Day O'Connor, then an Arizona state appeals court judge, to the Senate \"upon completion of all the necessary checks by the Federal Bureau of Investigation.\" However, it was not until almost six weeks later, on August 19, that Judge O'Connor was officially nominated. As noted above, after the Senate receives a Supreme Court nomination, the Judiciary Committee normally holds hearings, followed by final committee action, and consideration before the full chamber.", "The measurement of how long the President and the Senate take to execute their official duties surrounding Supreme Court nominations necessarily focuses on official dates of action taken. The most important of these action dates include those on which (1) an outgoing Justice officially informs the President of the intention to step down from the Court (or, alternatively, the date on which a Court seat is vacated due to the death of a Justice), (2) a President formally nominates someone to the Court, the Senate receives the President's nomination, and the nomination is referred to the Senate Judiciary Committee (almost always all on the same date), (3) the Senate Judiciary Committee holds hearings on the nomination, (4) the committee votes on the nomination, and (5) the Senate votes on whether to confirm, or chooses to take no action.\nIn addition to these dates, however, the President and the Senate usually consider Supreme Court nominations outside official timetables. Just as the President can begin considering a new nominee as soon as he knows a vacancy will arise, the Senate can begin preparing to consider a nominee as soon as the President announces his choice, even if the receipt of the formal nomination is still days or weeks away. Fundamentally, nominations and confirmations to the Supreme Court involve both formal and informal decisions. While formal decisions are easily accessible in historical records, informal decisions—sparsely mentioned in the formal record, or not mentioned at all—might, in many cases, provide better insight into how long the process truly takes.", "This report explores the speed of presidential and Senate decision-making surrounding nominations to the Supreme Court from 1900 to the present. The analysis concentrates on the period 1900-2010: (1) relevant historical data for this period are much more readily available and reliable than for earlier Court appointments, and (2) public confirmation hearings for Supreme Court nominations before the Senate Judiciary Committee—an important phase in the Supreme Court appointment process, and one of particular interest to this report—were unheard of before the 20 th century.\nAlthough research on Supreme Court nominations often focuses on either presidential or Senate decision-making, this analysis considers the time both institutions take to make decisions about, and act on, nominees. The report also takes a unique approach in discussing—as well as can be determined—how long Presidents actually take to decide who their nominees will be, and how long the Senate actually takes to act on nominations. For example, rather than starting the nomination clock with the official notification of the President of a forthcoming vacancy (e.g., the receipt of a formal retirement letter), this analysis focuses on when the President first learned of the vacancy (e.g., a private conversation with the outgoing Justice). Likewise, rather than starting the confirmation clock with the transmission the official nomination to the Senate, this analysis focuses on when the Senate became aware of the President's selection ( e.g., by a public announcement by the President).\nIn many cases, establishing precisely when a President knew that he would have the opportunity to make a Supreme Court nomination is impossible. Such information might never have been recorded or known by anyone except the President and his inner circle. However, historical research reveals several instances when a President had advance knowledge of an impending vacancy, well before the public announcement of a Justice's intention to leave the Court. Data sources used to determine when Presidents first knew of vacancies included historical newspapers, official documents such as public presidential papers (which contain Justices' retirement letters to various Presidents), and CRS consultations with presidential libraries. Dates cited throughout this report and in Table 1 , Table 2 , and Table 3 , at the end of the report, are based on that research.\nThe dates and intervals presented here may differ from those in other sources, such as media reports or even Congressional figures. In general, earlier starting dates and longer durations between dates presented here are likely due to this report's emphasis on when the President first learned of an opportunity to make a nomination and when the Senate first learned of an opportunity to act on a nomination—regardless of official timetables. In addition, events such as withdrawals, rejected nominations, and recess appointments can uniquely affect calculating intervals in the nomination and confirmation process. The tables and accompanying notes show which dates were selected to start and stop the nominations clock in these cases. Different methodologies could yield different results. This report takes no position on the appropriateness of other methodologies, and contrasting this report's methodology with alternatives is beyond the scope of the report.", "The need for a new appointment to the Court arises when a Justice position becomes vacant, due to death, retirement, or resignation, or when a Justice announces his intention to retire or resign. If the vacated seat is that of the Chief Justice, the President, if he chooses, may nominate a sitting Associate Justice to be Chief, thus setting the stage for the creation of an Associate Justice vacancy as well. Vacancies on the Court also will occur if Justices resign to receive new government appointments or to seek new government positions. When a nomination fails in the Senate, the President must select a new nominee (unless the President chooses to re-nominate his first choice).", "Supreme Court Justices receive what may be lifetime appointments, \"good Behaviour\" being the only constitutionally specified requirement for continued service. Lifetime tenure, interesting work, and the prestige of the office result in Justices often choosing to serve as long as possible. Historically, a number of Justices have died in office. Most recently, Chief Justice William H. Rehnquist died on September 3, 2005, after battling thyroid cancer for almost a year. Death in office was common on the Court during the first half of the 20 th century—14 of 34 vacancies between 1900-1950. In fact, all five Court vacancies occurring between 1946 and 1954 were due to death of a sitting Justice (see Table 1 ). Of the 23 vacancies since 1954, though, no Justice had died while still on the Court until Chief Justice Rehnquist in 2005.", "Since 1954, retirement has been by far the most common way in which Justices have left the bench (19 of 23 vacancies occurring after 1954 resulted from retirements). Resignation (i.e., leaving the bench before becoming eligible for retirement compensation) is rare. In recent history, two Justices have resigned from the Court. Justice Arthur Goldberg resigned in 1965 to assume the post of U.S. Ambassador to the United Nations. Justice Abe Fortas resigned in 1969 after protracted criticism over controversial consulting work while on the bench and a failed nomination to be elevated from Associate Justice to Chief Justice. When Justices retire or resign, the President is usually notified by formal letter. As noted previously, there is evidence in a few cases that a President informally learned of a forthcoming retirement in advance.\nPursuant to a law enacted in 1939, a Justice (or any other federal judge receiving lifetime appointment) may also retire if \"unable because of permanent disability to perform the duties of his office,\" by furnishing the President a certificate of disability. Prior to 1939, specific legislation from Congress was required to provide retirement benefits to a Justice departing the Court because of disability who otherwise would be ineligible for such benefits, due to insufficient age and length of service. In such circumstances in 1910, for instance, Congress took legislative action granting a pension to Justice William H. Moody. As the Washington Post reported at the time, although illness had kept Justice Moody from the bench for \"almost a year,\" he was not yet eligible for retirement.", "When a Chief Justice vacancy arises, the President may choose to nominate a sitting Associate Justice for the Court's top post. If the Chief Justice nominee is confirmed, he or she must, to assume the new position, resign as Associate Justice, requiring a new nominee from the President to fill the newly vacated Associate Justice seat. However, this scenario is relatively rare. During the 1900-2009 period, Presidents attempted to elevate Associate Justices to Chief Justice four times, with the Senate confirming three nominees. Most recently, in 1986, President Ronald Reagan nominated then-Associate Justice William H. Rehnquist to be Chief Justice.\nPresidents may also nominate sitting Justices to other political posts, which (if accepted) require resignation from the Court. Between 1900 and 2009, three Justices resigned to pursue other formal public service. In 1916, Justice Charles Evans Hughes resigned to pursue the Republican nomination for President. Justice James F. Byrnes resigned on October 3, 1942, becoming Director of Economic Stability for President Franklin D. Roosevelt. As noted previously, Justice Arthur Goldberg resigned in 1965 to become the U.N. Ambassador.", "When any Court nomination (whether for an Associate or Chief Justice seat) fails in the Senate, the President may either re-submit the nomination or choose another candidate to fill the bench. The entire process thus begins anew. Withdrawals and rejections can greatly increase the amount of time taken to confirm Justices to the Court. Controversial nominees who are eventually confirmed also usually take more time to consider. The late 1960s and early 1970s were one of the most tumultuous periods of nominations and rejections in the Court's history. On May 14, 1969, Justice Abe Fortas resigned from the bench. Fortas had been embroiled in a scandal surrounding his consulting income, and failed to win confirmation as Chief Justice when President Johnson nominated him to the seat in 1968. Previously, on October 14, 1968, President Johnson had withdrawn the Fortas nomination as well as the nomination of Homer Thornberry to fill the vacancy that would have been created by Fortas's elevation. The Senate rejected President Richard M. Nixon's first two nominees to the Fortas seat—Clement F. Haynsworth, Jr. and G. Harrold Carswell. President Nixon's third choice, Harry A. Blackmun, was not confirmed until May 12, 1970—almost a year after Fortas's resignation.", "Table 1 (at the end of this report) lists dates for the following events regarding each nomination to the Supreme Court since 1900: (1) when the actual or prospective vacancy apparently became known to the President, (2) when the President announced the nominee, (3) when the Senate Judiciary Committee held its first hearing on the nominee, (4) when final committee action took place, and (5) when final Senate action took place. Table 2 presents the number of days elapsed for six related time intervals: (1) from when the President apparently learned of the actual or prospective vacancy to the his announcement of a new nominee, (2) from the nomination announcement to the first Judiciary Committee hearing, (3) from the first hearing to the committee's final action, (4) from the committee's final action to the Senate's final action, (5) from nomination announcement to final Senate action (duration of total Senate action), and (6) from the vacancy starting date (when the President apparently first became aware of the opportunity to make a nomination) to final Senate action. Table 3 provides summary statistics for the number of days elapsed during each of these intervals, for all nominations from 1900 until 2010, and for two periods within those dates—1900-1980 and 1981-2010. As discussed later in this report, those periods were chosen because the data indicate a sharp difference in the pace of most nominations before and after 1980.", "As noted previously, it is often difficult or impossible to determine the specific date that a President first knew he would have the opportunity to name a new Justice to the Supreme Court. The President always has the constitutional obligation to make nominations to the Court when vacancies arise, and is certainly aware of the possibility that vacancies could arise at any time. However, the \"Actual or Prospective Vacancy Became Known to President\" columns in Table 1 and Table 2 focus on documented, specific instances when the President knew he had, or soon would have, the opportunity to name a new Justice to the Court. These dates are based on extensive research about when the Justice's impending departure (or death) was made public, and whether the President had advance knowledge of the vacancy before it became public. In cases in which research revealed no public evidence that the President had advance notice (or in which the data are inconclusive), the date of the first public account of the vacancy marks the beginning of the process (the \"When\" column in Table 1 and Table 2 ).\nFor example, Justice Sandra Day O'Connor announced her retirement, pending confirmation of a successor, on July 1, 2005. There is no evidence that President George W. Bush definitely knew that O'Connor would retire until her announcement. Therefore, July 1, 2005, is used as the starting point for what became the Associate Justice nomination of John G. Roberts, Jr. On the other hand, although Chief Justice Warren Burger's retirement letter to Ronald Reagan was not released until June 17, 1986, President Reagan's public papers reveal that Burger informed the President of his decision to retire on May 27, 1986. Therefore, May 27, 1986, is used as the starting point for what became the William H. Rehnquist elevation to Chief Justice. Notes throughout Table 1 and Table 2 provide information on historical context.", "Unless otherwise noted, the \"President's Announcement-of-Nominee\" date in Table 1 is the day when the President announced his nomination to the public or released the text of his nomination letter (whichever came first). This date is significant because it marks the Senate's first opportunity to begin considering the nomination, even if informally. There are a few cases, explained by table notes, in which Presidents announced their decisions less formally, but still publicly. For example, President Harry S. Truman casually told reporters during a July 28, 1949, press conference that he had offered an Associate Justice nomination to then-Attorney General Thomas C. Clark, even though Clark had not yet accepted the nomination. As discussed previously, in some cases, the announcement date differs by days or even weeks from the date the nomination was formally submitted to the Senate.", "Table 2 provides the duration of each major interval in the process of nominating and considering Supreme Court Justices. Table 3 provides the median number of days for each major interval in the process. The median is the middle number in a set of observations (in this case, the number of days involved in each stage of considering Supreme Court nominations). The median is generally the preferred measure of central tendency in social science research. As statistician William H. Greene notes, \"Loosely speaking, the median corresponds more closely than the mean to the middle of a distribution [group of numbers]. It is unaffected by extreme values.\" In other words, the median represents the best example of the \"average\" case, regardless of extremely short or long individual confirmations.\nHowever, in describing the speed of the Supreme Court nomination-and-confirmation process, even median values should be considered carefully. Each nomination is different, and political context and historical factors can have a major impact on when various events occur. Several factors affecting individual nominations to the Court are discussed later in this report.", "During the entire period covered by this report (1900-2010), the President and the Senate have each taken varying amounts of time to act on Supreme Court nominations and confirmations. As Table 3 shows, from 1900-2010, Presidents took a median of 28 days after a vacancy occurred to announce their nominees, compared with a median of 23.5 days for final Senate action once the nomination was announced. The entire process, from actual or prospective vacancy to final Senate action, lasted a median of 79 days from 1900-2010.\nHowever, the amount of time involved in each stage of the nomination-and-confirmation process varies widely when individual cases are examined. Some Supreme Court nominations are unusually fast, coming immediately on the heels a sitting Justice's departure from the bench. In these cases, the President almost certainly knew in advance of the outgoing Justice's intention to retire yet delayed announcement of the retirement to coincide with announcing a new nominee. For example, on May 27, 1986, President Reagan simultaneously announced the retirement of Chief Justice Warren Burger, the elevation of William H. Rehnquist to Chief Justice, and the nomination of Antonin Scalia to assume the Associate Justice seat being vacated by Justice Rehnquist. On the other hand, some nomination decisions can take months—at least to become public. For example, although Justice Harold H. Burton submitted his retirement letter to President Dwight D. Eisenhower on October 6, 1958, Eisenhower did not publicly announce Potter Stewart's nomination until January 17, 1959—103 days after announcing Justice Burton's retirement. The entire interval between Burton's announced retirement and Stewart's confirmation lasted 211 days, the bulk of the interval due to a long congressional recess.", "The data indicate that the median decision-making intervals surrounding Supreme Court nominations have changed substantially since 1981. When comparing Supreme Court nominations from 1900-1980 with those from 1981-2010, five patterns stand out. First, after apparently learning of vacancies, Presidents have typically been quicker to announce nominees since 1981 than in the previous 80 years. As shown in Figure 1 (and Table 3 ), from 1900-1980, Presidents took a median of 34 days to announce their nominees after apparently learning of vacancies, compared with only 19.5 days from 1981-2010.\nSecond, and perhaps most notably, the median interval between the President's announcement of his nominee and the first Judiciary Committee hearing was substantially longer from 1981-2009 than from 1900-1980. As shown in Figure 1 (and Table 3 ), this period almost quadrupled—from 12.5 days during the 1900-1980 period to 49 days from 1981-2010. Again, however, context is important. Even before hearings begin, the Senate can be actively working on the nomination. For example, prior to the start of John G. Roberts's hearings (and even before his nomination was submitted to the Senate), Senators met privately with Judge Roberts, and some pressed the White House to release records from Roberts's Department of Justice service. The Harriet Miers and Samuel Alito nominations followed similar patterns.\nThird, committee and floor action from 1981-2010 also took slightly longer than prior to 1981. From 1981-2010, the Judiciary Committee took a median of 15 days to reach a decision after starting hearings, while the interval between final committee action and final Senate action took nine days (compared with six and three days respectively from 1900-1980).\nFourth, as shown in Figure 1 (and Table 3 ), total Senate activity (the interval between the President's announcement of the nominee and final Senate action) increased from a median of 17 days (1900-1980) to 84 days (1981-2010).\nFinally, the entire nomination-and-confirmation process took substantially longer after 1980 than during the previous 80 years. The median duration for the entire process (from when the President apparently became aware of a vacancy until the Senate's final action on the nomination) was almost twice as long from 1981-2010 than during 1900-1980 (113 days versus 59 days, respectively).", "Some elements of the decision-making process surrounding the naming and the confirmation or rejection of Supreme Court nominees are known only to Presidents, nominees, and a few select advisors. Other elements are more obvious. Each nomination has its own political context, making each nomination somewhat different. However, several factors appear to be relatively constant in affecting the speed of Supreme Court nominations and Senate decisions.", "How quickly the President announces his nominee and how quickly the Senate considers that nomination can depend on how the vacancy occurred. When Justices die unexpectedly, Presidents can be eager to bring the Court back to full strength as soon as possible. On July 19, 1949, for example, Justice Frank Murphy unexpectedly died of a heart attack after a brief illness. President Harry S. Truman announced his nomination of Thomas C. Clark at a press conference nine days later, on July 28. The Senate also considered the nomination quickly, beginning hearings on August 9. Clark's entire nomination-and-confirmation process lasted just 30 days. A few months later, Sherman Minton was confirmed even faster—in 24 days—after the death of Justice Wiley B. Rutledge. Nonetheless, sudden death does not guarantee that either the President or the Senate will make nomination-and-confirmation decisions quickly. For example, when Justice Rufus W. Peckham died unexpectedly on October 24, 1909, President William Howard Taft waited 50 days to announce a nominee. Once Taft announced his choice, the Senate confirmed Horace H. Lurton seven days later.\nRetirements and resignations are often expected, allowing the President time to prepare for his choice even before an official announcement that a sitting Justice will step down. For example, at the time of his retirement, Justice William O. Douglas's health had been so poor and abilities allegedly in such decline that seven of his fellow Justices voted on October 17, 1975, to \"effectively strip Douglas of his power\" and excluded the aging Justice from deliberations. By the time Justice Douglas officially wrote to President Gerald R. Ford on November 12, 1975, announcing his retirement, the President was prepared to act quickly. He announced the nomination of John Paul Stevens just 16 days later. Congress, too, acted quickly, confirming Stevens 19 days later, on December 17, 1975.\nSometimes, though, even when retirements or resignations come with advance notice, the process moves slowly. For example, Justice Harry A. Blackmun privately told President William J. Clinton around January 1, 1994, that he was planning to leave the Court. Soon afterward, the White House staff began quietly considering replacements. However, President Clinton did not publicly announce Justice Blackmun's retirement until April 6, did not publicly announce Judge Stephen G. Breyer's nomination until May 13, and did not formally nominate Breyer until May 17. The Judiciary Committee began hearings 60 days after the nomination was announced, and the entire process surrounding Breyer's nomination lasted 209 days. However, decisions affecting the nomination were apparently being made even before Blackmun's retirement became public knowledge.", "Congress's schedule, especially whether the Senate is in session at all, plays an important role in how long Supreme Court nominations take to reach a conclusion. In the early 1900s, several vacancies arose during summer recess or election years when Congress was away from the Capitol. In 1910, for example, Congress adjourned on June 25 and did not return until December 5—a break of more than five months. In the interim, Chief Justice Melville W. Fuller died of a heart attack on July 4. As press coverage noted at the time, although potential nominees were immediately considered, President William Howard Taft waited to formally submit a nomination to the Senate until Congress reconvened. On December 12, five days after the Senate reconvened, President Taft announced and formally submitted to the Senate his nomination of former Senator Edward D. White of Louisiana to be Chief Justice. That same day, without referring the nomination to the Judiciary Committee, the Senate quickly confirmed Senator White.\nThree times during the 1950s, President Eisenhower resorted to recess appointments when Justices died or announced their retirement after Congress had already adjourned for the year. In each case, President Eisenhower formally submitted the nomination after the Senate convened the following January. Of the five persons whom he nominated to the Court, three first received recess appointments and served as Justices before being confirmed—Earl Warren (as Chief Justice) in 1953, William Brennan in 1956, and Potter Stewart in 1958. President Eisenhower's recess appointments, however, generated controversy, prompting the Senate in 1960, voting closely along party lines, to pass a resolution expressing opposition to Supreme Court recess appointments in the future.\nPresident Eisenhower's actions were the most recent recess appointments to the Supreme Court, and recess appointments to the lower federal courts also have become relatively rare since the late 1960s. While a President's constitutional power to make judicial recess appointments was upheld by a federal court in 1985, such appointments, when they do occur, may cause controversy, in large part because they bypass the Senate and its \"advice and consent\" role. Because of the criticisms of judicial recess appointments in recent decades, the long passage of time since the last Supreme Court recess appointment, and the relatively short duration of contemporary Senate recesses (which arguably undercuts the need for recess appointments to the Court), a President in the 21 st century might be expected to make a recess appointment to the Supreme Court only under the most unusual of circumstances.\nToday, Congress's availability is less of an obstacle to speedy consideration of nominations than in the past. Given Congress's increasingly year-round schedule, extended decision-making is more often the result of waiting for presidential decisions, background investigations of nominees, or preparations for Judiciary Committee hearings.", "Today, it would be highly unusual for the Judiciary Committee not to hold Supreme Court confirmation hearings lasting at least a few days. In the past, however, the Judiciary Committee often handled Supreme Court nominations without holding hearings at all. As Table 1 shows, of the 22 nominees to the Court from 1900 to 1937, only three had Judiciary Committee hearings (Louis D. Brandeis in 1916, Harlan F. Stone in 1925, and John J. Parker in 1930 (whose nomination was eventually rejected)). In contrast, of the 41 nominees after 1937, only three did not have hearings. Nominees did not begin regularly testifying at their own hearings until John M. Harlan did so in 1955.\nWhen the Judiciary Committee holds hearings, Senate floor consideration can be pushed back sometimes by weeks or even months. Controversial nominees often spur protracted hearings. For example, the Judiciary Committee spent 19 days considering Justice Louis D. Brandeis's nomination in 1916, and the interval between the start of hearings and final committee action lasted 105 days. The final Senate vote came eight days later. More recently, the Judiciary Committee, after learning of President Ronald Reagan's selection of Robert H. Bork, took 76 days to hold its first day of hearings on the nomination, and then 21 more days to conclude action on the nomination.\nSenate custom plays an especially large role when sitting or former Senators are nominated to the Court. The Senate has almost always considered their colleagues' nominations to the Court within days of receiving the nomination, often without committee hearings or floor debate. For example, although President Taft waited five months to nominate Edward D. White (a former Senator from Louisiana) for Chief Justice, the Senate confirmed the nomination with no debate in less than one hour. Since 1900, three sitting Senators—Hugo L. Black of Alabama (1937), James F. Byrnes of South Carolina (1941), and Harold H. Burton of Ohio (1945)—have been nominated to the Court, and all were quickly confirmed. Senators George Sutherland of Utah (1922) and Sherman Minton of Indiana (1949) were nominated to the Court after having concluded their Senate service. Sutherland was confirmed on the same day on which President Warren Harding announced the nomination, and Minton was confirmed in 19 days.\nThe decades since 1945 have yet to test again the Senate tradition of bypassing the Judiciary Committee when the Supreme Court nominee is a sitting U.S. Senator; no President since then has nominated a sitting Senator. The last former Senator to be nominated to the Court, in 1949, was Judge Sherman Minton of Indiana. (After defeat for re-election to the Senate in 1940, he had been appointed by President Franklin D. Roosevelt to a federal appellate court judgeship.) In a break with tradition, the Supreme Court nomination of former Senator Minton was referred to the Judiciary Committee, and Senate confirmation followed the day after the committee approved the nomination.", "As noted previously, withdrawn, rejected, or controversial nominations can substantially lengthen the process. In these cases, although Presidents often name nominees fairly quickly, consideration of the nominations can be drawn out in the Senate. During Judge Robert H. Bork's controversial nomination, for example, Senate consideration of Bork lasted more than a month, from the first Judiciary Committee hearing on September 15, 1987, until the Senate's floor vote to reject the nomination on October 23, 1987. The entire process—from President Reagan's announcement of his intention to nominate Bork to Senate rejection—took 119 days.\nControversy can also delay confirmation of nominees who are ultimately successful. Despite a relatively quick nomination-and-confirmation process of 42 days in late 1924 and early 1925 for then-Attorney General Harlan F. Stone, his nomination was temporarily set back when it was recommitted to the Senate Judiciary Committee, apparently because of Stone's investigation as Attorney General of Senator Burton K. Wheeler. More recently, although Judge Clarence Thomas narrowly won confirmation in 1991, nominating and confirming him took 110 days, including a second round of Judiciary Committee hearings surrounding law professor Anita Hill's allegations against Thomas of sexual harassment.", "Understanding how long the previous Supreme Court nomination-and-confirmation process has taken, and what factors affected that schedule, can provide useful perspective on presidential decision-making and the Senate's preparations for future nominations. While Presidents and supporters of nominees want Justices confirmed quickly, some Senators will continue to emphasize their right to consider nominees carefully and their responsibility to hold sufficient hearings. Against that political backdrop, this report demonstrates that the length of time required to nominate and confirm or reject a nominee varies widely. Even median durations must be interpreted cautiously. The context surrounding each nomination is particularly important in understanding how long the process takes.\nThis report indicates that, from 1900-1980, the President's portion of the process took longer than the Senate's. Since 1981, though, there has been a substantial increase in the median duration between the President's announcement of a nominee and the start of Judiciary Committee hearings. As a result, the Senate's portion of the process has taken longer than the President's.\nPrior to 1981, lengthy nomination-and-confirmation processes usually occurred because either the Senate was out of session when a vacancy on the Court arose, or the nomination was controversial. In recent decades, by contrast, slower decision-making has taken place during an era when Congress is in session longer than during the early 20 th century.\nSince 1981, the nomination-and-confirmation process has lasted a median of 113 days—almost twice as long as the 59-day median from 1900-1980. Although the data in Table 1 , Table 2 , and Table 3 provide a median measure of the process, political context is an essential backdrop for understanding the numbers. The President and the Senate share decision-making responsibilities for placing new Justices on the Court. Ultimately, the choices each institution makes determine how long nominations and confirmations take.\nOne possible explanation for the paradox of slower decisions despite more time in session is that, as some critics on both sides of the aisle contend, Supreme Court nominations have become battlegrounds for larger political debates. Another possibility is that the Senate is considering nominations more carefully than in the past, and therefore taking more time to make decisions about nominees. Similarly, the Senate might be using longer decision-making and scrutiny of nominees as a method of counterbalancing presidential power, especially when Senators believe that the President has chosen an unqualified nominee.\nSome early 20 th century appointments to the Supreme Court were confirmed within days of a vacancy occurring. More recent nominations and confirmations, by contrast, typically have taken several weeks or months. How and when a vacancy occurs, the Senate's schedule, Judiciary Committee involvement, institutional customs, and whether or not the nomination is controversial, all affect the speed with which the President nominates, and the Senate passes judgment, on prospective Justices." ], "depth": [ 0, 1, 1, 2, 2, 2, 3, 3, 3, 1, 2, 2, 1, 2, 2, 2, 2, 1, 2, 2, 3, 2, 3, 2, 3, 3, 3, 3, 2 ], "alignment": [ "h0_title h1_title", "h0_full", "", "", "", "", "", "", "", "h0_title", "", "h0_full", "", "", "", "", "", "h0_title h1_title", "", "h0_title", "h0_full", "h0_full h1_title", "h1_full", "", "", "", "", "", "" ] }

{ "question": [ "What does this report provide information on?", "How is time taken to act on Supreme Court nominations defined?", "How is the confirmation clock regarding nominations defined?", "How has the entire nomination-and-confirmation process changed from before and after 1980?", "How have certain aspects of the process changed?", "How has the amount of time between the nomination announcement and first Judiciary Committee changed?" ], "summary": [ "This report provides information on the amount of time taken to act on all Supreme Court nominations occurring between 1900 and the present.", "It focuses on the actual amounts of time that Presidents and the Senate have taken to act (as opposed to the elapsed time between official points in the process). For example, rather than starting the nomination clock with the official notification of the President of a forthcoming vacancy, this report focuses on when the President first learned of a Justice's intention to leave the Court (e.g., via a private conversation with the outgoing Justice), or received word that a sitting Justice had died.", "Likewise, rather than starting the confirmation clock with the transmission of the official nomination to the Senate, this report focuses on when the Senate became aware of the President's selection (e.g., via a public announcement by the President).", "The data indicate that the entire nomination-and-confirmation process (from when the President first learned of a vacancy to final Senate action) has generally taken almost twice as long for nominees after 1980 than for nominees in the previous 80 years. From 1900 to 1980, the entire process took a median of 59 days; from 1981 through 2010, the process took a median of 113 days.", "Although Presidents after 1980 have moved more quickly than their predecessors in announcing nominees after learning of vacancies (a median of 19.5 days compared with 34 days before 1980), the Senate portion of the process (i.e., from the nomination announcement to final Senate action) appears to take much longer than before (a median of 84 days from 1981 through 2009, compared with 17 days from 1900 through 1980).", "Notably, the amount of time between the nomination announcement and first Judiciary Committee hearing has almost quadrupled—from a median of 12.5 days (1900-1980) to 49 days (1981-2010)." ], "parent_pair_index": [ -1, 0, -1, -1, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 1, 1, 1 ] }

{ "title": [ "", "Introduction and Legislative Context", "What Is NASA For?", "What Should NASA Do?", "Human Spaceflight: The Vision for Space Exploration", "Program to Implement the Vision", "Issue for Congress: Cost and Schedule", "Issue for Congress: Why the Moon?", "Issue for Congress: \"The Gap\" and Utilization of the Space Station", "Human Spaceflight: The Augustine Committee", "Options Identified by the Augustine Committee", "Questions for Congressional Policy Makers to Consider", "Human Spaceflight: Administration Proposals", "Congressional and Public Reaction", "Modifications to the Administration Proposals", "Human Spaceflight: The 2010 Authorization Act", "Science", "Aeronautics", "Education", "Balancing Competing Priorities", "Space Shuttle Program", "Why the Shuttle Program Is Ending", "Possible Extension of the Shuttle Program", "Transition of Shuttle Workforce and Facilities", "International Space Station", "ISS National Laboratory", "ISS Service Life Extension", "Post-Shuttle Access to the ISS", "Future Access to Space", "Orion and Ares", "Multipurpose Crew Vehicle and Space Launch System", "Heavy-Lift Alternatives", "Commercial Crew Transportation Services", "Issue for Congress: Safety", "Destinations for Human Exploration", "Alternatives to Human Exploration", "Robotic Exploration", "Emphasize Technology Development", "Other Space Policy Issues", "NASA Acquisition and Financial Management", "U.S. Space Policy Governance", "U.S. National Security Space Programs", "NASA's Relationship with NOAA", "The U.S. Commercial Space Industry", "Legislation in the 111th Congress", "Summary of Major Issues for Congress" ], "paragraphs": [ "", "The idea of human spaceflight beyond Earth orbit has captivated many Americans for more than half a century. As U.S. space policy has evolved, new opportunities have emerged, and new challenges have arisen. From 2004 to 2010, the priorities of the National Aeronautics and Space Administration (NASA) were governed by the Vision for Space Exploration. The Vision was announced by President Bush in January 2004 and endorsed by Congress in the 2005 and 2008 NASA authorization acts ( P.L. 109-155 and P.L. 110-422 ). It directed NASA to focus its efforts on returning humans to the Moon by 2020 and some day sending them to Mars and \"worlds beyond.\" The resulting efforts are now approaching major milestones, such as the end of the space shuttle program and design review decisions for the new spacecraft intended to replace the shuttle.\nIn May 2009, the Obama Administration announced plans for a high-level independent review of the future of human space flight, chaired by Norman R. Augustine. Major components of the FY2010 NASA budget request were placeholders, to be revised following the results of this review. The Augustine committee released its final report in October 2009. The report identified serious barriers to the implementation of the Vision and proposed several alternatives. Committees in the House and Senate held hearings to consider the proposals. The Administration did not submit a revised FY2010 budget for NASA. In December 2009, Congress appropriated FY2010 funds for NASA at approximately the level in the President's original request. The appropriations conference report ( H.Rept. 111-366 ) stated that the Augustine committee's report\nraises issues requiring thoughtful consideration by the Administration and the Congress.... It is premature for the conferees to advocate or initiate significant changes to the current program absent a bona fide proposal from the Administration and subsequent assessment, consideration and enactment by Congress.... It is the expressed hope of the conferees that the Administration will formulate its formal decision soon, submit its recommendations for congressional review and consideration, and budget the necessary resources.\nIn February 2010, as part of its FY2011 budget, the Administration proposed major changes to the Vision, including the elimination of a human return to the Moon as NASA's primary goal, the cancellation of NASA's Constellation spacecraft development program, a new effort to encourage the private sector to develop commercial crew launch services, and increased emphasis at NASA on technology development and science. The 111 th Congress considered these proposals but ultimately did not pass a regular FY2011 appropriations bill for NASA. Under the Continuing Appropriations Act, 2010 ( P.L. 111-242 as amended by P.L. 111-322 ), NASA is operating at FY2010 funding levels through March 4, 2011. Because the continuing resolution does not explicitly remove it, a restriction in the FY2010 appropriations act that requires NASA to continue the Constellation program remains in effect.\nThe 111 th Congress did pass a comprehensive NASA reauthorization bill, the NASA Authorization Act of 2010 ( P.L. 111-267 ). This act mandates several major changes in direction for NASA. For example, it calls for the development of a new, crew-capable, heavy-lift rocket, and it provides for the development of commercial services to transport NASA crews into low Earth orbit. In the near term, NASA's ability to implement these changes may be constrained by operating under the continuing resolution. The NASA Inspector General has estimated that if the continuing resolution is extended through the end of FY2011, without changes to the requirement to continue Constellation, NASA will likely have to spend $575 million during FY2011 on activities that it would otherwise no longer pursue. In the longer term, fiscal constraints may also create barriers, if they result in future appropriations that do not match the growing NASA budgets envisioned by the 2010 authorization act.\nAs Congress considers these broad space policy challenges, the major issues it faces can be summarized as three broad questions:\nWhat is NASA for? Different analysts and policy makers give different answers to this question: making scientific discoveries, developing technologies with economic benefits, enhancing national security, enhancing international prestige, even fulfilling human destiny in space. How should these competing goals be prioritized? What should NASA do? In order to accomplish its broad goals, how should NASA balance its major programs in human spaceflight, robotic spaceflight, aeronautics research, and education? In the human spaceflight program, which is larger than all the others put together, should the agency's goal be exploration of the Moon, Mars, or some other destination? What should the top priorities be for NASA's science and aeronautics programs? How? Once these questions are decided, how should their answers be implemented? What new space vehicles are needed? Should they be government-owned or commercial? What should be done with existing programs, such as the space shuttle and the International Space Station?\nThis report analyzes these questions and some possible answers. It also addresses a number of cross-cutting issues, such as NASA's interactions with other federal agencies and the growing role of the commercial space industry.", "During the Eisenhower Administration, after the Soviet Union's launch of the first artificial satellite, Sputnik, but before the establishment of NASA, the President's Science and Advisory Committee identified four \"principal reasons for undertaking a national space program\":\n\"the compelling urge of man to explore and to discover\"; \"defense ... to be sure that space is not used to endanger our security ... [and to] be prepared to use space to defend ourselves\"; to \"enhance the prestige of the United States ... and create added confidence in our scientific, technological, industrial, and military strength\"; and \"scientific observation and experiment which will add to our knowledge and understanding of the Earth, the solar system, and the universe.\"\nTo these objectives, analysts today add\nthe potential for technologies developed for the space program to have direct and indirect (\"spinoff\") economic benefits; the opportunity to use space activities as a tool of international relations, through collaboration on projects such as the International Space Station; and the ability of the space program to inspire students and promote education in science, technology, engineering, and mathematics (STEM).\nThese goals form a foundation for U.S. space policies, but policy makers differ in how they should be balanced against each other. Is the urge to discover a sufficient reason to explore space, or must exploration also meet needs here on Earth? Should economic benefits be an explicit focus for NASA or just a positive side effect? To what extent should improving STEM education be a NASA function, as opposed to a consequence of its other functions? Should the emphasis of international space programs be competition or cooperation?\nThe priorities that Congress assigns to these objectives may determine how it balances the competing demands of NASA's programs. For example, if Congress believes that national prestige is a high priority, it could choose to emphasize NASA's high-profile human exploration activities, such as exploring Mars or establishing a Moon base. If scientific knowledge is a high priority, Congress could emphasize unmanned missions such as the Hubble telescope and the Mars rovers. If international relations are a high priority, Congress could encourage joint space activities with other nations. If economic benefits are of interest, Congress could focus on technological development, linking NASA programs to the needs of business and industry.\nA report by the National Academies proposed goals similar to those listed above and recommended three criteria to use in balancing their competing demands for resources:\nSteady progress. Each major area should be maintained at a level that allows sustained long-term progress with intermediate goals achieved at a reasonable pace. Stability. Rapid downsizing and abrupt redirection should be avoided because they are disruptive, can take time to recover from, and can create risk as operations experience is lost. Robustness. Sufficient human resources and research infrastructure should be maintained so that the nation can ramp up selected activities quickly in response to changing national needs or scientific breakthroughs.\nThe Academies report did not, however, actually employ these criteria to prioritize the goals it proposed.", "Based on this wide variety of objectives, NASA has established programs in human spaceflight, science, aeronautics, and education. The largest and most visible effort, in human spaceflight, has faced considerable uncertainty about its proper scope and aims. The content of the science, aeronautics, and education programs is less controversial but still faces questions about scope, balance, and other issues.", "The Vision for Space Exploration, announced by President Bush in a speech on January 14, 2004, directed NASA to focus its efforts on returning humans to the Moon by 2020 and eventually sending them to Mars and \"worlds beyond.\" (Twelve U.S. astronauts walked on the Moon between 1969 and 1972. No humans have visited Mars.) The Vision also directed NASA to return the space shuttle to flight status following the February 2003 Columbia disaster; to complete construction of the International Space Station (ISS) in accord with existing international commitments; and to conclude U.S. participation in the ISS by the end of 2015. The first post- Columbia shuttle flight was launched in July 2005. The other goals remain to be accomplished.\nTo advise NASA on implementation of the Vision, President Bush established a Commission on the Implementation of U.S. Space Exploration Policy, chaired by Edward C. \"Pete\" Aldridge, Jr. The Aldridge Commission issued its report in June 2004. In April 2005, NASA established an Exploration Systems Architecture Study (ESAS) to identify a strategy and technical architecture for implementing the Vision. The ESAS issued its final report in November 2005. From then until 2010, the reports of the Aldridge Commission and the ESAS were the baseline for NASA's space exploration plans.\nIn the NASA Authorization Act of 2005 ( P.L. 109-155 ), Congress endorsed the Vision in broad terms and established several milestones for its implementation, including a statutory mandate to return to the Moon no later than 2020. Nevertheless, it directed NASA to construct an architecture and implementation plan for its human exploration program \"that is not critically dependent on the achievement of milestones by specific dates.\"\nThe NASA Authorization Act of 2008 ( P.L. 110-422 ) reaffirmed the Vision's broad goals, including the \"eventual\" return to the Moon and missions to other destinations in the solar system. It expressed the sense of Congress that \"America's friends and allies\" should be invited to participate. It directed NASA to take a \"stepping stone approach\" in which lunar exploration activities are designed and implemented with strong consideration to their future contribution to exploration beyond the Moon. It directed that plans for a lunar outpost should not require its continuous occupation and that NASA should use commercial services for its lunar outpost activities \"to the maximum extent practicable.\"", "The program for implementing the Vision, as it stood before passage of the 2010 authorization act, addressed the conclusion of the space shuttle and International Space Station programs as well as the development and implementation of new vehicles for taking humans into Earth orbit and then back to the Moon. The major elements were as follows:\nRetire the space shuttle during 2011 (extended from the original deadline of the end of 2010). Rely on non-U.S. vehicles for human access to space until a replacement vehicle is developed. Terminate U.S. use of the International Space Station at the end of 2015. Under the Constellation program, develop new systems for space exploration: the Ares I rocket to launch astronauts into low Earth orbit, where the International Space Station is located; the Orion crew capsule, to be launched atop Ares I to carry astronauts into orbit and beyond; the Ares V heavy-lift rocket to send astronauts and equipment to the Moon; and the Altair lunar lander and various lunar surface systems.\nBefore the Administration's FY2011 budget proposals, no funds were projected for any shuttle flights after the end of 2010. No FY2016 funds were projected for deorbiting the space station. The first crewed flight (or \"initial operating capability\") of Ares I and Orion was scheduled for early 2015. The first return to the Moon, using all the Constellation systems together, was planned for 2020, although NASA acknowledged that meeting that date would be difficult.\nThe 2010 authorization act extended U.S. use of the International Space Station through at least 2020 and replaced Constellation with programs to develop commercial services for launching astronauts into low Earth orbit (instead of Ares I); a multipurpose crew vehicle (similar to Orion); and a new heavy-lift rocket (possibly similar to Ares V). The transition from Constellation to these new programs, however, is constrained while NASA operates under the continuing resolution.", "Cost played a central role as congressional policy makers oversaw the Vision's progress and considered proposals to modify it. During the Bush Administration, NASA stressed that its strategy was to \"go as we can afford to pay,\" with the pace of the program set, in part, by the available funding. The original plan in 2004 proposed adding a total of just $1 billion to NASA's budget for FY2005 through FY2009 to help pay for the Vision, with increases thereafter limited to the rate of inflation. Subsequent Administration budgets more than eliminated this increase, and actual appropriations by Congress were even less. As a result, most funding for the Vision has been redirected from other NASA activities, such as the planned termination of the space shuttle program.\nNASA has not provided a cost estimate for the Vision as a whole. In 2004, it projected that developing capabilities for human exploration, not including robotic support missions, would cost a total of $64 billion up through the first human return to the Moon. The Congressional Budget Office (CBO) concluded that, based on historical trends, the actual cost could be much higher. In its 2005 implementation plan, NASA estimated that returning astronauts to the Moon would cost $104 billion, not including the cost of robotic precursor missions or the cost of servicing the ISS after the end of the shuttle program. In 2007, the Government Accountability Office (GAO) estimated the total cost for the Vision as $230 billion over two decades. In April 2009, as directed in the 2008 authorization act, the CBO updated its 2004 budgetary analysis of the Vision. It found that NASA would need an additional $2 billion per year through FY2025 to keep the Vision activities on schedule, not counting probable cost growth in other activities. In October 2009, the Augustine report stated that executing NASA's plans would require an additional $3 billion per year, even with some schedule delays.\nSchedule is closely related to cost. For example, the 2009 CBO analysis found that NASA could maintain its currently planned budget by delaying its return to the Moon by approximately three years. The tradeoffs can be difficult to quantify, however. The Augustine report, unlike the CBO analysis, found that under NASA's budget plans at the time of the report, \"human exploration beyond low-Earth orbit is not viable\" and planned budgets would delay a return to the Moon \"well into the 2030s, if ever.\" Schedule delays were already evident. For example, the initial operating capability for Orion and Ares I, originally planned for 2012, had slipped to 2015; the Augustine committee concluded that 2017 was more likely.", "Ever since the Vision was announced, some analysts questioned its choice of the Moon as the headline destination for NASA's human exploration efforts. Some felt that revisiting the destination of the Apollo missions of 1969-1972 was a less inspiring goal than a new target would be. Some doubted the scientific rationale, suggesting that robotic missions to the Moon could accomplish as much or more at lower cost and without risking human lives, or that more could be learned by visiting another destination that has been studied less by previous missions. Some were simply concerned about the cost.\nSupporters countered that the Moon is the closest destination beyond Earth orbit and could serve as a stepping stone for subsequent destinations. As Earth's nearest neighbor, the Moon is of great scientific interest. Missions to the Moon would provide an opportunity to develop and test technologies and gain experience working in space. According to some advocates, the Moon might literally be a staging point for future missions. For some in Congress, concerned about national security or national prestige, the prospect of a manned Chinese mission to the Moon was a strong motivation to reestablish a U.S. presence. For many who supported the Vision, completing it became important in itself; part of the Vision's original purpose was to set a goal for NASA that would give the agency direction and enhance its public support, and some supporters feared that changing the plan would weaken NASA, whether or not a better plan could be devised.", "In order to fund the cost of the Vision and because of safety concerns following the Columbia disaster in 2003, NASA intended to end the space shuttle program in 2010 once construction of the ISS was complete. (Because of schedule delays and a congressional mandate for an additional flight, the program will end during 2011 rather than 2010.) The shuttle's successors, Orion and Ares I, were not expected to be ready for crewed flight until at least 2015. The difference between these dates is generally referred to as \"the gap.\" Congressional policy makers and others expressed concerns about U.S. access to space during the gap. The NASA Authorization Act of 2005 declared it to be U.S. policy \"to possess the capability for human access to space on a continuous basis.\" Former NASA Administrator Michael Griffin, a strong advocate of the Vision, referred to the gap as \"unseemly in the extreme.\"\nUnder current plans, Russian spacecraft will be the only means of access to the ISS for humans during the gap. A variety of alternatives are being considered for cargo. These points are discussed further below in the section \" Post-Shuttle Access to the ISS .\" The prospect of the gap has intensified congressional concerns about whether the capabilities of the ISS will be fully utilized.", "The Review of U.S. Human Spaceflight Plans Committee was formally chartered on June 1, 2009. It was chaired by Norman R. Augustine, a former chairman and chief executive officer of Lockheed Martin Corporation and a member of the President's Council of Advisors on Science and Technology under Presidents of both parties. Other committee members included scientists, engineers, astronauts, educators, executives of established and new aerospace firms, former presidential appointees, and a retired Air Force general. The committee reported jointly to the Administrator of NASA and the Director of the Office of Science and Technology Policy in the Executive Office of the President. The committee's charter defined its scope and objectives as follows:\nThe Committee shall conduct an independent review of ongoing U.S. human space flight plans and programs, as well as alternatives, to ensure the Nation is pursuing the best trajectory for the future of human space flight – one that is safe, innovative, affordable, and sustainable. The Committee should aim to identify and characterize a range of options that spans the reasonable possibilities for continuation of U.S. human space flight activities beyond retirement of the Space Shuttle. The identification and characterization of these options should address the following objectives: a) expediting a new U.S. capability to support utilization of the International Space Station (ISS); b) supporting missions to the Moon and other destinations beyond low-Earth orbit (LEO); c) stimulating commercial space flight capability; and d) fitting within the current budget profile for NASA exploration activities.\nIn addition to the objectives described above, the review should examine the appropriate amount of research and development and complementary robotic activities needed to make human space flight activities most productive and affordable over the long term, as well as appropriate opportunities for international collaboration. It should also evaluate what capabilities would be enabled by each of the potential architectures considered. It should evaluate options for extending ISS operations beyond 2016.", "The committee released its final report in October 2009. It identified five options: two within the existing budget profile and three that would require about an additional $3 billion per year. In the committee's judgment, developing Ares I, Orion, and the other Constellation systems is likely to take longer than NASA currently plans, and the options presented by the committee reflect these expected delays. The options are as follows:\nOption 1: Current Budget, Current Program . This option is the current program, modified only to provide funds for space shuttle flights in FY2011 and for deorbiting the International Space Station in FY2016. The first crewed flight of Ares I and Orion is no earlier than 2017, after the International Space Station has been deorbited. Ares V is not available until the late 2020s, and there are insufficient funds to develop Altair and the lunar surface systems needed for returning to the Moon until well into the 2030s, if ever. Option 2: Current Budget , Extend Space Station, Explore Moon Using Ares V Lite . This option extends use of the International Space Station to 2020 and begins a program of lunar exploration using a variant of Ares V known as Ares V Lite. It develops commercial services to transport humans into low Earth orbit. It delivers a heavy-lift capability in the late 2020s, but it does not develop the other systems needed for returning to the Moon for at least the next two decades. Option 3: Additional Budget , Current Program. Like Option 1, this option is the current program, modified to provide funds for space shuttle flights in FY2011 and to deorbit the International Space Station in FY2016. The first crewed flight of Ares I and Orion would still be after the International Space Station is deorbited. The additional funding, however, would permit a human lunar return in the mid-2020s. Option 4: Additional Budget , Extend Space Station, Explore Moon First . Like Option 2, this option extends use of the International Space Station to 2020 and uses commercial services to transport humans into low Earth orbit. The first destination beyond Earth orbit is still the Moon. There are two variants to this option. Variant 4A develops the Ares V Lite for lunar exploration as in Option 2. Variant 4B extends the space shuttle program to 2015 and develops a heavy-lift vehicle for lunar missions that is more directly shuttle-derived. Both variants permit a human lunar return by the mid-2020s. Option 5: Additional Budget, Extend Space Station, Flexible Path for Exploration. Like Option 4, this option extends use of the International Space Station to 2020 and uses commercial services to transport humans into low Earth orbit. Missions beyond Earth orbit, however, follow a \"flexible path\" of increasingly distant destinations—such as lunar fly-bys, rendezvous with asteroids and comets, and Mars fly-bys—without initially attempting a lunar landing. A lunar landing would be possible by the mid to late 2020s. Variant 5A employs the Ares V Lite. Variant 5B uses a commercial heavy-lift rocket derived from the Evolved Expendable Launch Vehicle (EELV). Variant 5C develops a shuttle-derived vehicle for heavy lift as in Variant 4B. (These alternative launch vehicles are discussed further later in this report.)\nAlthough the committee's report did not recommend any particular one of these options, it made a number of findings and comments that put the options into context:\nOption 1 and Option 2 fit within the current budget profile, but \"neither allows for a viable exploration program. In fact, the Committee finds that no plan compatible with the FY2010 budget profile permits human exploration to continue in any meaningful way.\" The additional funding contemplated in Options 3, 4, and 5 is necessary for \"an exploration program that will be a source of pride for the nation.\" \"The return on investment to both the United States and our international partners would be significantly enhanced by an extension of the life of the [International Space Station]. A decision not to extend its operation would significantly impair U.S. ability to develop and lead future international spaceflight partnerships.\" Commercial services to launch crews into Earth orbit \"are within reach. While this presents some risk, it could provide an earlier capability at lower initial and life-cycle costs than the government could achieve.\" Of the heavy-lift alternatives, Ares V Lite is \"the most capable.\" The commercial EELV derivative \"has an advantage of potentially lower operating costs, but requires significant restructuring of NASA\" including \"a different (and significantly reduced) role.\" A shuttle-derived vehicle would \"take maximum advantage of existing infrastructure, facilities, and production capabilities.\" Variant 4B, which extends operation of the space shuttle to 2015, is \"the only foreseeable way to eliminate the gap in U.S. human-launch capability.\" \"Mars is the ultimate destination for human exploration of the inner solar system; but it is not the best first destination. Visiting the 'Moon First' and following the 'Flexible Path' are both viable exploration strategies. The two are not necessarily mutually exclusive; before traveling to Mars, we could extend our presence in free space and gain experience working on the lunar surface.\"", "The Augustine committee identified five questions \"that could form the basis of a plan for U.S. human spaceflight\":\nWhat should be the future of the space shuttle? What should be the future of the International Space Station? On what should the next heavy-lift launch vehicle be based? How should crew be carried to low Earth orbit? What is the most practicable strategy for exploration beyond low Earth orbit?\nThese five questions focus on designing a future program of human spaceflight. In keeping with the committee's charter, the questions do not address NASA's other programs, and they take it as given that a human spaceflight program should be implemented. Congress may therefore wish to consider additional questions such as these:\nIs human spaceflight beyond low Earth orbit worth the cost and risk? If not, are there alternatives that would accomplish some of the same goals? What is the future of NASA's other activities, such as robotic exploration, science, and aeronautics research?\nEach of these issues is discussed in more detail later in this report.", "In its FY2011 budget request, the Obama Administration proposed cancelling the Constellation program and eliminating the return of humans to the Moon as NASA's primary goal. Instead, NASA would encourage the private sector to develop commercial space transportation services to carry astronauts to and from the International Space Station. For spaceflight beyond Earth orbit, NASA would emphasize long-term technology development rather than near-term development of specific flight systems. Operation of the International Space Station would continue until at least 2020. When asked about destinations for future human exploration of space, NASA officials stated that Mars would be the ultimate goal, but that other intermediate destinations would come first. They described these proposals as consistent with the \"Flexible Path\" option identified by the Augustine committee.", "For the most part, Congress and the public at large reacted negatively to the Administration's proposals. Their concerns included the potential negative impact of Constellation's cancellation on employment in the aerospace industry, the lack of a specific destination and schedule to replace the goal of returning humans to the Moon, and the risk that the private sector might not in fact develop commercial space transportation services that meet NASA's needs. In the media, attention focused on the proposed cancellation of Constellation, with less notice of the programs that would replace it, such as increased technology development and stimulation of commercial space transportation services. Press accounts often reported the Administration's proposals as cutting NASA's budget, or eliminating its human spaceflight program, even though the proposed FY2011 budget for NASA was actually an increase over previous plans and included other human spaceflight activities to replace Constellation.\nSupporters of Constellation were particularly concerned about its status during FY2010. The FY2010 appropriations act prohibited NASA from using FY2010 or prior-year funds to terminate or eliminate \"any program, project, or activity of the architecture for the Constellation program\" or to create or initiate any new program, project, or activity. Some analysts and policy makers expressed concern that NASA's contracting decisions and other actions during FY2010 violated this provision. NASA officials replied that they were continuing to implement the Constellation program during FY2010 in full compliance with the law, even though they intended to terminate the program in FY2011. Two GAO opinions in May and July 2010 concluded that NASA had not violated the appropriations provision. In June 2010, NASA announced that it would \"prioritize\" and \"pace\" (but not \"terminate\") contracts in the Constellation program because contract termination liabilities could result in a $1 billion \"shortfall\" in the program's FY2010 funding.", "On April 15, 2010, President Obama gave a speech at the Kennedy Space Center in Florida that attempted to answer some of these public and congressional concerns. In this speech, he announced several modifications to the original FY2011 budget request proposals:\nDevelopment of a modified Orion crew capsule would continue. The modified design would provide an emergency escape capability for the International Space Station, however, rather than transporting crews to and from the station on a regular basis. The next human mission beyond Earth orbit would be to an asteroid and would take place in 2025. This would be the first human mission to a destination more distant than the Moon. Subsequent missions to orbit Mars would take place in the mid-2030s. A human landing on Mars would remain the ultimate goal. NASA's increased technology efforts would focus on the development of a new heavy-lift rocket, with a decision in 2015 on a specific heavy-lift architecture for exploration of deep space. Independent of the FY2011 budget, an Administration task force will address economic development and the aerospace industry in the region of Florida known as the Space Coast.\nAn Administration budget amendment in June 2010 proposed transferring $100 million from the Exploration account in NASA's FY2011 budget request to the Departments of Commerce and Labor \"to spur regional economic growth and job creation along the Florida Space Coast and other affected regions.\"", "In October 2010, Congress passed the NASA Authorization Act of 2010 ( P.L. 111-267 ). The act authorizes funding for NASA for FY2011 through FY2013 at a level that matches the Administration's proposals. Its allocation of those funds within the agency, however, is quite different. New efforts in long-term space technology development are reduced by about half. This allows the addition of one extra space shuttle flight in FY2011 and additional funding for other human spaceflight programs in subsequent years. The human spaceflight program is to retain the full Orion crew capsule and develop a new, crew-capable, heavy-lift rocket. To pay for Orion and the new rocket, other elements of the human spaceflight program are to be scaled back significantly, including the Administration's proposals for technology demonstrations, robotic precursor missions, and development of commercial crew launch services.\nAs with any authorization act, these budgetary plans are subject to subsequent appropriations by Congress. Because the 111 th Congress did not pass a regular FY2011 appropriations act for NASA, the 112 th Congress will determine appropriations for all three years covered by the 2010 authorization act.\nOther provisions of the NASA Authorization Act of 2010 are discussed throughout this report together with related discussion of the topics addressed.", "About two-thirds of NASA's budget is associated with human spaceflight. Most of the rest is devoted to unmanned science missions. These science missions fall into four categories: Earth science, planetary science, heliophysics, and astrophysics. The latter three are sometimes known collectively as space science.\nIn part because of concerns about climate change, both Congress and the Administration have recently placed increased emphasis on Earth science. In the FY2006 and FY2007 budget cycles NASA had no separate budget for Earth science, and supporters became concerned that this was adversely affecting the field. In late 2006, NASA reorganized the Science Mission Directorate, creating a separate Earth Science Division. The National Research Council recommended in early 2007 that the United States \"should renew its investment in Earth observing systems and restore its leadership in Earth science and applications.\" In response, Congress and the Administration increased the share of NASA's science funding devoted to Earth science from 26% in FY2008 to 32% in FY2010. In addition, NASA allocated 81% of the science funding it received under the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) to Earth science. The Administration's requested budget for FY2011 would provide substantial increases for Earth science funding, including a five-year, $2.1 billion global climate initiative. For FY2011 through FY2013, the NASA Authorization Act of 2010 authorized these increases.\nIn recent years, Congress has sought to ensure that NASA's science program includes a balanced variety of approaches to R&D rather than focusing only on certain types of missions. For example, the NASA Authorization Act of 2008 stated that the science program should include space science missions of all sizes as well as mission-enabling activities such as technology development, suborbital research, and research and analysis (R&A) grants to individual investigators. According to the National Research Council, \"practically all relevant external advisory reports have emphasized the importance of mission-enabling activities,\" but determining their proper scale has been challenging \"throughout NASA's history.\" In the past few years, funding for planetary science technology has increased significantly, but funding for Earth science technology has increased only slightly; the astrophysics and heliophysics programs do not have dedicated technology subprograms. Funding for suborbital rocket operations increased from $51 million in FY2008 to $66 million in FY2010, but the trend is unclear as the latter amount was down from $77 million in FY2009. Funding for R&A grants, which NASA controversially proposed to reduce significantly as recently as FY2007, has recovered as the result partly of the Administration's own initiatives and partly of congressional action on appropriations legislation. The NASA Authorization Act of 2010 reaffirmed the sense of Congress that \"a balanced and adequately funded set of activities, consisting of research and analysis grants programs, technology development, small, medium, and large space missions, and suborbital research activities, contributes to a robust and productive science program and serves as a catalyst for innovation.\"\nIn December 2009, the National Research Council recommended ways to make the mission-enabling activities of NASA's science programs more effective through more active management. These recommendations included establishing explicit objectives and metrics, making budgets more transparent, and clearly articulating the relationships between mission-enabling activities and the ensemble of missions they are intended to support. The NASA Authorization Act of 2008 stated that the technology development program should include long-term activities that are \"independent of the flight projects under development.\" NASA may sometimes find it challenging to balance this independence against the goal of linking mission-enabling activities to the missions they support.\nNASA's science programs have a history of periodic review by the National Academies. Such reviews typically take place every 10 years, so they are commonly known as decadal surveys. The NASA Authorization Act of 2005 mandated an Academy review of each division of NASA's science directorate every five years. The NASA Authorization Act of 2008 also mandated periodic reviews and directed that they include independent estimates of the cost and technical readiness of each mission assessed. The NASA Authorization Act of 2010 directed NASA to \"implement, as appropriate ... within the scope of the funds authorized,\" the missions identified by the Earth science decadal survey, and to \"take into account\" space science decadal surveys when submitting the President's annual budget request. Decadal surveys by the National Academies are generally well received by NASA and are widely respected in the science and science policy communities. On the other hand, the expertise of the National Academies is primarily scientific. It is unclear whether their analysis of mission cost and readiness will be considered equally authoritative.", "After human spaceflight and science, NASA's largest activity is research on aeronautics, the science and technology of flight within Earth's atmosphere. There is a history of disagreement in Congress about the appropriate role of this program. Supporters argue that the aviation industry is vital to the economy, especially because aircraft are a major component of U.S. exports. They claim that government funding for aeronautics research can contribute to U.S. competitiveness and is necessary in light of similar programs in Europe and elsewhere. Opponents counter that the aviation industry itself should pay for the R&D it needs. Against the background of this debate, NASA aeronautics programs have focused increasingly on long-term fundamental R&D and on research topics with clear public purposes, such as reducing noise and emissions, improving safety, and improving air traffic control.\nIn 2005, Congress directed the President to develop a national policy for aeronautics R&D. The National Science and Technology Council (NSTC), part of the Executive Office of the President, issued this policy in December 2006. The policy established general principles and goals for federal aeronautics activities, laid out the roles and responsibilities of NASA and other agencies, and directed the NSTC to issue a national aeronautics R&D plan at least every two years. The NSTC released the first national aeronautics R&D plan in December 2007 and the second in February 2010. The NASA Authorization Act of 2008 stated that NASA's aeronautics research program should be \"guided by and consistent with\" the national aeronautics R&D policy.\nIn June 2006, in response to a congressional mandate, the National Research Council of the National Academies released a decadal strategy for federal civil aeronautics activities, with a particular emphasis on NASA's aeronautics research program. Along with other recommendations, the report identified 51 technology challenges to serve as the foundation for aeronautics research at NASA for the next decade. In the 2008 authorization act, Congress directed NASA to align its fundamental aeronautics research program with these technology challenges \"to the maximum extent practicable within available funding\" and to increase the involvement of universities and other external organizations in that program. It also mandated periodic Academy reviews of the NASA aeronautics program and directed that they include independent estimates of the cost and technical readiness of each mission assessed. As noted above with respect to its decadal surveys of NASA science, while the National Academies are widely respected for their scientific expertise, it is unclear whether their analysis of cost and technical readiness will be considered equally authoritative.\nThe aeronautics program's heavy use of shared facilities and capabilities, such as wind tunnels and supercomputers, has sometimes created challenges. For example, when NASA introduced full-cost accounting in the FY2004 budget request, the stated cost of the aeronautics program increased significantly because facility costs had previously been budgeted in another account. At least partly in response to these concerns, NASA subsequently established a separate Aeronautics Test Program in the aeronautics directorate and a Strategic Capabilities Assets Program outside the directorate. It has also sometimes been difficult for NASA to balance its stewardship of unique aeronautics facilities, often used by other agencies and by industry as well as by NASA itself, against the cost of maintaining those facilities. In 2005, Congress directed NASA to establish a separate account to fund aeronautics test facilities, to charge users of NASA test facilities at a rate competitive with alternative facilities, and not to implement a policy seeking full cost recovery for a facility without giving 30 days' notice to Congress. To accompany the national aeronautics R&D plan, the Aeronautics Science and Technology Subcommittee of the NSTC developed a national aeronautics research, development, test, and evaluation infrastructure plan. The infrastructure plan will be updated periodically in response to the biennial updates of the R&D plan.\nThere is ongoing congressional interest in the relationship between NASA's aeronautics program and related efforts by the Federal Aviation Administration (FAA) and the Department of Defense (DOD). One aspect of this relationship is the interagency Joint Planning and Development Office (JPDO), which oversees the development of a Next Generation Air Transportation System (NGATS) for improved airspace management. Congress has directed NASA to align the Airspace Systems program of its Aeronautics Research Directorate with the objectives of the JPDO and NGATS. The NASA Authorization Act of 2010 directed NASA to continue to coordinate its aeronautics research with DOD and the FAA.", "In 2008, a congressionally mandated National Academies review of NASA education programs found that even though NASA is uniquely positioned to interest students in science, technology, and engineering, its education programs are not as effective as they could be. The report found that NASA has no coherent plan to evaluate its education programs, and few of them have ever been formally evaluated. It recommended that NASA develop an evaluation plan and use the results of the evaluations to inform project design and improvement. It found that the operating directorates, rather than the Office of Education, fund about half of the agency's primary and secondary education activities. It recommended that the Office of Education focus on coordination and oversight, including advocacy for the inclusion of education activities in the programs of the operating directorates. Congress directed NASA to prepare a plan in response to the recommendations of the National Academies, including a schedule and budget for any actions that have not yet been implemented. NASA issued this plan in January 2010. In the NASA Authorization Act of 2010, Congress directed NASA to submit a report on outcomes of its education programs.\nUnlike the Department of Education or the National Science Foundation, NASA does not have a lead role in federal education programs. As a result, some analysts may view NASA's education activities as secondary to its primary efforts in spaceflight, science, and aeronautics. Congress, however, is typically supportive of NASA education programs and often provides more funding for them than NASA requests. This imbalance between Administration and congressional priorities, the dispersed nature of NASA's education activities outside the Office of Education, and the tendency for congressional funding increases to be dedicated to specific one-time projects rather than to ongoing programs, may make it difficult for NASA to plan and manage a coherent, unified education program.", "Ever since the announcement of the Vision, NASA's emphasis on exploration has created concerns about the balance between human spaceflight and NASA's other activities, especially science and aeronautics. Because most funding for the Vision has been redirected from other NASA activities, advocates of science and aeronautics have feared that their programs will be cut in order to pay for human exploration activities. Congress, while fully supporting the Vision, has been clear about the need for balance. The NASA Authorization Act of 2005 directed NASA to carry out \"a balanced set of programs,\" including human space flight in accordance with the Vision, but also aeronautics R&D and scientific research, the latter to include robotic missions and research not directly related to human exploration. The NASA Authorization Act of 2008 found that NASA \"is and should remain a multimission agency with a balanced and robust set of core missions in science, aeronautics, and human space flight and exploration\" and \"encouraged\" NASA to coordinate its exploration activities with its science activities. In January 2010, NASA Administrator Charles Bolden assured a group of scientists that \"the future of human spaceflight will not be paid for out of the hide of our science budget.\"\nBalancing these competing priorities depends on answering questions, raised earlier in this report, about NASA's purpose. More than 50 years ago, President Eisenhower's advisors were aware that a space program was justified both by \"the compelling urge of man to explore and to discover\" and by \"scientific observation and experiment which will to add to our knowledge and understanding.\" Today, there is still no consensus about how to balance these purposes. Some policy makers believe that a space program can best be justified by tangible benefits to economic growth and competitiveness. Others believe that its most important role is to be a source of national pride, prestige, and inspiration.", "Since its first launch in April 1981, the space shuttle has been the only U.S. vehicle capable of carrying humans into space. After a few remaining flights during 2011, the space shuttle program is scheduled to end. Although some advocates and policy makers would like to extend the program, technical and management issues are making that ever more difficult as the scheduled termination approaches. Congress's attention is increasingly on managing the transition of the shuttle workforce and facilities and on addressing the projected multi-year gap in U.S. access to space between the last shuttle flight and the first flight of its successor.", "The oldest shuttle is approaching 30 years old; the youngest is approaching 20. Although many shuttle components have been refurbished and upgraded, the shuttles as a whole are aging systems. Most analysts consider the shuttle design to be based, in many respects, on obsolete or obsolescent technology. The original concept of the shuttle program was that a reusable launch vehicle would be more cost-effective than an expendable one, but many of the projected cost savings depended on a flight rate that has never been achieved.\nOver the years, NASA has attempted repeatedly, but unsuccessfully, to develop a second-generation reusable launch vehicle to replace the shuttle. In 2002, NASA indicated that the shuttle would continue flying until at least 2015 and perhaps until 2020 or beyond. The Columbia disaster in 2003 forced NASA to revise that plan.\nWithin hours of the loss of the space shuttle Columbia and its seven astronauts, NASA established the Columbia Accident Investigation Board to determine the causes of the accident and make recommendations for how to proceed. The board concluded that the shuttle \"is not inherently unsafe\" but that several actions were necessary \"to make the vehicle safe enough to operate in the coming years.\" It recommended 15 specific actions to be taken before returning the shuttle to flight. In addition, it found that\nbecause of the risks inherent in the original design of the space shuttle, because the design was based in many aspects on now-obsolete technologies, and because the shuttle is now an aging system but still developmental in character, it is in the nation's interest to replace the shuttle as soon as possible as the primary means for transporting humans to and from Earth orbit.\nThe board recommended that if the shuttle is to be flown past 2010, NASA should \"develop and conduct a vehicle recertification at the material, component, subsystem, and system levels\" as part of a broader and \"essential\" Service Life Extension Program.\nThe announcement of the Vision for Space Exploration in 2004 created another reason to end the shuttle program: money. Before the shuttle program began to ramp down, it accounted for about 25% of NASA's budget. Making those funds available for the Vision became a primary motivation for ending the program.", "Despite the safety risks identified by the Columbia Accident Investigation Board and the need to reallocate the shuttle's funding stream to other purposes, some policy makers and advocates remain eager to extend the program. For example, the NASA Authorization Act of 2008 directed NASA not to take any action that would preclude a decision to extend the shuttle program past 2010. One of the options put forward by the Augustine committee (Variant 4B) included extending the shuttle program to 2015. The NASA Authorization Act of 2010 provided for an additional shuttle flight no earlier than June 1, 2011, and directed NASA to preserve its capability to launch space shuttles through FY2011.\nA decision to extend the program would create challenges relating to cost, schedule, and safety. With the planned termination date approaching, some contracts for shuttle components have already run out, and some contractor personnel have already been let go. Reestablishing the capability to operate the program would likely incur costs and delays, and this potential will grow as the planned termination date approaches. The recertification process recommended by the Columbia Accident Investigation Board could be costly and time-consuming, although the board itself gave no estimate of either cost or schedule. At this point, completing a recertification in time to maintain a continuous flight schedule might already be difficult. Congressional policy makers or the Administration could simply decide to continue flying anyway, in parallel with the recertification process—in effect, NASA has already done this to some extent with the decision to allow a few flights originally planned for 2010 to slip into 2011—but policy makers might suffer political repercussions from such a choice if another serious accident occurred.\nDuring the 2009 presidential transition, the GAO identified the pending retirement of the space shuttle in 2010 as one of 13 \"urgent issues\" facing the incoming Obama Administration. The GAO also stated that \"according to NASA, reversing current plans and keeping the shuttle flying past 2010 would cost $2.5 billion to $4 billion per year.\"", "The transition of assets and personnel at the end of the shuttle program is of great interest to many in Congress and represents a major challenge for NASA. The shuttle workforce is a reservoir of unique expertise and experience that would be difficult for NASA and its contractors to reassemble once dispersed. NASA managers are particularly concerned to maintain key human spaceflight expertise and capabilities. In certain communities, the loss of the shuttle workforce will have a significant economic impact. For individuals, the loss of specialized, well-paid employment that has been relatively stable for many years can be especially disruptive at a time when the job market is already unusually difficult. Finding the best alternative use of facilities and equipment is important for getting the best value for the taxpayer.\nNASA's transition management plan, issued in August 2008, establishes a timeline for the post-shuttle transition, defines organizational responsibilities for various aspects of the transition, establishes goals and objectives, and outlines planning and management challenges such as management of human capital and disposition of infrastructure. As it notes, the scope of the transition is huge:\nThe SSP [space shuttle program] has an extensive array of assets; the program occupies over 654 facilities, uses over 1.2 million line items of hardware and equipment, and employs over 2,000 civil servants, with more than 15,000 work year equivalent personnel employed by the contractors. In addition, the SSP employs over 3,000 additional indirect workers through Center Management and Operations and service accounts. The total equipment acquisition value is over $12 billion, spread across hundreds of locations. The total facilities replacement cost is approximately $5.7 billion, which accounts for approximately one-fourth of the value of the Agency's total facility inventory. There are over 1,200 active suppliers and 3,000 to 4,000 qualified suppliers geographically located throughout the country.\nCongress has addressed a number of these issues through legislation:\nIn the NASA Authorization Act of 2005, Congress directed NASA to use the personnel, capabilities, assets, and infrastructure of the shuttle program \"to the fullest extent possible consistent with a successful development program\" in developing the vehicles now known as Orion, Ares I, and Ares V. It also required the development of a transition plan for personnel affected by the termination of the shuttle program. In the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2008, Congress directed NASA to prepare a strategy, to be updated at least every six months, for minimizing job losses as a result of the transition from the shuttle to its successor. The strategy report was first issued in March 2008 and was updated in October 2008 and July 2009. As well as strategic information, it provides annual workforce projections for each NASA center and a summary of recent relevant actions by NASA and its contractors. In the NASA Authorization Act of 2008, Congress directed NASA to submit a plan for the disposition of the shuttles and associated hardware and to establish a Space Shuttle Transition Liaison Office to assist affected communities. It provided for temporary continuation of health benefits for personnel whose jobs are eliminated as a result of the termination of the program. It directed NASA to analyze the facilities and personnel that will be made available by the termination of the shuttle program and to report on other current and future federal programs that could use them. The resulting report summarized the \"mapping\" process that NASA is using to align the civil servant and contractor shuttle workforce and the shuttle facilities at each NASA center with the needs of other programs. In the Commerce, Justice, Science, and Related Agencies Appropriations Act, 2010, and in previous NASA appropriations acts for several years, Congress prohibited NASA from using appropriated funds to implement reductions in force (RIFs) or other involuntary separations, except for cause.\nBefore the release of the Administration's FY2011 budget, many of the personnel employed in the shuttle program were expected to transition to the Constellation program. The new direction for NASA's human spaceflight program established by the NASA Authorization Act of 2010 introduces new uncertainty into these plans.", "The ISS is composed of crew living space, laboratories, remote manipulator systems, solar arrays to generate electricity, and other elements. Launched separately, these elements were assembled in space. Rotating crews have occupied the ISS, each for a period of four to six months, since November 2000.\nWhen the space station was first announced, its assembly was to be complete by 1994. In 1998, when construction actually began, it was expected to be complete by 2002, with operations through at least 2012. Completion is now scheduled during 2011. In 2003, NASA briefing charts showed operations possibly continuing through 2022. Under the Vision, announced in 2004, U.S. utilization was scheduled to end after 2015. The NASA Authorization Act of 2010 extended U.S. utilization through at least FY2020.\nThe framework for international cooperation on the ISS is the Intergovernmental Agreement on Space Station Cooperation, which was signed in 1998 by representatives of the United States, Russia, Japan, Canada, Belgium, Denmark, France, Germany, Italy, the Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom. The intergovernmental agreement has the status of an executive agreement in the United States, but is considered a treaty in all the other partner countries. It is implemented through memoranda of understanding between NASA and its counterpart agencies: the Russian Federal Space Agency (Roskosmos), the Japanese Aerospace Exploration Agency (JAXA), the Canadian Space Agency (CSA), and the European Space Agency (ESA). The United States also has an ISS participation agreement with Brazil, independent of the 1998 framework.\nBecause of cost growth and schedule delays, the scope and capabilities of the ISS have repeatedly been downsized. The original concept was not just a laboratory, but also an observatory; a transportation node; a facility for servicing, assembly, and manufacturing; and a storage depot and staging base for other missions. By 1989, only the laboratory function remained, and even that was smaller and less capable than in the original plans. In 1993, Russia joined the space station partnership, a move that added foreign policy objectives to the program's goals. By 2001, following further downsizing, NASA saw three goals for the station: conducting world-class research, establishing a permanent human presence in space, and \"accommodation of all international partner elements.\" Following the announcement of the Vision in 2004, learning to live and work in space became a key justification for the ISS program, and ISS research was to be focused on the long-term effects of space travel on human biology.\nConcerned that the station's function as a research laboratory was being eroded, Congress took several legislative actions. The NASA Authorization Act of 2005 required NASA to allocate at least 15% of the funds budgeted to ISS research to \"life and microgravity science research that is not directly related to supporting the human exploration program.\" It also required NASA to submit a research plan for utilization of the ISS. Issued in June 2006, the plan described proposed R&D and utilization activities in each of six disciplinary areas. It characterized the ISS as a long-duration test-bed for future lunar missions; a flight analog for future missions to Mars; a laboratory for research directly related to human space exploration, such as human health countermeasures, fire suppression, and life support; and an opportunity to gain experience in managing international partnerships for long-duration space missions. The plan stated that research not related to exploration would continue \"at a reduced level.\" At about the same time, the National Academies issued a review of NASA's plans for the ISS. This review noted \"with concern\" that the objectives of the ISS \"no longer include the fundamental biological and physical research that had been a major focus of ISS planning since its inception.\" It concluded that \"once lost, neither the necessary research infrastructure nor the necessary communities of scientific investigators can survive or be easily replaced.\"", "The 2005 authorization act designated the U.S. portion of the ISS as a national laboratory, to be available for use by other federal agencies and the private sector. As required by the act, NASA submitted a plan for this designation in May 2007. It concluded that NASA use of the ISS must continue to have first priority, that use by non-NASA entities should be funded by those entities, and that \"the availability of cost-effective transportation services will directly affect the ability of the ISS to operate as a national laboratory in the years to come.\" The impact that the national laboratory designation would have was initially unclear. In the NASA Authorization Act of 2008, Congress directed NASA to establish an advisory committee on the effective utilization of the ISS as a national laboratory. As of mid-2009, NASA had established agreements for use of the ISS with at least five other federal agencies, three private firms, and one university, and had identified \"firm interest\" in using the ISS for education; human, plant, and animal biotechnologies; aerospace technologies; and defense sciences research. NASA officials believe that about half of planned U.S. utilization resources on the ISS could be available for non-NASA use.\nThe NASA Authorization Act of 2010 directed NASA to contract with a nonprofit organization to manage the activities of the ISS national laboratory. Under this provision, 50% of the U.S. research capacity allocation on the ISS will be reserved for experiments managed through the national laboratory process, and NASA utilization in excess of 50% will have to be requested through a proposal to the managing organization. NASA expects to select the managing organization no sooner than May 2011.", "The U.S. ISS components were designed for a 15-year lifetime from the date of deployment. They were launched at various times during the assembly process, but the nominal reference point is considered to be the launch of the U.S. laboratory module Destiny in February 2001. Despite the 15-year specification, past experience \"clearly indicates that systems are capable of performing safely and effectively for well beyond their original design lifetime\" if properly maintained, refurbished, and validated. The first milestones for a decision on service life extension past February 2016 will occur in 2014.\nIn order to receive a greater return on the cost and effort that have been invested in ISS construction, the NASA Authorization Act of 2010 extended operation and utilization of the ISS through at least FY2020. It also directed NASA to carry out a comprehensive review to identify spare and replacement parts that this extension will necessitate. A report on the review is to be provided to Congress in January 2011, and the Government Accountability Office is to provide its assessment of the report within 90 days after that.\nIn addition to cost, extending the life of the ISS will require overcoming several technical challenges. At present, failed parts are returned to Earth in the space shuttle for refurbishment. After the conclusion of the shuttle program, this repair strategy will likely no longer be possible, as most of the cargo vehicles being considered for the post-shuttle period are not capable of returning cargo back to Earth. Instead, new parts will need to be manufactured and sent up, but even this may be impossible in a few cases, as some ISS parts are too large for any of the planned post-shuttle cargo alternatives. Last but not least, as ISS components reach the end of their 15-year design life, they will need to be recertified, which is a potentially complex and costly process.", "The U.S. space shuttle has been the major vehicle taking crews and cargo to and from the ISS. Russian Soyuz spacecraft also carry both crews and cargo. Russian Progress spacecraft carry cargo only, as they are not designed to survive reentry into the Earth's atmosphere. A Soyuz is always attached to the station as a \"lifeboat\" in case of an emergency. The \"lifeboat\" Soyuz must be replaced every six months.\nPaying Russia for flights on the Soyuz is the only short-term option for U.S. human access to the ISS after the end of the space shuttle program. In 2009, in order to permit such payments, Congress extended a waiver of the Iran, North Korea, and Syria Nonproliferation Act ( P.L. 106-178 as amended) until July 1, 2016.\nOne element of NASA's plans for ensuring cargo access to the ISS during the gap is the Commercial Orbital Transportation Services (COTS) program to develop commercial capabilities for cargo spaceflight. Under the COTS program, SpaceX Corporation is developing a vehicle known as Dragon, and Orbital Sciences Corporation is developing a vehicle known as Cygnus. Both are cargo-only vehicles (at least in their initial versions) and will have about one-eighth the capacity of the space shuttle. Only Dragon will be capable of returning cargo to Earth as well as launching it into space. The first test flight of Dragon took place successfully in December 2010. Cygnus has not yet flown into space. In the NASA Authorization Act of 2008, Congress directed NASA to develop a contingency plan for post-shuttle cargo resupply of the ISS in case commercial cargo services are unavailable. This plan was transmitted to Congress in March 2010.\nNoncommercial alternatives for cargo, in addition to the Russian Progress, include the European Automated Transfer Vehicle (ATV) and the Japanese H-II Transfer Vehicle (HTV). The first ATV was launched in March 2008 and carried out docking demonstrations with the ISS the following month. The first HTV was launched in September 2009 and also docked successfully with the ISS. Contracting with Russia for use of the Progress would probably require passing an additional waiver of the Iran, North Korea, and Syria Nonproliferation Act. Like Dragon and Cygnus, the ATV, HTV, and Progress all have significantly smaller cargo capacity than the space shuttle. None of the noncommercial alternatives is capable of returning cargo to Earth.\nIn addition to commercial cargo services, the NASA Authorization Act of 2010 authorized the establishment and funding of a program to advance the development of commercial services that could carry crews. Commercial crew transportation services are discussed further in the next section.", "Whatever spacecraft are ultimately used for access to the ISS following the end of the space shuttle program, in the long term new vehicles will be needed to carry humans and cargo into space, both to low Earth orbit and beyond. Under the Constellation program, these vehicles would be the crew capsule Orion, the Ares I rocket to launch Orion into low Earth orbit, and the heavy-lift Ares V rocket to launch cargo. Under the new direction established by the NASA Authorization Act of 2010, they would be a multipurpose crew vehicle based on Orion; a new, crew-capable, heavy-lift rocket referred to in the act as the space launch system; and commercial services to carry astronauts to and from low Earth orbit. (The multipurpose crew vehicle and space launch system would together provide a backup option in the event that those commercial services are not available when needed.) A variety of alternatives to these plans have been proposed, particularly with respect to heavy-lift rockets.", "Development of Orion and Ares I is well under way by NASA and its contractors. Development of Ares V has not begun, but Ares I and Ares V would share some components. If the Constellation program were continued, the first crewed flight of Orion and Ares would be scheduled for 2015. The Augustine committee concluded that a 2017 date is more realistic and that a delay until 2019 is possible.\nOrion is similar to an enlarged Apollo capsule. It is designed to carry six astronauts and to operate in space for up to six months. An upgraded version would be required for travel to the Moon or beyond. The Augustine committee concluded that Orion \"will be acceptable for a wide variety of tasks in the human exploration of space\" but expressed concern about its operational cost once developed. The committee suggested that a smaller, lighter, four-person version could reduce operations costs for support of the ISS by allowing landing on land rather than in the ocean and by enabling simplifications in the launch-abort system.\nThe Ares I rocket is designed to be a high-reliability launcher that, when combined with Orion, will yield a crew transport system with an estimated 10-fold improvement in safety relative to the space shuttle. The development of Ares I has encountered some technical difficulties, but the Augustine committee characterized these as \"not remarkable\" and \"resolvable.\"\nAres V is designed to be capable of launching 160 metric tons of cargo into low Earth orbit. By comparison, the space shuttle has a cargo capacity for ISS resupply missions of about 16 metric tons, and the ISS, which was launched in pieces over a decade, weighs a total of 350 metric tons. For human missions beyond low Earth orbit, Ares V would launch equipment into orbit for rendezvous with an Orion launched by an Ares I. At present, Ares V is only a conceptual design. The Augustine committee described it as \"an extremely capable rocket\" but estimated that it was unlikely to be available until the late 2020s.", "For human space flight beyond low Earth orbit, the NASA Authorization Act of 2010 directed NASA to develop a multipurpose crew vehicle, based on Orion, and a new crew-capable, heavy-lift rocket known as the space launch system.\nThe multipurpose crew vehicle would \"continue to advance the development\" of the features, designs, and systems of Orion. Its capabilities would include serving as the primary crew vehicle for missions beyond low Earth orbit; conducting in-space operations, such as rendezvous, docking, and extra-vehicular activities; and delivering crews and cargo to the ISS, if commercial and other alternative services are unavailable. The act established December 31, 2016, as the target date for achieving full operational capability.\nThe capabilities of the space launch system would include lifting the multipurpose crew vehicle; initially, without an upper stage, lifting payloads weighing between 70 and 100 metric tons into low Earth orbit; with an integrated upper stage, lifting payloads weighing at least 130 metric tons; and delivering crews and cargo to the ISS, if commercial and other alternative services are unavailable. December 31, 2016, is the target date for achieving full operational capability of the initial version, without an upper stage.\nIn January 2011, NASA submitted a preliminary report to Congress on its plan for implementing the authorization act's requirements for the multipurpose crew vehicle human and space launch systems. The report stated that NASA has not yet been able to identify spacecraft designs that meet the act's capability and schedule requirements within the authorized funding levels.", "The Augustine committee identified three categories of heavy-lift launchers that could be alternatives to Ares V: a scaled-down version of Ares V called Ares V Lite; a rocket derived from the design of the space shuttle; and a rocket derived from the Evolved Expendable Launch Vehicle. Unlike Ares V, each of these could be rated to carry humans (in an Orion capsule) as well as cargo.\nThe Ares V Lite would be a slightly lower-performance version of the Ares V, capable of launching about 140 metric tons rather than 160. For human missions beyond Earth orbit, two launches of Ares V Lite, rather than one of Ares I and one of Ares V, would considerably increase the payload that could be carried to the destination. Some human missions beyond Earth orbit could be accomplished with a single Ares V Lite launch.\nShuttle-derived vehicles would use the same main engines, solid rocket boosters, and external tanks as the space shuttle. They could be either in-line or side-mount. In other words, the payload could be mounted either on top or on the side. One example of the in-line option is the Jupiter design advocated by DIRECT, a group ostensibly led by NASA engineers working anonymously on their own time. The Augustine committee did not compare the in-line and side-mount variants in detail, but it considered the side-mount option to be inherently less safe when carrying a crew. A shuttle-derived launcher would likely be able to lift 90 to 110 metric tons into orbit.\nThe Evolved Expendable Launch Vehicle program was a U.S. Air Force program that resulted in the development of the Delta IV and Atlas V rockets. Current EELV systems are not rated to carry humans. In testimony to the Augustine committee, the Aerospace Corporation stated that a human-rated variant of the Delta IV Heavy would be capable of carrying Orion to the ISS. A super-heavy EELV variant could carry a cargo payload of about 75 metric tons. The Augustine committee concluded that using an EELV variant to launch Orion would only make sense if a super-heavy EELV variant were to be selected for heavy-lift cargo launch.\nIn addition to differences in capability, the Augustine committee found that these alternatives differ in their life-cycle costs, operational complexity, and \"way of doing business.\" The committee concluded that Ares V Lite would be the most capable; that a shuttle derivative would take maximum advantage of existing infrastructure, facilities, and production capabilities; and that an EELV derivative could potentially have the lowest operating costs, but would require a significant restructuring of NASA. The committee noted that each alternative has strong advocates and that \"the claimed cost, schedule, and performance parameters include varying degrees of aggressiveness.\" It did not explicitly recommend any of the alternatives over the others.\nThe NASA Authorization Act of 2010 directed NASA to \"extend or modify existing ... contracts\" when developing the new space launch system. Moreover, Senate report language anticipated that\nin order to meet the specified vehicle capabilities and requirements, the most cost-effective and \"evolvable\" design concept is likely to follow what is known as an \"in-line\" vehicle design, with a large center tank structure with attached multiple liquid propulsion engines and, at a minimum, two solid rocket motors composed of at least four segments being attached to the tank structure to form the core, initial stage of the propulsion vehicle.\nThis language is seen by most analysts as calling for a design similar to the Augustine committee's Ares V Lite option, or possibly another in-line shuttle-derived design. Some observers have questioned whether it is appropriate for Congress to give such specific guidance about engineering design choices. NASA officials have indicated their intent to \"work with stakeholders in Congress to determine an appropriate transportation architecture\" and have stated that \"we have done some very objective heavy-lift studies [and] will try to influence the conversation to make sure we don't preclude possible answers that might be the optimum overall.\"", "The NASA Authorization Act of 2010 authorized the establishment and funding of a program to advance the development of commercial services that can carry astronauts. The Commercial Crew Development (CCDev) program extends and authorizes an initiative begun with funds from the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ). A number of companies, including SpaceX, Orbital, Boeing, Virgin Galactic, and the Sierra Nevada Corporation, have expressed interest in providing commercial crew launch services. Before CCDev, the COTS program considered the use of commercial services for ISS crew transfer and crew rescue (a capability known as COTS D).\nRegarding the option of relying on commercial services in lieu of Ares I for all crew access to low Earth orbit, the Augustine committee concluded the following:\nConsidering that all U.S. crew launch systems to date have been built by industry, \"there is little doubt\" that the U.S. aerospace industry is capable of building and operating a four-passenger \"crew taxi\" to low Earth orbit. Because of the importance of crew safety, commercial crew transport services would need to include \"a strong, independent mission assurance role for NASA.\" If the service were developed so as to meet commercial needs as well as NASA's, there would be private-sector customers to share operating costs with NASA. In that case, the cost of the program to NASA would be about $5 billion, and a service could be in place by 2016. If the private sector effort were to fail in mid-program, the task of crew transport would revert to NASA. NASA should continue development of Orion and move quickly toward the development of a human-ratable heavy-lift rocket as a fallback option to mitigate this risk.\nThe Augustine committee found that the commercial space industry is \"burgeoning,\" and concluded that creating an assured initial market would eventually have the potential—\"not without risk\"—to significantly reduce costs to the government.", "Space travel is inherently dangerous. Nevertheless, NASA's policy is that \"safety is and will always be our number one priority in everything we do.\" The Augustine committee described safety as a sine qua non . Analysts and policy makers generally agree with this emphasis, but some have concerns about whether it is matched by NASA's implementation of its safety policies and procedures.\nThe Columbia Accident Investigation Board found in 2003 that \"throughout its history, NASA has consistently struggled to achieve viable safety programs and adjust them to the constraints and vagaries of changing budgets.... NASA's safety system has fallen short of the mark.\" It concluded that \"a broken safety culture,\" including a \"reliance on past success as a substitute for sound engineering practices,\" was an organizational cause of the Columbia disaster. It found that one contributing factor was \"intense schedule pressure,\" which had also been identified as an organizational cause of the space shuttle Challenger disaster in 1986. It recommended that NASA establish a technical engineering authority, reporting directly to the NASA Administrator rather than to the space shuttle program, that independently verifies launch readiness and has sole authority to grant waivers for technical standards. In response to these findings, NASA has made many changes, including the establishment of an independent NASA Engineering and Safety Center under the auspices of the headquarters Office of Safety and Mission Assurance.\nNevertheless, some analysts see signs that potential problems remain. The deadline of 2010 to complete construction of the space station and stop flying the space shuttle created schedule pressure for both programs until NASA converted it from a hard deadline to a flexible goal (now extended to early 2011). In 2006, NASA decided to a proceed with a shuttle mission, even though the Chief Engineer and the head of the Office of Safety and Mission Assurance recommended against the launch because of an issue with the shuttle ice-frost ramps that they characterized as \"probable/catastrophic.\" Some observers saw signs of \"reliance on past success\" in NASA's justification for this decision: the NASA Administrator disagreed with the \"probable\" characterization because \"we have 113 flights with this vehicle ... and while we've had two loss of vehicle incidents, they've not been due to ice-frost ramps.\" (The two officials who recommended against launch stated that they were comfortable with the decision to overrule them because \"the risk was to the vehicle and not the crew.\") A member of NASA's Aerospace Safety Advisory Panel testified in late 2009 that describing safety as a sine qua non \"oversimplifies a complex and challenging problem\" and that NASA \"has given serious consideration only recently\" to the establishment of safety requirements for commercial crew transport services.\nNASA argues that it continues to implement initiatives to improve safety. These include greater emphasis on training and qualification of safety professionals; an emphasis on \"safety culture,\" including more open communication and clear appeal paths to the Administrator for safety-related dissenting opinions; more modeling and validation of software requirements; and improved tools for knowledge and requirements management.\nThe advent of commercial spacecraft that carry crews into space will require new processes for ensuring crew safety. The NASA Authorization Act of 2010 directed NASA to develop and make public \"detailed human rating processes and requirements\" for crewed commercial spacecraft that are \"at least equivalent to\" the existing requirements for human rating of NASA spacecraft. NASA issued this document in December 2010. It asserts that \"a crew transport capability that meets the safety requirements in this document will be approximately an order of magnitude safer than the space shuttle.\"", "Until 2010, the Vision for Space Exploration established the Moon as NASA's next goal for human exploration beyond low Earth orbit, followed eventually by Mars. In considering possible modifications to the Vision, space policy experts and other interested observers suggested various alternative goals. For example, some proposed that Mars should be the immediate objective, rather than returning to the Moon first. Others suggested human missions to asteroids or other solar system destinations.\nThe Augustine committee concluded that current technology is insufficiently developed to make a Mars mission safe. It found that Mars is \"unquestionably the most interesting destination in the inner solar system\" and the \"ultimate destination for human exploration\" but \"not the best first destination.\" A spacecraft that lands on either the Moon or Mars must overcome the lunar or Martian \"gravity well\" before returning to Earth. The fuel required to accomplish this makes either destination challenging. As potential alternatives, the Augustine committee considered fly-by missions to either the Moon or Mars, missions that would orbit either the Moon or Mars, missions that would land on the moons of Mars, and missions to near-Earth objects such as asteroids or comets. They also considered missions to various Lagrange points. Lagrange points are special locations in space, defined relative to the orbit of the Moon around the Earth or the Earth around the Sun. They are planned locations for future unmanned science spacecraft, and some scientists believe they will be important in determining routes for future interplanetary travel. Possible activities at each of these destinations are shown in Figure 1 .\nThe Administration's plan, first articulated in the President's speech in April 2010, is for NASA's first destination beyond low Earth orbit to be an asteroid, followed by an orbit of Mars and subsequently a Mars landing. This plan appears to be consistent with the NASA Authorization Act of 2010, which states that \"a long-term objective for human exploration of space should be the eventual international exploration of Mars.\" The act also, however, mandates a review by National Academies of the goals, capabilities, and direction of human space flight.", "Given the costs and risks of human space exploration, Congress could decide to curtail or postpone future human exploration missions and shift the emphasis of the nation's space program to other endeavors. The cost of human exploration is substantial, and according to the Augustine committee, it is not a continuum: there is an \"entry cost\" below which a successful program cannot be conducted at all. Congress could decide that this minimum cost is not affordable. Similarly, no matter how energetically NASA addresses safety concerns, human spaceflight is an inherently risky endeavor. Congress could decide that the potential benefits are insufficient to justify the safety risks.\nSeveral options are available as alternatives to human space exploration. Congress could seek to accomplish some of the same goals through other means, such as through robotic exploration. It could focus on technology development, in the hope of developing new technology that makes human spaceflight safer and more affordable in the future. It could focus on NASA's other activities, such as Earth science and aeronautics. Given sufficient funding, of course, all these options are also available in conjunction with human exploration rather than as alternatives to it. For example, the Augustine committee acknowledged that robotic exploration is important as a precursor to human exploration.", "Advocates of robotic missions assert that robotic exploration can accomplish outstanding science and inspire the public just as effectively as human exploration. The Mars rovers are a familiar example of a successful robotic science mission that has captured considerable public attention. Advocates also claim that robotic missions can accomplish their goals at less cost and with greater safety than human missions. They do not need to incorporate systems for human life support or human radiation protection, they do not usually need to return to Earth, and they pose no risk of death or injury to astronauts. Some analysts assert further that exploring with humans \"rules out destinations beyond Mars.\" Given that current plans include no destinations beyond Mars and treat Mars itself only as a long-term goal, this last limitation may not be important in the near term, even if it is correct.\nAdvocates of human missions note that science is not NASA's only purpose and claim that human exploration is more effective than robotic exploration at such intangible goals as inspiring the public, enhancing national prestige, and satisfying the human urge to explore and discover. They assert that even considering science alone, human missions can be more flexible in the event of an unforeseen scientific opportunity or an unexpected change in plans. As support for this assertion, they often cite the human missions to repair and upgrade the Hubble telescope. On the other hand, the Hubble repairs and upgrades required extensive planning and the development of new equipment. They were not a real-time response to an unexpected event. Moreover, robotic missions can also sometimes be modified to respond to opportunities and mishaps, through software updates and other changes worked out by scientists and engineers back on Earth.\nA few analysts portray robotic exploration as an alternative to human exploration. For the most part, however, the two alternatives are considered complementary, rather than exclusive. The Augustine committee, for example, found that without both human and robotic missions, \"any space program would be hollow.\" In addition, many analysts consider that in the absence of human missions, support for NASA as a whole would dwindle, and fewer resources would be available for robotic missions as well.", "If congressional policy makers were to conclude that cost and safety concerns make a human exploration program unaffordable or undesirable in the near term, they might seek to scale back NASA's human spaceflight program and focus on technology development, in the hope that improved technology will make the costs and risks of space travel more attractive in the future.\nThe strategy of developing improved technology and acquiring greater expertise could take many forms. It could complement a continuing, aggressive program of human exploration. For example, it is similar, in some ways, to the Augustine committee's suggestion (in its \"flexible path\" option) of visiting a series of less challenging destinations before attempting a Moon landing. It could also accompany a program of human missions in low Earth orbit without immediate plans for more distant destinations. It could even be part of a program that abandoned human spaceflight in the near term. Developing new technology effectively would likely be difficult, however, without a means of testing it in realistic missions. A program without any human spaceflight at all would risk losing existing expertise through inactivity.\nThe Augustine committee, the National Academies, and the Administration's FY2011 budget proposals all recommended a greater emphasis on technology development as a complement to an ongoing program of human spaceflight. The Augustine committee described NASA's space technology program as \"an important effort that has significantly atrophied over the years.\" It recommended that technology development be closely coordinated with ongoing programs, but conducted independently of them. The National Academies also recommended that NASA revitalize its technology development program. Like the Augustine committee, the Academies concluded that this program should be conducted independently. They recommended that NASA establish a DARPA-like technology development organization that reports directly to the Administrator.\nThe NASA Authorization Act of 2010 accepted the Administration's request to establish a new space technology program, although the funding it authorized for this effort was less than the Administration had proposed. It directed NASA to provide an implementation plan for the program by February 2011, and it directed the Administration to develop a national policy to guide space technology development programs across the federal government through 2020.", "In addition to the programmatic and prioritization issues that are the main focus of this report, NASA faces some cross-cutting challenges, such as acquisition and financial management, and issues involving its relationships with other agencies and the commercial space launch industry.", "Since 1990, the GAO has identified acquisition management at NASA as a high-risk area for the federal government. Although a 2009 update noted that \"NASA has made a concerted effort to improve its acquisition management,\" it also stated that \"since fiscal year 2006, 10 out of 12 ... major development projects in implementation exceeded their baseline thresholds.\" NASA issued an improvement plan in response to GAO's finding. The NASA Authorization Act of 2010 directed NASA to submit annual reports on its implementation of the improvement plan.\nIn the NASA Authorization Act of 2005, Congress established requirements for baselines and cost controls. The requirements include additional reviews of any program that appears likely to exceed its baseline cost estimate by 15% or its baseline schedule by six months and a prohibition on continuing any program that exceeds its cost baseline by 30% unless Congress specifically authorizes the program to continue. These requirements are similar to the Nunn-McCurdy cost-containment requirements for the Department of Defense.\nIn November 2008, the NASA Inspector General identified financial management as one of NASA's most serious challenges. The Inspector General's report found continuing weaknesses in NASA's financial management processes and systems, including its internal controls over property accounting. It noted that these deficiencies had resulted in disclaimed audits of NASA's financial statements since FY2003, largely because of data integrity issues and a lack of effective internal control procedures. According to the report, NASA had made progress in addressing these deficiencies, but the FY2009 audit was again disclaimed. The FY2010 audit, however, was qualified, rather than disclaimed; the NASA inspector general called this \"a notable improvement.\"", "A variety of governmental and nongovernmental organizations help to coordinate and guide U.S. space policy. These include the Office of Science and Technology Policy (OSTP) and the National Science and Technology Council (NSTC), both in the Executive Office of the President, as well as outside advisory groups, such as the NASA Advisory Council, committees of the National Academies, and independent committees such as the Augustine committee.\nThe National Academies have recommended that the President\ntask senior executive-branch officials to align agency and department strategies; identify gaps or shortfalls in policy coverage, policy implementation, and resource allocation; and identify new opportunities for space-based endeavors that will help to address the goals of both the U.S. civil and national security space programs.\nThe Obama Administration has stated that it intends to reestablish the National Aeronautics and Space Council (NASC), \"which will report to the President and oversee and coordinate civilian, military, commercial and national security space activities.\" The NASC was established along with NASA itself by the National Aeronautics and Space Act of 1958 (P.L. 85-568). It was most active during the Kennedy Administration, when it recommended, among other policies, the Apollo program to send humans to the Moon. Some analysts attribute its influence during this period to the fact that it was chaired by Vice President Johnson. The NASC was abolished in 1973, reestablished in 1989 as the National Space Council, then abolished again in 1993, with its functions absorbed into the NSTC.\nSome aspects of space policy are documented in a formal presidential statement of national space policy. In 2006, the Bush Administration issued such a statement, replacing a previous one that had been in place for 10 years. The 2006 policy established principles and goals for U.S. civilian and national security space programs and set guidelines for a few specific issues such as the use of nuclear power in space and the hazard of debris in orbit. It defined the space-related roles, responsibilities, and relationships of NASA and other federal agencies, such as the Department of Defense and the Department of Commerce. The Obama Administration issued an updated national space policy in June 2010. The new policy reiterated the policy changes proposed in the Administration's FY2011 budget and placed new emphasis on international cooperation and development of the commercial space industry.", "National security space programs, conducted by the Department of Defense (DOD) and the intelligence community, are less visible than NASA, but their budgets are comparable to NASA's. A key issue for them is how to avoid the cost growth and schedule delays that have characterized several recent projects. A shared industrial base and other areas of common concern sometimes result in NASA issues affecting national security programs and vice versa. For example, some policy makers expressed concern about the impact of cancelling of Ares I on the industrial base for solid rocket motors used by DOD. The NASA Authorization Act of 2010 directed NASA to assess, in consultation with DOD and the Department of Commerce, the effects of the end of the space shuttle program, and the transition to the space launch system authorized by the act, on the U.S. industrial base for solid and liquid rocket motors. Further discussion of national security space programs is beyond the scope of this report.", "Congressional policy makers have taken a long-standing interest in NASA's relationship with the National Oceanic and Atmospheric Administration (NOAA), which operates Earth observing satellites for weather forecasting and other purposes. The NASA Authorization Act of 2005 mandated the establishment of a joint NASA-NOAA working group; required NASA and NOAA to submit a joint annual report on coordination each February; directed NASA and NOAA to evaluate NASA science missions for their operational capabilities and prepare transition plans for those with operational potential; and directed NASA not to transfer any Earth science mission or Earth observing system to NOAA until a transition plan has been approved and funds have been included in the NOAA budget request. In the NASA Authorization Act of 2008, Congress directed OSTP to develop a process for transitions of experimental Earth science and space weather NASA missions to operational status under NOAA, including the coordination of agency budget requests; mandated a National Academies study of the governance structure for U.S. Earth observation programs at NASA, NOAA, and other agencies, to be transmitted to Congress by April 2010; and mandated a National Academies assessment of impediments to interagency cooperation on space and Earth science missions. The report was on impediments to cooperation was issued in November 2010. The NASA Authorization Act of 2010 directed OSTP to develop a strategic plan, updated at least every three years, to ensure greater cooperation among U.S. civilian Earth observation programs; and directed NASA to coordinate with NOAA and the U.S. Geological Survey (USGS) to establish a formal mechanism to transition NASA research and assets to NOAA and USGS operations. The extent to which the provisions in the 2005, 2008, and 2010 acts overlap suggests that the requirements of the earlier acts have not yet been successful in achieving Congress's goals for the NASA-NOAA relationship.", "Industry has long had an important role in both space launch and the development and operation of commercial satellites. Although the commercial satellite launch business has dropped off in recent years, many analysts expect the industry to expand as space tourism develops and NASA begins to rely more on the commercial sector for space transportation.\nThe prospect of space tourism on commercial vehicles is becoming increasingly likely. With the exception of five suborbital demonstration flights in 2004, private space travel has until now been limited to the purchase of trips to the International Space Station on Russian Soyuz spacecraft. A number of commercial companies are now developing reusable spacecraft to carry private individuals on short-duration flights into the lower reaches of space. Concurrently, several companies and states are developing spaceports to accommodate anticipated increases in commercial space launches. The safety of commercial space launches, spaceports, and space tourism are regulated by the Federal Aviation Administration (FAA). According to the GAO, the FAA faces a number of challenges in commercial space regulation, including maintaining sufficient space expertise to conduct proper oversight, avoiding conflicts between its regulatory and promotional roles, and integrating spacecraft into the air traffic control system.\nExport control regulations administered by the Department of State under the International Traffic in Arms Regulations (ITAR) have often been a concern for this industry. The regulations limit the export of satellites and related components because of the potential for their use in military systems. In order to expand opportunities for U.S. industry, some analysts and policy makers have advocated transferring the regulation of these technologies from ITAR to the Export Administration Regulations administered by the Department of Commerce. In April 2010, following an interagency review, the Administration proposed a number of changes in the U.S. export control system, including the establishment of a single licensing agency.\nThe development of commercial vehicles for cargo flights to the space station, and possibly to provide NASA with crew launch services into low Earth orbit, is discussed elsewhere in this report.", "The NASA Authorization Act of 2010 ( P.L. 111-267 ) is discussed above in the section \" Human Spaceflight: The 2010 Authorization Act \" and elsewhere throughout this report.\nAppropriations for NASA are provided in the Commerce, Justice, Science (CJS) appropriations bill. For more information on FY2011 appropriations legislation, see CRS Report R41161, Commerce, Justice, Science, and Related Agencies: FY2011 Appropriations . Like other agencies, NASA is currently operating at FY2010 funding levels under a continuing resolution, the Continuing Appropriations Act, 2010 ( P.L. 111-242 as amended by P.L. 111-322 ).\nFor FY2010, the CJS bill was passed by the House and Senate as H.R. 2847 . For final passage, it was included in the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ). For more information about FY2010 NASA appropriations, see CRS Report R40644, Commerce, Justice, Science, and Related Agencies: FY2010 Appropriations .\nFor FY2009 NASA appropriations legislation during the 111 th Congress, including passage of the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ) and the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ), see CRS Report RL34540, Commerce, Justice, Science and Related Agencies: FY2009 Appropriations .\nA number of other bills addressing specific topics related to NASA were introduced during the 111 th Congress. Among these, P.L. 111-125 extended the current third-party liability indemnification for commercial launch services companies through 2012. P.L. 111-314 restated existing law relating to NASA and other space topics as a new, separate title of the U.S. Code. Bills that did not become law included the following: H.R. 4804 and S. 3068 , which would have extended the space shuttle and ISS programs, provided for the development of a National Space Transportation system, and authorized appropriations for certain NASA programs; H.R. 1962 , which would have extended the space shuttle program to 2015; H.R. 3853 , which would have authorized grants to university consortia to establish centers in conjunction with NASA and industry; H.R. 5614 , which would have required expenditure of appropriated FY2010 Constellation funds on the Constellation program, without terminating or descoping contracts; and S. 3180 , which would have prohibited the use of the Anti-Deficiency Act (31 U.S.C. 1341) as the basis for terminating or eliminating a Constellation contract, program, project, or activity.", "In conclusion, major space policy issues facing Congress include the following:\nIs there a national consensus for human exploration beyond Earth orbit, despite the inherent risks and the substantial cost? If so, what destination or destinations should NASA's human exploration program explore? If human exploration beyond Earth orbit is too costly or too dangerous, should NASA focus its efforts on human missions in Earth orbit, robotic exploration, technology development, other activities such as science and aeronautics, or some combination of these? When the space shuttle program ends during 2011, how should the transition of shuttle workforce and facilities be managed? Now that U.S. use of the International Space Station has been extended to at least 2020, how can the ISS be managed and utilized most effectively? What can be done to ensure that new spacecraft for human exploration, both government-owned and commercial, are developed effectively, despite budget constraints? How should NASA's multiple objectives be prioritized? What is the proper balance between human spaceflight, science, aeronautics, and education programs, and how can the balance be maintained if the cost of the larger, more prominent programs grows?" ], "depth": [ 0, 1, 1, 1, 2, 3, 3, 3, 3, 2, 3, 3, 2, 3, 3, 2, 2, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 1, 2, 2, 2, 2, 2, 1, 1, 2, 2, 1, 2, 2, 2, 2, 2, 1, 1 ], "alignment": [ "h0_title h1_title", "h0_full", "", "h1_title", "h1_title", "h1_full", "", "", "", "", "", "", "h1_full", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "", "h1_full", "", "", "", "", "", "", "", "", "", "", "" ] }

{ "question": [ "What was the purpose of The National Aeronautics and Space Administration Authorization Act of 2010?", "How did the Continuing Appropriations Act of 2011 change NASA’s compliance with The National Aeronautics and Space Administration Authorization Act of 2010?", "Why might the 12th Congress continue to closely examine the future of NASA?", "What was the Obama Administration’s proposal regarding the Constellation program?", "How would NASA change their operations following the Constellation program’s cancellation?", "What other plans were included as part of this proposal?", "What were the results of the 2010 authorization act?" ], "summary": [ "The National Aeronautics and Space Administration Authorization Act of 2010 (P.L. 111-267) authorized major changes of direction for NASA. Among these, it called for the development of a new, crew-capable, heavy-lift rocket, and it provided for the development of commercial services to transport NASA crews into low Earth orbit.", "However, under the Continuing Appropriations Act, 2011 (P.L. 111-242 as amended by P.L. 111-322), NASA continues to operate under a requirement to proceed with its previous human spaceflight program.", "Moreover, in a period of fiscal constraint, it is unclear whether future appropriations will match the growing NASA budgets envisioned by the 2010 act. Thus the 112th Congress is likely to continue to closely examine the future of NASA.", "In February 2010, the Obama Administration proposed cancelling the Constellation program and eliminating the goal of returning humans to the Moon.", "NASA would instead rely on commercial providers to transport astronauts to Earth orbit, and its ultimate goal beyond Earth orbit would be human exploration of Mars, with missions to other destinations, such as visiting an asteroid in 2025, as intermediate goals.", "Operation of the International Space Station would be extended to at least 2020, and long-term technology development would receive increased emphasis.", "The 2010 authorization act incorporated many of these proposals, though it retained elements of Constellation and scaled back the proposed emphasis on commercial providers and technology development." ], "parent_pair_index": [ -1, 0, -1, -1, 0, 0, -1 ], "summary_paragraph_index": [ 0, 0, 0, 2, 2, 2, 2 ] }